YEAR 2000 CONTINGENCY PLANNING FOR MUNICIPAL GOVERNMENTS

October 1, 1998 Version 2.0

Abstract

The year 2000 software problem can have a very unfortunate impact on municipal governments in the United States and abroad. Urban government year 2000 problems may be severe, and many governments will not be able to repair all of the problems before the end of the century. In addition, the year 2000 problem has the potential to damage urban infrastructures and temporarily disable public utilities such as electric power, water supplies, and sewage.

The year 1998 is a critical transition period between in year 2000 planning. Prior to 1998 most year 2000 plans concentrated on repairs and remediation. From now on, most year 2000 plans will concentrate on damages and recovery actions. This generic municipal planning template sketches out some of the considerations for year 2000 contingency plans in the context of urban governments in the United States.

Capers Jones, Chief Scientist Artemis Management Systems

Software Productivity Research, Inc. an Artemis company 1 New England Executive Park Burlington, MA 01803-5005

Phone 617 273-0140 X-102 FAX 617 273-5176 Email Capers@spr.com CompuServe 75430,231

Copyright SYMBOL 227 \f "Symbol" 1998 by Capers Jones, Chief Scientist, SPR/Artemis, Inc. All Rights Reserved.

YEAR 2000 CONTINGENCY PLANNING AND MUNICIPAL GOVERNMENTS

The needs of municipal governments for year 2000 repairs are more complex than corporate needs, due to several factors. Municipal governments will be tasked with coordinating damage control for many infrastructure problems, such as loss of electric power and perhaps interruption of public water supplies. If these infrastructure problems occur and last more than a day or two, then they will trigger needs for police and fire department involvement. Should these problems last more than about 10 days, then National Guard assistance may also be needed.

If the year 2000 infrastructure problems such as loss of electric power last more than about a week, then secondary impacts will also occur. These collateral damages include transportation problems, weather damages such as burst pipes for cities in cold climates, and possible food shortages if transportation is interrupted. Thus public shelters may be needed.

In addition, the municipal costs of year 2000 damage control and recovery will be large and may exceed planned budgets. This may necessitate unpleasant increases in local taxes or reductions in urban services, or both. In fact, urban bankruptcies are a significant possibility.

This brief outline merely summarizes some of the factors that should be included in municipal government contingency and recovery plans for the year 2000 problem. It is no longer possible to achieve 100% year 2000 repairs, so the time to begin serious contingency planning is right now in 1998. It would be imprudent and irresponsible to delay contingency planning until it is too late to stock necessary emergency supplies.

GOALS FOR MUNICIPAL YEAR 2000 CONTINGENCY PLANNING

Minimize urban damages from unrepaired year 2000 problems Minimize risk of infrastructure damages due to power or water failures Optimize the speed of recovery from unrepaired year 2000 problems Minimize the risks of litigation against government units Provide accurate status information to concerned citizens Coordinate local Y2K status with other governments

MUNICIPAL YEAR 2000 ADVISORY BOARD MEMBERS

The year 2000 problem is pervasive and affects financial applications, telephone systems, electric power generation, water supplies, sewage treatment, and all other computer-controlled activities. This means that year 2000 coordination for urban governments must involve every bureau and operating unit. A municipal year 2000 advisory board should be set up in mid 1998 to handle the overall coordination of year 2000 information and repairs.

Mandatory Members Mayorms office or city managerms office City council representatives Operating Unit representatives CIO or data processing Police department Fire department Tax office Public Health Transit authority Port authority (if any) School board Social services Personnel Finance or CFO Legal or town attorney Emergency Preparedness Engineering Planning/Real-Estate

Optional Members Liaison q federal government Liaison q state government Liaison q county government Liaison q other urban governments Chamber of Commerce Local Year 2000 groups Local business associations Local universities Year 2000 experts (pro bono basis?)

Note: The municipal year 2000 advisory board will be about 25 members in size for both towns and cities. It is important that the advisory board be non-partisan and non-political. The year 2000 problem can be as pervasive as a natural disaster such as a hurricane or earthquake.

YEAR 2000 CONTINGENCY TEAM MEMBERS

The role of the contingency team is to be ready to deal with year 2000 problems that are not repaired before the end of the century. There will be unrepaired year 2000 problems and it is folly to deny it. The software industry has never repaired 100% of any kind of problem, and the year 2000 problems are more complex than most.

Because fiscal years and calendar years are not always the same, it is necessary to assume that problems may begin to occur as early as January of 1999 for applications that llook aheadn for a 12 month period. In particular, the U.S. Federal governmentms fiscal year starts in October, so any software applications or data base connections between Federal and municipal governments may experience problems. Other fiscal years can also be troublesome.

The contingency team members will largely be derived from the pool of personnel who are already working on year 2000 repairs.

Approximate Size of Year 2000 Contingency Teams

Software expert(s) 1 per 5,000 function points deployed Data base expert(s) 1 per 10,000 function points deployed Embedded system expert(s) 1 per 2,500 function points deployed Public utility experts 1 per 100,000 population of city Electricity Water Sewage Police department 1 per 25,000 population of city Fire department Unknown Legal department All available attorneys Public health 1 per 5,000 population of city Transportation Unknown School board Unknown Social services 1 per 5,000 population of city Note: The size of the contingency team may require a total of 10 to 15 staff members per 100,000 population of the city. This means for a city with 1,000,000 people there may be 100 to 150 civil servants and contractors dedicated to emergency repairs. These personnel must be included in city budgets and hence the contingency staff may reduce other urban activities.

For several kinds of representatives on the contingency response team, there are no current rules of thumb for ascertaining how many participants may be needed. These areas of uncertainty include the fire department, the school boards, and local transportation authorities (if any exist in the municipality).

Many cities have formed local citizens action groups that are able to assist elected officials and city officers in dealing with aspects of the year 2000 problem. These citizen action groups can be very helpful and should be supported to the fullest.

YEAR 2000 CONTINGENCY CALENDAR

This generic contingency calendar is organized by month from September of 1998 through March of 2000. The calendar is not aimed at any specific city, but merely indicates some of the topics that municipal governments need to consider when dealing with year 2000 problems.

Among the worst kinds of problems might be the loss of electric power for cities with cold winter climates. For arid cities, another serious problem might be temporary disruption of water supplies. For all cities, there is a shared concern that year 2000 expenses may be so high that city finances cannot cover them, so special taxes may be needed.

Calendar Year 1998

September 1998 Local advisory board appointed First meeting of advisory board Town meeting #1 on year 2000 contingency plans Press release #1 on year 2000 contingency plans

October 1998 Head of contingency planning named and begins work Year 2000 contingency cost estimate prepared Year 2000 preliminary budget: What if insufficient funds exist? What about political opposition? What about cuts to other urban services? What about state or federal funding? What if experts are unavailable for local assistance? Salaries and benefits of contingency team members set Civil service status of contingency team members set Use of contractors/consultants for contingency work discussed Survey of other urban governments for useful planning templates Survey of state and federal sources for useful planning templates Local year 2000 web site established

November 1998 Contact established with volunteer citizens groups Contact established with local year 2000 association Preliminary survey/audit of all urban software applications for year 2000 status Preliminary survey/audit of public utilities for year 2000 status Electricity Water Sewage Natural gas Preliminary survey of communication channel year 2000 status Local telephone companies Long-distance companies Cellular companies Radio stations Television stations Ham radio operators Preliminary survey of transportation into and out of area Air services Railroads Trucking Highways Water transport Preliminary survey of emergency equipment and supplies Electric generators Fuel supplies Emergency food and water Batteries for electrical equipment Medical supplies Preliminary survey of weather-related supplies Heating oil Natural gas Preliminary survey of available experts for Y2K emergency work Software experts Data base experts Embedded system experts Electrical engineers Civil engineers Transit and transport specialists Nursing and medical personnel

December 1998 Criteria for joining contingency team worked out Budget approved to fund contingency group Contingency team nucleus begins to form Group leader First software experts Contact list of all year 2000 offices created Liaisons established with other governments (urban, country, state, federal) First draft of urban contingency plans created Fiscal year contingency plan Calendar year contingency plan Probable local damages Estimated time to repair Estimated costs of year 2000 repairs Preliminary contingency budget approved Funding shortages addressed Requests for proposals from outside vendors Generators and emergency equipment Radios and two-way communication equipment Year 2000 testing and compliance audit

Calendar Year 1999

January 1999 Monitoring all applications for 12-month fiscal llook aheadn year 2000 problems Letters/phone calls to all vendors whose software failed First try out of year 2000 problem notifications First actual year 2000 problems repaired Year 2000 lhot linen established (1 shift)

February 1999 Full contingency team selected and training begins (part time) Contracts for year 2000 consultant prepared Possible filing of litigation against unresponsive vendors Contract let for external audit of year 2000 testing

March 1999 Monitoring all applications for 9-month fiscal year 2000 problems Orders placed for emergency supplies (generators, batteries, etc.) Town attorneys review possible litigation status against town agencies Unrepairable, unreplacable applications identified Manual backup plans for unrepairable applications

April 1999 Revised contingency plans based on failures during first 3 months of 1999 Note: 65% chance costs will go up; 35% chance costs will come down. Town meeting(s) on municipal year 2000 status Press release on municipal year 2000 status Web site updates on municipal year 2000 status

May 1999 External audit of urban year 2000 testing and repairs Audit report on methods and liability issues June 1999 Monitoring all applications for 6-month fiscal year 2000 problems Year 2000 hot line expands to two-shift operation Major town meeting on local, state, and federal year 2000 status

July 1999 Briefings to police and fire departments on anticipated year 2000 problems Weekly year 2000 status reports released to press, radio, TV

August 1999 Revised year 2000 damage cost estimates Updates to fiscal year and calendar year contingency plans

September 1999 Monitoring all applications for 4-month llook aheadn year 2000 problems Multi-city/state/federal testing to guard against reinfection

October 1999 U.S. Federal government fiscal year begins: major problems can occur Town meeting in response to Federal government year 2000 problems Press release in response to Federal government year 2000 problems Emergency supplies and back-up equipment stocked and available Final survey of key local businesses for year 2000 status Banks Local phone companies Insurance companies Hospitals Supermarkets

November 1999 Contingency team ldry runn to check response speed Loss of electricity Loss of telephone services Reinfection from external sources Liaison with citizen volunteer groups Liaison with state and federal year 2000 contingency teams Liaison with other municipal year 2000 contingency teams

December 1999 Contingency team in place and ready for 24-hour operations Volunteer citizens groups trained and ready to assist Emergency supplies fully stocked and available Police and fire units standing by Year 2000 hot lines open and staffed Year 2000 radio/tv coverage prepared Police and fire emergency teams ready on 12/31 Year 2000 contingency team ready on 12/31 Radio contacts with state and federal emergency groups Final town meeting on year 2000 status Final status reports released to TV, radio, newspapers

Because many government fiscal years start prior to calendar years, the last half of 1999 will provide a good overview of how serious year 2000 problems may be in a government context. In particular, October of 1999 will be a major milestone because that is when the U.S. Federal fiscal year begins. Major problems can be expected.

Calendar Year 2000

The worst-case scenario for January of 2000 would be protracted loss of electrical power and telephone services for a period of two weeks or more, coupled with disruption of public water supplies. For cities with cold climates, extended loss of electric power could lead to substantial collateral damages such as burst pipes and deaths of homeless persons.

Once the year 2000 event has occurred, it can be expected that at least several months of emergency work will be needed to repair software and data base applications that were not repaired in time. In addition, substantial manual backup work will be needed to perform activities that would normally be done by computer: preparing W2 tax forms and issuing municipal paychecks, for example.

By about March of 2000, assuming 24-hour a day emergency software repairs, most of municipal the software and computerized applications should be restored to service. However this assumes that electric power outtages, water shortages, and other infrastructure damages are not too severe, and will be rapidly repaired.

The Spring and Summer of the year 2000 will be spent in attempting to restore municipal government operations to pre-2000 levels of performance. The more serious issues during this period will be the economic damages and tax revenue reductions.

Municipal governments face a possible four-fold set of damages from the year 2000, as pointed out in Capers Jones book The Year 2000 Software Problem q Quantifying the Costs and Assessing the Consequences (Addison Wesley, 1997).

Municipal year 2000 repair expenses will be high, and exceed planned budgets. Municipal repairs will be less than 100%, leading to possible lawsuits. Year 2000 problems may well lower municipal bond revenues. Local tax revenues will be reduced due to corporate year 2000 problems.

The aftermath of the year 2000 problem may result in some municipal bankruptcies. Even if bankruptcy does not occur, there will probably be a need to raise local taxes and reduce some local services to pay for year 2000 damages. There may be State and Federal year 2000 relief, but none is currently committed as this is written.

There will also be negative political fallout from the year 2000 event. Elected officials who were not proactive about year 2000 repairs will probably not be reelected. For several years, a political leaderms stance on year 2000 problems will no doubt play a significant part in election results.

January 2000 Police and fire emergency teams on 24 hour duty for first week Guarding food stores Guarding banks Guarding public facilities Volunteer citizens groups assist police and fire departments if needed Contingency team on 24-hour duty for first two weeks Year 2000 hotline on 24 hour duty (if phones are working) Surveillance against reinfection (if computers are working) Daily status reports and press releases Decision whether or not to declare city a ldisaster arean Decision whether or not to ask for National Guard assistance Year 2000 emergency physical repairs Electric power Water Sewage Emergency communication cut in Radio contacts with contingency team Radio contacts with state and federal year 2000 offices Year 2000 emergency software repairs Payrolls Taxation Accounts payable and receivable Manual backups for key activities Manual issuance of payroll checks Manual payment of accounts receivable Issuance of W2 forms and 1099 forms for tax reporting Emergency shelters open if needed Stranded travellers at airports Travellers running out of gas Anyone if temperatures are below freezing and power is off Initial assessment of year 2000 urban damages Physical damages due to freezing, fire, riots, etc. Status of all urban software, data bases, hardware, etc. Collateral damages (burst pipes, polluted water, etc.) Social problems (civil disturbances, evacuations, etc.) Litigation filings against vendors whose products caused serious damages Litigation defense against claims by citizens and businesses

February 2000 Accumulation of municipal year 2000 damage costs Survey of infrastructure damages and repairs Water supplies Electric power Sewage Continued filing of litigation against vendors whose software failed Continued defense against litigation filed against town agencies Negotiations with IRS on dealing with incorrect W2 and 1099 forms Hopefully all public utilities restored and fully operational Electricity Water Sewage Telephones Hopefully all modes of travel back at full capacity Year 2000 aftermath town meetings

March 2000 Survey of local business failures with analysis of reduction in city tax base Manual backup methods gradually phased out as software repairs wind down Financial health of urban government assessed Federal and state financial assistance disbursements continue Decisions on raising taxes, reducing services, or both to pay for year 2000 Decision on potential municipal bankruptcy to avoid damage claims Some municipal services more or less normal Some municipal services suspended due to lack of available funds Litigation continues indefinitely Contingency team begins to disband if problems are contained

The economic aftershock from the year 2000 problem may well last for years. The worst case assumption for a municipal government would be such severe reductions in tax revenues coupled with lawsuits for urban year 2000 damages that municipal bankruptcy occurs. The worst case situation would occur if electricity and water supplies were shut down long enough to cause major infrastructure damages and local business failures.

The expected case for municipal governments would be a stressful period that lasts from mid 1999 through the end of fiscal year 2000 and perhaps into 2001. During this period emergency repairs and recovery would be dominant activities, but the year 2000 problem would not be severe enough to trigger bankruptcy.

The best case for municipal governments would be only minor problems between about October of 1999 (when the Federal fiscal year begins) and June of 2000, by which time unrepaired year 2000 problems would be under control.

-- cynthia (cabeal@efn.org), November 11, 1998