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The Boston Globe

Business

Benefits system woes cost extra $800,000

Joanne Feinberg Goldstein, state labor chief, talked about problems with Deloitte.

Dina Rudick/Globe Staff/File 2013

Joanne Feinberg Goldstein, state labor chief, talked about problems with Deloitte.

To the $46 million the state spent to build the problem-plagued computer system for managing unemployment benefits, add at least another $800,000, according to the state Executive Office of Labor and Workforce Development.

In three months following the July 1 rollout, the state paid that amount in overtime to employees working to resolve issues with the system, including those answering phone lines flooded with questions and complaints about getting — or not getting — benefits. The overtime was calculated through Sept. 21, and state Labor Department officials said they could not comment on deadline on whether the state continues to pay overtime connected to the unemployment computer system.

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But concerns about the volume of complaints and other issues reported by The Boston Globe prompted the state Senate Post-Audit and Oversight Committee to hold a series of hearings on the system, and more broadly, on how the state buys information technology services. The second hearing will be held Thursday at the State House.

The committee is also investigating a $114 million contract won by Deloitte to modernize the state’s tax reporting technology at the Department of Revenue. The Revenue Department fired Deloitte in August after a test run found 1,000 glitches in the system and officials concluded that it could not be completed in the expected time frame.

Deloitte was paid $54 million for the work, although the system has never been installed. Deloitte has said the firm and the Revenue Department “mutually agreed to terminate the contract when the project changed direction. We met our obligations and were paid for the work we performed.”

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Scheduled to testify at Thursday’s hearings are Margaret Monsell, a staff attorney at the Massachusetts Law Reform Institute, Michael Krigsman, an independent IT industry analyst, and Gary Lambert, chief procurement officer for the state’s Information Technology Division.

Last year, the IT division hired another consultant, McKinsey & Co., for $2 million to analyze all large state technology contracts, including a “deep dive” analysis of the troubled unemployment benefits computer system.

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The system was designed to replace outdated software and streamline state unemployment services with expectations it would bring savings through cost efficiencies in the future. But after the July 1 rollout, many users complained that they were unable to receive all or part of their unemployment benefits. Others received erroneous bills saying they owed thousands of dollars in back payments. One Lawrence man said he mistakenly received a bill for $45,339.

When claimants called the state’s help line, they were often put on hold for long periods, only to be told to call back at another time or to be abruptly disconnected.

The state extended the hours of call centers, hired temporary workers, and paid overtime to handle the volume of calls. In September, the state reduced some of the extra hours.

State officials testified at a Senate hearing on Oct. 28 that the system, while not perfect, was processing the vast majority of claims. Joanne Goldstein, the state labor secretary, said only a relatively small number of people have experienced problems.

Yet in a nod to the flood of calls and complaints into the Department of Unemployment Assistance — and legislators’ offices — she said, “I recognize this success is irrelevant to the claimant who is without benefits or cannot reach a claims representative.’’

Megan Woolhouse can be reached at megan.woolhouse@globe.com. Follow her on Twitter @megwoolhouse.

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