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State of Alabama Changes in State Government

State of Alabama Changes in State Government. How an Enterprise Resource Planning Project became a Segmented Approach Presented by Thomas L. White, Jr. State Comptroller April 12, 2012. State Financial Condition Changes Challenging Times. Post FY08 economic downturn

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State of Alabama Changes in State Government

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  1. State of AlabamaChanges in State Government How an Enterprise Resource Planning Project became a Segmented Approach Presented by Thomas L. White, Jr. State Comptroller April 12, 2012

  2. State Financial Condition ChangesChallenging Times • Post FY08 economic downturn • Significant revenue reductions from historic highs • General Fund (GF) $1.8B • Education Trust Fund (ETF) $6.4B • FY10 GF revenue declined to FY05 level (-21%+) • FY10 ETF declined to less than FY06 (-18%+) • Full impact of reductions offset by federal stimulus (ARRA) and other one time funds • Lower than anticipated revenues triggered proration in multiple FY’s

  3. FY09 -0- FY10 10.0% FY11 15.0% FY12 10.6% All Rainy Day Accounts exhausted FY11 Revenues $1.5B -$300M from FY08 FY09 11.0% FY10 9.5% FY11 3.0% FY12 -0- All Proration Prevention Accounts exhausted FY11 Revenues $5.3B -$1.1B from FY08 ProrationGeneral Fund Education Trust Fund

  4. State Financial Condition Changes Continued • Annual merit step raises frozen calendar 09-12 • Employee layoffs and attrition reductions • Agencies reduced or eliminated • Equipment purchases • Contracts • Operating expenses • Revenues • Incremental recovery after low point in FY10 • Low single digits • Revenue growth of 1-2% per year will take 5+ years to recover to FY08 level

  5. Recent State Employee Changes • Deferred Retirement Option Program (DROP) abolished • State retirement contributions increased • State employee insurance changes increased cost for many employees retiring after January 1, 2012 • State employee overtime not eligible for retirement contributions (AG opinion 2011-090) • Internal Revenue Service (IRS) non overnight per diem FICA/Medicare tax • In-state employee travel paid on payroll

  6. Financial Management System History • State of Alabama’s business processes are collectively referred to as the Financial Resource Management System (FRMS) • Combination of on-line and batch computer programs and data processes • Accounting • Financial Reporting • Payroll • Procurement • Personnel Functionality • Implemented 1990-92 • Extensive upgrade in 1999 to be year 2000 (Y2K) compliant • Y2K upgrade to meet minimum operating requirements, no improved functionality • All FRMS systems are highly customized

  7. Current FRMSMajority AMS now CGI • Central Accounting System • American Management System (AMS) Advantage Financial 2.0 • State-wide payroll and personnel system • AMS Advantage HR 2.0 • Agency Accounting • Modified version of AMS Advantage Financial 2.0 Advantage Financial System (AFNS) implemented as an agency accounting system • A significant number of state agencies have their own accounting systems and do not use AMS Advantage Financial 2.0 AFNS • Transportation is the largest • Procurement • Informs, Inc. (local vendor)

  8. The Plan • Original Plan • Implement a Commercial Off-the-Shelf (COTS) Enterprise Resource Planning (ERP) software package and supporting technologies • Interim Steps • Discovery Project • Auburn University Montgomery Center for Government and Public Affairs • explored possibilities, ramifications, cost, risks, and environment of a business transformation effort • Benchmarking Project - 2007 • Hackett Group • efficiency and effectiveness, • benchmark other states, financial, procurement, personnel, and payroll management, and identify areas with most benefit from business transformation • Business Process Reengineering for ERP planning - 2007 • 300 business processes were evaluated • ~150 identified based on efficiencies gained in a ERP project and detailed in “as-is” and “to-be” format

  9. First ERP Step • Procurement Systems Improvement RFP issued December 2009 • Planned award date March 2010 • State decided not to make an award • Funding issues • Manpower requirements • Primary election/general election year politics • New incoming Governor would replace 2 term limited Governor • Outcome • New Republican Governor • Democratic House and Senate became Republican super majority in both houses • Most radical change at state level in over 130 years

  10. What can we do? • In 2011 • identified segmented concept focused on greatest need and opportunity for improvement • Follow the money • Personnel Cost $2.4B • 40,000+ employees • Use a best of breed/best of fit approach • Time & Attendance opportunity • Front end interfaced with current payroll system • Standardization

  11. Time & Attendance Situational Summary • Considerable amount of effort, time and money required to maintain the state's current Time and Attendance processes • Existing payroll processes are labor intensive • Numerous timekeeping practices that differ widely • High costs associated with existing processes • Time and leave reporting errors more likely • Labor Law Compliance Risks • Extensive use of paper and distribution labor • Costly payroll production and distribution • Hard copy timesheets and leave requests • Lack of labor analysis and scheduling tools

  12. Business Needs • Control and reduce overtime • More accurate leave reporting, scheduling and processing • Ensure Labor Law Compliance • Fair Labor Standards Act (FLSA) • Family and Medical Leave Act (FMLA) • Provide employee self service facility (Portal) • Support automated workflow and online approvals • Better secure employee information • Personally Identifying Information (PII) • Convert to an employee number system • Provide ability to support future requirements • Labor and pay changes • Conversion to different pay cycles

  13. Project Description • Procure software, hardware and implementation services • Use RFP and ITB process • Anticipate five year contract managed by Finance State Information Systems Division • Contract will consist of professional services, software, technical support, training and software maintenance • Project will consist of • Implementation of a new statewide T&A System • Team comprising state employees and T&A implementation experts • Phased implementation approach • Duration estimated at 24 Months • Permanent Support Team • Sustain system, training and upgrades

  14. Benefits • Efficiency gains and cost reductions • Automated workflow replaces the current paper-based review and approval • Greater Accuracy • Human error reduction • More accurate reporting • Reduction of labor wages • Increased control over employee overtime • Elimination or reduction of paper documents • Creation of an Employee Portal where employees • Electronically record time • Request leave • Review pay and leave-related documents • Eventually perform many other tasks

  15. Benefits, continued. • And where managers • Approve employee time and leave requests • Create and modify work schedules • Better manage workforce • Data Availability provides support for • Labor cost studies • Workforce analysis • Productivity analysis • Audits • Dispute resolution • Improved compliance with state and federal laws

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