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Vendor is finally signed, but agency gets political flak for proposed delay in paid family leave law.

The Oregon Employment Department has signed a contract with a vendor for its long-awaited computer modernization project.

Acting Director David Gerstenfeld said his agency made final a contract with FAST Enterprises, which has been involved in other state projects, on May 13 after review and clearances from other state agencies.

"We can now start transforming our unemployment insurance system while laying the groundwork for the paid family and medical leave insurance program," he told reporters on a weekly conference call Wednesday, May 19.

But the agency's pending request for a delay in deadlines for Oregon's paid family leave program ran into opposition Thursday, May 20, during a hearing of the House Rules Committee. Contributions from employers and employees for the new program are included in the first phase of the modernization project, which is scheduled to start in July.

One legislator even proposed to transfer the program to another agency. But another legislator called that proposal "an ill-advised move," and a lobbyist for one of Oregon's top business associations said, "If we are going to do this, we need to do it right."

Gerstenfeld was with the Employment Department, but not its director, when Oregon received $85.6 million from the federal government in 2009 for modernization of a mainframe computer system that goes back to 1993. The system relies on a computer language that originated in 1959.

The money has not been spent. Since Oregon received it under Gov. Ted Kulongoski, one director retired under pressure and Gov. Kate Brown fired two others.

Gerstenfeld said modernization will enable the agency staff to automate many functions that are done manually now.

"We will be using the lessons we have learned since the start of this pandemic as a guide," he said. "We also will be taking great care to ensure that this project does not affect our ability to continue paying unemployment benefits to people."

Previous projects

FAST Enterprises is based in Centennial, Colorado, outside Denver. It was named the vendor back on Sept. 11, but the required state review for major computer projects and a challenge from a competing vendor took time.

FAST Enterprises was the vendor for two major Oregon projects in the past decade.

One is the GenTax system for the Department of Revenue, which rolled it out between 2013 and 2017 to replace a system that dated back to the 1980s. The other was a new system for the Driver and Motor Vehicle (DMV) Services Division, which just completed its three-year rollout of its Service Transformation Project this year. It enables DMV to comply with the requirements of the federal Real ID Act of 2005 to make driver licenses more secure.

Brown has included a total of $146.4 million in her proposed two-year state budget for a new computer system for the Oregon Employment Department (the original $85.6 million) and other items to make paid family leave a reality.

The first phase of the Employment Department will involve the current system it uses to collect payroll taxes from employers that pay into the state unemployment trust fund, plus future contributions from employers and employees paying into a new fund for family leave benefits. Part of those initial collections will repay a state loan for start-up costs.

"That will mean Oregon will have a combined payroll reporting system that the Employment Department coordinates with the Department of Revenue and Department of Consumer and Business Services," Gerstenfeld told reporters.

"This will allow us to incorporate all the reporting into the same system."

The second phase will involve the current system used to pay unemployment benefits. Payments under the new system are scheduled to start in early 2024.

Under the 2019 law that created Oregon's paid family leave program, it set Jan. 1, 2022, for the start of contributions by employers and employees to the new fund, and Jan. 1, 2023, for the start of benefit payments. But a pending bill (House Bill 3398) would reset those deadlines to Jan. 1, 2023, and Sept. 1, 2023.

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NOTE: Reposted version. A more detailed story about the Employment Department's request for a delay in implementing paid family leave, plus opposition voiced to it at a hearing of the House Rules Committee, is now posted separately.

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