UPDATE, Thursday evening: The Board of Education has approved the resolution. See end.
The Board of Education will vote today on whether to pour an additional $6 million into its $2.8 million no-bid contract with Alvarez & Marsal, the firm hired to fix the school district’s ongoing payroll crisis.
That would mean the district will be spending 64 percent of its $13.7 million price tag for the EmPowerSF payroll system, which debuted in January. More than 3,000 SFUSD employees have gone underpaid, mispaid or unpaid since the district switched to the new system.
The Board will vote on the contract amendment at a special meeting open to the public at 6 p.m. If tonight’s motion passes, the district will be spending up to $8.8 million to fix a system that hasn’t even been in place for a year.
The amended contract would roughly double Alvarez & Marsal’s staffing, and extend its last day of services by an additional four months, from Jan. 31 to May 31, 2023.
Alvarez & Marsal staff are contracted to support the ongoing Corrective Action Plan, which involves working through the ticket backlog, as well as addressing underlying EmPowerSF issues and their root causes.
“It’s a weird feeling,” said Chris Clauss, a special education teacher at Washington High, when asked about tonight’s vote. “I want the payroll system fixed, but that’s $6 million more that could have gone to schools, to staff, to students, and programs that support students.”
Cynthia Lasden, an educator at McKinley Elementary School, said she believed that the school district should spend money on a different, trusted system.
“Another $6 million to fix a broken system does not sound like a good idea to me,” she said.
Rafael Picazo, the president of the staff SEIU 1021, said the district needs to admit it made a mistake and return to the old payroll system, and “stop throwing good money after bad money.”
“I knew this would happen, and I believe it’s a joke that the school district wants to continue to waste taxpayers’ money on a system that has failed since the beginning of it being implemented,” Picazo said.
SFUSD employee Roberto Peña said that fixing EmPowerSF and ensuring errors no longer happen are the most important things the school district should do.
“I do see our current SFUSD leadership as more transparent and attempting to fix EmPower, but at what point, or millions, do they just cut their losses?” he asked.
The district declined to answer questions regarding the contract amendment in a press inquiry, stating that it anticipates having more information to share after tonight’s meeting.
The amendment has been approved.
The new $8.8 million contract, previously with a fixed fee of $175,000 per week, would be changed to a range between $175,000 and $310,000, plus a maximum of 15 percent extra for out-of-pocket expenses such as travel, meals and hotels.
It will be funded by carry-over funds from the 2021-2022 academic school year, rather than the unrestricted general fund. The school district also expects about $1.1 million in 2022-2023 salary savings from “vacancies in operations departments.”
In his Board presentation, Superintendent Dr. Matt Wayne also gave an update about what went wrong in the initial implementation of EmpowerSF, which had happened before Wayne took over for Vincent Matthews in July, 2022.
Infosys, the company that’s contracted to implement EmpowerSF, had recommended adding 28 staff to payroll, human resources and technology to transition to EmpowerSF.
However, Wayne said, that recommendation had come at a time that the school district was “reducing millions of dollars at school sites, so it wasn’t tenable to be able to move forward with that.”
In other words, the district cut back on hiring payroll and HR staff in a cost-cutting move that turned out to be wildly counterproductive, and went against the explicit advice of the contractor implementing the new payroll system.
Wayne added, “there really does need to be a full accounting of what happened, and where this went wrong.”
“I know we were facing budget, but I’m sure if anybody were asked, would you invest in this to avoid that, everybody would have said yes. How did that not enter into the conversation to be able to make a decision?” he said. “So, we need that full accounting of it. And secondly, while I recognize some of these things happened while I was not here, while I’m here, what is being put in place to ensure that it doesn’t happen again?”
An assessment by Alvarez & Marsal has indicated that 30 to 50 full-time-equivalent employees, plus the “partial use” of SFUSD employees, were required “for testing and other functional support” when SFUSD first implemented EmpowerSF.
Based on assessments of EmpowerSF’s initial implementation, SFUSD concluded that it should have invested between $7 million and $12 million in staffing for 2021-22 and 2022-23 to have successfully implemented EMPowerSF, according to Wayne.
“We’re bringing forward those costs, now with a premium, because we’re in a state of emergency,” he said.