Labor agencies strong-arm congress for y2k funds

The U.S. Labor Department has sent off the only set of checks the federal government will probably distribute expressly to help state agencies pay for their Year 2000 software conversion work. And that is only because a vocal group of state employment insurance agency directors successfully convinced the department and Congress that without a handout, date-sensitive state employment insurance programs could fail.

"We simply had to have the money," said Don Peitersen, director of unemployment insurance for Colorado. "We get a basic grant from the federal government for unemployment, but that doesn't cover changes to automation. Many of the states, therefore, got together and said, 'We need to have this money for the conversion because without it, we don't know how we will get this done.' "

The federal government responded with a $200 million fix for state employment security agencies (SESAs), which collectively will spend about $400 million to $500 million on Year 2000 programming and conversions, according to a recent federal survey. No other federal agency is making similar disbursements for state Year 2000 work, according to a Labor official, who asked not to be named.

Even before Congress finalized its decision in October to fund the work, Labor had sent a check to each state. "We made available to each one of the 53 SESAs $1 million as a base amount," said the Labor official. "We told them if they wanted to request additional funding, they had to come back to us with a supplemental request."

Supplemental Funds

That offer generated 41 supplemental requests from states — about $250 million in requests vying for $107 million that remained in Labor coffers after the initial round of funds went out. Among the petitioners was the Florida Department of Labor and Employment Security (FDLES), which asked for $9.5 million. "Florida is the fourth most populous state and leads the nation in job growth," said the state in its request. "The risk of failure of the employment security program due to the arrival of the new millennium obviously must be avoided."

FDLES began working on its Year 2000 strategy in 1995, and since January 1996 it has spent about 11,000 hours of staff time on Year 2000 tasks. The request puts FDLES' Year 2000 spending at just more than $460,000 to date. But the biggest bills are yet to come. FDLES anticipates spending almost $2 million on its mainframe infrastructure alone and more than $5.5 million on application conversion costs. Dan Hauversburk, Florida's data administrator and Year 2000 coordinator, said: "The Year 2000 problem comes along, and here you have systems that have been around for a long time and no real state funding program necessary to take care of the Year 2000 [issue]."

To prevent the unthinkable — a failure of Florida's unemployment compensation benefits system — the state is looking to ship program code to a third-party software renovator. "If the money is available, for the critical applications we'd like to use code factories," Hauversburk said. "We would give them an entire chunk of the application, and they would run that up to standard. It is more expensive, but they can do it on a tight time frame."

Delaware plans to funnel part of its federal money to Year 2000 vendor Keane Inc., Wayne, Pa. "Because dates are so critical to what we do in unemployment insurance, we hired an outside vendor to come in and work with us in reviewing and analyzing current systems to see what needs to be done to make those systems compliant with the Year 2000," said Tom MacPherson, Delaware's unemployment insurance director. "We have 700,000 lines of code that need to be adjusted, so the federal money will also be used to pay the cost of our own staff."

Missouri's Labor and Industrial Relations Department turned up some 3 million lines of code and about 4,200 programs that must be tweaked. "The supplemental budget request that Missouri submitted includes mainframe fixes, midrange fixes and PC fixes," said John Helmig, the state's Year 2000 coordinator. Before the federal government came through with Year 2000 money, Missouri's labor agency was nibbling at its federal base funding and general revenues to help fix the problem. "Honestly, the money has to come from somewhere, and if it didn't come from a special funding source, then it would have to come from the base budget. Eventually, there would be some sort of impact," Helmig said.

Most state employment programs are faced with the same situation. "The long and short of it is that there was no money earmarked for this before, so the states were having to guess whether they could get enough money out of other sources for these conversions," said Judy Carr, automation and finance director of the Interstate Conference of Employment Security Agencies, a national organization that has helped unemployment insurance administrators attain the federal funds.

Carr described the route to federal funding as a "grass-roots" effort. "To my knowledge, this is the only federal Y2K funding program of its kind," she said, warning other state officials not to hold out too much hope of garnering similar federal help. "Keep in mind the time it takes to get something like this through the process," she said. "I don't know if there is now time for somebody starting at square one." Instead, Carr recommended that states get creative in other areas.

"A number of state agencies have gone to their legislatures and been successful in obtaining funding," she said. "Also, state agencies in certain areas have banded together and shared the costs of assessments" and other Year 2000 work for which they share a common need.

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