Is the NY State Pension Fund Properly Equipped with an Automated Management System?

The Wall Street Journal published an article written by Joel Schectman on Wednesday, August 21, 2013, NY State Pension IT ‘Approaching the Point of Failure’. We found a number of curious points in this article. We think the public will benefit from closely scrutinizing this type of press. So we decided to record some of our thoughts in the hope others can benefit when they attempt their own analysis of this type of news.

  1. Just who is rendering an opinion on whether or not the NY State Pension System’s office automation solution is “obsolete”?
  2. If the Pension System “manages benefits distribution for $160 billion in retirement funds”, then why is “[t]he system … audited infrequently…”?
  3. What is the rationale for any government agency to argue, as “Gartner analyst Rick Howard” claims this group at NY State argues, that “‘[y]ou become highly invested in [software systems like the one in use at the NY State pension benefits office] and they are highly expensive to replace,’ Mr Howard [says]. ‘In the public sector there are many competing and legitimate needs for dollars so you don’t invest enough in security, and you hope nothing happens.”?
  4. Since when do “…COBOL-proficient programmers tend to be older …” and why do they “…cost more.”?

Here are our impressions, on a point by point basis:

  1. Someone at NY State obviously has the expertise to determine what is current and what is obsolete. In our experience this type of individual, or group, has the wherewithal to remediate a system like the one described in this article. We question why the State of New York has not assigned these folks to work on the “obsolete” system
  2. It is absolutely preposterous to us that a fund with $160 billion in assets would in any way amount to an asset not requiring regular audits. IT audits and risk assessments are absolutely required for any fund of the size of the one described in this article. Tax payers should demand to know more as to how an oversight like a haphazard audit schedule for an asset of the size of this one could ever be implemented by any legislative body. This statement is, at the least, highly questionable and definitely worth further inquiry.
  3. Ditto. We are incredulous when we read a statement like this one. Security should be the absolute number one priority for any IT organization charged with maintaining an asset of this value for the likely size of the group of personnel who maintain a very high interest in ensuring the security of it. Social security numbers and other highly personal information are likely stored in the system. There is absolutely no credibility, in 2013, for an argument based on justifying a lack of attention to data security as the result of limited resources. Bunk
  4. In 1994 we were engaged in the contract staffing business for IT programmers. COBOL was on the way out back then, so why is the skill so pricey today? Further, the argument most COBOL programmers are older no longer holds up. There are many younger programmers interested in opportunities to develop computer applications in an IBM Mainframe environment who are proficient in COBOL programming. This point is ludicrous, as well

On a positive note we were happy to read Bob Loomis’ points in the article and think anything believable here likely resides in his points.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

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