Y2K: You’ve still to time to do something

I am not the kind of person who slows down to gape at car accidents. I would not stay in my beach house (which, by the way, I don’t have yet) and toast the coming hurricane. I don’t get a thrill out of seeing bad things happen. So why am I so looking forward to Dec. 31, 1999?

Certainly, part of it has to do with the fact that I am not a computer programmer; nor am I the president of an airline, the supervisor of a bus system, the director of a city’s utility department, or the person in charge of anyone’s paycheck. In other words, whatever the Millennium Bug does or doesn’t do to anyone is not likely to get me sued. Inconvenience I can live with.

I don’t even intend to stock up on necessities like Cheetos and beer. And, much to what I am sure is the chagrin of my financial institution, my money will remain safely ensconced there.

How, you ask, do I remain so calm in the face of impending disaster? I answer: Because I don’t think anything is going to happen. But, on the off chance something does happen, I think it will be fun to watch.

Oh, I’ll grant you, the possibility that something will happen does exist. But I’ve been around long enough to know that, when things look bleakest, we Americans have a way of finding that tiny ray of sunlight. I also know that local government types, as whiny and complaining as they can occasionally be, like nothing better than a challenge. And if challenges were holidays, Y2K would be Christmas, Halloween, the Fourth of July and Arbor Day all rolled into one.

>From what I’m hearing, most local governments are treating the Year 2000 problem as serious business. Many have wide-ranging programs in place to deal with everything from paycheck problems to garbage pickup. A few cities, like San Carlos, Calif., and Lawrence, Kan., are so ready that they can’t help gloating.

Those of you still considering doing something have got your work cut out for you. That does not mean you can throw the back of your hand to your forehead and cry, “Woe is me!” Y2K experts (who are going to have to find another title after this year) say it’s not too late.

Quick fixes, however, are not easy. But there is a wealth of information available to help you. Organizations like the National League of Cities, the National Association of Counties and the International City/County Manager’s Association have directed considerable resources to helping local governments solve whatever problems Y2K might present them with. Public Technology, Inc., whose president, Costis Toregas, wrote a feature for this special supplement, is a gold mine of Y2K information.

You’ve got half a year to go. You can do it. If you don’t start now, however, there will be nowhere to hide on Jan. 1, 2000.

Of course, it really doesn’t matter because nothing’s going to happen.

I don’t think.

While doomsayers regard the year 2000 as Armageddon and information technology experts curse the programming glitch that started the Y2K frenzy, local governments are scrambling to remediate the problem. With proper preparation, and a little luck, city and county leaders may be able to join the rest of the year-end partygoers, instead of working to control the shutdowns Y2K could cause.

The possible problems are wide-ranging. Time-sensitive computer software that has not been fixed may not operate, or it may operate erratically and unpredictably; control systems that depend on small computer chips, some of which are embedded, may stop functioning; and data streams that were thought to be reliable may turn out to be dysfunctional and could infect clean data.

With six months to go, it becomes imperative for local governments to embark on a multi-stage program of awareness, inventory, triage, remediation, testing and contingency planning. Most cities and counties have already completed a significant portion of that program, but there is still time for latecomers to address systems problems and perform contingency planning.

‘LACE’ solutions City and county leaders must adopt guiding principles that will serve the public well under all possible scenarios. Those principles have worked successfully with other technological challenges, and they should be equally helpful in the Y2K context. Taken together, they form the acronym “LACE.”

Listen. It is essential to listen carefully to all ideas and all concerns. Having one opinion, one perspective or one solution will not serve the community well when many different scenarios might unfold.

And it is imperative to establish and manage communication systems to tell people what is known, hear their concerns and respond to those concerns. Telephone hotlines, web pages and community groups all can serve as communication tools in the event of a crisis. Assets. Consider what all parties (residents, community groups, governments, the private sector and others) bring to the table. Make sure they understand what the local government can provide. No matter how insignificant it may look at first, the combined skills and resources of a collective group form the foundation of a winning strategy. Collaborate. Through a collaborative strategy with these parties, and a clear understanding of proper roles, an optimal strategy can be forged.

Eliminate. Remove the barriers that stand in the way of collaboration. People’s perceptions toward one another, distrust of different cultures and the ever-present belief that tradition should define the way things are done are all major obstacles to collaboration. They must be directly challenged and overturned if collaborative strategies are to have a chance to succeed.

In addition to “LACE,” Y2K needs one key ingredient – leadership – from local officials. But that leadership must accept the limitations of agencies to deal individually with a society-wide problem, and it must be calm and inclusive in bringing the diverse elements of society together to resolve the Y2K crisis.

Leading the way Strong local leadership can be helpful to neighboring communities as well as to individual government agencies. Y2K has presented a unique networking opportunity for cities and counties to share ideas and solutions for compliance.

“This is the kind of [situation] where it doesn’t pay to be original,” says Don Gloo, assistant to the Urbandale, Iowa, city manager. “It actually helps to copy other people’s ideas.”

Urbandale participated in the “Y2K & You” program for assistance with Y2K compliance projects. Administered byPTI, the National League of Cities, the National Association of Counties and the International City/County Managers Association, all of Washington, D.C., the program provides participants with up-to-date information, resources and guidelines for Y2K solutions.

As a result of that networking tactic, Urbandale was selected by CNN as one of several cities to be profiled for Y2K reports. CNN ran a feature in March and will visit the city periodically during the next few months to check on its progress.

Urbandale (population 28,000) has completed its systems inventory, replaced or updated non-compliant elements, and currently is working on contingency planning and public communication. The city has a dedicated section on its web page (www.urbandale.org) to keep residents informed about Y2K projects and timelines.

Being in the spotlight has not added to the pressure of meeting the Y2K deadline, Gloo says. “The embarrassment of [non-compliance] on CNN would be minor compared to the inconveniences we might cause our residents if we’re not ready,” he says.

The societal impact Residents could be seriously affected by the Y2K problem if their cities are not prepared. The Y2K problem affects society in many ways well beyond computer applications such as automated payroll and budget systems. Multiple areas of local government, from water services to public safety functions and emergency systems, need to be Y2K-compliant.

Software and embedded chips are part of critical functions such as wastewater treatment, power and telecommunications services, all of which residents cannot imagine being without for more than a few minutes or hours. Y2K also affects functions as diverse as the operation of doors in jails and sophisticated medical devices in county hospitals.

Substantial investment has been made on fixes and management “work-arounds” to ensure proper execution of services on Jan. 1, 2000. Yet it is conceivable that, in some parts of the United States, residents may lose those services for days and perhaps even weeks. In addition, normal winter weather conditions throughout the nation may add to any existing Y2K-related problems.

City facilities such as airports are among the priority items to be fixed. On April 10, the Federal Aviation Administration conducted a live systems test at Denver Terminal Radar Approach Control Facility at the Denver International Airport. The four-hour test was performed on a set of backup computers with clocks moved ahead and running on Y2K-compliant software. The system mirrored actions of the current system managing traffic around Denver. The test was successful, proving that the FAA will meet its June deadline for Y2K compliance.

Denver International Airport has spent about $9 million on its Y2K corrections. Airport officials have hired outside consultants, installed new monitoring software, replaced the television monitors that display flight information, replaced the controls for the runway lights, and installed various other equipment throughout the airport.

In some areas, however, the Y2K bug will not affect services at all. For example, Amarillo, Texas’ two wastewater treatment plants are controlled manually 24 hours a day. The city’s north plant does not use computers at all in its daily operations.

Passing the test For city and county agencies that will be seriously affected by Y2K, testing – one of the final steps – is a critical element of Y2K compliance. Last November, Racine County, Wis., conducted a four-hour tabletop drill to test its systems. The mock disasters affected water, power and emergency services. County officials and other organizations “responded” by developing solutions to the different possible scenarios.

Similarly, Phoenix officials are planning “Operation Countdown,” a Year 2000 exercise, on June 11. The 18-hour exercise will include dozens of city officials, external consultants, the American Red Cross and two or more shifts of employees. Participants will respond to simulated events caused by Y2K. The overnight exercise will be conducted in realtime.

“We are feeling an increasing comfort level that our systems will work,” says City Manager Frank Fairbanks. “I’m fairly optimistic, but I’m sure there will be some little nuisances.”

Phoenix has been working on its Y2K compliance effort since 1996. Critical systems have been corrected, and the city is now working on testing and contingency planning. Contingency plans include adding emergency power generators to several sites around the city and increasing communication with neighborhood associations. In addition, all police officers and emergency personnel will be required to remain in the city at the end of the year.

No guarantees No matter how much money agencies spend or how many consultants they hire to achieve Y2K compliance, no one really knows what will happen on Dec. 31. Because individual systems depend on upstream suppliers and downstream customers to operate, others’ inefficiencies may render compliant agencies ineffective. The sheer magnitude of the problem (there are more than 25 billion embedded chips in the United States alone) make at least some system breakdowns highly likely.

Even as government leaders get a better handle on the U.S. marketplace, the stark reality is that other nations are inadequately prepared, and that may mean potential weakening of the local economies. News reports have stated that most other countries are, at best, behind in their compliance efforts. Some have barely begun the process.

“It’s never too late to start,” Urbandale’s Gloo says. By completing just the critical tasks before the impending deadline, city and county leaders may be able to toast the New Year without worrying about the potential catastrophes awaiting them when 2000 becomes a reality.

Costis Toregas is president of Public Technology, Inc., Washington, D.C. Assistant Editor Christina Couret contributed to this article.

Chicago CIO Elizabeth Boat-man doesn’t sleep much these days. In fact, she says she averages about four and a half hours per night. But with a $55 million, Y2K compliance and software implementation project hanging over her head, her sleepless nights are easy to understand. “It’s eye-opening,” she says.

In November 1996, when Year 2000 seemed far away to many cities, Chicago delved into its compliance efforts. After starting with a preliminary systems assessment, the city soon developed a Y2K Awareness Campaign and a Y2K Coordinators Group to handle the operation. The initial effort spawned the development of a Y2K Executive Steering Committee, which meets twice monthly.

The committee includes representatives from the mayor’s office and Purchasing; the CFO; the CIO; the budget director; the comptroller and corporation counsel. The committee members receive monthly reports on the city’s Y2K-related projects in order to make budget and personnel decisions.

One of the group’s earliest decisions involved hiring an outside consulting firm to act as project manager. Blue Bell, Pa.-based Unisys is responsible for providing staff, communicating with the entire project team; maintaining and updating the project plan; working with outside vendors and advising city leaders. The project team meets weekly. Boatman says she hired an outside firm to ensure that she had experts at the helm of the city’s Y2K effort.

“I think in the beginning we all thought that, by using internal resources, we would know best where to find the problem,” she says. “We learned over the past three years that there really is an expertise that has developed in this area. I didn’t think we could continue to stay on top of all of that.”

Boatman also wanted to protect the city against potential lawsuits. “The city is going to get sued,” she says. “We get sued for things that aren’t our fault all the time. We needed to make sure we had exercised due diligence, and I wanted to be able to say we’d hired outside experts.”

Y2K compliance, with or without the addition of outside consultants, often carries a hefty price tag, particularly for large cities. In Chicago, technology costs increased even more as the city decided to implement Y2K solutions while replacing and upgrading non-Y2K-related components.

“It’s been hard to find the money,” Boatman says. “But I haven’t had any arguments about whether we should spend it. If we didn’t spend the money, and we did have major failures, people would be wondering why we didn’t invest in this. “If it just affected city services, that would be bad enough. But there’s a societal impact on things beyond our control,” Boatman adds.

In order to expand Chicago’s reach and provide assistance to non-government groups and residents, the project team has formed specialized task forces. The Public/ Private Infrastructure Task Force, for example, has been charged with communicating with professional associations, labor unions, businesses and community groups about Y2K. The task force provides readiness information and resources. “We needed to feel comfortable that folks were doing their part, and we wanted to make sure they understood what we were doing and what we were worried about,” Boatman says.

The task force also is communicating with local churches, neighborhood groups and individual residents to prepare them for Y2K. The city has produced a brochure, which was sent out to residents in April, and area police are preparing to provide extra assistance to residents.

Another specialized team, the Emergency Planning Task Force, is boosting emergency efforts for potential Y2K fallout. The team consists of representatives from the Chicago Police Department, the Chicago Fire Department, the Office of Emergency Communications/911, and Streets and Sanitation.

“Our emergency plan, while robust for one disaster, really didn’t take into consideration a domino effect of disasters” which may occur if Y2K problems simultaneously shut down major operations such as water or gas, Boatman explains. As a result, the city plans a tabletop test for June to check emergency plans. The Office of Emergency Communications/911 has planned a live test of its systems for this fall, allowing time to make any last-minute corrections before the impending deadline.

Despite the sleepless nights, Boatman says she is very excited about the city’s Y2K compliance projects. “Everyone thinks it’s such a drag of a project, but it’s actually incredibly interesting,” she says. “By the end of this we are going to know so much more about how city services get delivered. It has been a real learning experience.”

By now, when municipalities, public authorities and agencies are asked what they are doing to address the Year 2000 issue, they had better be able to answer, “A lot.” However, while they most likely have focused primarily on operational problems – and rightly so – they should not fail to prepare themselves for the impending legal ramifications of Y2K.

The fact is that Y2K is not only a technological issue, it also is a legal one. In today’s plugged-in society, virtually every municipality, authority and agency will be affected by the Y2K bug, and each is at some risk of being involved in a lawsuit related to the issue. Expecting to prevent Y2K-related lawsuits altogether is unrealistic. However, it is prudent for government managers to take steps now, not only to minimize the impact from any suits that may be brought, but also to put their units or agencies in the best position possible to respond to litigation.

Realizing Y2K potential The Y2K problem is simple in concept, but difficult and expensive to fix. The dual technical/legal nature of Y2K is borne out by the following cost estimates: While the expense of fixing worldwide Y2K problems has been estimated at $600 billion, the volume of legal claims spawned by Y2K is estimated to total as much as $1 trillion.

In addition, government agencies that are counting on their insurance companies to pay claims based on Y2K problems may be disappointed. Insurance industry leaders have said that they will not bedeep-pocketed benefactors who will solve the problems of those who failed to prepare for the future. In fact, insurance companies already are putting Y2K disclaimers in new and renewal policies, and attorneys for insureds are already considering actions against insurance companies to seek coverage for Y2K-related losses. The breadth of insurance coverage and disclaimers will ultimately be decided by the courts.

So far, of course, little of that $1 trillion in litigation has materialized, and it is difficult to draw reliable conclusions from the limited actions that have occurred. But it is not hard to anticipate the types of claims that cities, counties, public authorities and agencies may face on or soon after Jan. 1, 2000.

Irate citizens are the most obvious – but hardly the only – source of potential litigation, which may be spawned by any number of Y2K-related problems: * Citizens may claim damages for personal injury resulting when a city’s 911 emergency dispatch system is slow or non-operational, delaying the arrival of an ambulance or police; * Employees could bring claims because Year 2000 problems in the payroll system software delay their paychecks; * An out-of-state trucking company whose driver is hurt in a collision might seek damages and reimbursement of medical costs because a traffic light at a busy intersection failed; * An individual may sue because his credit rating is lowered after the municipal water and sewer authority’s accounts receivable system fails to record his payments; * A city could attempt to collect damages and litigation costs from a software vendor that sold supposedly Y2K-compliant computer systems that crash when 2000 rolls around; * A public water authority may take action against its insurance company, which claims that it is not responsible for covering any of the Year 2000 problems over which others are suing the authority.

Plaintiffs as well as defendants In Y2K-related litigation, municipalities, authorities and agencies may find themselves both defendants and plaintiffs – defending themselves in suits brought by residents while simultaneously pursuing actions against suppliers, vendors and other third parties. To prevail in those actions, cities, counties and agencies may be able to raise a number of legal points.

For example, sellers and licensers of goods and services that are not Y2K-compliant or that claim to be capable of correcting the Y2K problem may be subject to breach of contract claims if the obligations and claims in the contract are not met. At the same time, suppliers of software and other goods that are sold with any representation that could be construed as constituting a warranty, may be accountable under the Uniform Commercial Code if their products do not perform as promised. Claims also may include breaches of implied warranties.

Furthermore, if the vendor or licenser knew that a purchaser intended to use the software beyond 2000 and either negligently or intentionally failed to alert the purchaser to the fact that the product would not properly function past Dec. 31, 1999, a claim for negligence, intentional misrepresentation or even fraud may arise. Finally, causes of action may arise for deceptive and/or unfair trade practices under various federal and state consumer laws.

Facing the music The extreme complexity of liability issues related to Y2K may cause considerable consternation within local governments. Simply put, it likely will be more difficult to determine who is to blame for a Year 2000 failure than it usually is for other types of products or performance failures. For example, unlike a case of product liability in which the manufacturer of an allegedly faulty item is the obvious target of litigation, assessing liability in Y2K cases could prove considerably more troublesome.

Many municipalities use computer hardware and software from a variety of suppliers that in turn rely on other companies to design and produce their systems. Consequently, in the event of a system failure, it is not always easy to determine where the fault lies. Blame could be placed on manufacturers, designers, vendors or Y2K analysts, or spread among them all.

In assessing blame, it also will be difficult to measure the performance of government managers in addressing Y2K issues. It is likely that governmental units and agencies will be assessed in retrospect, with the clarity of hindsight. Thus, without well-established procedures and sound documentation, it may be impossible to substantiate compliance efforts.

The best way to prepare now for possible litigation is to understand the nature of the municipality’s Y2K liabilities and to document all the actions taken related to evaluating and fixing the problem. Managers must create a “paper trail” that will serve as evidence to show the diligent and reasonable efforts taken to deal with the Y2K problem.

Whether the local government is the plaintiff or defendant in a lawsuit, proper documentation will assist in asserting or protecting its position. Practical steps to prepare for litigation include the following: * researching and evaluating the applicability of various governmental immunities, statutes of limitations and other affirmative defenses; * evaluating the grounds for claims for actions against suppliers and manufacturers of hardware and software; * requiring written statements of Y2K and leap-year compliance from all consultants, software vendors and other third parties – such as telephone and building systems companies – whose system failures may affect operations; * preparing letters to respond to inquiries from residents and others about compliance status. (Letters should be prepared with the advice of legal counsel to avoid repercussions in the event of any future problems. However confident managers may be about compliance efforts, it is critical to refrain from simply declaring that the organization is Y2K-compliant. Should unanticipated problems arise in the new millennium, such a statement could be damaging); and * ensuring that personnel who will have to deal with inquiries and complaints from residents are fully trained in appropriate procedures and responses. (Governmental units, public authorities and agencies should consider the good will and other benefits of establishing a Year 2000 hotline or ombudsman.)

For the last 30-plus years, computer use by governments, businesses and individuals has grown to the point that no one can pretend to know just how serious the Y2K problem will be. Two things, however, are certain. First, ready or not, the deadline for compliance cannot be changed. Second, there will be a dramatic increase in litigation.

Some suits will be initiated in good faith, while others will merely be the result of individuals or organizations seeking to capitalize on an unprecedented opportunity. Prudent management demands that municipalities, public authorities and agencies prepare strong defenses while there is still time.

Joel Lennen and David Tungate are attorneys with Eckert Seamans Cherin & Mellott, LLC, a national law firm headquartered in Pittsburgh.

As owner and operator of an electric utility, Tallahassee, Fla., had an immediate need to correct its customer billing and financial systems to make them Y2K-compliant. Originally, the city planned to replace the utility’s entire IT system, but, after an initial investigation, the Information Systems and Services Applications Division determined that a “plug-in” approach would work just as well, without the enormous expense of a sweeping changeover.

“We were going to buy our way out of the Y2K problem – it was time to look for new software anyway,” says Gene Crawford, project manager in the Tallahassee IS Department. “But some people thought maybe we shouldn’t spend so much money.” In late 1997, the city paired with local company Saxon Software to correct the coding in the utility billing and financial systems. Instead of changing all the coding to recognize four-digit dates, programmers tweaked it to perform a logical comparison. (The system merely compares dates and can determine which date is most recent in order to issue bills and enter payments.) The change was relatively simple, Crawford says.

Eight months and $300,000 later, the Year 2000 problem was successfully resolved. The project saved the city more than $1 million by eliminating the need for new software purchases. In total, eight applications, more than 2,500 programs, and more than 1.5 million lines of computer program instructions were corrected.

Because the project was so successful and inexpensive, city leaders decided to market their new “Alternative 2000” program to other governments and businesses. So far, the city has sold the package, which consists of methodology training, program templates, project plan templates, project tracking templates and training publications, to one small local company.

Because Tallahassee saved so much money on its Y2K compliance project, the city now has the opportunity, and means, to upgrade other existing technology. “The city recognizes the need to stay current on technology because people see the value of the Internet and new technology,” Crawford says. “We have to spend the dollar to be more competitive.”

The Alternative 2000 project won an Innovation Award last year from the National League of Cities, Washington, D.C. The annual award honors creative uses of information technology.

The tab for fixing local governments’ Y2K problems is skyrocketing, and the nation’s counties are going to have to pick up their part of the check. The National Association of Counties, Washington, D.C., predicts U.S. counties will spend a total of $1.7 billion on compliance projects.

By comparison, predictions for the total cost of correcting Y2K-related problems in the private sector have topped $1 trillion, according to a survey of 130 companies by Cutter Consortium, Arlington, Mass. And the federal government’s most recent prediction is that it will have to spend $6.8 billion to become compliant.

To find out exactly how counties are achieving Y2K compliance, NACo conducted a telephone survey of randomly selected county officials last year. Questions ad-dressed countywide plans, priorities, systems, testing and the total costs of Y2K projects. The 500 respondents estimated their total compliance costs at $283 million, even with 267 counties (53 percent) spending nothing. Five percent spent between $100,000 and $1 million, and 27 percent were unable to quote an exact figure. Only 4 percent reached the million-dollar mark.

Survey data indicate that a county’s size relates directly to its Y2K costs. For example, Los Angeles County, the largest county participating in the survey, estimated its costs at $155 million. Oakland County, Mich., is spending $4.6 million, and Ohio County, Ind. (population 5,458), is spending $400,000.

Fiscal budgets for 1998, 1999 and 2000 did not reflect the needs for Y2K funding, however. When asked about budgets, 138 counties did not answer. Thirty-five percent of the responding counties had budgeted nothing for Y2K solutions. The majority of counties that did budget funds (18 percent) allotted between $10,000 and $99,999.

The majority of counties did know where to get the money for compliance projects, if not how much they needed. County general funds will absorb Y2K costs, according to 431 respondents (86 percent). Two percent planned on using federal grants in addition to local funds, and 5 percent planned to tap state grants as well. Another 5 percent said they did not know where they would find the necessary funds.

Despite challenges in funding compliance projects, by the end of 1998, half of the respondents had a solid plan for Y2K, and 16 percent had already completed the necessary tasks. In order to survive the potential difficulties in 2000, however, counties must be compliant, no matter the cost.

The newness of the Internet will not save it from the Millennium Bug. Even as cities and counties employnew hardware and software on their web sites, they are implanting the bug because much of the most recent technology still is not Y2K-compliant.

According to Tim Robinson, a Dallas-based Y2K consultant, date-dependent web site functions are among the most vulnerable candidates for Y2K attacks. Frequently, city web sites with an angle for tourism allow viewers to enter dates and learn about city festivals or other programs occurring at a particular time of year. If the original web site coding was done in two-digit date format, it must be corrected.

That is not necessarily easy. For agencies with millions of lines of coding to correct throughout their systems, a small line of HTML coding may be easy to overlook, he says. Government web sites containing only text and graphic elements will function normally, provided the operation platforms are Y2K-compliant. A glitch in Microsoft FrontPage – a common web design tool – or even in the viewer’s browser, such as Netscape Navigator or Internet Explorer, can cause the web site to fail.

To correct potential glitches, many vendors, including Microsoft, have issued “patches” for users to download to their programs to make them Y2K-compliant. The patches fill in any holes in the original coding that might cause Y2K-related failure.

Although most web sites are not crucial to government functions, they have proven to be an effective means of communicating with constituents about general topics of interest and even about Y2K. For example, in Livonia, Mich., IS Director Dan Putman has created a section on the city’s web page specifically to provide information about the city’s compliance efforts.

“We’re looking at multiple methods to communicate with constituents – cable access, phones, the web site, even PA systems,” Putman says. “With all the preparation we’re doing we expect that at least some of our methods will be effective.” With 160 visitors per day, the web site (www.ci.livonia. mi.us) has proven its popularity. Putman applied a Microsoft patch to ensure the site’s compliance.

Malfunctioning phone lines will affect the usefulness of even the most compliant web site, Putman says. Ultimately, providers such as AT&T are responsible for providing clear connections, but local governments would be wise to have their lines checked for dial tones, Robin-son says. “If we can’t get a dial tone, nothing will work,” he notes.

According to a recent article in USA Today, Y2K should not affect worldwide phone service. Ron Balls of the International Telecommunications Union, the U.N. agency charged with worldwide communications regulation, has said that Y2K does not actually affect telephone switches, but it does affect the alarm systems that monitor traffic and notify technicians of failure. And there probably will be New Year’s-related congestion on the phone lines, which may affect person-to-person calling as well as Internet connections.

Most cities and counties have emphasized emergency systems, rather than web sites, in Y2K compliance projects. As cities like Livonia have depended more on the Internet as a communications tool, however, it is crucial that web sites not be overlooked.

The Y2K issue is hot stuff, and virtually no day goes by without newspapers and radio/TV stations reporting about potential crises within the federal government. City and county Y2K preparedness, however, is frequently ignored.

Consequently, the Government Finance Officers Association and Armonk, N.Y.-based bond insurer MBIA conducted a survey to attempt to determine how local public officials feel about their communities’ efforts to comply with Y2K requirements. The survey, which was conducted in July 1998, sought to address the following questions: * How confident are public officials about the progress they have made thus far? * To what extent have governments conducted an enterprise-wide inventory of information systems? * Have governments purchased Y2K liability insurance? and * Have funds been systematically appropriated to address Y2K issues and problems?

The survey of government finance officers indicated that most are confident about their communities’ progress. In fact, 56 percent of the respondents stated they were “highly confident” to “very confident” about their governments’ efforts. Another 33 percent answered that they were “confident,” while only 11 percent claimed to be either “somewhat confident” or “not confident.”

Respondents who had completed an enterprise-wide inventory were more confident than those who had not. Of those who had conducted inventories, 68 percent were “highly” or “very” confident, while only 42 percent of respondents who had not completed such inventories fell into those categories.

Local respondents were somewhat less confident than state respondents. Of the 75 county and 302 city respondents, 52 percent and 54 percent, respectively, said they were “highly” and “very” confident. Sixty-nine percent of the 13 state respondents and 63 percent of the 76 special district respondents were “highly” or “very” confident. Officials in smaller jurisdictions (with populations of 50,000 and less) were more confident than those in larger jurisdictions.

Just 11 percent of respondents indicated that their organizations have purchased Y2K liability insurance, but 30 percent indicated that their operating budgets included funding for Y2K readiness. (The median for such funding was $100,000; the minimum and maximum allocations were $100 million and $200 million.)

City governments allocated the least in operating and capital budget dollars for addressing Y2K issues, with a median operating budget allocation of $50,000. State and local governments had a median capital budget allocation of $100,000.

Survey respondents were asked whether their Comprehensive Annual Financial Report (CAFR) or Official Statement contained a disclosure about Y2K issues. About 30 percent indicated that theirs did.

The survey indicates that, while local governments are mostly confident about the direction of their Y2K efforts, they could benefit from completing a systematic enterprise-wide inventory.

This article is excerpted from “Year 2000 Readiness of State and Local Governments: Findings from the GFOA/MBIA Survey” in the Decem-ber 1998 issue of Government Fi-nance Review. For more information, contact GFOA at (312) 977-9700.