'It is just a dark cloud' | Gaston County Schools' ongoing payroll issues cost taxpayers money

In 2016, the state legislature passed a law and attached funding to develop a plan to modernize the school business systems. 

The modernization, called School Business Systems Modernization (SBSM), would update the systems used by the state’s K-12 school districts and the North Carolina Department of Public Instruction. The systems update would move the current older systems to modern, cloud-based solutions. 

School business systems include the districts' systems financial, payroll, human resources, and other business areas. 

The legislation also required NC DPI, in collaboration with the Friday Institute, local school administrative units and charter schools, to issue a Request for Proposal (RFP) to outside vendors and entities to implement the plan by 2017. 

In 2018, the School Business Systems Modernization Program awarded multi-million dollar Master Service Agreement Contracts to CherryRoad Technologies and Tyler Technologies if districts chose to move forward with either of the companies. 

The contracts locked districts into a fixed price for five years and guaranteed no more than a 3% increase for the following five years. Its initial contract terms are set to expire in 2024. 

CherryRoad Technologies has partnered with Oracle to provide its Oracle Cloud ERP solution and Tyler Technologies provides its Munis ERP solution.

According to officials with NC DPI participating in the SBSM, Gaston County Schools becoming a pilot program was optional. 

Gaston County Schools created a committee that participated in presentations from both CherryRoad Technologies and Tyler Technologies. The committee recommended CherryRoad Technologies. 

At an August 2019 meeting, a consent agenda item recommended Gaston County Schools move forward with CherryRoad Technologies.

Public meeting minutes showed the initial kickoff for the SBSM was scheduled for January 2020, "but was delayed to June 2020 due to lack of funding from the State." 

It went on to say, "The kickoff was rescheduled to June 2020, but was again delayed by CherryRoad due to a lack of resources and funding concerns." 

In March 2020, NC DPI and Gaston County entered a Memorandum of Understanding (MOU). The MOU stated DPI would provide up to $3.8 million for a new, modernized business system.

In June 2020, at a public meeting after the two previous delays, Gaston County officials told school board members that it was going to finally kick off the system in July 2020.

The pandemic would later hit and stall the project in earnest until 2021. 

Funding was allocated in the 2021 Session by the General Assembly for the grant program. Gaston would eventually use that to help eligible schools modernize its systems. 

The General Assembly granted funds, and those were sent to DPI to award.

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On July 1, 2021, Gaston County Schools converted its accounting, finance, purchasing, and accounts payable systems to Oracle with CherryRoad Technologies overseeing the conversion. It wouldn't go live with its troubled staff payroll and HR systems until a few months later. 

In August 2021, the director of technology strategy and transformation from the Office of Educational Technology and Data Services Mark Samberg presented an update on the SBSM to the state board. 

“It's an important note on these contracts as they are opt-in, right, so districts can choose to buy off of these contracts," Samberg said at the August 2021 meeting. 

It had been about a month since Gaston County Schools and another school district went live with the SBSM. 

"Gaston County Schools went live with CherryRoad, and New Hanover County Schools went live with the Tyler Technology product, and the important thing, they got paychecks out on July 31," Samberg said.

If there were any problems with the transition, there was no mention of it during the public meeting. 

"When you go out with a new financial system, you can mess anything up as long as people get paid," Samberg said. "And everybody got paid."

Samberg also told the state board that districts didn't have to choose the two providers DPI had contracts with. 

"They can also choose to modernize with their current provider," Samberg said. "We don't however, because we don't have RFP for that when we fund this centrally. We are only funding the districts who are moving to one of the two vendors on the RFP. Our approach to working with those two vendors is to create what we call a golden template." 

WCNC Charlotte's Shamarria Morrison spoke with WCNC Charlotte Anchor Colin Mayfield about how she went about this investigation and all the work that went into it.

On Jan, 1, 2022, Gaston County Schools converted its remaining systems' HR and payroll accounts payable system to Oracle to be implemented by CherryRoad Technologies. Employees said they ran into issues with their paychecks almost immediately once the switch happened.

Nearly eight months later, it was revealed that emails between North Carolina Representative Kelly Hastings (R-110) and North Carolina General Assembly fiscal analyst Eric Moore showed Gaston County Schools administrators were advised not to transition to the payroll system that would eventually lead to missing paychecks and retirement funds.

In April 2022, Gaston County Schools would ask NC DPI for its first major increase of money. 

Through one amendment, the original state contribution of $3.8 million rose to $4.3 million -- an increased price of $494,200. The increase was labeled post-production issue resolution support. In other words, Gaston County Schools needed more money to fix and support the payroll system. 

WCNC Charlotte's investigation found a financial form where Gaston County Schools agreed CherryRoad would provide remote operational support from July 2022 through the end of December 2022. This support would cost Gaston County Schools $99,840 to be paid in equal amounts of $14,262 a month.

Each CherryRoad staff member contracted would cost $160 an hour. One CherryRoad employee cost $17,920 for 112 hours (or about 14 days) worth of work. 

Another CherryRoad employee cost $48,640. CherryRoad estimated this employee would do 304 hours of work, which equates to about 38 days over the six-month period. 

In May 2022, Gaston County Schools would enter a contract with another company, True Ingenuity, to help with its payroll issues. That original contract was not to exceed $50,000. Months later, that price limitation would be increased as Gaston County Schools faced more issues. 

Finally, in June 2022, through a second amendment to the MOU, Gaston County Schools asked NC DPI to give it more money to fix and support the payroll system. That increase this time cost $237,920. 

That meant the original state contribution, funded through taxpayer dollars, for the grant program rose from $3.8 million to $4.6 million in just a few months. 

On Aug. 26, 2022, WCNC first reported about the payroll issues. It was the first payday of the 2022-2023 school year for Gaston County Schools. Teachers and other staff went home with incorrect or missing paychecks. 

“It is just very disheartening and insulting,” elementary school teacher Sherry Willis told WCNC Charlotte at the time. She said she has received late and incorrect paychecks several times that year. 

Another middle school teacher Diane Gibson said she had spoken with some teachers that were crying because they had not received the money yet. 

"And then, we had some co-workers who got paid, but deductions were wrong,” Gibson said. 

A spokesperson for the district told WCNC Charlotte the district expected to face some payroll issues with it being the first payday of the new year. 

"We know the continued issues with the payroll system are frustrating and concerning; however, we are working diligently to address the issues and correct mistakes,” spokesperson Todd Hagans said at the time.

Meanwhile, CherryRoad Technologies and Oracle were continuing to be paid thousands to fix the payroll system. The pressure to publicly address and fix the payroll issues soon started to get statewide attention. 

Gaston County Schools would eventually attribute its ongoing payroll issues to the payroll system itself and not its staff for the issues. 

"In the business world, an employee is typically hired to do one job and is paid for working that one job.  In a school system, one employee may have two or three jobs.  For example, an employee’s primary job is a teacher, but that employee is also a coach and a bus driver.  Oracle recognizes the employee as a teacher and pays that employee as a teacher; however, we have encountered issues with the system not recognizing that the teacher also has to be paid as a coach and a bus driver.  This factor has contributed to the issues that we have experienced."
-Todd Hagans in September 2022.

On Sept. 7, 2022, WCNC Charlotte reported more than 1,000 people signed a petition to get Gaston County Schools employees properly paid.

In the same month, the True Ingenuity contract with Gaston County Schools to help with payroll issues was amended. The original contract, which was not to exceed costs of $50,000, was increased by $100,000, with a new caveat of "not to exceed cost" of $150,000. 

Adrienne Scearce was a Gaston County Schools employee who left in May 2022.

“I have not received anything from Gaston County Schools," Scearce told Shamarria Morrison in August 2022. "I have not received even as much as an email phone call nothing from Gaston County Schools. If my figures are correct, which I believe they are, they owe me $3,956.71."

After WCNC Charlotte’s Where's the Money investigation aired, Scearce contacted Shamarria saying she had finally received some of the money owed to her.

“There are still issues with employees not receiving their correct pay," Scearce texted Shamarria on Sept. 1. "Thank you for working so hard on this story. You are the reason I finally received my money."

Gaston County Schools knew it was having major problems with the new payroll system just months after it was implemented. The district asked for its first major increase of money from NC DPI to help resolve the issues.

Scearce said, during that time, employees didn’t feel the impacts of any extra money being used to fix the problems.

“The atmosphere was people were kind of losing hope because you had people who were having automatic drafts come out of their account: their mortgage, their rent, their car payments," Scearce explained. "Some people couldn't even, you know, get groceries [or] their basic necessities.”

When WCNC Charlotte told Scearce about the additional money CherryRoad Technologies received to fix the ongoing problems, Scearce was surprised.

“It would have been nice if the state would have said, 'No, what we're going to do is we're going to pay the employees,'” Scearce said.

Scearce believed Gaston County Schools should not have given CherryRoad any additional money until the problem was fixed and that the district could have paid her and several other people instead of paying CherryRoad.

“So, you're paying these people who aren't getting the problem fixed?” Scearce asked. “So, that's another issue that I have. That's another major concern. It’s starting to make me think, where's the money, and who was doing something wrong?”

Former Gaston County Schools Superintendent Jeffrey Booker has previously apologized to staff members for the problems. Emails show Booker was intimately in the loop about the payroll system issues. Scearce said the faults of the payroll system are on the shoulders of the former superintendent.

“As the leader of Gaston County Schools, he was at fault,” Scearce said. “He was the one who approved all of this. He was the one who, I guess, negotiated or was a part of it or can sign off on it. So, he is at fault. Nobody else is to take the blame. He is at fault.”

Scearce is just one of the many Gaston County Schools employees who have been impacted by the payroll system problems. She’s been told the rest of the money she’s owed should be given to her next week. 

On Sept. 12, 2022, Booker publicly apologized to staff members with incorrect or missing paychecks during a town hall meeting. 

"I have great regrets that all this is done to different people," Booker said.

Booker told hundreds of people on the call he wasn't there to point fingers. 

"I don't think benefits anyone to say who shot what and who did [what], Booker said. "I can, what I know is that at 2:30 in the morning, 4:30 in the morning on those calls. I see CherryRoad representatives, I see Gaston County representatives; I may see state representatives all trying to work to try and get the files correct.”

He didn't say how much taxpayers' dollars were being used to correct it. 

A few weeks later, Rep. Hastings' emails released between state officials showed Gaston County Schools administrators were advised not to transition to the payroll system.

A Sept. 30, 2022, order form from Gaston County Schools showed the district purchasing another year-long support package from Oracle. The support would get them an engineer and pay for employees' travel expenses for a total of $87,704.16.

More purchase orders and invoices would continue.

Gaston County teachers and other employees would continue to hold rallies outside of board of education meetings while Gaston County School leaders would continue throwing more money at the problems. 

Gaston County Schools board members voted at a November 2022 meeting to use local funds and some additional money -- $25,000 -- from NC DPI to pay for “ongoing support” from Oracle, CherryRoad Technologies and True Ingenuity.

The vote was silent and without discussion in a consent agenda item. 

A December 2022 purchase order from Gaston County Schools showed the district getting another's year’s worth of CherryRoad support for $200,000. Oracle was also getting paid.

A January 2023 purchase order showed operational support being contracted. One bill was $18,926.04 and another bill was $2,620.86.

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After months of fielding questions from state lawmakers and employees, school board members started to lean into top Gaston County leaders.

“I have called, emailed and gone in-person to try to get this resolved," Gaston County teacher Alexa Gram Feller said through tears during a February 2023 school board meeting. "And I've been more than patient. How do you expect teachers to stay especially first-year teachers like me?”

The spotlight was on Gaston County Schools associate superintendent for finance and operations Gary Hoskins and superintendent of schools Jeffrey Booker. 

"It is just a dark cloud, Dr. Booker," Gaston County Schools board member Robbie Lovelace said. "Just hovering over everything good that you've done for Gaston County Schools. This is how we're going to be remembered. For Oracle."

Booker responded with silence—letting Hoskins field all the questions.

“We have way too many," Hoskins said. "This is not an acceptable number, but they are working through those as quickly as we can."

Despite staying silent in public meetings, emails WCNC Charlotte obtained showed Booker was intimately in the loop about the payroll system issues. 

Booker's signature was on all the contracts associated with price increases for the project.

On April 18, 2023, WCNC Charlotte reported that after 14 years within the district, Booker was leaving the district due to a new career opportunity. There was no mention of leaving due to the payroll issues. 

At a June 12, 2023, school board meeting, the following was announced: 

• All retirement accounts were up to date and employee benefit files were submitted but are waiting to be accepted
• Compensation Time (overtime pay) was currently the only global issue outstanding, and they were working with Oracle and CherryRoad for a solution
• A ticketing system was being used by employees to document questions and concerns regarding payroll and HR
• There were currently 318 unresolved payroll folder issues and 13 unresolved HR issues

WCNC Charlotte compared this update to a Feb. 20, 2023, school board meeting:

• NC State Retirement files were submitted through September and posted through August
• Empower 401(k) was posted through January, and all other retirement plans 457 and 403 were posted through December
• Compensation Time (overtime pay) was an outstanding global issue. The system used the employee's pay rate at the time when compensation time was earned. The system should have been using the pay rate at the time when the compensation time was used. (Example: Their comp time reflected a $13 an hour pay, but they currently earn $15)
• The district also discussed the ongoing Individual Issues employees were facing they included incorrect deductions, overpayments, compensation time pay rate, retirement contributions, and leave balance accrual issues
• Of the 1,834 incidents reported from January through September 2022, 464 employees were resolved. In the incidents reported from November through February, 498 employees’ folders were still in the process of being resolved

WCNC Charlotte asked for an update on these numbers from Gaston County Schools. That update was received on Aug. 31, 2023, in which the district said "of the 498 “folder” issues that you referenced in your e-mail, 356 of them have been resolved – we continue to address outstanding issues on an employee-by-employee/individual basis."

WCNC Charlotte wanted to explore NC DPI's role in helping Gaston County Schools implement the system and its role in giving the district more money for the SBSM. 

We spoke to agency officials who told us DPI was not responsible for rolling out the SBSM statewide. Instead, it was there to support districts in the choices made by providing them with the funding and governance necessary so they can successfully implement enterprise resource planning (ERP). 

ERP refers to the software system that helps organizations automate and manage core business processes. 

"All enterprise resource system (ERS) migrations are complex and require ongoing resolution and maintenance for the system to reach optimal functionality," a spokesperson for the Department of Public Instruction said. "Gaston County Schools has worked diligently to resolve accounting issues and has stabilized their implementation."

We asked agency officials why NC DPI increased the MOU amount from $3.8 million to $4.6 million in the first year the program went live. 

"You know, unfortunately, a pandemic hit right in the middle of this," one agency official said. "And so that necessitated some additional supports. 

The agency said some projects slowed down during that pandemic. 

"So certainly the pandemic created some challenges for live implementation at that time," the agency official said. 

When asked if the amount of money added to the original money is typical for such a large product the official said yes. 

"Like I said, they had some challenges with the pandemic, impacting their timeline, and impacting the ability to be on site. That would be very typical in response to the pandemic challenge," the official said. 

But why continue to work with the companies where the problems originated from? 

It had to do with the complexities of the Oracle software, according to agency officials. 

"Whenever you are purchasing a software product off the shelf, it is designed off the shelf," the agency official said. "But when you're moving into a public entity where you might have certain criteria that force you to do a function a certain way."

WCNC Charlotte gave an agency official an analogy to try and better understand why would state dollars go to the company to fix something that wasn't working efficiently in the first place: 

A homeowner needed to update a decades-old refrigerator. This refrigerator was custom to the home and would need to be installed by one company. After installation, the homeowner found out some of the customized features weren't working including the most vital function the freezer. There are thousands of dollars worth of groceries in the freezer. Do you give the money to the company that installed the refrigerator to save your groceries right now? Or risk trying to find another expert to fix the company's work and lose all your groceries? 

"I think that's a good analogy," the agency official said. "I mean, obviously, this is a very complex set of complex systems.  But I think that's a good analogy."

But the agency official said he would take it a step further. 

"I think if you want to go with that analogy, that we're more than like a unique refrigerator, they are unique items that someone needed to freeze, that might not have been typical to an off-the-shelf refrigerator" the agency official said. 

Meaning Oracle's systems are unique to the company and you can't just get anyone to fix them. 

"At the end of the day, our goal along with Gaston County's leadership, and, you know, all parties involved just wanted the best for Gaston's employees and the Gaston team and so that ]increasing funding] made sense," the agency official said. 

Despite helping guide and providing checklists to help Gaston County Schools successfully navigate the new system, NC DPI officials were clear about their roles. 

Gaston County Schools was under no "hard deadline" to modernize its systems, and the district was "free to contract with, you know, any third party consulting they wish to or want to."

"The additional support was put there for them to be more effective in using this product, learning how to use the product better, making the configurations of this product work better for Gaston County, so they can make payroll work and they can make accounts payable work as they needed to," the agency official said. 

NC DPI said it knows of no other entities utilizing CherryRoad Technologies. Prior to the public revelations of the issues in Gaston County Schools, CMS Schools was slated to transition with CherryRoad Technologies services. That didn't happen. 

An NC DPI spokesperson said it will continue to support schools in transitioning to more current technology that also increases their security and business continuity as required by legislative requirements. 

"Post-pandemic, across the IT spectrum, inflationary pressures have increased the costs of software, personnel, maintenance, and support," NC DPI's spokesperson said. "The vision of the agency’s Office of Systems Modernization is to effectively support schools in creating optimal environments for finance and human resources so that educators and district administrators can seamlessly carry out day-to-day tasks."

WCNC reached out to CherryRoad Technologies, Gaston County Schools and individual members of the Gaston County School Board for a comment on this story. We gave each entity an opportunity for an interview and to submit a comment prior to the publishing of this story.

Our initial response from Gaston County Schools was: "Good afternoon.  Please know that your e-mail has been received.  We will review your information and questions and provide a response in as timely of a manner as possible.  Thank you."  Todd Hagans  Chief Communications Officer

Then, at 11:35 a.m. on Aug. 31, 2023 -- 25 minutes before the deadline expired for comment -- the district sent the following statement: 

On January 1, 2022, Gaston County Schools converted its payroll system to the Oracle Cloud platform as a result of the School Business Systems Modernization (SBSM) state legislation.  The system Gaston County Schools used prior to the conversion was more than 30 years old.

To support the modernization of school business systems, the state provided funds to pay for a school district’s conversion, if the school district selected either Oracle Cloud (implemented by CherryRoad Technologies) or Munis (implemented by Tyler Technologies).  Gaston County Schools chose to implement Oracle Cloud, and state funds from the N.C. Department of Public Instruction (NCDPI) were provided to pay for our conversion. 

Prior to the conversion implementation date of January 1, 2022, representatives from Gaston County Schools, NCDPI, and CherryRoad Technologies all agreed that Gaston County Schools was ready for the implementation.  After the conversion went live, Gaston County Schools began experiencing payroll-related issues.

School finance/payroll is complicated.  Unlike most businesses where an employee performs one job and is paid one amount for his or her work, a school district has employees who work varying lengths of time (10, 11, or 12 months); are considered either certified or classified; can perform and be paid for more than one job (such a teacher who also is a bus driver and a coach); receive supplemental pay; are paid on varying salary and experience scales; and have varying amounts of pay deducted for health, vision, dental, and other benefits.  The complexity of school finance/payroll combined with the implementation of a new system contributed to Gaston County Schools experiencing issues.  

In the weeks and months after the conversion, Gaston County Schools worked to address issues.  Fortunately, NCDPI made funds available to secure dedicated technical support from CherryRoad Technologies to help us address issues – we were able to have personnel from CherryRoad Technologies assigned specifically to work only with Gaston County Schools both onsite and in a virtual capacity (rather than just relying on CherryRoad’s help desk for support).  Because of the additional personnel and technical/programming support assigned specifically to Gaston County Schools, progress was made and the payroll system became more stable and manageable.  As a result, Gaston County Schools has been able to run its payroll as scheduled while managing and minimizing issues with each payroll run.  We are grateful for NCDPI providing funds to pay for the dedicated technical and programming support – it was a necessary expense that helped us lessen the number of issues moving forward and put our finance/payroll department, which is fully staffed now, in a much better position to use and administer the Oracle system.

Currently, the payroll system continues to be stable.  We are processing our bi-weekly and monthly payroll runs as scheduled, and issues have become fewer with each new payroll run.  Most important to point out – the district is processing its payroll through Oracle Cloud, and employees continue to be paid.  

Additionally, our contributions to the ORBIT state retirement system are up-to-date as well as all other retirement plans (Empower 401K, 457, and 403).  We are not experiencing any significant global issues (a global issue is one that affects a wide-range of employees) at this time.  Of the 498 “folder” issues that you referenced in your e-mail, 356 of them have been resolved – we continue to address outstanding issues on an employee-by-employee/individual basis.

While the conversion of our payroll system has been challenging, we have made considerable progress.  We realize that no computerized system will be 100 percent free of errors; however, our payroll personnel are working diligently to ensure that the payroll runs this school year are processed on time with minimal issues.  If issues occur, we are committed to addressing them in a timely manner. 

If you have an employee who has contacted you about an issue and he or she has not had an opportunity to talk with someone about the issue, I hope you will encourage the person to contact his or her principal/supervisor so the principal/supervisor can put him or her in contact with the right person to discuss and review the concern.  We are committed to addressing all questions, concerns, and issues that are brought to our attention. 

No board members responded to the email. 

WCNC has requested in-person interviews dating back to November 2022 with Gaston County Schools, then-superintendent Jeffery Booker, and the chair of the school board for comment on continued support to fix the payroll. Those interviews did not happen. Instead, Gaston County Schools sent written statements to answer questions. 

An electronic read receipt showed CherryRoad Technologies vice president of administration Ann Marie Gulban read WCNC Charlotte's email request for comment on Tuesday, Aug. 29, 2023, but no response was given before the noon deadline on Thursday.

Contact Shamarria Morrison at smorrison@wcnc.com and follow her on Facebook, Twitter and Instagram.

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