The Philadelphia School District’s new computer accounting system was inefficiently purchased, is over budget, and “still doesn’t do many of the things it was intended to do,” according to an audit released Oct. 16 by the Philadelphia city controller’s office.

The school district purchased Advantage 2000, a $15.6 million system, from American Management Systems Inc. (AMS) in January 1998 for financial management, human resources, and payroll.

But after nearly three years, the price tag has escalated to almost $36 million—and school district officials still have not determined the cost of future improvements or additional services, according to the audit.

“This one is especially distressing to me because it took money from the school district, which is looking at an $80 million deficit and where every penny is so desperately needed,” City Controller Jonathan Saidel said in a statement.

According to the controller’s office, the school district’s request-for-proposal (RFP) process for purchasing the system was “significantly flawed,” because the process was conducted solely by the district’s Office of Information Technology and because vendors were given only two weeks to submit proposals.

“Computer systems should not be procured in this fashion. [District officials] should take more time with this process so they end up with more than two bids,” Deputy City Controller Tony Radwanski said in an interview.

“From the time they procured this system to the time our field work was done in May, there were 300 enhancements done—they call them ‘enhancements,’ I call them changes,” he said. “That’s ridiculous. You shouldn’t have to make that many changes to a brand-new system.”

The way the system was implemented also had a “deleterious effect” on the school district’s payroll and accounts-payable operations, according to the audit.

Radwanski said the situation was so bad that the district posted an armed guard in the payroll office for protection from angry employees. He said the computer system was withdrawing money from people’s bank accounts rather than depositing their paychecks.

The audit, conducted by Margolis & Company P.C., cites several faults of the Advantage 2000 system and makes nine immediate recommendations, including establishing a technology oversight committee and a review team to provide accountability for problems related to the system.

It also recommends creating a help desk with two full-time staff members, since the district doesn’t have one now. This help desk should be publicized and all calls and resolutions should be tracked, the audit said.

The audit also said the district should write policies and procedures for things such as assigning passwords, handling sensitive data, and having trained staff to cover key employees when they’re absent.

“We observed two instances—out of the six schools observed—where staff-level employees utilized the principal’s user ID and password to approve and submit payroll data entered by that employee,” the audit stated.

Because it found users are not trained to use the system adequately, the audit suggests implementing a formal training program and recording when employees complete their training.

The auditors reported the system often froze for 20 seconds or more and frequently defaulted back to the log-in screen, decreasing productivity. The audit recommends fixing this problem.

The auditors also found that users are not required to change their passwords regularly, so they recommend that users be required to do so every 180 days to protect the integrity of the system.

In a prepared response to the audit, school district officials said they “welcome this third-party review” but already have begun to address many of the audit’s criticisms. The school district also hired an outside consultant to help with improvements a month before it received the controller’s audit.

“We are pleased to report that there has been much improvement over the last year. We are now assessing what enhancements to the system—if any—we will undertake,” said Alexis Moore, the district’s executive director of communications, in a statement.

Already, two of the nine recommendations have been resolved, according to Moore. “The first three pay days of this new school year were virtually trouble-free,” she said. “In the area of paying vendors, the situation this year is vastly improved from last year.”

The school district refused to comment beyond the statement it issued.

Radwanski said district officials probably didn’t comment further because “there’s no way you can justify how you can spend so much money on a computer system.”

But Bob Butler, vice president of the state and local solutions group at AMS, said the system did not cost any more than comparable projects. He said he did not think the report “presents any surprises.”

“It can often take years for the initial implementation” of such a system, Butler said. He said the Philadelphia School District implemented the Advantage 2000 system in about 18 months, when it usually takes between 48 and 60 months.

“There’s certainly work left to be done, and we continue to support the district in those areas,” he added.

Philadelphia is the second high-profile school district to make headlines recently for problems with new record-keeping software. On Oct. 2, eSchool News reported that the San Francisco Unified School District has spent nearly $5 million so far on a system from PeopleSoft that still does not work correctly.

“These are very large, complex projects,” Butler said. “Things happen along the way that can’t always be predicted.”

Links:

Philadelphia City Controller’s office
http://www.philadelphiacontroller.org

School District of Philadelphia
http://www.philsch.k12.pa.us

American Management Systems Inc.
http://www.amsinc.com