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Backlog at California's CalPERS fund worse than before new computer system launched

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Backlog at California's CalPERS fund worse than before new computer system launched

Sacramento Bee
April 17, 2012

The line at CalPERS' customer service window is getting longer.

After converting to a half-billion-dollar computer system to process benefits for hundreds of thousands of California public agency retirees last September, backlogs for some services are worse than before the project launched.

The new hardware and software installed by New York-based tech firm Accenture aimed to consolidate 49 old data systems into one when it launched last September, two years late at nearly twice its original $279 million budget. The California Public Employees' Retirement System committed another $6.8 million in December, bringing the total cost to $514 million. The money has come from CalPERS assets, currently valued at $234 billion.

Meanwhile, fund members have complained that a system intended to speed up service and boost efficiency has done the opposite.

Since September, CalPERS has run into snags issuing death benefits to widows and widowers, and for a while failed to make timely payments to health insurers. The delayed payments triggered cancellation notices from the insurers, shocking retirees who thought everything was fine. CalPERS apologized and assured the members that their insurance hadn't lapsed.

CalPERS' ongoing struggles with the system have angered members, tarnished the fund's reputation for strong service and frustrated front-line staff who can't get their work done because of computer foul-ups.

CalPERS' managers say they're making progress.

An 11-page staff assessment of the so-called "my|CalPERS" system that the CalPERS board will get today notes improvements in recent months, including software fixes, training, outreach to employers who weren't using the system and strategic decisions to prioritize work that have helped the nearly 5-year-old project turn the corner.

"The important thing to recognize is that we're starting to see normal processing levels" in some areas, said Donna Lum, CalPERS' deputy executive officer of customer service.

Callers to the fund's member service center aren't on hold as long, according to the report. Pension check direct deposit processing is speeding up. A unit that examines pensions for spiking abuses and errors has cut the number of reviews in its queue by more than half to 1,285. More employers are using the new system correctly.

On the downside, my|CalPERS can't perform some basic functions that affect pension payments, death benefit disbursements and employee retirement planning. Backlogs in several areas will continue through the end of this year, according to the report:

• Retirement adjustments: The system has been unable to automatically process common adjustments to retirees' pension checks. The fund started January with nearly 6,951 accounts that needed adjustments. It added another 4,195 during the month and closed just 35. CalPERS says software fixes due soon will speed up the work, and estimates it will close 10,000 cases per month by the end of this year. Still, the backlog by then will be three times larger than it was in January.

• Survivor death benefits: The backlog for processing claims by widowed spouses and others due benefits has become so severe that to catch up, CalPERS is hiring six temporary employees. The caseload is expected to grow nearly 20 percent by August to more than 10,000 cases before trending back down.

• Service credit purchases: The computer system can't calculate the prices for employees seeking to buy "air time," additional service credit that increases pension payments. The fund could provide estimates for only 792 employees in March, Lum said, against roughly 1,700 new requests. She expects the unit will process 1,200 estimates this month. The backlog stood at nearly 17,000 in January.

Some retirees have had other problems.

CalPERS shorted retired state worker Michael La Deaux's pension check some $1,200 last month because of erroneous charges withheld for his 28-year-old disabled son's health and dental benefits. That came without warning after months of back-and-forth with CalPERS over whether his son, who because of his age must be regularly approved for benefits, was covered at all.

CalPERS wasn't able to generate the usual certification letter but assured La Deaux his son was covered.

"Your re-certification has been approved. There was just a glitch in the system that is preventing them from issuing you out the approval letter," according to a Dec. 15 email from CalPERS that La Deaux provided to The Bee.

Then a dental insurer denied a claim, and La Deaux, who understands government bureaucracy from nearly 35 years at the State Compensation Insurance Fund, found out his son's medical insurer also had dropped him.

CalPERS fixed those problems, but then issued the pension payment in March with the unexpected $1,200 hit.

A fund representative acknowledged the error over the phone but told La Deaux he would have to wait seven to 10 days for a call. After a reporter forwarded details of the case to CalPERS' press office, the fund overnighted a refund check to La Deaux.

"I'm just hoping my next (pension payment) comes out correctly," La Deaux said. "I'm sure I'm not the only one this has happened to."

Michael Krigsman, a government tech consultant with Boston-based Asuret Inc. who has followed the project over the last few years, faulted the staff report for lacking many details about the service problems or how exactly they're being fixed.

"The report describes the situation in broad brush strokes," Krigsman said after reading it online. "It's difficult to have confidence in CalPERS' claims that things will be getting better."

Read more here: http://www.sacbee.com/2012/04/17/4419226/backlog-at-californias-calpers.html#storylink=cpy


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