CalPERS is seeing $9.8 million in ongoing and annual savings through that insourcing, according to a report presented during the pension system's most recent meeting this month. The staffing decision was particular to the my|CalPERS project, a $514 million system launched in 2011 replacing 49 legacy systems, including 90 separate databases, with a Web-based platform to give CalPERS staff an integrated view of customer data.
In addition, CalPERS says that it has saved a further $1 million by replacing "a more expensive commercial-off-the-shelf (COTS) product with a custom in-house solution to handle business rules. [The] organization will make use of tools already on hand to save on the upgrade conversion required with the COTS system, in addition to fees and support costs for that product."
These savings are included in a $922 million tally of cost savings and avoidance CalPERS says it has recorded during the past five years, in areas such as IT, its investment office and health-care program.
Like many public pension systems across the country, CalPERS is looking to find efficiencies in the face of low investment returns and its aging membership.
New CalPERS CEO Marcie Frost reported to the CalPERS board last week that the long-term sustainability of the pension system will be one of her top priorities.
"You did hear from our team yesterday [Nov. 15] about the low return environment that we are expecting over the next decade, and the vulnerabilities I think we really do have as a system that is 68 percent funded," Frost said. "It's going to be important, again, as an organization that we work collaboratively together amongst the CalPERS team and the board, but as well as with the employer partners and our member partners, to continue to take these discussions to actions that are necessary, again, to have the sustainability of the system that we all have a common goal to accomplish."
CalPERS also reported on its year-end 2015-2016 budget as it pertains to enterprise projects:
"Of the total $37.5 million Enterprise Project Costs Budget, CalPERS expended $32.1 million, which was $5.4 million or 14.4 percent under budget, due mainly to the postponement of the Information Technology Backup/Disaster Recovery project ($4.0 million) and savings in the Security Roadmap project due to lower cost negotiated for hardware and software purchases ($0.7 million). The Information Technology Backup/Disaster Recovery project was delayed to ensure that the new five year agreement represents CalPERS’ list of refreshed mission critical services and updated recovery objectives. Savings in the Actuarial Valuation System Redesign project due to delays were reallocated to the mylCalPERS Optimization Project ($1.2 million) to implement critical health functionality changes, including Online Health Statements and the redesign of Medicare processes."
