Gov. Joe Lombardo was bullish about the rollout of a multimillion-dollar effort to modernize the state’s finance systems, giving it top billing in his State of the State address earlier this month.

“Now, Nevada is paying its bills,” Lombardo said, heralding it as a shift from a money-draining project he called off early in his term.

The reality has been far bumpier.

Since switching over to the new system in early January, the state has at times been unable to distribute certain child support, pension and health savings account payments. The new system has also struggled to pay certain vendors and caused glitches in budget account interfaces for state finance employees, according to interviews with state employees and memos from project leaders obtained by The Nevada Independent. 

In response to The Indy’s findings, state officials said that many of the issues directly related to the rollout of the new finance system have been resolved, but that other payroll errors, such as dozens of rejected timesheets that resulted in delays in employees being paid, will likely persist until the summer when a new human resources system is unveiled.

In a statement, Lombardo spokeswoman Elizabeth Ray said problems with the existing system were to blame for the recent payroll issues.

“While [the new system] was developed, payroll processing issues persisted due to the innate flaws of the legacy platform,” she said in the statement. “The new platform coming online early this summer, will follow industry best practices and is designed in a way that will be sustainable for years to come.”

Lombardo’s administration set forth an ambitious timeline to roll out the project — called CORE.NV — by calling for a “minimum viable product” of the new finance system to go live on Jan. 1, 2025, and proposing to launch the HR system in summer 2025.

“I'm very angry and very upset for the people who have not gotten their paychecks,” said “Sam,” a state employee who was granted a pseudonym because they were not authorized to discuss the issues. “I told everyone two years ago … ‘I said [Lombardo’s] pushing the date of Jan. 2, 2025, so that he can talk at the State of the State and say, ‘Look what I did in two years.”

Officials strongly denied that political considerations played a role in the timeline of the new project, and that the best times to roll out new systems are either at the start of the calendar year or the fiscal year.

‘A crashed project timeline’

The errors come less than a month into the initial release of the massive project to revamp the state’s finance and human resources systems. State officials have eyed revamping the systems for a dozen years, and a 2014 state-commissioned study found that Nevada’s IT systems (not updated since 1999) were in the bottom quartile of all states for effectiveness and efficiency.

An earlier version of the project was a failure. The state spent $80 million, but the SMART 21 project collapsed after years of poor leadership, minimal staffing and training and tension between agency employees and the lead contractor on the project, The Indy reported. 

Lombardo pulled the plug on the project three months after taking office, but despite the myriad issues, several state employees who worked on the project questioned the governor’s decision to scrap the project because major components were set to go live within months. 

Ray, Lombardo’s spokeswoman, touted the decision to scrap the previous version of the project that “remained unresolved by the previous administration.”

State legislators subsequently appropriated more than $160 million for the new effort. The original price tag on the project was $50 million.

Project leaders told legislators last month that it was on track to go live as planned at the start of the year, with the exception of the Nevada Department of Transportation’s finance systems going live over the summer, rather than in January.

But there were early warning signs flagged in reports by the project’s third-party evaluator, Plante Moran, a consulting firm.

The group’s November report identified several “critical” problems with the project, including an inability to print checks under the new system, and the troubleshooting of that issue temporarily broke the ability to print checks at all. The report also noted that testing of the new system’s interface was “not being completed adequately and on schedule,” and that there was a lack of a contingency plan for the initial rollout.

The governor’s office said these findings were accurate at the time, but that many of the reported risks had been mitigated by the time the report was published. It also said a contingency plan was not needed because the project went live as scheduled, and that the project could not test as much as desired because of the timeline.

Asked about the third-party evaluator’s September report (which raised even more concerns) in a legislative hearing last month, Brian Bowles, the administrator of the Office of Project Management, which is overseeing the project, said the team immediately responded to the evaluator’s concerns while downplaying some of the flagged issues.

“Obviously with a crashed project timeline like this, we have to make decisions that remove delays and get things done immediately. That doesn’t always take with what the book says … which is what we’re being graded against,” Bowles told lawmakers. “That being said, just because something is in red and is identified as a critical risk doesn’t mean that we’re going to fail in that particular area. And conversely, if something is tagged as green and not at risk, it doesn’t mean that we couldn’t stumble on that.”

What the problems are

News of payment issues came to light last week when project leaders sent a memo to state employees that there were issues with reprinting checks directly made out to employees’ beneficiaries, payments to vendors and disbursements related to child support, pensions and health savings accounts.

“We understand the urgency of these payments and are actively working to resolve the interface as quickly as possible,” the memo said.

State officials said that these issues stemmed from a “blackout” period while switching over to the new finance system. The issues have been fixed, and all payroll-related vendors have been paid, the officials said.

Sam told The Indy that as of Thursday, they had not received their latest health savings account payments, which is money taken out of their paycheck pre-tax to pay for health care costs. Without these funds, they will have to pay out of pocket.

Sam also said one of their lowest-paid colleagues did not receive a paycheck for nearly two weeks — and it was not fixed until higher-ups got involved — though state officials said this was not because of the rollout, but rather because of the outdated HR system.

“I have worked with a lot of dedicated individuals, and these people work hard for their paychecks. And a lot of them work paycheck to paycheck,” Sam said. “It's anger for me that they could do this and then not stop everything they're doing to get that check cut.”

Earlier this week, employees received another email informing them that the finance system was “unable to process” retention bonuses, and that there had been an error with deductions from employee paychecks.

However, the governor’s office told The Indy that there was no issue with processing retention incentives, and that a precautionary decision was made to delay the release of these payments by one pay period because of “other payroll concerns.” Additionally, the office said that errors with pay deductions were attributed to human error, and they made up less than 1 percent of paychecks.

“Alex,” another state employee granted anonymity, told The Indy that they were alerted on Jan. 16 that they would not be paid the following day, as scheduled, because their timesheet had been rejected. Initially, they were told that the issue would be resolved in the coming days, but they had to wait 12 days before receiving their paycheck in the mail, rather than through direct deposit.

Alex is planning to file a grievance with the Office of the Labor Commissioner.

The issue of rejected timesheets was conveyed in an internal email to state leaders last week from Bachera Washington, the state’s top HR official, according to a copy obtained by The Indy.

The email said there were “significant” issues with the existing system (still in use by HR employees), as well as the integration of the old and new systems. This has resulted in timesheets being rejected, and a “massive amount” of timesheets needing to be completed by hand, the email said. 

Washington wrote that she expected this issue to be present until the state is only using the new system, which would be in the summer, and apologized for “any inconvenience this may cause.”

State officials said almost all of the rejected timesheets had to do with problems with the HR system, not the rollout, and that there were about 120 timesheets completed by hand in one pay period this month, which is a heavy lift and far more than usual. Employees have been advised to complete their timesheets on Mondays to ensure they are paid on time. 

‘I don’t really have anything positive to say’

Behind the scenes, state employees who work in accounting said the rollout has made their work more difficult — and that training on how to use the system has been insufficient.

A particular concern was a memo sent out earlier this month by Deputy State Controller James Smack about the incorrect use of “posting codes,” which are labels used by employees to designate types of accounting systems.

“Any further misuse of posting codes and posting pairs after today will result in the loss of your CORE.NV access indefinitely,” the memo said.

However, multiple employees told The Indy that they never received any guidance on posting codes and took issue with the memo.

“It was pretty nasty, and it was threatening … There is not one of us, I guarantee you, in the state that was doing it maliciously,” said “Avery,” another state employee granted anonymity. “We were all just sort of told to sink or swim, and most of us went underwater several times.”

The governor’s office referred to the dozens of training sessions offered by the state officials, which were attended by more than 1,000 employees, that received high marks from attendees. It did not directly respond to concerns about the posting codes memo.

Sam added that they have been unable to see new deposits or transactions in their budget accounts, but that they were hopeful the system would improve over time.

Project officials confirmed that they identified “numerous issues” with the interfaces providing information to the state’s financial data warehouse, and that the “vast majority” of identified issues have been fixed. 

“I do think that working in it every single day like we have been, and sharing our tips and tricks here internally has been very helpful,” Sam said.

Avery, who is a state finance employee, is more pessimistic. They said that it takes four times as long to enter information from documents than under the old system.

“I don't really have anything positive to say about it,” Avery said.