Anchorage’s new $80M software system routinely screws up paychecks, unions say

Two of Anchorage's largest city unions have filed breach-of-contract complaints over missing pay and other errors tied to the launch of the city's $80 million new business software called SAP.

Three months after the launch of the new system, union officials say paychecks have been routinely wrong. Some employees are still owed money from October paychecks, the officials say.

"A lot of us aren't high earners, so a lot of folks missing a couple hundred dollars out of a paycheck, it really hurts," said Terre Gales, vice president and chief shop steward of the Anchorage Municipal Employees Union.

In an interview late Thursday, city manager Bill Falsey asked for patience. He promised that "everyone will be made whole."

"Whenever we adopt these new systems, whenever anybody adopts these new systems, there are issues," Falsey said.

Falsey said it's taking time to process individual pay correction requests because of the complexity of how city workers are paid.

The error-riddled paychecks are the latest twist in a troubled, massively complex software upgrade project that began in 2011 and has since ballooned in cost. As of July, the price tag had topped $81 million.


On Oct. 6, the SAP system, named for the German company that created it, started issuing paychecks for the first time. At the time, several hundred employees reported pay mistakes, though city officials said that was to be expected. Some brought complaints directly to the Anchorage Assembly a few weeks later.

[Timeline: Anchorage's increasingly expensive software project drags on]

At roughly 500 employees, AMEA is usually the city's largest union. The union covers a wide range of city workers, including nurses, engineers and parks and recreation staff.

At first, union officials tried to work through the paycheck issues with the Berkowitz administration, Gales said.

With the problems persisting, the union this month filed what's known as a "grievance," a formal step toward resolving labor disputes, according to Gales.

The Anchorage firefighters' union has also taken steps in recent weeks. Mike Stumbaugh, the president of International Association of Firefighters Local 1264, said his union had filed two grievances so far, which he described as "pretty sweeping." One involves delinquent payments to state and city retirement accounts, Stumbaugh said, and the other has to do with the paycheck mistakes.

City officials weren't able to say whether additional unions also had filed complaints. Officials also declined to provide copies of the grievances, citing personnel rules.

Stumbaugh said his union has seen some of the more significant and confusing errors, since police and firefighters don't work normal shifts. Like Gales, Stumbaugh said that he's aware of union members who are still owed money from an October paycheck. Meanwhile, some were overpaid.

Stumbaugh said the situation has slowly been improving and that city payroll staff had been hard at work trying to fix errors. Instead of nearly all his members having problems every payday, it's now down to a few dozen, Stumbaugh said. He himself hasn't had issues.

"The goal is just for everyone to get paid right," Stumbaugh said.

The problems could add up to a substantial cost for the city. Payment errors trigger contract clauses that levy penalties against the city. In the case of the fire union, it's $50 a day to an employee as long as the pay error lasts. The AMEA contract calls for a $60 daily penalty.

Stumbaugh said his union isn't interested in collecting the penalties, which he said would likely take a lawsuit. He emphasized that he and other union officials just want the errors fixed and for people to be paid what they're owed.

He suggested the city may have been too hasty in launching the system.

"You have to have a deadline sooner or later, but I'm not sure that we were ready for it," Stumbaugh said. "And obviously, the proof is in the pudding: Paychecks are still routinely wrong."

Falsey, the city manager, said one reason for the delay is that the people responsible for fixing problems across the entire system are also responsible for fixing the inaccurate paychecks.

The union grievances could end in arbitration, or a private third party coming in to settle the issues. But that's unusual. Stumbaugh said he expected the unions, the mayor and the Assembly would work together in the coming weeks.

Devin Kelly

Devin Kelly was an ADN staff reporter.