District weaning itself off costly computer help

By Emily Richmond (contact)

Friday, Nov. 21, 2008 | 2 a.m.

Even when criticism was at its loudest, Clark County School District officials stood by their decision to invest nearly $40 million in a new computer system: The Enterprise Resource Planning project would pay for itself within five years through improved efficiency, they said.

But with the district facing a massive budget shortfall, and the incomplete project costing more than $500,000 a month in consulting fees, that decision is getting harder to defend.

On Wednesday, Superintendent Walt Rulffes described it as “a flawed decision made with the best of intentions.”

Were he to do it over again, Rulffes told the Sun, he would wait until the district had the in-house expertise to handle the job instead of paying consultants.

“We were always told that business can do it better than government,” Rulffes said. “We took that approach. I wouldn’t do it again.”

The School District has been criticized for its reliance on costly consultants in a variety of areas that some say could be handled by staff. The criticism is especially keen with the budget shortfall jeopardizing the jobs of full-time employees.

Yet when the School Board approved the computer system upgrade in 2004, district officials believed outside experts would be the most efficient way to accomplish an urgent task. Auditors had for years warned that the School District’s outmoded systems would ultimately collapse, leaving the state’s largest public employer unable to cut paychecks, access records or make purchases.

The project, which would allow departments to easily share information and streamline operations, had an estimated price tag of $36 million and a completion date of January 2007. As recently as 2006 it earned praise from auditors hired by the Legislature to scrutinize the district’s finances.

But because of the escalating costs and the shortfall in state funding, district officials decided in January to “hibernate” most of the project. Only two departments, finance and purchasing, use the system, designed to support eight departments.

And instead of becoming a symbol of the district’s fiscal savvy, the project has become, in the words of district officials, a hibernating bear.

With another $120 million in budget cuts expected for the next biennium, education officials say the project is unlikely to be revived in the near future. The best option, they say, is to maintain the system as cheaply as possible until funding is available to complete it.

Yet the project continues to consume considerable funding.

In January, the 38 consultants at work on the system were costing the district nearly $1.4 million a month.

As of this week, the district was still paying $508,000 per month for 18.5 consultants — one consultant works part time. Nearly all of the money comes from the district’s general fund.

At a Clark County School Board meeting in February, Jeff Weiler, the district’s chief financial officer, promised the School Board that the remaining consultants would be gone as soon as possible.

Earlier this week district officials said they planned to drop three more consultants from the project by Jan. 1, another two by April and that all would be off the payroll by July 1.

After fielding the Sun’s inquiry into the cost of the consultants, Weiler informed the School Board Thursday that he had decided to phase out all project consultants by Jan. 1, a move that will save the district about $3 million.

The consultants still on the job come at a cost of $135 to $225 per hour, or $21,600-$36,000 per month. Two supervisors cost $315 per hour, or $50,400 per month.

The work is highly specialized, and their skills are in such high demand that the district had little choice but to pay the exorbitant costs, Weiler said.

Hiring full-time employees to do the work is the cost-efficient alternative, he said. But because of the district’s budget woes, no one’s sure when they could be hired.

After the consultants are gone, the district won’t be able to modify the system. Fixing problems will take longer, “but we’ll limp along,” Weiler said.

School Board Vice President Terri Janison said she is pleased the district is paying less in consulting fees, but would like to see all of the consultants off the job as quickly as possible.

“None of us are comfortable with this kind of money going to consultants,” Janison said. “But right now, there isn’t really an alternative.”