Oregon still fixing state employee payroll system after problems last year 

The Oregon Department of Administrative Services, headquartered in Salem. oversees payroll for state employees. (Ben Botkin/Oregon Capital Chronicle)

Auditors were unable to completely review Oregon’s new $21 million payroll and human services system that plagued thousands of state workers with inaccurate paychecks in early 2023, records show. 

The finding is contained within the Secretary of State’s statewide single audit, released this week, that looks at a variety of state government agencies and programs. The Oregon Department of Administrative Services implemented the payroll system, called Workday, in December 2022 for about 44,000 state government employees after years of planning to replace an older system. 

Immediately, thousands of state workers began experiencing problems with their paychecks. Some didn’t receive their full pay and turned  to food banks, credit cards or borrowing money to stay afloat. Others received paper checks instead of direct deposits and had to float bills with credit cards while waiting for checks to clear, and some employees who were overpaid had large sums subtracted from future checks without notice. 

In May 2023, Oregon Department of Administrative Services officials said they did not identify any systemic problems with payroll that month but declined at the time to provide the Capital Chronicle with an estimate of how many errors the system had.

Nearly a year later, state auditors said they struggled to get full and complete information from the department, which prevented them from fully assessing the system. 

“Given the lack of availability of key system documentation and the department’s inability to provide timely responses to audit requests, we were unable to complete our audit procedures intended to identify and test internal controls,” auditors wrote. 

For example, auditors said they received incomplete and outdated records when they requested documentation that would demonstrate the agency’s due diligence when planning a project of this size. 

In other instances, auditors said they faced long waits for information such as the number of employees impacted and the total dollar amount of overpayments or underpayments. Those delays also hampered their ability to complete the audit, they wrote. 

“The information was not readability available to provide to auditors, indicating a lack of organization expected of a project of this magnitude,” they wrote.

Based on the available data, auditors said the results suggest a lack of adequate testing to flag problems before the rollout. About 4,500 state employees – or roughly 10% of the workforce – were underpaid or overpaid in January 2023, auditors said. In each of the next two pay periods, more than 2,000 state workers were improperly paid. 

“The number of employee paychecks impacted, and the variety of underlying causes identified by the department, indicate testing of the configuration was either not sufficiently scoped or not properly conducted,” auditors wrote.

Auditors recommended the state put proper controls in place for payroll processing, take steps to eliminate errors in employee pay and provide and communicate better guidance about the system to agencies.

Agency response 

In their response to the audit, Oregon Department of Administrative Services managers said the agency worked with state employees and payroll offices to correct underpayments and recoup overpayments. 

“Efforts remain underway, and significant progress has been made to track and resolve the issue,” the agency wrote in its response. 

They said the agency plans to fulfill all the audit’s recommendations by Dec. 31. 

The agency has refused to provide numbers about the scope of the problem to the Capital Chronicle. Agency spokesperson Andrea Chiapella refused to answer questions about how widespread the payroll issues currently are or detail what remaining work is left to resolve the issues, citing ongoing litigation about the issue. 

In January 2023, state employees filed a class-action lawsuit about the payroll system’s problems, which is ongoing. The lawsuit, filed in Multnomah County Circuit Court, currently is scheduled to go to trial in April 2025.

Last year, the agency declined a public records request from the Capital Chronicle for the estimated number of payroll errors, saying those figures were compiled for litigation.  

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