Tuesday, May 4, 2021

IBM and the Legacy Replacement Project

In April, IBM released a presentation, Myth versus reality - Modernization on IBM Z, outlining the firm's strategy for upgrading IBM's traditional mainframe systems.

The main thrust of the presentation is that converting to other platforms is significantly more expensive than upgrading the mainframe platform. Of course, IBM has a vested interest in this claim but the firm's arguments match up with my experience in building systems over the years.

As reference, in 2016, I helped a client convert from in-house AS/400 based application system to a a third party MS Sequel Server based industry oriented application system. The implementation required customization but the conversion was relative simple because the new application was already written and the old AS/400 system functioned on a very basic flat file system without overwhelming transaction volume.

The NYCERS situation, however, is radically more complex with massive transaction volumes. In addition the new application is not yet written.

IBM also has published a short five page document listing the problems that conversion projects run into Problems with Offloading Data.

Saturday, May 1, 2021

Transit Hint – Tier 4 – Age 62 – Non-Transit Service

In the Tier 4 Transit 25/55 Plan only service (operating force or clerical) with the Transit Authority counts towards the full benefit payable under the Plan.

This creates a problem for a member with other than Transit service. Military service is an exception.

Example 1

In a common scenario, A member starts working for the city at age 25 and switches over to the Transit Authority in an operating force position at age 30.

In the Transit 25/55 Plan that member is eligible to retire at age 55 with a 50% benefit. The 50% is based on his 25 years with Transit.

The member gets no value from his 5 years at the city from age 25 to 30. Once the member has the 25 years of Transit credited service, there is no way to avoid the loss of the five years, but the member is able to retire at 55 without age reduction that applies to 62/5 members.

Example 2

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Consider the following different scenario - A member starts working for the city at age 35 and switches over to the Transit Authority in an operating force position at age 40.

Under the Transit 25/55 Plan, this member can only to retire at age 65 with a 50% benefit. The 50% is based on his 25 years with Transit. The member gets no value from his 5 years at the city from age 35 to 40.

This member can, however, retire one week before he attains his 25 years at Transit. His benefit will a standard a 62/5 Plan benefit, 60% benefit (based on all NYCERS credited service). The key is not to have 25 years of Transit credited service.

This sounds crazy but it is how the law was written.

Note: Unfortunately, Transit Plan members are not eligible for early retirement under the 62/5 Plan. The enacting law specifically excluded Transit Plan members. So the comment below is not applicable.

Depending on how much non-Transit service the member has, it might even make sense to retire before 62 to avoid the 25-year threshold , absorb the reduction but get all credited service.

NYCERS should be laying out these scenarios for its members. NYCERS’s has a duty to its members to warn them of pitfalls in the law.

Saturday, April 17, 2021

The Bleeding Has Started - Legacy Replacement Project - $85.0M - Accenture

Legacy Replacement Project - $85,076,693 – Accenture

On February 26, 2021 NYCERS finally awarded the Legacy Replacement Project (LRP) contract to Accenture. The cost of the contract is $85,076,693. The LRP is supposed to be a five-year project. It was first proposed in the spring of 2015.

I have been writing about the LRP for the last six years. My first post was in 2015. My most recent post was in 2020. This boondoggle started in the spring of 2015 and has been dragging along ever since. Thank god the legacy systems built by civil servants have lasted over 40 years.

On of April 8, 2021, in support of the LRP project , the trustees adopted a massive increase in the NYCERS FY-2022 admin budget. The amount approved was $136.0M. As contrast, the budget in FY-2015 was $55.0M. This is at the same time as the mayor is cutting the medicare benefits of NYC retirees.

I have no hope that this lunacy will stop. After a six year delay in the start of this project, the trustees at the board meeting were thanking Liz Reyes for her great work on the project. What can you expect from people who are brain dead.

Accenture LRP Contract

The initial work, Phase 0, is a ten-week effort by Accenture to analyze its contract plans and possibly propose changes but with no cost increases. This phase may be longer than ten weeks. At the end of this phase either side can opt out of the contract without penalty or cost.

The second part of the contract, Phase 1, is scheduled to start July 1, 2021 and end December 31, 2021. The five-year term of the contract gives us an end date of June 30, 2026. I wonder who will be in the White House then.

Other Contracts Linked to the LRP Project

  1. NYCERS has paid Gartner, the consulting firm, $7.1M since FY-2015.
  2. Risk advisor to the Board of Trustees. The contract was awarded to Linea Solutions, Inc. on 7/21/2020 at a cost = $4,598,496 with a period of five years.
    • Will need to be place until 6/30/2026.
  3. Quality Assurance advisor (projected award date - April 30, 2021) to NYCERS staff for the project. Contract being negotiated. Cost unknown. Period five years.
    • Will need to be in place until 6/30/2026.
  4. Mainframe maintenance for five years while the LRP is being implemented. Contract awarded on 2/11/2019 to Blue Hill Data Services. Cost = $3,894,000. Period of five years.
    • Will need to be place until 6/30/2026.
  5. FileNet maintenance for five years while LRP is being implemented. Open RFP issued on 11/7/2019. Cost unknown.
    • Will need to be place until 6/30/2026.
    • NYCERS has allowed this system run out of support both from Microsoft and IBM.
  6. Roughly 30 computer consultant contracts, each averaging $150,000 per year. Yearly cost of $4.5M
  7. Office reconfiguration in FY-2020 that cost $3,448,080.
    • In FY-2000 NYCERS moved into 133,000 sq. feet of totally brand-new class A office space. It was the most modern office space in the NYC government. It rivaled anything in the private sector. God help us what they have done to that office.
  8. Customer Relationship Management (CRM) software. Contract was awarded to Accenture, the same firm with the LRP contract, on 8/8/2018
    • at a cost = $14,832,123, with two modifications:
    • $654,000 as of 6/1/2020, and
    • $138,780 as of 12/24/2020.
  9. In FY-2019 and FY-2020 NYCERS paid Accenture $11,575,713, and $4,381,360 to a third-party firm for licenses & support as part of the CRM project.
    • Not sure what the value of the CRM is to the NYCERS membership.
  10. A replacement IVR system contract was awarded on 12/29/2020 to Genesys Telecommunication Labs. Cost = $712,885.
    • The first phase of this system is promised to be in place by 4/30/2021. It will entail switching over from in-house Avaya interactive voice response (IVR) system to a cloud-based phone system integrated with the CRM system. At this point Genesys will not have an IVR in place.
    • Phase 2 does not yet have a timeline, scope of work, or I suspect a price tag. It is not clear whether Phase 2 is covered by the initial cost figure.
    • Phase 2 is the part where Genesys will create the new IVR system. Sounds like Avaya needs to stay in place until after Phase 2 is completed.
    • I do not see how this will solve the call center chaos that exists at NYCERS. In spite of the obvious, there is no word of increasing the call center staff.
  11. At the Dec 10, 2020 board meeting the Trustees adopted a resolution approving the ten-year LRP project at a cost of $279.0M.
    • Not sure what value this has except to warn everyone that a tsunami is coming.

Sunday, April 11, 2021

History: NYCERS Administrative Expenses 2000 - 2020

The following is a chart of NYCERS administrative expenses from 2000. The information comes from NYCERS Comprehensive Annual Financial Report. As a point of reference NYCERS had an annual budget of $8.8M in FY-1996, the last year NYCERS was part of the city budget.

NYCERS Admin Expenses
Fiscal Year Personnel Expenses Contracts & Consultants Phone, Mail, & Printing Rentals Software, Hardware, Support, Supplies, & Maintenance Depreciation & Credits Total
FY-2020 $45,736,806 $11,337,750 $1,173,896 $6,870,614 $12.548,240 $0 $77,667,306
FY-2019 $43,717,712 $15,884,418 $1,114,263 $6,637,959 $14,719,873 $0 $82,073,325
FY-2018 $40,444,145 $4,310,427 $1,072,077 $6,348,888 $7,513,233 $0 $59,688,770
FY-2017 $39,505,894 $3,829,758 $1,561,282 $5,909,352 $8,864,342 $0 $59,670,628
FY-2016 $37,950,289 $4,687,929 $1,360,397 $5,453,383 $7,230,989 $0 $56,682,988
FY-2015 $37,368,409 $3,652,,154 $1,336,002 $5,037,893 $7,239,560 $0 $54,635,018
FY-2014 $33,571,938 $3,773,082 $1,269,387 $4,863,720 $6,952,691 $0 $50,430,818
FY-2013 $33,064,087 $3,102,385 $1,078,411 $4,674,442 $6,797,095 $0 $48,666,420
FY-2012 $32,623,085 $3,088,256 $1,096,186 $4,796,584 $9,780,637 $0 $51,384,748
FY-2011 $31,748,443 $4,108,186 $995,415 $4,741,621 $4,780,811 $0 $46,374,476
FY-2010 $31,527,659 $5,434,495 $1,041,471 $4,278,903 $6,678,071 $715,000 $49,675,599
FY-2009 $30,187,604 $4,043,775 $914,311 $4,047,949 $8,198,354 $1,430,000 $48,821,993
FY-2008 $28,344,427 $6,401,744 $997,316 $4,138,211 $6,687,716 $1,430,000 $46,999,000
FY-2007 $27,123,219 $2,677,793 $1,055,233 $5,203,902 $4,205,095 $1,430,000 $41,695,242
FY-2006 $24,992,543 $3,124,688 $1,497,895 $4,797,895 $4,472,246 $1,406,132 $40,291,469
FY-2005 $24,474,710 $3,039,970 $827,277 $4,454,258 $3,118,356 $1,392,296 $37,306,867
FY-2004 $22,631,504 $3,124,800 $845,391 $4,192,543 $3,375,187 $1,430,000 $35,559,081
FY-2000 $15,990,745 $1,587,290 $718,686 $1,531,536 $2,691,719 $725,000 $23,244,976

So, With an Unlimited Budget, I Guess Five Months is Good Enough for an Option Letter.

In December 2019, I wrote a complaint about how NYCERS was taking six or more months to produce final benefit letters for newly retired members.

At the March 11, 2021 Board of Trustees meeting, the "Chief Operations Officer" reported to the trustees that NYCERS was now getting the benefit letters out in five months and had met its goal. She also asked if she could stop reporting to the trustees about the benefit letters as long as she was meeting the five-month goal. The trustees agreed to the request.

I am sorely tempted to call the trustees stupid but that is not accurate. The decision they agreed to was stupid just like paying $245M/yr for bad investment advice.

First of all, five months is a poor goal. The traditional goal is three months. Second, they now have no way of knowing whether this goal is being maintained. Third, this is the key monthly production figure for NYCERS along with the number of loans issued each week. It should be the highlight of the executive director's monthly report to the trustees.

Note: There is no civil service title at NYCERS for chief operations officer. In fact the legal civil service title is deputy executive director and there is another person in that position. That person is legally responsible for the functions being assigned to the "COO". I suspect, however, that person is on her way out. Here we have the Dilbert Principle in full bloom.

Saturday, March 20, 2021

Final Average Salary and NYSL Employees Retirement System and the NYC Teachers Retirement System

I have been complaining for several years about how NYCERS short changes its retirees when it comes to overtime and part-time earnings. In particular, how it computes the three year period used for determining the compensation base, FAS, used in the benefit calculation.

Someone just recently pointed out to me how the state system, NYSLERS, handles the FAS. Just below are the words for the NYSLRS news website run by the State Comprtoller:

When we calculate your pension, we find the set of consecutive years (one, three or five, depending on your tier and retirement plan) when your earnings were highest. The average of these earnings is your FAE. Usually your FAE is based on the years right before retirement, but they can come anytime in your career. The years used in determining your FAE do not necessarily correspond to a calendar year. For FAE purposes, a “year” is any period when you earned one full-time year of service credit.

The state system has been doing this since 1983, the start of Tier 4, based on Section 608.b (RSSL). In 2010, members of the NYC Teachers Retirement System (NYCTRS) were added to Section 608.b to provide a statutory basis for previous practice.

On May 31, 1988 the NYS Court of Appeals unanomously found that NYCERS had no legal basis to deny membership to part time workers. In 1992, the state legislature passed legislation to correct the mistakes caused by NYCERS improper actions, one of which was to create a new definition of FAS for all Tier 4 members using a new subsection, 608.d (RSSL), which in turn pointed to another newly created subsection, 13-638.e.(14), in the NYC Admin Code. The new definition in S.13.638.e.(14) was identical to S.608.b. The relevant sections are listed below if you want to follow the bread crumbs.

Bottom line, NYSLERS and NYCTRS are treating their members correctly and NYCERS is screwing all over a large part of its membership. I am putting the NYCERS trustees on notice that they are in violation of the law and they better have a substantial memo from the the NYC Law Department to cover their asses.

In addition, since there are two city pension systems doing two different things with the same statute, the Law Department has a problem. The Law Department has a history of quietly letting two systems go different ways but when one system finds out what the other is doing, the show is over. By the way, do not count on in-house staff with law licenses. They are not your statutory counsel.

FAS Statutes - Tier 4 and 6

Section 608.b (RSSL)

b. Notwithstanding the provisions of subdivision a of this section, with respect to members who first became members of the New York state and local employees' retirement system and the New York city teachers' retirement system before April first, two thousand twelve, a member's final average salary shall be equal to

one-third of the highest total wages earned by such member during any continuous period of employment for which the member was credited with three years of service credit;

provided, however, if the wages earned during any year of credited service included in the period used to determine final average salary exceeds the average of the wages of the previous two years of credited service by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary. With respect to members who first become members of the New York state and local employees' retirement system and the New York city teachers' retirement system on or after April first, two thousand twelve, a member's final average salary shall be equal to one-fifth of the highest total wages earned by such member during any continuous period of employment for which the member was credited with five years of service credit; provided, however, if the wages earned during any year of credited service included in the period used to determine final average salary exceeds the average of the wages of the previous four years of credited service by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary.

Section 608.d (RSSL)

d. Subject to the provisions of subdivision c of this section, and

notwithstanding the provisions of subdivision a of this section,

with respect to members of the New York city employees' retirement system and the New York city board of education retirement system who are subject to the provisions of this article, a member's final average salary shall be determined pursuant to the provisions of paragraph fourteen of subdivision e of section 13-638.4 of the administrative code of the city of New York, provided, however, that the applicable provisions and limitations of the term "wages", as defined in subdivision l of section six hundred one of this article, shall apply to such determinations of final average salary.

Section 13-638.4.e(14) (NYC Admin Code)

(14) (i) Subject to the provisions of subdivision f of this section and the provisions of subdivision c of section six hundred eight of the RSSL, where those provisions are applicable, and

notwithstanding the provisions of subdivision a of section six hundred eight of the RSSL,

for a tier IV member of NYCERS who is not a New York city revised plan member (as defined in subdivision m of section six hundred one of the RSSL) or for a tier IV member of BERS who is not a New York city revised plan member, the term "final average salary", as used in article fifteen of the RSSL, shall be equal to the greater of:

(A) one-third of the highest total wages earned by such member during any continuous period of employment for which the member was credited with three years of service credit;

provided that if the wages earned during any year of credited service included in the period used to determine final average salary exceeds the average of the wages of the previous two years of credited service by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary; or (B) the total wages earned during any six consecutive years from service for which the member received service credit divided by the amount of such service credit earned during that six-year period, provided, however, that "wages", as used in this paragraph, shall mean the applicable provisions and limitations of the term "wages", as defined in subdivision 1 of section six hundred one of the RSSL. (ii) Subject to the provisions of subdivision f of this section where those provisions are applicable, and notwithstanding the provisions of subdivisions a and c of section six hundred eight of the RSSL, for a tier IV member of NYCERS who is a New York city revised plan member (as defined in subdivision m of section six hundred one of the RSSL) or a tier IV member of BERS who is a New York city revised plan member, the term "final average salary", as used in article fifteen of the RSSL, shall be equal to one-fifth of the highest total wages earned by such member during any continuous period of employment for which the member was credited with five years of service credit; provided that if the wages earned during any year of credited service included in the period used to determine final average salary exceeds the average of the wages of the previous four years of credited service by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary, provided further that "wages", as used in this paragraph, shall mean the applicable provisions and limitations of the term "wages", as defined in subdivision l of section six hundred one of the RSSL.

Wednesday, February 10, 2021

Update on Nespoli Tier 6 Litigation - Outrageous Delay

The Nespoli Tier 6 case is dragging on forever. The members' lawyer just wrote a letter to the judge asking what the hell he/she is doing about this case. Of course, she was more diplomatic than my phrasing.