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Problems With Idaho’s New $100M Financial System Demonstrate Just How Hard Modernization Is

The new project aimed to modernize accounting, hiring and employee review, but for many, the overhaul has just added unnecessary frustration. The last time Idaho overhauled its processes to this extent was in the 1980s.

“Go live.”

After a decade of planning within Idaho’s government agencies, that was the term a team of state leaders began using for July 1, 2023 — the date that Idaho’s computing networks would transition to a new system as part of an effort to modernize accounting, hiring and employee review.

When the new software systems went live, they changed daily tasks and workflows for the state’s thousands of employees.

For proponents of the project, called Luma, the new software has been a $102 million lift that brings better security, record-keeping and management tools to the state, and has pushed Idaho ahead of others around the nation as the first to implement a fully cloud-based system. The last time Idaho overhauled its processes to this extent was in the 1980s.

But for some employees, the transition has meant headaches and tribulations, filling the days of financial employees with error messages, adding to their workload and even making it difficult to find the state’s revenues and expenses.

Some challenges with the new system have extended for months and caused issues with payments to contractors, delaying invoices worth hundreds of thousands of dollars.

The frustrations were widespread enough to reach Idaho House Speaker Mike Moyle, who told Luma’s operators at a Nov. 2 meeting to look into a Plan B because “this thing is a joke,” according to the Idaho Capital Sun.

For some employees on the ground, the changes have led to tears of frustration over basic tasks such as transferring money between agencies.

“It was a very, very simple process in the old system,” said one financial employee who spoke on the condition of anonymity out of fear of retribution. “The new system is absolutely insane.”

System Intended to Modernize, Improve Processes

In 2014, the Idaho Legislature approved a study to review the state’s technology systems. The effort was led by the Controller’s Office, a lesser-known branch of the state government charged with running fiscal operations.

One problem was security. The state’s software for managing human resources, procurement, finances and accounting was based in an onsite hard drive at the Controller’s Office in downtown Boise. An extended power outage or cyberattack could mean the state wouldn’t be able to pay its bills.

Another issue was the diversity of management at the state’s 85 agencies, some of which had different methods for processing invoices and other needs, Josh Whitworth, the chief deputy controller, told the Idaho Statesman in an interview. He said the state wants all of those processes standardized, in part because previously, some ways of conducting office work were largely housed in a few employees’ minds, and were handed down by word of mouth.

By 2019, when implementation began, most modern computing systems had shifted to cloud-based models, where information and software is hosted offsite and accessed online. Software packages are now largely subscription-based, too, and technology companies regularly issue security updates and bug fixes.

The new umbrella venture includes subscriptions for human resources recruitment, personnel development, performance evaluations and accounting through Infor, a New York company; budget development software through Sherpa, a Chicago company; and other software. The Controller’s Office hired two consultants — McKinsey and Deloitte — to help with the transition.

’A Huge Struggle Every Day’

The state’s transition to a suite of new software programs has irritated a number of financial employees, who have said the situation has led to issues with accounting and intra-government processing of payments. Paychecks and travel reimbursements for some employees have been delayed, the financial employee granted anonymity said.

“It’s just been a huge struggle every day,” the employee said. “We hit brick walls constantly.”

The employee said the system frequently glitches, stalling workflow. Luma’s help desk requires employees to submit tickets online for problems; those employees are themselves still learning how to use the system.

“It’s kind of like the blind leading the blind in some situations,” the financial employee said.

Rather than halting specific job functions, the employee said the issues have instead stalled all of their work, leading to much longer processing times, delays in reconciling transactions and a need for additional staff.

“Inter-company billing is an absolute nightmare,” the employee said.

Moving to an electronic transfer system was intended to save money, but it’s hard to see how costs have been cut when it takes financial employees so much longer to process each transfer, the employee said.

The employee said the help desk is well-meaning and sometimes helpful, but often the fixes don’t work, and new tickets have to be submitted.

The employee said they’re in favor of modernizing the state’s financial systems, just “not in this way.”

“I’ve been so frustrated that I had tears in my eyes, and that’s never happened,” the employee said. “It has not been getting easier at all.”

’Something Needs to Be Done’

In October, Chemung Supply, a New York-based supply company, emailed the Idaho Transportation Department to note that it had not received payment for a more than $163,000 invoice after two months.

“We have shown much patience, but now are at the point that something needs to be done,” an employee of the company, Jodi McNeal, said in the email. McNeal told the Statesman in a follow-up email that there were “bumps along the way” in processing invoices, but they have since been resolved, and the company hopes to do business with ITD in the future.

Another company, Cyclomedia, checked in with ITD employees in November, almost two months after submitting invoices for more than $462,000. ITD employees responded that they thought the payments had already gone through.

“ITD is working with a new system ‘Luma’ and we are identifying some issues,” one employee wrote to the company.

A Fisher’s Technology employee emailed ITD in late November, because that company was also having problems.

“Attached is another invoice we have been told is paid and your online Luma portal shows paid. We have not received payment for this invoice,” the employee wrote.

A spokesperson for the Controller’s Office, Christopher Davis, told the Statesman by phone that the issues with these three companies have been resolved.

Luma’s implementation has also led to some duplicated payments.

About $32 million in payments by the Department of Health and Welfare were duplicated in November because of a processing error between the new Luma programs and the state’s agencies. Davis said the problem was an “isolated incident” — the agency has recovered most of the money and expects to recover the rest of it soon.

Agencies in the government have also struggled with reporting, which is the accounting process of displaying an agency’s financial status.

The top budget official at the Idaho Legislature told lawmakers in January that the Legislative Services Office could not “independently verify” agency cash balances.

Idaho’s employee retirement system Financial Executive Officer Alex Simpson told the Public Employee Retirement System’s board in December that his staff members still had issues with reporting.

“We think we know what we’re doing, but we might not,” he said. “There was a while where I was saying, ‘Well, do this and see if it works,’ and that’s not a good way to do accounting.”

In a follow-up email to the Statesman, Simpson said through a spokesperson: “We are working through any challenges and are seeing overall improvements in the system. PERSI appreciates the opportunity for further learning of the many features of Luma.”

Whitworth said he thinks much of the upset over Luma has been because of the challenge of switching to a new way of doing things, especially if state financial employees are used to the old systems.

“Some individuals were so comfortable in the former processes, that it was hard for them to update,” he said. “We’ve taken those people who were very confident when they hit go in the old world, to — they’re kind of hesitating. So that process is slower right now. And so I think for some vendors, it has been slower.”

Whitworth also said that ITD is the only agency — aside from universities — that was held back from the July 1 Luma implementation date because of the complexity of its finances, and that it has instead been manually feeding information from its old system into the Luma system before payments will process.

In an email, Davis said that the “overall number of outstanding payments is but a fraction of a percent of the total payments that have gone out through the system.”

‘The System Works. You Don’t Just Unplug It’

Whitworth said he is confident the state’s new systems will prove a major advancement over the former software, but acknowledged that there have been hiccups in the transition.

“Changing process is about making our employees have a better experience in time,” he said.

Whitworth said some of the previous computing systems the state was using were so outdated that they could no longer be updated with added security protocols or adaptations, largely because people are no longer trained to use the software.

If the state were to change its employee health insurance, he said, it would have taken a year to reprogram the old system.

Rather than a number of physical hard drives that could be vulnerable to extended power outages, Whitworth said the cloud-based system is backed up across the country and is therefore more resilient. It also requires the state’s 85 agencies to use largely the same processes, ending what Whitworth said is a long-standing practice of siloed invoice and transaction processing.

He said two notable problems that have cropped up have been with shifting data over from the last fiscal year and the challenge Moyle mentioned, of seeing state revenues and expenditures.

Executive carry-forward is a process that allows agencies to spend money appropriated in one year during the next fiscal year. When the July 1 “go live” occurred, the Luma team assumed there wouldn’t be that many outstanding contracts, and planned to have agencies manually enter each of them rather than programming the data to convert, Whitworth said.

But some agencies had upwards of 1,000 contracts that needed to be carried over, which led to hours of manual entry for some employees.

“The prioritization and activity probably could have been better in that one,” Whitworth said.

With agency reporting, Whitworth said he could’ve organized that process better, too, and that while the information was available all along, it required coordination between state agencies that did not start out on the same page.

“I needed to get all those people in a room,” he said, noting that since then, agencies have been able to view their revenues and expenses. “I think that problem is solved today.”

Ultimately, Whitworth said the state should stick to its new systems and get used to them.

“To actually accomplish the jump of an enterprise the size of the state of Idaho to where we are at today with the cloud suite and modernizations and opportunities that are now ahead of us, to me is a huge success for the state of Idaho and a huge opportunity for us to again lead our peers,” Whitworth said.

He also said the state can’t go back.

“Pulling it out doesn’t solve anything,” he said. “This is not a system problem, this is a process and education problem.

“The system works. You don’t just unplug it and plug a new one in.”

©2024 The Idaho Statesman. Distributed by Tribune Content Agency, LLC.
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