Schools buy insurance for Y2K; $281,000 contract ensures that 17,000 in Balto. County get paid; Cost could grow larger; Emergency action prompts criticism of education management


The Baltimore County Board of Education will spend at least $281,630 to make sure its 17,000 teachers and support staff receive paychecks because the schools' computerized payroll system might not be Y2K-compliant.

The cost of the emergency no-bid contract with ADP Inc. of Owings Mills could grow to as much as $650,000 if the company issues paychecks for six months and provides other services.

Though they were assured last summer that the school system's payroll computers would be ready for the year 2000, school board members were forced to buy a costly 11th-hour insurance policy this month in case its computer programs don't recognize the calendar change.

"The concern is that with 17,000 employees, we want to make absolutely sure that if Murphy's Law kicks in and any problems do occur, we have it covered," said school board President Donald L. Arnold.

The decision to approve the contingency contract so late in the year troubles at least one Baltimore County official as well as a representative of the teachers union.

The school board "assured us that they were compliant," said Baltimore County Council Chairman Kevin B. Kamenetz, a Pikesville-Randallstown Democrat, adding that he felt "anger and disappointment" when he learned about the potential payroll problems.

"It raises concerns about the management ability within the department of education," Kamenetz said.

Representing the Teachers Association of Baltimore County in Towson, president Mark Beytin said: "I'm sorry we're in this situation. I said to [the school board] last spring, 'We're Y2K compliant, we hope you are, too.'"

Beytin and County Auditor Brian J. Rowe said they are relieved that the school board is taking precautions to ensure that employees get their holiday season checks. The school system issues paychecks once every two weeks.

"It's a good safeguard, it's a good fallback," Rowe said. "To ignore the problem would be foolish."

Most computer systems use two digits to keep track of the calendar year and experts say that without modifications, many computers will read 2000 as 00 when the New Year begins.

During the past four years, the county government has spent roughly $3 million on outside programmers and consultants, and another $6 million on staff time and new equipment, to prepare for 2000.

Exactly how the school system will pay for the ADP contract is unclear.

Chief Financial Officer Robin Churchill said the money could come out of the school system's $682 million operating budget. Arnold hinted that the school system, which comes to the county once a year for its funding, may have to return for more money.

"We're working with the county on this situation," Arnold said. "Together we'll work it out."

How the school system landed in the mess is equally murky.

Arnold said school board members, who have been quick to criticize unexpected costs within the system, failed to get a clear answer about the dilemma.

"I don't know why the ball was fumbled, it's something we need to check into," he said.

School system technology experts have been working with a consultant for about a year to replace a decade-old computerized payroll system with a new model. In a report to the board last summer, William Rust, schools technology director, stated that the Westinghouse payroll processing system would be converted by Nov. 15.

But the project was "more complex" and "took longer to implement" than expected, said Rust.

When the technology team realized that the new system wouldn't be up in time for the 1999/2000 calendar change, it decided to reprogram the existing system, in hopes that it would be bug-free before the year's end.

"We're not willing to concede that it won't be ready," said Rust, who set a Dec. 10 deadline for the work.

School officials, however, are hedging their bets to the tune of hundreds of thousands of dollars in taxpayers' money in case Rust's team misses that goal.

Under the contract, agreed to Nov. 9 without public input, the school board must pay ADP at least $281,630 for initial programming and preparation work even if it doesn't have to use the company's services.

Under extreme circumstances, the system could be on the hook for another $368,370 to cover payroll services through the end of June as well other possible emergency services for the rest of 2000.

"It's something that we've got to do," Arnold said, adding that it would be unfair to gamble with paychecks for thousands of families. "There's not a whole heck of a lot of discussion you can have."

Should the school board seek extra money from the county to cover the ADP contract, it could get a cool reception.

In March, County Council members questioned Superintendent Anthony G. Marchione's request for an additional $6.1 million to cover the school system's budget overrun.

"I suspect the council is getting a little tired of their inability to handle their budget," Kamenetz said. "Every other agency can handle their budget."

Kamenetz said the payroll issue exacerbates his concerns about the lack of school system oversight by county officials. State laws prohibit the County Council from playing a larger role in schools management.

"The county is Y2K compliant, and we are going to ensure our employees are paid on a timely basis at no additional cost," he said. "Shouldn't we expect the same from the Department of Education?"

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