Payroll News

If Gov. Arnold Schwarzenegger wants to issue minimum-wage checks to 200,000 state workers in less than a month, he may want to rehire any semi-retired computer programmers he terminated last week.

Democratic state Controller John Chiang said Monday it would take at least six months to reconfigure the state’s payroll system to issue blanket checks at the federal minimum wage of $6.55 per hour, though Schwarzenegger insists such a change should occur this month.

Experts say Chiang isn’t joking when he describes the state’s payroll system as a computing relic on par with vacuum tubes and floppy disks.

“It’s an example of a number of computer systems in which the state made a large investment decades ago and has been keeping it going the last few years with duct tape,” said Michael Cohen, director of state administration with the Legislative Analyst’s Office.

The Republican governor signed an executive order last week recommending the cut to minimum wage for most permanent state workers and terminating 10,133 temporary and part-time employees. He believes the state must take drastic steps to preserve cash over the next two months as the state continues to operate without a budget 36 days into the new fiscal year.

Chiang reiterated Monday that he will ignore the order and issue full paychecks to state workers. He disputes Schwarzenegger’s legal interpretation of a 2003 California Supreme Court decision, which the governor said mandates that the state pay only minimum wage to employees until a budget is passed.

But even if the governor’s legal reasoning proves to be sound, Chiang said, the state cannot logistically retool its payroll system in a matter of weeks as the governor has asked. And if the change eventually were made, Chiang said it would take an additional nine to 10 months to issue back pay to employees when the budget is approved.

“Pragmatically, we just can’t get the system to work in a timely manner for us to implement payment of minimum wage,” Chiang said.

Fred Klass, chief operating officer for Schwarzenegger’s Department of Finance, testifying Monday in a Senate hearing, challenged Chiang’s description of his logistical hurdles.

“We have not been provided with the evidence that would show us that this is an impossibility, nor does it answer the question of why aren’t we working on this for next time,” Klass said.

“To some degree, it’s not the point,” he added. “The point is the law needs to be adhered to, and the governor is saying we need to follow the law. And if the controller is saying it’s inconvenient, I think the controller needs to explain why inconvenience is a reason to ignore the law.”

The state payroll system is based on the COBOL, or Common Business Oriented Language, programming language – a code first introduced in 1959 and popularized in the 1960s and 1970s.

“COBOL programmers are hard to come by these days,” said Fred Forrer, the Sacramento-based CEO of MGT of America, a public-sector consulting firm. “It’s certainly not a language that is taught. Oftentimes, you have to rely on retired annuitants to come back and help maintain the system until you’re able to find a replacement.”

Forrer said the system has tens of thousands of lines of code, so it is time-consuming to find and replace salaries for each job classification on an individual basis.

Cohen said other states have moved faster to modernize their payroll systems, though it’s also common for states to cling to their antiquated computers well beyond their scheduled life.

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