Monterey County Auditor-Controller Mike Miller was a no-show when the county budget committee met on Jan. 31.

He sent a staff member in his place, and County Supervisor Luis Alejo was fuming. Supervisors Alejo and Jane Parker – who serve on the budget committee – and a roomful of department heads were expecting to hear from Miller why the county’s troubled electronic financial system upgrade had gone from a $4.4 million cost estimate in 2014 to $18.5 million in 2018.

The news got worse during the meeting. The fund used to pay for the upgrade – known as the Enterprise Resource Planning project, or ERP – is projected to be at a $5.7 million deficit this fiscal year ending in June, which means cuts to nearly every county department. And the county’s budget office estimates the total cost of the system is actually closer to $27 million, when ongoing and future costs associated with maintaining it are added in. (Miller’s office contends additional costs will eventually be refunded by federal and state reimbursements.)

“One of our biggest responsibilities is to carry out our fiduciary duty to protect taxpayers dollars, and this project – just being honest – has been filled with problems from the beginning,” Alejo said. “I’ve been in office quite a few years and I haven’t seen something like this.”

He suggested an audit of the auditor’s office.

Six days later, when the Board of Supervisors met Feb. 6, Alejo got his chance to grill Miller at length about the ERP system. Miller contended that the $4.4 million was an initial estimate provided as a “heads up” that the county needed to upgrade its aging system that was near a breaking point. (The system includes the county’s payroll, budget, human resources, accounts payable and other financial systems.) Problems plaguing the project included things like department heads making unauthorized changes to the payroll system and untrained staff trying to manage the complex upgrade, Miller said, causing that initial cost estimate to rise to $7.7 million in 2015.

Alejo also wanted to know why, in late 2015, Miller entered into a sole-source contract worth $2.2 million with a Carmel Valley company called eCare Manage, Inc., claiming it was an emergency situation to take over project management. By the time that contract came to the Board of Supervisors in March 2016, the supervisors raised concerns that it had been signed with no bidding process and without their authorization. They rejected the long-term contract and told Miller to send it out to bid. eCare was paid $826,000 for about seven months of work, then lost out to another firm for the new contract.

Among the reasons the board was skeptical: Miller knows eCare CEO Jim Fenstermaker personally, and told the board they have a “casual friendship.”

Supervisor John Phillips called the eCare contract “the most troubling” aspect of the “poorly managed” system upgrade at the Feb. 6 meeting, and suggested an audit of the auditor’s office.

The board voted 5-0 to have county staff study the feasibility of transferring supervision of the ERP out of Miller’s department and into IT instead. They will also look into forming an audit committee and conducting an independent audit.

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