[House Prints 109-109]
[From the U.S. Government Publishing Office]
USE OF TECHNOLOGY
TO IMPROVE PUBLIC BENEFIT PROGRAMS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HUMAN RESOURCES
of the
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
APRIL 5, 2006
__________
Serial No. 109-69
__________
Printed for the use of the Committee on Ways and Means
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30-442 WASHINGTON : 2006
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COMMITTEE ON WAYS AND MEANS
BILL THOMAS, California, Chairman
E. CLAY SHAW, JR., Florida CHARLES B. RANGEL, New York
NANCY L. JOHNSON, Connecticut FORTNEY PETE STARK, California
WALLY HERGER, California SANDER M. LEVIN, Michigan
JIM MCCRERY, Louisiana BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. MCNULTY, New York
PHIL ENGLISH, Pennsylvania WILLIAM J. JEFFERSON, Louisiana
J.D. HAYWORTH, Arizona JOHN S. TANNER, Tennessee
JERRY WELLER, Illinois XAVIER BECERRA, California
KENNY C. HULSHOF, Missouri LLOYD DOGGETT, Texas
RON LEWIS, Kentucky EARL POMEROY, North Dakota
MARK FOLEY, Florida STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas MIKE THOMPSON, California
THOMAS M. REYNOLDS, New York JOHN B. LARSON, Connecticut
PAUL RYAN, Wisconsin RAHM EMANUEL, Illinois
ERIC CANTOR, Virginia
JOHN LINDER, Georgia
BOB BEAUPREZ, Colorado
MELISSA A. HART, Pennsylvania
CHRIS CHOCOLA, Indiana
DEVIN NUNES, California
Allison H. Giles, Chief of Staff
Janice Mays, Minority Chief Counsel
______
SUBCOMMITTEE ON HUMAN RESOURCES
WALLY HERGER, California, Chairman
NANCY L. JOHNSON, Connecticut JIM MCDERMOTT, Washington
BOB BEAUPREZ, Colorado BENJAMIN L. CARDIN, Maryland
MELISSA A. HART, Pennsylvania FORTNEY PETE STARK, California
JIM MCCRERY, Louisiana XAVIER BECERRA, California
DAVE CAMP, Michigan RAHM EMANUEL, Illinois
PHIL ENGLISH, Pennsylvania
DEVIN NUNES, California
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
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C O N T E N T S
__________
Page
Advisory of March 29, 2006, announcing the hearing............... 2
WITNESSES
Texas Workforce Commission, Diane Rath, Chair and Commissioner
Representing the Public, Austin, Texas......................... 7
Louisiana Department of Social Services, Marketa Gautreau,
Assistant Secretary of Community Services, Baton Rouge,
Louisiana...................................................... 12
Florida Department of Children and Families, Don Winstead, Deputy
Secretary, Tallahassee, Florida................................ 16
Oklahoma Department of Human Services, Lisa Henley, Project
Director of the Oklahoma EBT Project, Oklahoma City, Oklahoma.. 28
New York City Human Resources Administration, Dennis Fecci,
Former Chief Information Officer, New York, New York........... 32
SUBMISSIONS FOR THE RECORD
Cohen, Gregory, and Sherri Heller, ACS Government Solutions,
joint letter................................................... 48
Gerry, Hon. Martin, Social Security Administration, letter....... 49
Hammond, Hon. Donald V., U.S. Department of the Treasury,
statement...................................................... 53
Kentucky Cabinet for Health and Family Services, Frankfort, KY,
statement...................................................... 54
Kibble-Smith, Brian, J.P. Morgan Chase Treasury Services,
Chicago, IL, statement......................................... 55
National Association of State Workforce Agencies, statement...... 58
Newman, Brent, Accuity Inc., Skokie, IL, statement............... 62
SAS Institute, Cary, NC, statement............................... 64
Visa U.S.A. Inc., statement...................................... 70
USE OF TECHNOLOGY
TO IMPROVE PUBLIC BENEFIT PROGRAMS
----------
WEDNESDAY, APRIL 5, 2006
U.S. House of Representatives,
Committee on Ways and Means,
Subcommittee on Human Resources,
Washington, DC.
The Subcommittee met, pursuant to notice, at 3:04 p.m., in
room B-318, Rayburn House Office Building, Hon. Wally Herger
(Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON HUMAN RESOURCES
CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE
March 29, 2006
HR-7
Herger Announces Hearing on the Use of
Technology to Improve Public Benefit Programs
Congressman Wally Herger (R-CA), Chairman, Subcommittee on Human
Resources of the Committee on Ways and Means, today announced that the
Subcommittee will hold a hearing on the use of technology to improve
public benefit programs. The hearing will take place on Wednesday,
April 5, 2006, in room B-318 Rayburn House Office Building, beginning
at 3:00 p.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only.
Witnesses will include program administrators and other experts
familiar with how technologies have been used to improve public benefit
programs. However, any individual or organization not scheduled for an
oral appearance may submit a written statement for consideration by the
Subcommittee and possible inclusion in the printed record of the
hearing.
BACKGROUND:
Recent improvements in technology can offer better service to
individuals seeking a variety of public benefits.
Some technologies already have been applied widely. For example,
electronic payments exceeded payments by paper checks for the first
time in 2003. In its application in government programs, this
increasing use of electronic payments has accelerated individuals'
access to needed funds while creating billions of dollars in program
savings for taxpayers and reducing fraud and abuse. Surveys suggest
benefit recipients are 30 times less likely to experience a payment
problem with electronic payments compared to paper checks, which is
essential in programs that assist low-income individuals or those
recently laid off from work.
Other technologies are still under development. Some States and
agencies recently implemented more efficient application, identity
verification, and service monitoring processes designed to provide
better services to those in need. For example, pilot programs using
child care ``smart card'' technology can better track services provided
to children, making better use of existing resources. Other States are
poised to make more extensive use of data matching to better ensure the
provision of benefits to eligible individuals, and to more efficiently
target additional services such as work supports to those who recently
found a job.
In announcing the hearing, Chairman Herger stated, ``Americans from
all walks of life have experienced in recent years the benefits of new
technologies in their homes and workplaces. These improvements have led
to better, less expensive and more accessible services. Families and
individuals in need of government assistance should benefit from the
same revolutionary advances in getting the help they need. This hearing
will explore how programs and agencies are using these new technologies
to better serve beneficiaries and taxpayers alike. It also will provide
an opportunity to review what can be done to further improve services,
which is what the American people rightly expect.''
FOCUS OF THE HEARING:
The hearing will focus on the use of technology to improve public
benefit programs under the Subcommittee's jurisdiction.
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noted above.
Chairman HERGER. Welcome. At today's hearing we will review
ways technology can be used in public benefits programs to
improve customer service, better prevent fraud and abuse, and
even produce savings for taxpayers. This may seem like rocket
science to some, but the advantages of using technology are
both obvious and necessary for programs to work successfully.
Consider how people apply for welfare or other unemployment
benefits. The old way involved going to and waiting your turn
in a government office, providing information face to face to a
caseworker who fills out a paper form, and then waiting to see
if you qualified. This is time intensive and labor intensive
for applicants and government workers. It is also expensive to
administer and often frustrating to all involved. Despite those
flaws, some States and programs still operate this way.
The new way involves encouraging individuals to apply for
key benefits either over the phone or online. This is easier,
faster, and more convenient for applicants. It is also cheaper,
as several States will describe today, and it allows States to
focus more resources on what people really need, like helping
find a job, getting job training or referring individuals to
substance abuse treatment. The new way also has other important
benefits. Consider disaster preparedness. States and agencies
that have moved to online application for and the electronic
payment of benefits are able to serve more people better and
faster under the very worst circumstances. As we saw following
Hurricane Katrina and other storms, programs that maintained
only paper files effectively lost recipients. Paper checks sat
unopened in post offices or mailboxes, and coordinating
benefits people needed was even harder than under normal
circumstances.
Today we will explore what several States have done to
improve their use of technology in these programs, and what
more remains to be done. We will learn about how technology can
improve service delivery at every stage of the benefit process,
whether it is application, payment, or ensuring program
integrity. We will learn how real people benefit along the way,
which is the most important part. For instance, surveys suggest
people who receive benefits the old way, by paper check, are 30
times more likely to encounter a payment problem than people
who receive electronic payments. Checks get lost, damaged or
stolen. Checks take days to arrive in the mail. Checks need to
be signed, delivered and deposited. Checks cost programs more
in the process and too many recipients need to pay fees just to
get their check cashed.
It is no wonder States are increasingly turning to direct
deposit or other electronic payments for welfare, unemployment,
child support and other benefits. Recipients who get electronic
payments are the biggest beneficiaries of this improved benefit
delivery system. Today we will learn more about how we can use
these and other improvements and technology to better serve all
Americans. On a day-to-day basis and in times of disaster such
as Hurricane Katrina, it turns out that it is smarter, cheaper,
and faster than the old way, both for recipients and taxpayers
alike. That is the kind of win-win solution we should be
looking for across all public benefit programs. Mr. McDermott,
would you care to make a statement?
Mr. MCDERMOTT. Thank you, Mr. Chairman. For too many
Americans, we are the last line of defense. That is painfully
true after the hurricanes which devastated the Gulf Coast last
year. Thousands of hurricane victims were scattered by the
winds to cities across the country, put in my city of Seattle,
and no doubt, Mr. Chairman, to the communities in your own
congressional district. It was estimated that we had about
5,000 people in Seattle from New Orleans, and that is a long
way from Louisiana. I recently held a town meeting in Seattle,
where displaced Americans recounted their stories of their
personal triumphs and public malfunction. I have to agree after
touring the region--we went down with the Speaker and Nancy
Pelosi, the Minority Leader--that during that trip we saw
things that confirmed what I heard from people in Seattle.
Now, in New Orleans a member of the clergy told us their
biggest fear was that they would drop off the front page of the
newspaper, and drop off page ten, and drop off the paper all
together. I went back and looked at my own Seattle newspaper,
there was not a thing in there about Katrina of New Orleans or
anything else. It is a real problem that the problems that we
see as acute in event, become chronic and are soon forgotten by
most of the country. One extraordinary public servant you will
meet shortly, told me how she lived, not just afraid, but
really terrified for weeks after the storm because hundreds of
foster kids were missing and they had to find them one by one.
It was going out looking for the sheep one at a time.
Maybe it is because I represent the city that is at the
forefront of our technological transformation with Microsoft
and all the rest of what goes on in Seattle, I firmly believe
technology can have a profound and positive influence in our
lives if used appropriately. I really welcome today's hearing
to explore the role technology can play in how public benefit
programs are implemented. We cannot forget for a second that we
must translate the ones and zeros of computerese into the
meaning of the needs of people especially children. This is not
a theoretical discussion. If we learned anything from Katrina
and Rita, it is that we need electronic lifelines and homing
beacons to better protect foster and disadvantaged kids during
and after natural disasters. We really need to build an
electronic levee, if you will, around the vulnerable kids, and
we need guidance and real-world experience to help us do it
right, and that is why I am pleased to have someone here from
the Gulf Coast, the head of Louisiana's State Child Welfare
Program to join us today. Marketa Gautreau is someone who lived
through the nightmare of locating hundreds of missing kids, and
someone whose advice and counsel we should heed.
When we were in New Orleans, this is about a month ago the
largest radio station was already doing the countdown to the
beginning of the hurricane season again. We are talking 57 days
and it starts all over again. Now, technology can undoubtedly
help us track kids and better understand their backgrounds, but
what comes next? Well, remember, it is about meeting the needs
of vulnerable Americans in the wake of a crisis. We think of a
hurricane, but an abuse event is the same kind of crisis in a
family. We have critical questions that have to be answered.
How can we help families get past the emotional trauma they
experience during and after a disaster? How do we better
support the children and families outside the child welfare
system? What more should we be doing to ensure that children
can be safely maintained in their own homes? How can we ensure
the children, who must be placed in foster care, are safe and
their needs met, and are reunited with parents or are
permanently placed with their loved ones on a timely basis?
Technology can help, but we need a dedicated and qualified
workforce to determine the needs of every vulnerable child, and
you got to do it one at a time. You can't do it in groups. When
we know what needs to be done, we must act, especially if we
have to remove a child from his or her parents. It is about
action. That becomes more and more difficult for States as the
Congress reduces its commitment to child welfare programs, to
Medicaid and to the Social Services Block Grant (SSBG). Against
that backdrop of congressional withdrawal, ordinary Americans
stepped in to nurture vulnerable children as foster parents.
They have opened their homes and hearts even as the Republican
leadership in this Congress has closed their eyes and wallet,
and you will see it in the budget that we pass this week. When
I was in New Orleans I met foster parents who told me about the
challenges they faced. The first storm was forecast in the
Gulf. The second storm was not forecast out of Washington, D.C.
Good, decent, ordinary Americans leaped in, but the Federal
Government ducked out, and the burden is too great to be
carried by the American people alone or by technology.
Technology would not have fixed much of what went on down
there.
To meet the needs of vulnerable children we need to recruit
and retain foster parents and adoptive parents. We need the
adequately fund services aimed to help vulnerable children and
their families. We are not adequately doing any of those things
now, in my opinion. I look forward to hearing more about that
technology can meet our responsibility to kids, but ones and
zeros will never replace hearts and minds. As we know in
Seattle, and lots of other American citizens know, the Gulf
Coast is certainly not the only place where a natural disaster
can and will strike. In Seattle we are waiting for the big one,
the big shaker. We had a shaker on the 26th of October 2001. It
was an 8.6, and we know that we will have one. I am looking at
this not as something in other places, but what affects my
area. Mr. Chairman, you also live on the West Coast so you know
about shakers too. I look forward to hearing the testimony of
the witnesses. Thank you.
Chairman HERGER. Thank you, Mr. McDermott. Before we move
on to our testimony today I want to remind our witnesses to
limit their oral statements to 5 minutes. However, without
objection, all the written testimony will be made a part of the
permanent record. We have one panel today, and our witnesses
who are seated at the table. To introduce our first witness,
the gentleman from Texas, Mr. Johnson.
Mr. JOHNSON OF TEXAS. Thank you, Mr. Chairman. I appreciate
that. Diane Rath, Chairwoman of the Texas Workforce Commission
(TWC), we are glad to have you here today. She has overseen
implementation of welfare reforms, and the rolls have decreased
71 percent since 1996. She understands the importance of local
involvement. Most of her budget is in control of the local
workforce boards, who know the needs of their neighbors. In the
wake of Katrina, she has been working to get evacuees from
Louisiana trained and back into the workforce. We have done our
best here in Congress to make sure Texas is able to continue to
offer those services as long as they are necessary. I will tell
you what, her staff reflects the kind of leader a person is,
and I have heard nothing but great things about your staff here
in Washington. Thank you for being here. We are glad to hear
you testify. Thank you, Mr. Chairman, for allowing me to make
the introduction.
Chairman HERGER. You are welcome. Thank you. The gentleman
from Louisiana, Mr. McCrery, to introduce one of our witnesses.
Mr. MCCRERY. Thank you, Mr. Chairman. We are also delighted
to have with us today, Ms. Marketa Gautreau from Baton Rouge,
the Assistant Secretary of Community Services, Louisiana
Department of Social Services. I think, as my colleague from
Washington pointed out, this is a timely hearing based on the
experience we have had on the Gulf Coast with, frankly, having
a lack of technology to assist us in the aftermath. The State
of Louisiana, along with others, had a difficult time, to say
the least, putting back together all of our records, locating
children and so forth. This is in fact a timely hearing.
I think, Ms. Gautreau would join me though in thanking Dr.
McDermott, Chairman Herger, the Congress, not the Republican
Congress, but the Congress, because Democrats and Republicans
worked together to try to get immediate aid in the form of
unemployment compensation, money. Louisiana got about $400
million quickly there to bolster our fund, getting about $220
million for social services. Those kinds of quick responses
that we join together here in the Congress to provide, were, I
think, indispensable to my State, Ms. Gautreau's State, just
really surviving in those first few months following Katrina. I
want to thank Dr. McDermott for going with us down to
Louisiana, and for his efforts to really get into the nitty-
gritty details of what the needs are, and for offering very
constructive suggestions, really, since September 1st, on ways
to help. It is very much appreciated. This Congress, and this
Committee particularly, the staff on both sides of the aisle,
Democrat and Republican, responded admirably to my call for
help and others' calls for help. Ms. Gautreau, welcome, and we
are delighted to have you and looking forward to your
testimony.
Chairman HERGER. I thank the gentleman from Louisiana. We
would also like to welcome Mr. Don Winstead, Deputy Secretary
of the Florida Department of Children and Families (DCF), from
Tallahassee, Florida; Ms. Lisa Henley, Project Director of the
Oklahoma EBT Project for the Oklahoma Department of Human
Services, from Oklahoma City, Oklahoma; and Mr. Dennis Fecci,
Former Chief Information Officer for the New York City Human
Resources Administration, from New York, New York. With that,
the gentleman from Louisiana, to inquire. Excuse me.
[Laughter.]
Ms. Rath to testify, please.
STATEMENT OF DIANE RATH, CHAIR AND COMMISSIONER REPRESENTING
THE PUBLIC, TEXAS WORKFORCE COMMISSION, AUSTIN, TEXAS
Ms. RATH. Thank you. Good afternoon, Mr. Chairman, Members
of the Committee, and thank you for that introduction, Mr.
Johnson. I appreciate it. I am Diane Rath, and I am Chair and
Commissioner of TWC, and we appreciate being invited to share
the experience of Texas in using technology to more efficiently
serve our residents. We no longer have unemployment offices in
Texas. In 1998 we established Tele-Centers that allow Texans to
file unemployment claims and to file for payments online or
over the telephone. We also created a comprehensive online
capability for our unemployment insurance program. Claimants
and employers can complete all their business with TWC online
if they so choose. 90 percent of our users now access our
service without having to go to an office or stand in line.
One of the Commission's most valuable tools is the
Workforce Information System of Texas (TWIST). The TWIST is a
centralized point of intake, case management, service delivery
and reporting for our employment and training programs. In
addition to the advantage of integrated case management, it
eliminates duplication in enrollment. Folks only have to give
us information one time, and it provides real-time access to
information. Any time we need to check enrollment figures for a
particular program, workforce board, or individual, we can do
so without any time lag. The linchpin of our employment
services program is our award-winning WorkInTexas.com, a real-
time website designed to match employers of all sizes and all
industries, at no charge, with qualified job candidates, and we
have separate sections for both employers and job seekers.
WorkInTexas is fully integrated with our TWIST, so that
participants in various employment and training programs are
automatically registered. All unemployment claimants are
required to register and make a minimum of three work searches
per week. Since its debut almost 2 years ago, more than 147,000
employers--that is about one out of three employers in Texas--
have used WorkInTexas.com. More than 415,000 people have found
jobs using WorkInTexas.
Our agency's total capabilities were tested like never
before last fall with Hurricanes Katrina and Rita. No matter
how you plan, nothing can prepare you for nearly a million
people to cross over your State line with no advance notice and
no timeline for returning home. Almost half a million have
remained in Texas. Our resources and manpower have been
challenged, but we have been able to provide employment and
support services to tens of thousands of our neighbors who had
nowhere else to turn, and we were able to do that only because
of our commitment to technology and our ability to adapt. The
TWC immediately stepped forward to spearhead a multi-State
effort to process a massive of Louisiana unemployment claims.
We created a separate toll free number for Louisiana callers
that went into our Texas Unemployment Insurance (UI) Tele-
Centers, and then were either handled by our representatives or
routed to other States that had volunteered to help. Our use of
technology allowed us to reroute those calls to other States in
a way that was seamless. The caller didn't know if they were
speaking to someone from Rhode Island or Washington unless they
picked up on the accents.
The hotline we established received more than 2.6 million
calls, of which Texas employees handled nearly half. We also
helped Louisiana development an Internet application for both
regular and disaster UI, used by their residents or our staff.
To date, Texas has processed nearly 68,000 unemployment claims
for Louisiana. On the workforce side, our local workforce
boards established temporary workforce shelter centers at the
major hurricane shelters. These centers allowed evacuees to
file for unemployment, to receive job counseling, conduct a job
search, prepare a resume, meet with employers, and attend job
fairs on site. Each center had computers available, and we
encouraged job seekers to use WorkInTexas to identify
opportunities for employment. Our local boards also deployed
mobile workforce units, each equipped with computers and
satellite Internet access.
We adapted WorkInTexas to allow Louisiana job seekers to
indicate their evacuee status, and allow employers to indicate
a preference to hire Katrina evacuees. We partnered with the
Louisiana Association of Business and Industry on an initiative
to recruit workers to fill their members' critical labor
shortage. Now we have Louisiana employers and Louisiana job
seekers looking for and finding each other on WorkInTexas.com.
We have also created a separate tracking system for these
Louisiana job matches. Technology has helped us integrate our
various programs and provide a more comprehensive and coherent
approach to helping people find work. Service integration had
kept Texas on a leading edge of workforce service delivery, and
we believe that other States can achieve similar results if
they are willing to abandon their old models and embrace
technology and service integration. More details about our
initiatives are found in the written testimony, and I
appreciate the chance to share our story and look forward to
your questions.
[The prepared statement of Ms. Rath follows:]
Statement of Diane Rath, Chair and Commissioner Representing the
Public, Texas Workforce Commission, Austin, Texas
Chairman Herger, Ranking Member McDermott and members, good
afternoon. My name is Diane Rath, and I am the Chair and Commissioner
Representing the Public for the Texas Workforce Commission. Thank you
for inviting me to share with you how TWC is creatively using
technology to provide high-quality services to Texans.
By way of background, the Texas Workforce Commission celebrated its
10\th\ anniversary last month. Prior to 1995, the state's 28 employment
and training programs were spread across 10 different state agencies,
but then-Governor George W. Bush believed that Texans would be better
served by bringing all the traditional labor programs--payday, UI,
etc.--all employment services--including TANF, Food Stamp, Wagner-
Peyser, and state funded--and child care under a single umbrella. The
Commission was created as that umbrella, and we were additionally
charged with developing a new model for integrated delivery of those
services. We have now block-granted nine of those programs--
representing $800 million of our total budget of $1.1 billion--to our
network of 28 Local Workforce Development Boards.
First of all, we no longer have local unemployment offices in
Texas. In 1998, TWC established ``Tele-Centers'' that allow Texans to
file unemployment claims and request payments over the telephone. In
2002, we also created a comprehensive online capability for our UI
program. Not only can claimants file their claims online, but employers
can also create new tax accounts, file their tax reports, respond to
separation requests, and report unemployment fraud online. Instead of
having to drive across town or to a different county to wait in line at
an unemployment office, claimants and employers can transact their
business with us from their homes or offices.
We have two major initiatives that will make extensive use of
technology to improve our unemployment program. First, we are
transitioning from paper checks to direct deposit and debit cards for
unemployment benefits. The Lone Star Card, Texas' debit card for social
service benefits, has been accepted by the public and reduced both
administrative costs and fraud associated with delivering benefits. We
have also started work towards a complete integration of our
Unemployment Insurance and Employment Services programs.
One of the Texas Workforce Commission's most valuable tools is
TWIST, The Workforce Information System of Texas. TWIST is a
centralized point of intake, case management, service delivery, and
reporting for six of our largest employment and training programs.
Besides the obvious advantage of integrated case management, this
system helps us in three critical ways. First, it eliminates
duplication in enrollment. If someone enrolls in one of our programs
and then wants to enroll in others, they only have to provide us the
information the first time. Second, it creates economies of scale.
Third, it provides us with real-time access to performance data. Any
time we want to check enrollment figures for a particular program,
workforce board, or individual, we can do so without any time lag in
the data.
The linchpin of our Employment Services program is WorkInTexas.com,
a real-time web site designed to match employers of all sizes and
industries with qualified job candidates. We have separate sections for
employer and job seeker resources, and because it is on the Internet,
it is available 24 hours a day, 7 days a week, 365 days a year.
WorkInTexas.com takes a unique approach as a recruitment and
employment resource. The job posting format allows employers to match
on multiple combinations of occupation experience and education, view
detailed comparisons of each job seeker to their job's requirements,
and create customized screening questions to obtain specific
information from interested job seekers. Employers can set up multiple
accounts for different hiring groups within their organization, manage
their account and its users, and manage their job postings. Even
without posting a job, they can test the workforce and training
available in potential new job sites, or perform keyword searches to
find specific skills.
Job seekers can create multiple matching combinations for different
location and pay preferences, use a wizard to create a professional
resume, view detailed comparisons of their qualifications to each job
posting, and email job postings to their friends. Job seekers
interested in career planning can link to a skills-assessment test,
research the suggested occupations and available training, and select
occupations to add to their matching profile in WorkInTexas.com.
WorkInTexas.com is fully integrated with TWIST so that the
participants in our various employment and training programs are
automatically registered for WorkInTexas.com. All unemployment
claimants are required to register with WorkInTexas.com and make a
minimum of three work searches per week.
Since its debut not quite two years ago, more than 147,000
employers--roughly one-third of the state's total--have registered on
WorkInTexas.com. These employers have access to nearly 4.2 million job
seekers. More than 410,000 people have been hired through the site--
about one-third of these people had been receiving unemployment at the
time of their hiring. WorkInTexas.com was selected by Harvard
University's Ash Institute as one of the ``Top 50 Government
Innovations for 2006,'' and took first place for the Government-to-
Business category in the 2004 Digital Government Achievement Awards, a
national award program recognizing outstanding government Web sites and
services.
Our agency's total capabilities were tested last fall like never
before by Hurricanes Katrina and Rita. No matter how many worst-case
scenarios you plan, nothing can prepare you for having nearly a million
people cross over your state line with no advance notice, and no
timetable for returning home. Almost half a million have remained in
Texas. Our resources and manpower were challenged, but we have been
able to provide employment and support services to tens of thousands of
our neighbors who had nowhere else to turn. And we were able to do that
only because of our commitment to technology and our ability to adapt
it to situations for which we could not possibly prepare.
Immediately after the storm, TWC stepped forward to spearhead a
multi-state effort to process the massive number of Louisiana
unemployment claims. We created a separate toll-free number for
Louisiana callers that went into our UI Tele-Centers, and then were
either handled by our Texas claims representatives or routed to other
states that had volunteered to process claims. Our use of Voice Over
Internet Protocol (or VoIP) in the Tele-Centers allowed us to route
those calls to other states in a way that was seamless to the client.
The caller didn't know they were speaking to someone from Rhode Island
or Montana unless they picked up on the accents. The hotline we
established received more than 2.6 million calls, of which Texas Tele-
Center employees handled nearly half. We also helped Louisiana develop
an Internet application for both regular and disaster unemployment that
either their residents could fill out online or that our claims takers
could do in our Tele-Centers. To date, Texas has processed nearly
68,000 unemployment claims for Louisiana.
On the workforce side, our local Workforce Boards established
temporary workforce centers at the major hurricane shelters. These
centers allowed evacuees to file for unemployment, receive career and
professional counseling, conduct a job search, prepare a resume, and
meet with prospective employers. Each of these centers had computers
available, and we encouraged the job seekers to use WorkInTexas.com to
identify opportunities for temporary and permanent employment. We also
established voice mailboxes to which evacuees could call in and receive
personalized job referrals. Our local boards also deployed five mobile
workforce units--each equipped with computers and satellite Internet
access--to assist with overflow at the larger centers and to provide
services in communities with smaller shelter operations. These mobile
units later served as temporary replacements for the Southeast Texas
one-stop centers that were badly damaged by Hurricane Rita.
We adapted WorkInTexas.com to allow Louisiana job seekers to
indicate their evacuee status and to allow employers to indicate a
preference to hire Katrina evacuees. And as the number of Louisiana
residents registered on WorkInTexas.com surpassed 30,000, we partnered
with the Louisiana Association of Business & Industry on an initiative
to recruit workers to fill their members' critical labor shortages. Now
we have Louisiana employers and Louisiana job seekers looking for and
finding each other on WorkInTexas.com. We have also created a separate
tracking system for these Louisiana job matches.
At the Texas Workforce Commission, we have made the cultural shift
and are steadfast believers in the power of technology to improve the
quality of services we deliver Texans. The main lesson from our
experience is that technology must be central to program design.
Technology not only makes programs run more efficiently, but it allows
for easier scalability--you can expand or shrink capacity based on
demand with relatively limited costs. Related to that is the importance
of VoIP. We gave the example for the Katrina calls, but when Hurricane
Rita looked like it was headed for the southern tip of Texas, we had to
make contingency plans to close our McAllen Tele-Center. In the old
days, that would have presented a major disruption to our network, but
with VoIP, we can instantly route the calls to our other five centers
and continue with barely a hitch.
Our agency has switched from a personal-service model (where you
have to go to a person to get help) to a self-service model (where you
can help yourself but also have the option to talk to someone if you
need to). In the unemployment program, employers and job seekers can
complete all their business electronically, if they choose. But if they
want personal service, the staff in our workforce centers is available
to assist them. More than 90 percent of our users are now accessing our
services without having to go to a local office or stand in line. This
maximizes our staff resources and allows us to invest less in bricks,
mortar, and overhead, which, in turn, makes more of our limited
resources available for direct services.
Technology has helped us to integrate our various programs and
provide a more comprehensive and coherent approach to helping people
find work. Service integration has kept Texas on the leading edge of
the workforce service delivery, and we believe that other states can
achieve similar results if they are willing to abandon their old models
and embrace technology and service integration.
The last item I want to share with you is our recent rollout of the
first online version of the Transition Assistance Program, which
provides job-search assistance, employment services, labor market
information and other forms of assistance to separating service members
and their spouses during their transition into civilian life.
Traditionally, this has been offered in the form of 2- to 3-day
seminars, which we operate at 13 sites in conjunction with the U.S.
Department of Defense. But TWC has now taken that material and
developed a six-chapter, self-directed course that any service member
or spouse can access at any time, from any computer, anywhere in the
world. The eTAP program has already become extremely popular with
service members, and is particularly important for the returning
Reserves and National Guard.
I appreciate the chance to share our story with you today, and I
will look forward to answering any questions you might have.
Chairman HERGER. Thank you very much, Ms. Rath, and we
certainly appreciate the job you did in being so helpful during
this tragic time we had. Now, Ms. Gautreau.
STATEMENT OF MARKETA GARNER GAUTREAU, ASSISTANT SECRETARY OF
COMMUNITY SERVICES, LOUISIANA DEPARTMENT OF SOCIAL SERVICES,
BATON ROUGE, LOUISIANA
Ms. GAUTREAU. Thank you, Mr. Chairman, and Members, and
thank you, Texas. I do not know what we would have done without
this. I am Marketa Garner Gautreau, and I am the Assistant
Secretary of the Office of Community Services, which houses the
child welfare system in Louisiana. On behalf of my Governor,
Ms. Blanco, I appreciate the opportunity to be here. I would
like to talk about technology in the context of who we are in
child welfare and what we did before the storm. We have 1,800
employees that investigate about 35,000 allegations of child
abuse and neglect each year. On any given day, I have 5,200 to
5,400 children in foster care, 7,000 in subsidized adoption,
and another 500 in the Young Adult Program, which is the
program of foster children aging out of the system. We had a
budget of $255 million before the storm. 60 percent of that is
title IV-E eligible, which shows the very high penetration rate
that we have.
At the height of the storm, 73 percent of my foster care
population evacuated. 2,000 children had to leave the Greater
Orleans area. Another 500 had to evacuate yet less than a month
later in Rita. The Department of Social Services in Louisiana
is charged with staffing shelters. Our of my 1,800 employees,
600 evaluated in the first hurricane. 900 of them went to work
in shelters for 1 month. 600 stayed for the next 6 weeks. Our
workforce was very, very impacted by the storm. Our highest
priority was finding those 2,000 children, and then, of course,
we had those famous missing children that you heard so much
about in the national media, the thousands of Katrina orphans
supposedly that were floating around somewhere in Louisiana.
Those were the first things that happened.
In technology, I am not a technology expert, but I want to
tell you what didn't work. What didn't work was that I had no
capacity to reach my staff in real time. Cell phones were down.
Land lines were down. Technologies that we had always relied on
were not available to us. There was no accurate real-time data
to track these children where they were and where they were
going and how they were getting there. I needed geo-mapping so
I could track people and find out if they were in Texas or
Washington or Minnesota. We didn't have any of that.
The main technology lessons that we learned from Rita is
that the traditional systems failed. Cell phone towers were
down. Land lines were down. Blackberries worked, but
unfortunately, the Department of Social Services doesn't staff
every single one of our 1,800 child welfare workers with
Blackberries. We needed policies and procedures in place in our
registration sites and shelters that were uniform and
systematic. We used paper registration. Red Cross used a
different form. Different State agencies used different forms,
and so nobody matched and nobody knew where anybody was when we
tried to call a shelter across town to find a child. Those need
to be standardized. That needs to be done by technology and not
by paper. We needed centralized reporting outside of the
affected area, call centers that would not be blown away by the
winds. Finally, we recognize very clearly that paper is no
match for a Category three, and the records, the precious life
books of our foster care children and their case files, and the
court documents that were lost in Katrina will take us forever
to replace and to redocument.
The other issues that we dealt with that the Federal
Government could help us with are very clear to me. First of
all, our Children's Bureau was hampered greatly by the lack of
authority to waive, extend or otherwise adjust Federal
reporting. Under the Child and Family Service Review, we are
evaluated on the major metro area, which became the smallest
metro area in the State, and there was a report due September
1st. If you remember, Katrina struck August 29th. It was a
little difficult for us to try to meet the Federal requirements
of a form to fill out that many days after the storm, and yet
there was no ability for the Bureau to waive that requirement.
Child welfare workers are not deemed emergency responders, and
that hampered us in our work tremendously. We did not have the
same priority for housing, for offices, or for communication
systems that other first responders had, and yet, we were on
the frontline looking for those children, trying desperately to
reunite them with their families. We need a new way for rapid
distribution of supplemental funds. We are extremely grateful
for the 220 million that just came into Louisiana, but it came
7 months after the storm. We needed that money faster than
that. I believe that Congress can help us with that. I believe
that the SSBG is money that is absolutely critical, and title
IV-E money is absolutely critical to the State, and we must
address those issues at this level. Thank you, and I will be
glad to answer questions later.
[The prepared statement of Ms. Gautreau follows:]
Statement of Marketa Gautreau, Assistant Secretary of Community
Services, Louisiana Department Of Social Services, Baton Rouge,
Louisiana
Mr. Chairman and Members of the committee, my name is Marketa
Garner Gautreau and I am the Assistant Secretary of Louisiana's
Department of Social Services (DSS). On behalf of Governor Kathleen
Babineaux Blanco and that state of Louisiana, I thank you for the
opportunity to be here. I am responsible for DSS' Office of Community
Services (OCS) which administers our state's child welfare system. We
investigate allegations of child abuse and neglect, provide prevention
services, place children in foster care and residential services, and
help children achieve permanency as quickly as possible--by
reunification with their birth families, adoption, or placement in
independent living.
OCS handles about 35,000 allegations of abuse and neglect a year
and has roughly 5,400 children in care at any point in time. Under the
best of circumstances, ours is difficult and challenging work. Roughly
1,800 staff care for children who have lived through traumatic
situations. Dealing with displaced and disrupted families is our stock
and trade on a daily basis--the aftermath of Hurricanes Katrina and
Rita forced us to cope with these issues on a much broader and more
urgent scale, but it remained work with which we are intimately
familiar.
I consider myself an advocate for children who has entered public
service to further their interests. I am not an information technology
specialist. But as head of a $250 million state human services agency,
I can easily define what I need from technology as a routine matter. I
need:
The ability to reach my subordinates and field staff (and
for them to reach me) 24/7.
Accurate, real time information about the status of abuse
allegations.
Accurate real time contact information for our children,
their foster parents, birth parents and other caregivers.
Reliable data on our costs.
Historical information about caseload, services, child
outcomes, staffing, and other operational issues.
Geo-based mapping so that we can track the physical
location of our population and analyze the nature of abuse and neglect
by area.
Excellent management reports to allow us to be strategic
as well as tactical in making program and policy decisions.
DSS is the agency responsible (under the state's emergency
management plan) for operating special needs shelters for children, the
elderly and the disabled during natural disasters or other emergencies.
These situations require special communications technology as well as
information systems that can handle evacuee registration and tracking,
rapidly dispense emergency aid and ensure that there are central data
collection and reporting centers so that separated families can make
contact and have a better chance for rapid reunification.
Louisiana's existing technology systems are not adequate to fully
meet our day to day needs or support ``typical emergencies'' (average
storms with shelter needs of a few hours to a few days) let alone the
massive crises created by Katrina and Rita.
On a day-to-day basis we do not yet have a real time case tacking
and management system. While I can generally rely on phones and e-mail
for 24/7 communication with the field, we remain very weak in
management reporting, cost analysis and currently have no geo-based
technology available. In emergencies these weaknesses are magnified.
The most important lessons we have learned about technology from the
Katrina/Rita experience are:
1. Land-lines, traditional cell phones, and e-mail and other web-
based communications, cannot be relied on during a large scale natural
disaster. The only reliable communication we had between the central
office and the field staff in affected areas was through wireless text
messaging using PDA devices. A very small percentage of OCS and DSS
staff have access to such devices as that technology is expensive and
generally considered non-essential for all levels of staff. This
severely hampered our ability to know where staff or clients were or to
respond quickly where staff, materials, or other resources were most
needed.
2. Systematic registration and tracking of evacuees is essential
if families are to be kept together, highest need people appropriately
triaged, and missing persons reunited as quickly as possible. No common
procedure existed between the public special needs shelters and
privately operated regular shelters (e.g., Red Cross, church-based) for
registering evacuees and few lap-top based or other technology was
available to manage this process.
3. Existing legacy systems used for child welfare caseload
management are not sufficiently accurate or timely to be relied upon in
an emergency as a source for contact information and child status.
There can be lag-times of a few days to several weeks in entering new
information about birth parents, child placement, investigation status,
and related contact information. Individual social workers almost
always have timely information about all cases in their care. But the
data may not get entered into our systems as it is difficult and time
consuming to do and there is no reporting capacity from the system that
makes any individual worker's job better. As a consequence, the most
accurate information is sometimes off-line, in the caseworker's
possession. It works reasonably well under normal circumstances. But in
an emergency of the scale of Katrina and Rita--when as many as 600 of
our 1800 staff (and virtually all of the staff in the affected areas)
were themselves missing or out of communication--it makes the ability
to ``find'' our children extremely difficult.
4. Paper record keeping is simply not tenable in this day and age
in weather emergency prone areas. We had whole offices where all of the
case records were totally destroyed. The history of the child's care,
records of legal status, treatment related information, and similar
critical information about a child's history were permanently lost.
To be fully prepared in a new emergency situation, we need wide
spread wireless messaging capability; policies, procedures and systems
support for the management of evacuee populations that is shared
between federal, state and local agencies and among and between public
and private non-profit shelter providers; better core systems so that
we can centrally access accurate, real-time contact and status
information about our clients; and electronic record keeping with back-
up in areas unlikely to be affected by natural disasters.
To prepare for the upcoming hurricane season, our Department is
currently planning to test a product this season in a limited number of
locations that can scan drivers' licenses or ID's and can issue a bar
coded wristband allowing for registration. It has the ability to link
families to a head of household that could be used to match child to
parent should they become separated. The system is web based and all
updates are back to a central database so that all sites have access to
the same information. This kind of registration solution would be most
helpful in tracking people from evacuation points to shelter or other
sites to meet their needs.
The best solution of course would be that all agencies responsible
for shelter registration could use compatible systems so that
information can be shared. Legislation allowing the sharing of
information may be appropriate since privacy issues in the sharing of
data such as shelter registrations, may arise as they did in the post
Katrina event when thousands were missing and being sought by family
members.
An imaging solution is being planned for areas below Interstate 10,
the areas most prone to hurricane damage. This would allow the
Department to reestablish an office virtually anywhere else in the
state and have full access to the case file and proceed with needed
services base on the facts of the case history. This information can be
made available via the web for both front line workers and management.
I'd like to share some of the other issues that have emerged in the
aftermath of Katrina and Rita--particularly as they relate to OCS and
its interaction with the Federal government.
The Federal Administration of Children and Families (ACF)
has been very supportive since the storms but their ability to be
helpful has been constrained by lack of authority to waive, change, or
amend Federal program rules and requirements in emergency situations.
We have been mutually frustrated by the lack of authority to waive
reporting requirements and submission deadlines that result in
financial penalties--or waive the penalties themselves for programs
such as:
ASFA
Title IVE (eligibility documentation requirements)
CFSR Program Improvement Plan
Title IVE Program Improvement Plan
Child and Family State Plan
In lieu of simply being able to waive penalties and requirements,
the Children's Bureau staff worked tirelessly with our state to re-
write the CFSR Program Improvement Plan and are to be commended for
their efforts to lessen the impact of the original plan for the state
of Louisiana.
A second problem involves the timeliness of supplemental
funding for emergency needs of children in custody. Our population has
special housing, clothing, transportation and medical needs. While we
now have supplemental social services block grant funding to cover some
of the extraordinary expenses being incurred post-storms, that funding
took more than seven months to be authorized and received. Certain
other expenses--such as the transportation costs for caseworkers to
visit children in out-of-state settings--have not been deemed storm
related by FEMA and may not be reimbursed. These visits are court-
ordered and generally cannot be done by substitute staff in other
jurisdictions.
Child welfare workers are not deemed ``first responders''
or critical staff under most Federal emergency programs. Consequently,
they have not been high on the priority lists for temporary housing or
other access related resources. The ability to get offices in the
affected areas back up and running has been severely constrained by the
lack of staff housing.
The ability to meet matching requirements for federal
programs has been severely affected by the magnitude of the state's
fiscal crisis. In some cases Federal dollars will have to be forgone
even when they are many multiples of the state match required simply
because of the lack of state general funds.
Based on our experience the past six months, Federal oversight
agencies for child welfare are very constrained in their ability to
waive, except, or otherwise amend reporting, penalties, matching and
other compliance requirements when an extraordinary emergency has
occurred. While we hope America never has to witness a dislocation on
the scale of the New Orleans and Lake Charles devastation again,
responsible leadership demands that we all plan for such circumstances.
That planning needs to recognize that abused and neglected children,
their foster parents and caregivers--and the public agencies
responsible for their care--need special support in times of emergency
in order to avoid further trauma to these children.
I believe the funding issues Congress can address are clear:
Child welfare agencies responsible for the care, custody, and
safety of minor children need immediate response to disasters of this
magnitude. Louisiana did receive supplemental emergency funds through
the Social Services Block Grant--seven months after the disaster. This
was the first and only supplemental child welfare funding received to
date.
The Budget Reconciliation Act resulted in a projected reduction in
Title IVE benefits for LA for an estimated $3.5 million. Reducing our
ability to claim IVE reduces the basic services we are able to provide
children and families in our care.
There are on-going discussions to cap the Title IVE entitlement
program. Title IVE is the only uncapped revenue for the child welfare
population and maintenance and administrative costs increase each year.
Capping that program severely impacts every state's child welfare
agency in their ability to provide the most basic services.
There are also efforts to cut the Social Services Block Grant--
funds that are used entirely for child welfare in Louisiana. I would
like to advocate for the current level of SSBG funding to states remain
unchanged. Recent budget proposals included $7M reduction which for LA
would be almost 30% of total SSBG.
Because our children in foster care are among the most vulnerable
and have complex mental health issues, I also ask that you consider
promoting legislation that would designate a percentage of mental
health/Medicaid funds to child welfare clients. This would help
prioritize the services for these children.
In closing, I would like to ask the committee to consider support
of prevention funding for child welfare. Because of funding
limitations, most child welfare systems focus on response once abuse
and neglect has happened and children are in the state's custody. We
believe that investments in prevention would help stabilize families
before tragedies occur. I strongly support an expansion of funding
opportunities for states to move toward more prevention focused child
welfare system. (However not at the expense of entitlement programs
such as IVE.)
I am happy to answer any questions about the Louisiana experience
and will be happy to work with the committee and its staff as you
address issues of technology and human services administration and
consider special needs for child welfare management in large-scale
emergencies.
Chairman HERGER. Thank you. Don Winstead, Deputy Secretary
of the Florida Department of Children and Families, from
Tallahassee, Florida. Mr. Winstead.
STATEMENT OF DON WINSTEAD, DEPUTY SECRETARY, FLORIDA DEPARTMENT
OF CHILDREN AND FAMILIES, TALLAHASSEE, FLORIDA
Mr. WINSTEAD. Mr. Chairman, Mr. McDermott, Members of the
Committee, I am pleased to be here today to discuss the use of
technology to improve public benefit programs. I am Don
Winstead, Deputy Secretary of the DCF. We are the State agency
in Florida that, among other programs, is responsible for
determining eligibility for benefit programs including
Temporary Assistance for Needy Families (TANF), food stamps,
and Medicaid.
Mr. Chairman, the world of customer service has changed.
When I flew to Washington for this hearing, I traveled on an
electronic ticket purchased online. At the airport I checked
myself in the computer terminal, and printed out my boarding
pass. Although there were a few employees there to assist if I
needed help, I was able to manage the process pretty
efficiently. In Florida, we have been using many of the same
technologies used in airports, retail outlets and other
businesses to improve customer service, while decreasing cost
and improving effectiveness. We call our business model ACCESS
FLORIDA. Let me contrast how ACCESS FLORIDA works compared with
traditional public benefit approaches. As you said, Mr.
Chairman, in the old, traditional public benefit model, people
apply at agency offices. They fill out a lengthy paper
application, spend an inordinate amount of time waiting--
probably in an uncomfortable blue plastic chair--and then go
through an extensive interview and provide additional
information to verify key items.
In Florida, in contrast, families needing help can apply
anywhere, anytime, using ACCESS FLORIDA, our Web application.
Customers enter their own information. While people may apply
from computers anywhere that can access the Web, they also can
go to a wide variety of other sites. In addition to our
offices, the ACCESS FLORIDA program includes over 2,500
community partner sites around the State. Partner sites include
Workforce One-Stops, community centers, health clinics,
hospitals, homeless service centers, domestic violence
shelters, public libraries, faith-based and community-based
organizations, and on and on. My written statement describes
the process, and I have attached some copies of some of our
computer screens to give you a better idea of what the customer
sees. Part of the process is when our eligibility staff review
the Web application. They are assisted by a process the
technology folks call ``data streaming.'' As an old public
assistance worker, I call it ``magic.''
The Web application flows the information at lightning
speed into our legacy computer system, pausing when necessary
for the eligibility worker to make decisions or authorize
benefits. This minimizes duplicate data entry and greatly
improves efficiency. Our agency staff have also constructed a
Web-based document imaging system to better manage information.
statewide implementation is underway and will result in the
electronic storage of 1.25 million records with $4.5 million in
annual savings. Savings have already more than paid for the
equipment necessary and have produced a net gain to the State.
So far, our other results have been remarkable. Since 2002, we
have reduced positions from 7,200 to less than 4,200 today that
are filled, and our target is 4,109 positions by June 30. This
is over a 40-percent reduction in staff; at the same time, our
workload has increased by over 20 percent. We have gone from
about 1.9 million recipients unduplicated in July 2002 to about
2.3 million today. Since inception, ACCESS FLORIDA
implementation has reduced costs to taxpayers over $83 million.
Since we implemented the Web application in 2005, the
acceptance and use by Floridians has been astounding. In
February, 77 percent of our applications for public assistance
were e-signed Web applications. Of the Web applications, over
half came via the Internet rather than the intranet. This means
that over half came through home computers or computers in
partner sites rather than computers in our offices. High
utilization is one measure of acceptance. In addition, we ask
customers to complete a customer satisfaction survey at the
conclusion of the application process. The last page attached
to my written statement gives you a recap of the results.
Importantly, 90 percent of the respondents said they would use
the application again. In conclusion, we say that ACCESS
FLORIDA is supported by technology and powered by partnerships.
DCF staff have transformed customer services in Florida.
Working with thousands of community-based partners, we have
improved access, increased efficiency, reduced costs, and
improved performance. Mr. Chairman, we are far from finished. I
appreciate the opportunity to testify today and provide the
Committee with information about ACCESS FLORIDA, and I would be
happy to respond to any questions.
[The prepared statement of Mr. Winstead follows:]
Statement of Don Winstead, Deputy Secretary, Florida Department of
Children and Families, Tallahassee, Florida
Mr. Chairman, Mr. McDermott, and Members of the Committee, I am
pleased to appear before you to discuss the use of technology to
improve public benefit programs. My name is Don Winstead. I am Deputy
Secretary of the Florida Department of Children and Families (DCF). DCF
is the state agency in Florida responsible for determining eligibility
for public benefit programs including Temporary Assistance for Needy
Families (TANF), Food Stamps and Medicaid.
Mr. Chairman, the world of customer service has changed. When I
flew to Washington for this hearing, I traveled on an electronic
ticket, purchased on-line. When I arrived at the airport, I checked
myself in at a computer terminal and printed out my boarding pass.
Although there were a few employees there to assist if I needed help, I
was able to navigate the process easily and efficiently.
In Florida, we are using many of the same technologies used in
airports, retail outlets and many other businesses to improve customer
service while decreasing cost and improving effectiveness. We call our
business model, ACCESS FLORIDA. Let me contrast how ACCESS FLORIDA
works compared with traditional public benefit approaches.
In the old, traditional public benefit model, people apply at
agency offices. They generally fill out a lengthy paper application,
spend an inordinate amount of time waiting to be interviewed--probably
in an uncomfortable, blue plastic chair--go through an extensive
interview and provide additional information to verify key items. While
the interview might be conducted with the aid of a computer terminal,
the agency employee asks the questions and, based on the application
and the information provided by the customer, goes through the tedious
process of key-entering the information into the legacy computer
system. At the end of the process, the family may be ultimately
approved for benefits and issued an EBT card. We used to call this
``technology''.
Our Focus: Customer Service
In Florida, families needing help can now apply anywhere, anytime
using the ACCESS FLORIDA web application. Customers enter their own
information. While people may apply from any computer that can access
the web, they also can go to a wide variety of other sites. In addition
to our offices, the ACCESS FLORIDA program includes over 2,500
community partner sites around the state. Partner sites include
Workforce One-Stops, community centers, health clinics, hospitals,
homeless service centers, domestic violence shelters, public libraries,
faith-based and community-based organizations, and so on.
At a community partner site, applicants can access a computer to
apply or check on the status of a previous application, drop off or fax
verification information to us, access a help-line telephone or get
assistance in using the technology.
Customers can also visit agency offices but they won't find the
same process they did a few years ago. Today our lobbies have self-
service computer terminals, greeters and helpers to answer questions or
assist in the process, telephones to access help-lines and printers so
that applicants can print out copies of information they have
submitted. Plastic chairs are being replaced by upholstery and seating
areas have been redesigned to reflect a more professional environment.
To improve customer service, call center agents are available by
toll free number. We have three customer call centers, in Jacksonville,
Tampa and Miami with over 500 employees to assist customers. In
addition we have developed telephone and web based automated response
units, so that people can find out key information about the status of
their application or review without needing to talk to a live agent.
When customers enter information into the web application, the
information is reviewed by eligibility staff. In some cases, people
still will need to come into an office for a face-to-face interview and
in other situations, needed information can be obtained by telephone,
fax or mail. Full interviews are required in complex or error-prone
situations. These cases are called ``red track'' and require more
detailed review. Simpler and less error-prone situations are designated
``green track'' and simplified or abbreviated processes can be used. Of
course, if the applicant is applying for temporary cash assistance and
is required to participate in work activities, he or she will have to
go into one of our Workforce One-Stop centers.
When our eligibility staff review the web application, they are
assisted by an automated process the technology folks call ``data
streaming.'' As an old public assistance worker, I call it ``magic.''
The web application flows the information at lightning speed into our
legacy computer system, pausing when necessary for the eligibility
worker to make decisions or authorize benefits. This process minimizes
duplicate data entry and greatly contributes to the efficiency of the
process. Soon customers will also be able to report a change in their
circumstances via the internet.
Solutions: Staff-Driven Initiatives
Another important part of the process is document imaging. Our
agency staff have constructed a web-based document management system to
which commercially available scanning devices can connect. These
devices permit documents to be digitized and indexed so that the
information is available to eligibility staff using our secure network
anywhere in the state. There are no imaging software costs associated
with the scanning since the software application was developed by
agency employees in our Tampa Bay region.
The Tampa Bay region designed, created, and implemented this
comprehensive electronic filing system for the storage and retrieval of
the region's 190,000 public assistance case files. After trial and
error with different models, the scanning equipment vendor secured a
new machine (Ricoh IS760D) that had not previously been available in
the United States. The first machine released in the U. S. was shipped
directly from the manufacturer so the Tampa Bay region could use it for
this project. The scanner performs high speed tray-fed images of
approximately 100 pages per minute. This enterprise solution, along
with the software written by agency staff, has been implemented region-
wide and is currently being adopted statewide. This system improves
security and accessibility to case information yet eliminates costs
associated with the creation, maintenance, location and retrieval of
paper case files. In the pilot region, this technology saved $270,000
in the first year and is projected to save $930,000 over the next three
years. Statewide implementation will result in the electronic storage
of approximately 1.25 million records and nearly $4.5 million in annual
savings. Savings more than paid for the equipment necessary for
implementation, resulting in a net gain to the State.
Recent and planned refinements to our technology include use of
``screen scraper'' technology in our call centers so that key
information from multiple computer screens is collected in one place so
that call center agents can see the most relevant data for a family
without needing to scroll through multiple computer screens. This
speeds customer response and reduces call wait time. We are working on
additional innovations, such as speech interactive capability to make
more information and services available by telephone and through the
web.
Results So Far: Remarkable
So far, the results have been remarkable. In 2002, we had slightly
over 7,200 positions in our Economic Self-Sufficiency program. Right
now, we have about 4,173 filled positions with a target of 4,109 by
June 30, 2006. This means we will have over a 40 percent reduction in
staff over this period of time. At the same time, our workload has
increased over 20 percent. We had about 1.9 million public assistance
clients in July 2002. Now we have about 2.3 million. Since inception,
we have reduced costs to taxpayers over $83 million.
While the TANF caseload has continued to decline, the food stamp
and Medicaid caseloads have continued to increase. Like in the TANF
program, the majority of the adults in these families are employed and
are receiving benefits or health coverage to supplement their earnings.
Those who are not employed or elderly are most likely to be disabled. A
key benefit of our model is that it is consistent with program goals
that emphasize work.
Since we implemented the web application in mid 2005, the
acceptance and use by Floridians has been astounding. In February, 77%
of our applications for public assistance were e-signed, web
applications. Of the web applications, over half came via the internet
rather than the intranet. This means that over half came through home
computers or computers in partner sites rather than from our offices.
High utilization is one measure of acceptance. In addition, we ask
customers to complete a customer satisfaction survey at the conclusion
of the application process. In February 2006, 73 percent of respondents
said they were able to complete the application without help. 57
percent said it took less than thirty minutes to complete the
application with only 14% saying it took over an hour. 52 percent found
the process easy and 87 percent rated the experience either easy or
fairly easy. Importantly, 90 percent told us they would use the web
application again.
We say that ACCESS FLORIDA is supported by technology and powered
by partnerships. Working with our thousands of community-based partners
we have improved access, increased efficiency, reduced costs and
improved performance. And Mr. Chairman, we are far from finished.
Background: How We Got Here
Important to the development of the model was the direction of the
Florida Legislature. The 2003 General Appropriations Act included
proviso language requiring the department to develop a plan to
outsource public assistance eligibility functions or to develop
alternative service delivery and administrative approaches to achieve
greater efficiency in these functions. Ultimately, in 2004, a detailed
business case was developed showing an outsourced option and an in-
sourced option. The in-sourced option included development of community
partnerships while retaining core eligibility functions being performed
by agency employees.
Governor Bush examined the alternatives and on January 12, 2005
decided that Florida would pursue the in-sourced option.
The other important factor in the development of ACCESS FLORIDA,
was the hurricane season of 2004. That summer, visitors to Florida
included Charley, Frances, Ivan and Jean, in rapid succession. To serve
the affected citizens in our state, Florida had to implement a Disaster
Food Stamp Program of unprecedented volume. The ``Food for Florida''
program was begun, but we were rapidly overwhelmed by applications. We
quickly had tens of thousands of paper applications, far beyond our
capacity to process. We needed an automated solution, and we needed it
fast. Over the course of 72 hours, agency staff developed a prototype
web application. We took paper applications at sites in affected
counties and shipped them to back room processing centers outside the
disaster areas where staff fed the information into the web application
for processing.
Two things emerged from this experience. First, the Food for
Florida program provided desperately needed help to over 2 million
Floridians. Secondly, the agency staff came out of the experience
feeling like they could do just about anything. Since then, history has
proved them right.
The hurricane season of 2005 gave us more opportunity for learning.
We used streamlined procedures from 2004 when Hurricane Dennis slammed
into the Florida panhandle last July. We added functions to our web
applications to provide simplified access to special food stamp, TANF
and Medicaid benefits for Katrina evacuees from Alabama, Mississippi
and Louisiana. Finally, Hurricane Wilma brought devastating power
outages and damage to some of the most populated areas of our state.
Again, our Food for Florida program was able to help about 3 million
Floridians in addition to our guests from other Gulf states.
Future Developments
During this past year, we have focused on reengineering two of our
three major business processes: applications and reported changes.
During the coming year, we plan to reengineer the third process,
complete redeterminations. We will continue to move towards a system
where customers will manage their accounts on-line. This will be
accomplished through a web-based system which has conversational
functionality with our legacy system.
We will be continuing to improve our processes in anticipation of
the 2006 Hurricane season. We are looking at new ways to pre-register
applicants to reduce the large crowds at disaster sites. We are
examining use of point of sale devices to speed issuance of benefits
and also to provide access to Florida's drivers' license database to
improve verification of identity. As in the past, we plan to move the
disaster-related innovations into the mainstream program. Using data
matches to automate verification of identity and citizenship and using
card swipe technology to access case files are part of this plan.
To help illustrate how ACCESS FLORIDA works, I have attached copies
of several computer screens to this testimony. Below is a list of
attachments. A brief explanatory comment is shown at the top of each
page. These selected screens do not, however, tell the full story. I
invite any Member of the Committee to browse through the information on
our web site to see the system for yourself. The easiest way to access
the information is to go to the state's web portal, www.myflorida.com.
Select the tab, ``Find an Agency'' and click your way to the Department
of Children and Families home page and from there to the ACCESS FLORIDA
link. You can see the web application, get further information about
partner sites, and find our offices by county or zip code.
While at our web site, I would invite you to also check out our
``Performance Dashboard''. You, along with every citizen of Florida,
can monitor our performance on a variety of measures. You can check how
we're doing with application processing standards and dozens of other
metrics. Our goal is to measure key performance indicators and, not
only make ourselves accountable for results, but be entirely
transparent in the process.
Supported by technology and powered by community partnerships, our
staff has transformed customer services in Florida. Mr. Chairman, I
appreciate the opportunity to testify today and provide the Committee
with information about ACCESS FLORIDA. I would be happy to respond to
any questions.
______
Attachments
Attachment #1--Welcome Screen (page 6).
Attachment #2--Start Screen (page 7).
Attachment #3--Benefit Information (page 8).
Attachment #4--Household List (page 9).
Attachment #5--Common Application Form and Eligibility Survey (page
10).
Attachment #6--ACCESS Online Survey (page 11).
Attachment #7--Survey Results (page 12).
Attachment #1--Welcome Screen
This welcome screen permits the customer to select a language and
provides introductory information.
[GRAPHIC] [TIFF OMITTED] T0442A.001
Attachment #2--Start Screen
This screen starts the application process. Note that both
screen-level and item-level help are available.
[GRAPHIC] [TIFF OMITTED] T0442A.002
Attachment #3--Benefit Information
This screen permits the applicant to designate for whom he
or she is applying and the benefits applied for. Some
combinations of choices will activate additional drop-down
options.
[GRAPHIC] [TIFF OMITTED] T0442A.003
Attachment #4--Household List
This screen shows an example of screen with customer-
entered information. The tabs across the top show progress in
the application process. By clicking on the ``Save and Quit''
button, the applicant can return later to finish the
application
[GRAPHIC] [TIFF OMITTED] T0442A.004
Attachment #5--Common Application Form
Information from the web screens is placed on the common
application form. The applicant can review all the information
submitted and can print out a copy for her records.
[GRAPHIC] [TIFF OMITTED] T0442A.005
Attachment #6--ACCESS Online Survey
This screen provides customer feedback on the web
application process.
[GRAPHIC] [TIFF OMITTED] T0442A.006
Attachment #7--Survey Results
These graphs summarize key data from the customer survey
for February 2006
[GRAPHIC] [TIFF OMITTED] T0442A.007
Chairman HERGER. Thank you. Ms. Henley to testify.
STATEMENT OF LISA HENLEY, PROJECT DIRECTOR, OKLAHOMA EBT
PROJECT, OKLAHOMA DEPARTMENT OF HUMAN SERVICES, OKLAHOMA CITY,
OKLAHOMA
Ms. HENLEY. Thank you, Mr. Chairman and Members, for having
Oklahoma in today to talk to you about our electronic benefit
services for child care. The Oklahoma Department of Human
Services began implementing an Electronic Benefit Transfer
(EBT) child care system in fiscal year 2000. The factors that
led to our decision to put child care on an EBT card were
simple. We needed to reduce overpayments, whether those were
done inadvertently because of the cumbersome paper process or
were intentional overpayments by providers claiming for
services that had not been rendered. We wanted to improve the
quality of child care received by eliminating and reducing the
paperwork required by providers to complete each month. We
wanted to ensure that all participants in the system were
accountable, including our staff, the providers, and our
clients. We wanted to improve cash flow for our providers. In
the current paper system, providers were paid on a monthly
basis. We needed to get parents involved in child care. They
needed to get into the centers and homes and see what was going
on with their child care providers and their children. We
wanted to reduce administrative costs.
Did we accomplish these goals? Our system has been in
effect now for 3 years and operates like a dream. Overpayments
have been reduced by 10 percent. In Oklahoma, that is a $10
million saving. Those savings have been put back into the
quality program, which affects all of Oklahoma's kids.
Everybody benefits. Providers no longer complete paper claims
unless they have been granted an exception. We have
approximately 47,000 kids in the program. We do fewer than 50
claims per month. Our staff have 2 working days to either
approve or deny services, and we actually accomplish that in
Oklahoma in 1.4 days. Parents are responsible for payment to
providers for services if they fail to swipe their cards. Child
care benefits are linked to their food stamp and TANF cards,
which ensures or we hope ensures that parents will not be
leaving their cards at a provider's location. Providers know
that the first swipe of every day if the child is approved for
services, the co-pay amount that is to be paid by the parent,
and the part-time and full-time rates that the provider will be
paid for rendering those services.
Providers are paid weekly now, 2 weeks in arrears, all via
direct deposit. There are no paper checks given. Liquidated
damages are applied to any providers who are found in receipt
of a card. The parents must swipe in accordance with the child
care facility's requirements. They must at the very least
conduct swipes once every 10 days. We have eliminated eight
staff, and we no longer mail monthly claim forms or warrants.
The child care EBT system by itself has not produced
significant savings. It has been in association with the
agency's policy changes that we have really seen some cost
savings. The two together are a strong and powerful tool for
reducing costs and putting those funds back in to improved
quality child care. Thank you.
[The prepared statement of Ms. Henley follows:]
Statement of Lisa Henley, Project Director of the Oklahoma EBT Project,
Oklahoma Department of Human Services, Oklahoma City, Oklahoma
OKDHS Electronic Benefits and Child Care Subsidy Fact Sheet--State
Fiscal Year 2005
The Program
The Child Care Subsidy pays for part or all of childcare costs
while parents or caretakers work, job search, attend school or receive
training. Childcare services may also be provided as part of a
protective service plan to prevent abuse, neglect or exploitation. The
subsidy is paid directly to the childcare provider on the family's
behalf. The family may have a co-payment for the childcare based on
their income, the number of family members and the number of family
members needing services.
Vendors and Rates
The OKDHS Rates Schedule (OKDHS Appendix C-4), available at http://
www.policy.okdhs.org/home/, presents the payment tables listed with a
variety of determining factors. Payment is scaled and tiered based on
the age of the child, the county in which the vendor is located
(standard and metropolitan market rates), the care setting (center or
home), the quality of the provider and the type of authorization.
Authorization type, such as part-time care, full-time care or special
needs care is determined during the eligibility process.
All childcare providers in the state of Oklahoma must meet the
requirements to be licensed through the OKDHS Division of Child Care.
Licensed providers are then able to request that Family Support
Services Division execute a contract that allows their facility to
receive payment for eligible clients through the subsidy program.
Approximately 70 new contracts were opened each month and
79 were closed
5,103 contracts were in effect for some part of the
fiscal year
Child Care Quality--``Reaching for the Stars
Oklahoma was the first state to successfully implement a tiered
reimbursement program that helps childcare providers succeed and
improve childcare quality. Called Reaching for the Stars, licensed
childcare programs that meet quality criteria receive a higher Star
rating and higher reimbursement rates for child care services.
At the end of fiscal year 2005 nearly 94 percent of
children supported by OKDHS Child Care Subsidy in childcare centers
were in facilities rated higher quality as determined by independent
raters.
Eligibility System
Prospective clients obtain an application for services from the
county Human Services Center (there is at least one HSC in all Oklahoma
counties), a childcare provider or online through www.okdhs.org/
childcare. OKDHS Social Workers make an eligibility decision based on
both need for services and financial status. The commitment is that an
eligibility determination will be made within two working days of the
receipt of a complete application packet, which consists of the
application with accompanying verification documents. In SFY 2005 this
timeliness goal was achieved on 88.5 percent of application approvals.
Services are delivered by issuing an authorization that approves a
specific child to attend a specific vendor for a number of days per
month that is determined by service need. This authorization for care
is processed in a statewide, real time and online system through the
OKDHS Wide Area Network and an Electronic Benefits Transfer (EBT)
application. Delivered care is recorded with magnetic cards produced by
the HSC and Point of Sale (POS) devices that are present at each vendor
location. This data is processed for a direct deposit payment on a
weekly basis.
Clients took an average of 9.1 days to complete the
application packet, the eligibility decision was returned in an average
of 1.4 working days
Social Workers process an average of 5,160 approved
authorizations per month
Administration
At the administrative level seven OKDHS divisions directly support
operational aspects of the program. These divisions and their primary
role are:
Family Support Services Division Eligibility Policy, Provider
Contracting
Division of Child Care Provider Licensing and Quality
Finance Division EBT and Payment Processing
Field Operations Division Eligibility Determination
Office of Inspector General Auditing and Program Integrity
Data Services Division Systems and Application Support
Administrative or state-office level staff assigned full
time to subsidy functions number approximately 20
There are approximately 2,032 staff statewide devoted to
eligibility determination and case management (these staff also perform
the same function for a number of other programs including Food Stamps,
Medicaid and Temporary Assistance for Needy Families)
Electronic Benefit Services (EBT) Child Care
The EBT System in Oklahoma
The Oklahoma Department of Human Services began implementing
Electronic Benefits for Child Care in 2000. Factors leading to our
decision include--
Reducing overpayments.
Improving the quality of care received by eliminating/
reducing the paperwork required by providers.
Insuring OKDHS staff, providers and clients were
accountable for the services provided.
Improving cash flow for providers. Providers were paid
monthly.
Getting parents involved in their children's child care
needs and environment.
Reducing administrative costs.
Did we accomplish these goals?
Overpayments have been reduced by approx. 10%.
Providers no longer complete paper claims unless they
have been granted an exception (OKDHS pays fewer than 50 paper claims
for exceptions per month).
OKDHS staff have two (2) working days to either approve
or deny eligibility.
Parents are responsible for payment to providers if they
fail to swipe when services are received.
Child Care benefits are linked to the same card as Food
Stamps and TANF making it less likely that parents will leave cards at
a provider's facility.
Providers know with the first swipe of each day if the
child is approved for services, the copay amount to be paid by the
parent and the part-time and full-time rates OKDHS will pay for that
child.
Providers are paid weekly, two weeks in arrears.
Liquidated damages are charged to any provider found in
receipt of a card.
Parents must swipe in accordance with the Child Care
facility requirements but must at least conduct swipes once every ten
days.
OKDHS has eliminated 8 FTE and no longer mails monthly
claims forms or warrants.
Brief Overview of the System
Swipes can be conducted daily or within 10 days of the service or
any combination thereof. Child Care facilities decide how swipes will
be conducted with their facility. Parents can check in/out up to ten
(10) children in a single swipe transaction. All members of a family
are assigned ``person numbers'' and parents can conduct swipes for any
combinations depending on which kids are in care on any given day. An
example is listed below:
Case #123456 has 3 children
Swipe Card
Enter PIN number
Select choice on key pad of check in/out
Enter child number
Enter child number if applicable
Enter child number if applicable
Hit enter again which informs POS that parent has no more
child numbers to enter
System returns approved or denied message and prints info
for each child checked in/out
Providers can run daily exceptions reports that inform them of kids
that are checked in but have not checked out. Detail weekly payment
reports are printed on the POS terminal for providers with fewer than
20 kids. Providers with more than 20 children receive a ``summary''
report with detail provided by the OKDHS Provider website.
Broadcast messages can be sent to individual providers, providers
in a specific county or to all providers statewide. Caseworkers can
also send individual messages to specific parents, which is printed
when they swipe in.
All swipes, whether approved or denied, can be seen by OKDHS staff.
OKDHS staff can also determine how many subsidy kids are in care, at
any given time, insuring Licensing requirements are being met.
An Average Month
Pre-Statewide Implementation
Contracted Vendors 4,805 (Childcare Centers and Family
Childcare Homes)
Children Receiving Services 46,870
Pay for Services $11,673,304
Services are delivered in all 77 of Oklahoma's counties
$249.06 average per child
Recipient families are responsible for approximately
$1.58 million in co-pays
There are approximately 27,570 recipient families
Post-Statewide Implementation
Contracted Vendors 4,348 (Childcare Centers and Family
Childcare Homes))
Children Receiving Services 47,294
Pay for Services $10,615,827
Services are delivered in all 77 of Oklahoma's counties
$224.46 average per child
Recipient families are responsible for approximately
$1.59 million in co-pays
There are approximately 27,300 recipient families
EBT and Policy
Electronic Benefit systems by themselves do not affect significant
cost savings. Cost savings are based on the policies implemented, in
conjunction with EBT, by the States. OKDHS initially built the EBT
system based on current policy and procedures and the system failed.
The success of the system is attributed to a favorable political
environment, the backing of leadership, improvements in county
operations and our commitment to a successful system. Policy changes
include:
Two working days to approve or deny application
No payment for failure to swipe unless a medical
emergency prevents swiping
Liquidated damages applied to any provider found in
receipt of a card
Cancellation of subsidy contract after three possessions
Parent's must enter Child Care facility at least once
every ten days
Creation of new rates to facilitate swipe process
System Costs
The monthly Cost Per Case Month (CPCM) is $5.24 and includes:
Call Center Operations--located in Sandy City, Utah
Transaction Processing--Time and Attendance tracking
Settlement to providers
Reconciliation
Card stock
Embosser installation and maintenance
POS installation and maintenance
Training
The average CPCM paid to the Contractor for above services is
$247,993.48
Original Contract Award (one-time funding)--$5.2m
Design $378,067.11
POS Terminals $3,600,000.00
Training $1,221,932.89
The Department spent an additional $793,174.50 on enhancements
during the life of the contract.
Chairman HERGER. Thank you. Mr. Fecci to testify.
STATEMENT OF DENNIS FECCI, FORMER CHIEF INFORMATION OFFICER,
NEW YORK CITY HUMAN RESOURCES ADMINISTRATION, NEW YORK, NEW
YORK
Mr. FECCI. Mr. Chairman, Members of the Committee, my name
is Dennis Fecci. I am former Deputy Commissioner and Chief
Information Officer for New York City Human Resources
Administration. I am here to talk to you today a little bit
about external data matching for caseload integrity. Experience
has shown us that many applicants and recipients supply
information that is not accurate or current. By current, I mean
that at the time of eligibility determination, the information
was accurate, but changes in circumstances were not reported at
all or not reported on a timely basis. A recent study in
Indiana revealed that over 25 percent of the Medicaid
recipients in long-term care had assets that were unknown to
the State. We have seen that many States do not aggressively
seek to externally verify information that is submitted by
applicants and recipients. They depend on information supplied
by the applicant or recipient and the documentation that they
provide. We have also seen in New York and now in Indiana that
it is possible to do a series of simple data matches to
identify and correct critical information about the applicants
and recipients. This results either in termination of the
benefits or rebudgeting the case to the correct benefit levels.
The process is very simple. The State eligibility database
is matched against external databases using demographic keys.
When a discrepancy is discovered, a letter is sent to the
recipient requesting them to call in to discuss the
discrepancy. They have 10 days to respond. If they do not
respond within that 10-day period, another letter is sent to
them stating the State's intent to close that cases. If there
is no response within 10 days, the case is closed. If the
client verifies the match, they are asked to submit
documentation. When the documentation is received, the case is
rebudgeted, and the rebudgeting could result in a reduction in
benefits of closing of the case. Indiana has embarked on a
program to utilize as much information technology as possible
to assure that only truly eligible persons receive benefits.
Starting on February 9, 2006, Indiana modified some data
matches, sent over 20,000 discrepancy letters to recipients,
and so far we expect that in about 36.5 percent of these cases
there will be a reduction of benefits or a temporary or
permanent termination of benefits. Indiana plans to pursue
about 35 different matches, which I have listed in the written
testimony. We found both in New York and in Indiana that
obtaining access to the external data can be very difficult and
time-consuming. Many organizations do not understand the legal
privacy and confidentiality regulations and, therefore, are
hesitant to share the information. We found that it takes many
times longer to get the access to the information and the
technical issues of actually programming the match and
operationalizing the match. Thank you very much. I will be
pleased to answer questions.
[The prepared statement of Mr. Fecci follows:]
Statement of Dennis Fecci, Former Chief Information Officer, New York
City Human Resources Administration, New York, New York
External Data Matching for Caseload Integrity
Experience has shown us that many applicants and
recipients supply information that is not accurate or current. For
example, a recent study in Indiana revealed that over 25% of Medicaid
recipients in long term care had assets that were unknown to the state.
Many states do not aggressively seek to externally verify
information submitted by applicants and recipients.
It is possible, using simple data matches, to identify
and correct critical information that states have about applicants and
recipients either terminating the ineligible or rebudgeting the case to
the correct benefit grant levels.
Typical data matches seek: undisclosed assets; new
employment; private medical benefits; actual addresses/living
arrangements; etc.
Indiana is embarking on a program to utilize information
technology to assure that only truly eligible persons receive benefits.
Starting on February 9, 2006 Indiana modified an existing
data match alert relating to new employment of recipients and has sent
over 20,000 information discrepancy letters to those recipients. In
approximately 36.5% of these cases, this process has (will) resulted
in:
Reduction of benefits
Temporary termination of benefits
Permanent termination of benefits
Indiana Plans to pursue the following external Data
Matches:
Bank Match
Bureau of Motor Vehicles Match
Casino Winnings Match
Child Care Employment Match
County Employment Match
Credit Bureau Match
Home Attendant employment Match
Hoosier Lottery Match
Identity Unduplication Match
Inheritance Match
Insurance Award Match
Medicare Eligible 65+ Match
National Fleeing Felon Match
National New hire Match
Neighboring States Public Benefits Match
Outstanding Warrants Match
Personal Injury Awards Match
Professional License Match
Property Tax Match
PARIS Match
Quarterly Wage Reporting Match
Racing Winnings Match
SSA 40 Quarters CITIZENS Match
School Address/Guardian Match
Securities Match
Section 8/Public Housing Match
State Payroll/Pension Match
SAVE Match
TPHI Match
UIB Match
Utilities Match
VNS Employment Match
Vital Statistics Match
Worker's Comp. Match
24-Month Continuing Eligibility Match
Obtaining access to external data can be difficult and
time consuming. States need assistance to promote this exchange of
data.
Chairman HERGER. Thank you. I want to thank each of you for
your testimony and particularly for traveling to be with us
here today. It seems that a key advantage of increased use of
technology involves disaster preparedness, which is obviously
something that Texas, Louisiana, and Florida have experienced
firsthand. Would each of you please briefly address how the use
of automation can help speed services and assistance to people
when disaster strikes and comment on what we have learned from
Katrina to help better prepare for future disasters?
Ms. RATH. Mr. Chairman, I think it was important that the
technology has to be very closely tied and an integrated part
of the program service delivery. From our perspective, the most
important aspect of it was the scalability. You can immediately
increase your capacity and your capability for delivering
services without being limited by your personnel, your
location, or your offices. If you have that scalability, then
you are able to respond to a sister State's needs. We had our
own Rita. We had 65,000 unemployment claims come in in 2 weeks,
to immediately process those, not by the offices in the area,
but we had centers in El Paso responding to that need.
Technology allows us to do that very seamlessly and without the
customer being aware of it.
Chairman HERGER. Thank you.
Ms. GAUTREAU. In Louisiana, we issued 500 million emergency
food stamp applications in a very short period of time, and I
know that the technology there to do that was critical for our
State's success in being able to handle that incredible volume.
The technology failure, however, in the registration of people
coming into shelters I think was one of the most glaring errors
that really we saw so clearly with Texas because we were
working with them multiple times during every day, trying to
understand who was coming into their shelters. What we saw
happen in the evacuation was, as the waters rose, children were
taken from rooftops, from dangerous situations, and flown to
Baton Rouge where we had an emergency children's shelter. The
helicopters that came back then took the parents to Texas.
There was no way that we had any electronic means to register
either those children or those parents at those shelters. If we
had had some kind of common data system that we could have used
for registration, then we would have been certainly better
equipped in our reunification process. We are looking at maybe
electronic bracelets. We have a new Permat system that we plan
to hopefully not have to test in 56 days, but as the new season
approaches, we are looking at more technology at the
registration sites in those shelters, and we hope that that
will give us an edge against that kind of destruction and
separation.
Chairman HERGER. Thank you.
Mr. WINSTEAD. Mr. Chairman, the hurricane season of 2004
was one of the important events that really led to the
development of our Web application. Among the visitors to
Florida in 2004 were Charley, Frances, Ivan, and Jeanne, and we
were frankly devastated by that. In the Disaster Food Stamp
Program, we were faced with having tens of thousands, if not
hundreds of thousands of applications that we could not
process. In a 72-hour period, our agency staff developed the
prototype Web application that became the start of our ACCESS
FLORIDA Web application. Ultimately, we served 2 million
Floridians in the Disaster Food Stamp Program in 2004. Then in
2005, with Hurricane Dennis that hit the Panhandle and then
Hurricane Wilma that hit some of the most populated areas of
Florida, we served an additional 3 million Floridians in 2005,
and there we were able to apply those lessons. We took paper
applications, but we drop-ship them to processing centers where
we scan them in and then stream the data to our Web application
for processing, and then issue benefits by EBT card.
We are planning new things in anticipation of the hurricane
season of 2006. We have enhancements to our Web application,
looking at ways to do more issuance of EBT cards on sites,
looking at point of sale terminals for card swipe technology,
integrated with the Florida driver's license database. All of
our driver's licenses now have magnetic strips on them, so we
are working on technology so you can swipe your driver's
license to verify your identity, swipe your EBT card to
validate your benefits there. We can associate the EBT card
number, the case number, and the driver's license number so
that we can make sure we have got the right person and speed
the application of benefits. We are also looking at some
additional mobile technology, including satellite technology,
to try to be ready to rapidly respond to the needs of people
this hurricane season.
Chairman HERGER. Thank you. Mr. Fecci, do you have any
post-9/11 New York thoughts?
Mr. FECCI. Yes, I do. I was very heavily involved in the
recovery after 9/11 in the city. We were able to rebuild
facilities that were heavily damaged very quickly and convert
our systems over to the issuance of emergency benefits. One of
the chief lessons I learned from that was that we were able to
do that because we were able to suspend the very complex and
time-consuming procurement regulations, and I would suggest
that many States should have emergency contingency type
contracts that would only be exercised in a time of emergency
to get us the goods and services that we need to rebuild very
quickly.
Chairman HERGER. Thank you. Ms. Henley, do you have any
comments?
Ms. HENLEY. Well, as it relates to disasters? No, sir. I
think that there are--one of the things that I would like to
see with technology, especially with EBT and child care, is
incentives offered. It would be a real shame to have saved the
$10 million plus that we have saved in Oklahoma and pour it
back into quality child care, just to have that taken back out,
because all of our kids are benefiting now, so incentives would
be a great opportunity.
Chairman HERGER. Thank you. The gentleman from Washington,
Mr. McDermott, to inquire.
Mr. MCDERMOTT. Thank you, Mr. Chairman. When I went to
Louisiana, the trip was scheduled to see a lot of oil fields,
and I sort of skipped all that and went to see foster kids and
hospitals and the kinds of social services things. I would like
to ask you a couple questions about that. There is a budget
laying on the desk here in the Senate--or in the House right
now that cuts 30 percent out of the SSBG. In light of that,
talk about what the disaster did to your planning for
technology and also your ability to give mental health
services, because nobody here has said a single thing about
what happens to human beings emotionally in this, which we all
know creates more turmoil, which creates more child abuse,
which creates more foster kids. It is a system that is feeding
itself, and unless you arrest that, the mental health issue has
got to be there someplace in it. Talk about a 30-percent cut
and where you are in putting your system back online since you
have had a whole 7 months to get it back all together, right?
Ms. GAUTREAU. Yes, thank you, Dr. McDermott. We were in the
process of doing an integrated case management system across
the Department of Social Services called ``No Wrong Door'' that
actually would have several of the ingredients that my
colleagues here have talked about today. That project was put
on hold in the financial constraints that hit Louisiana
immediately after the storm. We are now going to have to--I
believe the word is ``hold'' or ``freeze'' that contract. we
are finishing up the first phase of it so that we will have a
product to deliver, but it will not put us in statewide
Automated Child Welfare Information System (SACWIS) compliance,
which is the Federal standard for child welfare systems and our
technology. The original product would have done that. It will
not do that now, and that is due to our budget cuts. The cuts
to the social services block grants mean an awful lot to a
State that is already in fiscal constraints. Our use of those
funds really does allow us to enhance our mental health
services. Our Department of Health and Hospitals, which houses
our mental health, can only meet the needs of about 14 percent
of the population, of the identified need that we know we have.
That was pre-storm. We have always used our money and the child
welfare system to augment those mental health services.
The children that come into the foster care system are
already, by virtue of coming into the system, children that
have been traumatized by abuse and neglect, and so their mental
health needs certainly exceed those of most ordinary children.
We have staff as well as foster families and foster children
whose mental health is very fragile. The radio station that you
referenced, counting down the days to the storm, I don't think
there is an Louisianian anywhere in this Nation that does not
realize that hurricane seasons starts June 1st. People are
frightened. They are fragile. They are worried. We are seeing
an incredible increase in post-traumatic stress. We are seeing
children that were adjusting well in other States getting
frantic. We are seeing our incidence of child abuse in the
resettled part of New Orleans going up exponentially. We took
13 children into care in 1 month in a city that has less than
half of the population that it had before. We are just seeing
the exponential repercussions of not addressing the mental
health services of this population--not just the foster care
population, but our staff and our regular citizenry. The
technology that we need to move forward as SSBG, if that cut
goes through, as the Budget Reconciliation Act (P.L. 109-171)
impacts that, if title IV-E gets capped, as is often talked
about in these hallowed halls, you are really putting a burden
on States that are fiscally constrained by the aftermath of the
storm. We were fiscally constrained before, but we certainly
have a dual impact now.
Mr. MCDERMOTT. Talk about the title IV-E cap, what that
means to you.
Ms. GAUTREAU. The title IV-E cap would be an immediate $3.7
million hit to my budget, and that is just in the first year,
and then the outward progressions would change as----
Mr. MCDERMOTT. Is that salaries of employees or is that----
Ms. GAUTREAU. It is administrative cost, which includes
some salary, but it also includes some service delivery.
Mr. MCDERMOTT. Are you retaining foster parents or are
you--how are you dealing with the 13 new ones you got? What do
you do them? You just plop them on top of what you already
have, or have you got foster parents standing out there
waiting?
Ms. GAUTREAU. No, we do not have foster parents sitting out
there waiting. We hoped that we would with the aftermath of the
storm when all of the people that called that wanted to adopt a
Katrina orphan. We tried to sign them up and encourage them to
become foster parents in their own States as well as Louisiana.
We have a shortage of foster care families in the State. We
still have about 136 foster families outside of the State that
have not been able to come back into the State, and that leaves
us a shortage of those families. We waived the normal
restrictions for foster care about space and house size and
room capacity so that we could double and triple up with our
foster families who are in the State and who are willing to
take extra children. We are in desperate need of foster care
families, and that takes money to recruit them.
Mr. MCDERMOTT. Thank you, Mr. Chairman.
Chairman HERGER. Thank you. The gentleman from Louisiana,
Mr. McCrery, to inquire.
Mr. MCCRERY. Thank you, Mr. Chairman. I thank all of you
for your testimony today and for trying to help us as we figure
out the best way to proceed nationally on improving our social
services benefit programs across the board. I want to assure
all of you that, even though the President's budget calls for a
30-percent cut in social services block grants, the President
cannot pass anything. The Congress has to pass the budget and
appropriate all moneys, and every once in a while we disagree
with the President, whether he is Republican or Democrat. I
cannot remember in 18 years in Congress when a President's
budget has been adopted by the Congress. Don't worry about this
30-percent cut in the President's budget. My guess is that when
the Congress passes the real budget, there will not be a 30-
percent cut in the SSBG.
Ms. Gautreau, I want to explore just for a minute your
reference to the SCWAS. As you know, this has been basically an
open-ended entitlement for States. Initially, back in the early
nineties, there was a 75-percent match. For every dollar spent
by the State, the Government would put up 75 cents of it. Now
it is a 50-percent match, 50 cents per dollar Government
contribution, Federal Government contribution. Yet our State
never got to the point where we were implementing a program. Of
course, that is not your fault. That has been a number of years
that that inaction has occurred. Where are we now? Why haven't
we been taking advantage of this open-ended entitlement?
Ms. GAUTREAU. We were taking advantage of it in the No
Wrong Door system that we were building that I referenced a
moment ago. The program was put on hold because of the lack of
the State's ability to meet its 50-percent match now to move
forward in light of the budget constraints that we are under.
The system that we were building would have been SACWIS
compliant. We are one phase into a three-phase, 10-year
project, and we were not quite 2 years in. We have the
beginning of a SACWIS compliance system, but we will not be
there with the implementation of this first phase.
Mr. MCCRERY. If we were to have had a system fully
operational before Katrina, would it have helped us deal with
the effects of Katrina?
Ms. GAUTREAU. Absolutely. We would have not been so reliant
on the paper records. We lost the entire record system in St.
Bernard Parish. We lost many of the records in Plaquemines
Parish. We were fortunate that in Orleans our office was on the
15th floor of a building downtown, and so when we got the
papers dried out, most of them were there. The courts lost a
lot of documents, but between us we have been able to piece
together case records. Had we been SACWIS compliant, had that
technology been in place, all of that would have been
computerized data, and we would have had no fear of losing any
child's record.
Mr. MCCRERY. Have all the foster children been accounted
for?
Ms. GAUTREAU. Yes, sir. We found them all very, very
quickly. They were scattered across our Nation, and they were--
we still have quite a few children in Texas, Mississippi, and
in Georgia. There are only 136 out of State now, so out of
2,000, we are thrilled to have them home.
Mr. MCCRERY. We talked a little bit about the $220 million
in additional social services coming to Louisiana. What do you
plan to do with that?
Ms. GAUTREAU. Fifteen million out of the $220 million will
go to help us catch up with some of these children, the mental
health services that we desperately need for these children we
will use to kind of backfill some of our budget deficit. We
will use that money to do the mental health. The travel--we
have this unique dynamic now where we have a court of
jurisdiction in New Orleans, we have a child maybe living in
Texas, and then we have a birth parent in, say, Alabama. We
have this unique triangular system, and courts require foster
children see their birth parents monthly and they come to court
monthly. We do not have the transportation dollars to manage
this system, and we will be using some of that SSBG money to
help us literally transport these children across State lines.
We will also use some of it to implement some new prevention
programs which we hope will in the long run keep children out
of foster care and keep families stable and together.
Mr. MCCRERY. All right. Thank you very much.
Ms. GAUTREAU. Thank you.
Chairman HERGER. Thank you. The gentleman from California,
Mr. Stark, to inquire.
Mr. STARK. Thank you, Mr. Chairman. Just very quickly,
while I am intrigued and encouraged by information technology
that can help us all do our work, sometimes I think that we
have to be careful, particularly in dealing with children, that
we not lose the human contact. Ms. Henley, you point out that
your program gets parents involved in the children's child care
needs and environment. I suspect that means as a result of
requiring them to be at the child care facility at least once
every 10 days and swipe a card. That does not mean that they
are really getting in and involving themselves in the
activities of the child care. It just means they have got to be
there to put their key in the lock. That is better than
nothing. Don't misunderstand me, but I hope that you wouldn't
lose sight of the way that we could entice parents to become
more actively involved. Mr. Winstead, while I am intrigued with
the Florida system--and I am sure this is something you have
heard more about than you care to, but it seems to me that your
Statewide Child Welfare Automated System was fully working at
the time you lost Rilya Wilson, wasn't it?
Mr. WINSTEAD. If I may----
Mr. STARK. Well, and you have not found her yet, as far as
I know. Now, maybe it would be easier to find her with the
electronic system, but I merely suggest that as a means of
saying that losing contact with people that, particularly in
your communities, you are charged with--and particularly with
children, where I think that well-trained caseworkers still
could be the quickest way to determine when children might need
the services of Dr. McDermott. He is not going to be replaced
very soon by a computer, I don't think. I guess I would just
like to--I would say the thing to Mr. Fecci, that while I am
intrigued with how much money Indiana has saved by matching
data, there is nothing in that list that says they have also
found a lot of people who might be entitled to benefits who are
unaware. The outreach was not emphasized. I guess I would just
hope that with some of the savings that you get, Mr. Winstead,
you would raise the pay of the workers who have face-to-face
contact with your cases and in Louisiana that we would have
some money left over from rebuilding to get preventative
services to children who are going to be more traumatized than
ever by being uprooted and moved to a strange community. God
help them if they had to come to Oakland, California, from
beautiful Louisiana. That could be a really traumatic
experience for them. I am just suggesting that while we would
like to help any way we can to encourage automation, that we
don't become so intrigued with the push-pull, click-click of
the computers and our BlackBerries and all this that we lose
sight of what you all are really charged with is at some point
that human interrelation that only a well-trained caseworker
who is interested, and particularly with children, can be the
one to help.
Mr. WINSTEAD. If I may?
Mr. STARK. Please, Mr. Winstead.
Mr. WINSTEAD. I think we would agree, and I would in no way
try to do anything but agree that the Rilya Wilson situation
was a tragedy, and I offer no excuse, no rebuttal.
Mr. STARK. Probably not caused by data processing----
Mr. WINSTEAD. If I may quickly say a couple of things.
First of all, yes, we have raised those frontline caseworker
salaries. Governor Bush has led that charge. Secondly, one of
the things that was not happening in Florida was proper
attention in keeping up with monthly visits by caseworkers to
children. That has been a real emphasis for us. The U.S.
Departmant of Health and Human Services Inspector General did a
report released in December about monthly visitation to
children that noted Florida has the second highest compliance
in that, but that was far too low for us. Last month, in March
2006, out of over 47,000 children in in-home care and out-of-
home care in our State, caseworkers visited 99.18 percent of
them. That is what we are doing. The other thing, though, with
technology that I would mention very quickly, Mr. Chairman,
just to make you aware of a new project, it is a pilot using
Nextel IH70 GPS-enabled camera/cell phone and Zora time track
technology.
Mr. STARK. You lost me.
Mr. WINSTEAD. What it does--and I have seen it work. We
right now are piloting--we have got 82 protective investigators
in Florida using this technology. They have got GPS cell
phones. The supervisor can call up on a computer screen. You
can actually see a map, and you can watch where the caseworker
goes. We have got a camera. The caseworker can take a picture
of the child----
Mr. STARK. Don't you tell my wife about that, Mr. Winstead,
or I am in trouble.
[Laughter.]
Mr. WINSTEAD. The caseworker can also, when they go on
annual leave or go to the doctor, enter a button to turn off
the technology, but their supervisor knows it is turned off.
The next version that we are getting in the pilot also will
have a panic button so that if the caseworker gets in trouble
in the field, we know where they are; we know to send help.
Also, in rural counties, knowing where your caseworker is when
a call comes in, you do not have to wait for somebody to come
back to the office. You can look and see who is closest to that
child and get somebody out there. That is a way that we are
coupling the human contact that is so important--I agree
completely about the training and the skill because it is
really a people business. If we can give our workers the tools
that they need and use the technology to help them do a better
job, I think that is where you----
Mr. STARK. Great, and that is what I guess I just wanted to
remind everybody. Thank you all for your testimony. Thanks, Mr.
Chairman.
Chairman HERGER. The gentleman from California, Mr.
Becerra.
Mr. BECERRA. Mr. Chairman, thank you very much, and thank
you for holding this hearing. To the witnesses, thank you for
your testimony, especially on how you have tried to respond
under some very compelling circumstances in many cases,
especially, I know, in certain States more than others, things
have been very difficult. Applause to you for the work that you
do because we know you are already overworked to begin with.
Let me just add, I know we have a vote coming up, so I would
just like to say one thing. I hope we can continue to make use
of every piece of technology we can, because as I see it, we
are losing social workers faster than we can train them. Unless
we do something to provide them with a better environment and
they do not feel so overburdened, all that technology is going
to go for naught because we will not have the human face that
the technology allows us to put before these individuals,
whether it is a foster child or parents who are trying to help
out, as quick as we should.
I hope that we can find ways or you can let us know ways
that we can harness this technology to help you save money with
other administrative costs, because if we do not figure out a
way to have the average social worker stay on the job more than
2 years, we are in real trouble. There is no way that anyone
can do a decent job of providing services when you have got 100
families you are trying to monitor, when you should really be
looking at no more than 15 or so. Kudos to you if you have
implemented some things. Congratulations if you have faced
adversity and you overcame it. Then let us know how we can help
you harness that technology sooner than later. With that, I
will yield back the balance of my time because of the votes
that we have coming up. Thank you very much for being here.
Chairman HERGER. Thank you, and I want to thank each of you
for the time you have taken for traveling here. Your
information you have provided has been very interesting and
will be helpful in the future as we look for ways to improve
service delivery, achieve program efficiencies, and stretch
taxpayer dollars. I would like to request of you, if we have
some more written questions, if you would respond to those,
please. Thank you again very much, and with that this Committee
stands adjourned.
[Whereupon, at 4:10 p.m., the hearing was adjourned.]
[Questions submitted from Chairman Herger to Ms. Rath, Mr.
Winstead, and Mr. Fecci, and their responses follow:]
Questions from Chairman Wally Herger to Ms. Diane Rath
Question: I understand that Texas plans to use electronic payments
for unemployment benefits. How will receiving electronic payments help
recipients? What type of savings do you expect to produce for
taxpayers?
Answer: Receiving electronic payment of benefits via a debit card
will assist Unemployment Insurance (UI) claimants by:
1. Eliminating lost or stolen warrants;
2. Decreasing the time between payment authorization and
availability of funds to the claimant;
3. Eliminating check-cashing fees for claimants who do not have a
bank account;
4. Allowing the claimant 24-hours-a-day, 7-days-a-week access to
the claim's payment history through an interactive voice-response
system, customer support, or the Internet; and
5. Providing 24-hours-a-day, 7-days-a-week customer support for
payment-related problems.
TWC anticipates the following savings by transitioning to a debit
card system of UI benefit payments:
1. Elimination of postage associated with mailing a warrant every 2
weeks;
2. Elimination of warrant cancelation and reissue expenses;
3. Elimination of the need to store, print, process, and account
for special warrant stock.
Question: What is involved in Texas's ``complete integration of our
Unemployment Insurance and Employment Services programs'' that you note
in your testimony? How long will that take? What do you expect that
process to yield in terms of better services for recipients? Will
taxpayers see additional savings?
Answer: Complete integration is a large coordination and coding
project intended to both combine and streamline the information
collection processes for UI claim filing and work registration. One of
the primary goals is increasing data integration and sharing between
both components of the UI claim filing systems--telephone and Internet,
and WorkInTexas.com, the state's automated labor exchange system. TWC
is also redesigning how job seekers input information into
WorkInTexas.com to provide better quality resumes and applications for
UI claimants.
How long will that take? We estimate approximately 18 months for
completion of the project as currently scoped.
What do you expect that process to yield in terms of better
services for recipients? The project envisions a single, more
efficient, and essentially seamless claim filing and work registration
process, resulting in a better quality work application. These
integration efforts will provide a more user-friendly process for UI
claimants and a more efficient method for Texas Workforce Center staff
to match job seekers and employers.
Will taxpayers see additional savings? Ultimately, our efforts at
system integration will enhance the ability of our employers to fill
their vacancies quickly, using the public workforce system they fund.
We also believe that improving the quality and timeliness of UI
claimants' work registration will reduce the amount of time claimants
are unemployed.
Question: Your testimony notes that the ``Lone Star Card'' is now
used for social service benefits and that administrative costs and
fraud have been reduced. Can you tell us how much has been saved or
made available for other benefits by this innovation? What were some
examples of fraud and abuse that has been prevented?
Answer: How much has been saved or made available for other
benefits by using the ``Lone Star Card'' for payment of social service
benefits, including savings achieved through reduced administrative
costs and fraud? The Lone Star Card is used for food stamp benefits as
well as Temporary Assistance for Needy Families cash assistance.
Eligibility and payment of benefits are administered by the Texas
Health and Human Services Commission. Although exact savings are
difficult to calculate, during the first 7 years of implementation,
according to information from the Texas State Comptroller, the Lone
Star Card was estimated to save $126 million in administrative and
other costs. In addition, data from electronic benefits transfer makes
it easy to detect and eliminate duplicate accounts and redundant
information. The computerized system can also quantify the amount of
unused benefits from 1 month to the next. As a result, in fewer than 3
years following implementation of the Lone Star Card, almost 900,000
dormant cases worth more than $28 million were removed from the Food
Stamp rolls and cases worth more than $5.5 million were removed from
the Temporary Assistance for Needy Families rolls.
What are some examples of fraud and abuse that have been prevented?
A $1 million illegal food stamp ring was uncovered at the end of the
pilot project as a direct result of the electronic audit trail provided
by the Lone Star Card. In addition, in 1996, a U.S. Department of
Agriculture investigation in Houston only disqualified 9 percent of the
area's food stamp retailers, compared to 15 percent that were
disqualified in cities in states using paper coupons. This discrepancy
suggests that unscrupulous retailers might have voluntarily withdrawn
for fear of exposure with the electronic benefits transfer system.
Question: What differences have you seen since unemployed workers
have been required to register with WorkInTexas.com? How do you verify
that claimants are making at least three work searches per week?
Answer: What differences have you seen since unemployed workers
have been required to register with WorkInTexas.com? Texas has always
maintained a requirement that UI claimants register for work in the
state's automated labor exchange system. Implementation of
WorkInTexas.com has made that registration process much easier. Because
WorkInTexas.com is Internet-based, UI claimants can access the labor
exchange system 24-hours-a-day, 7-days-a-week, from any location that
has an Internet connection. Additionally, feedback from users continues
to validate that the WorkInTexas.com application compares extremely
favorably to other Internet job search applications. We anticipate that
the number of Texas employers and job seekers using the publicly funded
labor exchange application will continue to grow.
How do you verify that claimants are making at least three work
searches per week? TWC uses a statistically valid, random sampling
methodology to verify that UI claimants, who are required to do so, are
making the appropriate weekly work searches. Each week, UI claimants
are randomly selected to submit their work search logs to TWC. Staff
verifies that (1) the requested log is received, (2) the log contains
the appropriate number of work search contacts, and (3) the work search
activities contained in the log are valid. TWC enacted state rules that
integrate UI with each of our 28 Local Workforce Development Boards
(Boards). TWC has determined that UI claimants must demonstrate that
they are actively seeking work by making at least 3 weekly work search
contacts. TWC has further determined that it may be appropriate to
require more than three contacts per week, depending upon local labor
market conditions as determined by the Boards. Boards, using various
economic and geographic factors within their local workforce
development areas, may raise the required number of work search
contacts. In addition, TWC also provided Boards with the ability to
lower the number of work search contacts in rural counties. However,
the vast majority of UI claimants in Texas are required to make a
minimum of three work search contacts per week. UI claimants who have
been temporarily laid off, with definite return-to-work dates, as well
as UI claimants attached to nondiscriminatory union hiring halls, are
not required to conduct weekly work searches
Question: What efficiencies have you noted since Texas started
running data matches using the National Directory of New Hires? Which
programs are involved? What savings have you achieved? Do you have
plans to use this information or similar data matching more broadly in
the future?
Answer: What efficiencies have you noted since Texas started
running data matches using the National Directory of New Hires?
Accessing the National Directory of New Hires (NDNH) database has
contributed to TWC's ongoing initiative for early fraud detection,
while reducing the amount of overpayments. Since TWC entered into a
computer-matching agreement with the Office of Child Support
Enforcement (OCSE) in fall 2005, weekly new hire matches have increased
by 75 percent. OCSE reports New Hire W-4 information 30 days from the
date of hire, which is much timelier than acquiring employer wage
information. Additionally, TWC has noted an increase in collection
notices generated to UI claimants, which can be directly attributed to
the additional new hire matches.
Which programs are involved? Federal statute limits TWC's use of
the NDNH to administration of the unemployment compensation program.
What savings have you achieved? In Federal Fiscal Year 2005, TWC
recovered overpayments in excess of $3 million. Additionally, TWC
estimates potential overpayments that were avoided of approximately
$3.9 million.
Do you have plans to use this information or similar data matching
more broadly in the future? TWC is interested in expanding our use of
the NDNH to confirm employment for individuals participating in other
programs. However, our use of NDNH is limited based upon federal
statute. TWC administers many workforce programs in addition to
unemployment insurance. If the federal statute were amended to provide
workforce agencies more flexibility in the use of NDNH for all programs
they administer, TWC would be able to conduct cross matches for other
income eligible programs, and determine if individuals were
fraudulently receiving benefits. In addition, TWC has been working
closely with the United States Department of Labor (DOL) and OCSE in
developing the design for the quarterly wage cross match. OCSE
anticipates that the new cross match design will be available in fall
2006. TWC also is working to enhance the current data-sharing agreement
with the Social Security Administration (SSA) to improve verification
of identity, while obtaining additional personal characteristics to
reduce fraud. These additional data elements include disability, death,
and prison information.
Question: What defines the difference between states that have
taken steps to improve their use of technology in public benefit
systems and those that haven't yet? Does it boil down to resources,
leadership, vision, or something else? All states have access to the
same federal funding rules when it comes to paying for systems; so that
seems to suggest that funding is not the key issue. So what drives
state differences on this?
Answer: What defines the difference between states that have taken
steps to improve their use of technology in public benefit systems and
those that have not yet? We can only speak to those factors that have
driven technology decisions as they relate to the Texas workforce
system. For Texas, the challenge to meet employer and job seeker needs
counterpoised against very real budget constraints has led to the use
of technology and automation. Additionally, Texas continues to foster a
climate favorable to high-technology and science-oriented business.
Enhanced use of technology by the public workforce system is a natural
extension of that effort.
Does it boil down to resources, leadership, vision, or something
else? We believe that in Texas, it is a combination of all three.
1. Resources: Texas receives less than 40 cents of every dollar
paid by its employers in UI tax. With that rate of return, we have been
driven toward finding efficiencies and process improvement through the
strategic use of technology. Our efforts have helped us to
simultaneously contain costs and improve the services we provide to
employers and job seekers.
2. Leadership: TWC is a leadership partner with the Governor in
ensuring that the Texas workforce system effectively and efficiently
serves employers and job seekers of Texas. Employing technology in
innovative ways throughout the publicly funded workforce system
maintains services, contains costs, and positions Texas as a leader
among states in economic and workforce development.
3. Vision: The vision of Texas' leadership is to ensure that it
maintains a workforce and economic development infrastructure that
makes Texas highly attractive to business, thereby generating high-
growth, high-demand jobs for Texans. Successful deployment of
automation and technology are key factors in realizing this vision. All
states have access to the same federal funding rules when it comes to
paying for systems, so that seems to suggest that funding is not the
key issue.
What drives state differences on this? As previously indicated,
resources, leadership, and vision are the key drivers of the
differences among states. However, we should note that Texas has long
been concerned that federal funding rules do not drive states toward
seeking the efficiencies that Texas has--particularly regarding UI. We
have, for years, puzzled over the discrepancies between the allotment
criteria in federal statute and the factors that DOL says it has relied
upon to allot grant funds among the states. Indeed, two of the three
factors set forth in section 302 of the Social Security Act for
allotting funds necessary for ``proper and efficient administration''
of each state's UI laws have been ignored by DOL in awarding base
grants to states. This allotment practice not only reinforces, but
finances inefficiencies and inequity among states, while penalizing
streamlining and cost-reductions. The population covered by state laws
and the number of unemployed in a state should be key factors in any
allocation methodology. While differences in states' administrative
costs are often attributable to choices that states have made regarding
UI claimant eligibility, overall recipiency, and program
administration--DOL methodology should not consider these cost factors
``uncontrollable,'' thereby allowing other states' programs to be
financed by tax proceeds from Texas' employers. Texas has worked
diligently to enhance services to employers and UI claimants while
containing costs. Strategic deployment of technology and automation
have been key to those service enhancements.
______
Questions from Chairman Wally Herger to Mr. Don Winstead
Question: What has Florida done with the estimated $83 million in
savings you produced by improving your use of technology in public
benefit programs? Are those state or federal funds? Did your saving
state funds also reduce federal spending in Florida?
Answer: The $83 million in savings was achieved from administrative
costs due to reductions in personnel and related expenses, such as
savings from reducing leased office space. These savings resulted in
reductions in our agency's budget requests to the Florida Legislature.
The savings included state funds, Temporary Assistance for Needy
Families (TANF) federal funds and federal matching funds for food stamp
and Medicaid administrative expenditures. The state fund reductions
permitted the Legislature to use the resources on other priorities and
to reduce the overall budget. The TANF savings were redirected by the
Legislature to other permissible uses and the portion consisting of
federal matching funds resulted in reduced federal expenditures and
savings for federal taxpayers.
Question: How are welfare and food stamp benefits paid in Florida?
Specifically, do you still use paper checks? How about benefits for
Hurricane Katrina evacuees? What are the advantages to Florida of
paying benefits electronically?
Answer: Florida no longer uses paper checks for either welfare or
food stamp benefits. Most of such benefits (including cash payments or
food stamps to Hurricane Katrina evacuees) are paid using Electronic
Benefit Transfer (EBT) cards. Cash assistance recipients also have the
option of having their benefits deposited to their bank accounts
through electronic funds transfer (EFT). Currently about 300 recipients
choose EFT rather than EBT. Most cash assistance customers also receive
food stamp benefits, so the EBT card provides the convenience of
providing both benefits. Medicaid recipients receive ``Gold Cards''
through which they receive access to health care by authorized health
providers.
EBT and EFT services are a win-win for customers, retailers,
financial institutions as well as federal and state agencies. Customer
benefits are received more quickly and are less likely to be lost or
stolen. It is also easier for customers to access benefits.
Efficiencies in processing payments and recordkeeping provide savings
for taxpayers. In addition, electronic payments enhance program
integrity. This is particularly evident in the food stamp program where
the use of EBT cards help assure that benefits are only used on
authorized food items at participating retailers.
Question: What does Florida do to promote electronic payments? What
do you do to help people without bank accounts who cannot receive
direct deposits? Do you foresee a day when every government payment is
made electronically, and none by paper check?
Answer: Florida is a leader in promoting electronic payments.
However, we believe we can do much more in this area. State statutes
require most state employees to use direct deposit. Payments to
contracted providers are also primarily issued via direct deposit. As
indicated above, benefits are issued for the major Economic Self-
sufficiency Programs electronically via EBT cards or EFT. While cash
assistance recipients can choose the option of direct deposit into bank
accounts, they do not have a choice to receive paper checks.
Additionally, direct deposit is used for unemployment compensation
payments to people with bank accounts and discussions are underway now
to enable the use of EBT cards for others. The Department's Strategic
Plan also includes a cross functional workgroup to plan for use of
electronic payments for Independent Living stipends, foster care and
adoption subsidies, and self-directed mental health and substance abuse
services. Regarding assistance for people without bank accounts, bank
accounts are not needed when benefits are issued on EBT cards. However,
the department has worked with the State Comptroller's office to
encourage financial institutions to create low cost bank accounts for
individual use. Finally, we do foresee a day when every government
payment is made electronically and we are rapidly moving toward that
day.
Question: You note that in your Economic Self-Sufficiency programs
you now serve more people, with literally thousands of fewer staff. If
my math is correct, each worker now helps about 560 recipients per
year, compared with about 260 recipients served per worker in 2002.
What programs are included in the Economic Self-
Sufficiency plan?
What happened in terms of the quality of services? Is
there any evidence that services suffered in the process?
What became of the caseworkers who formerly carried out
these functions for applicants?
Answer: The Economic Self-Sufficiency program includes determining
eligibility for TANF, food stamps, Medicaid, Optional State
Supplementation, Refugee Cash Assistance and Refugee Medical
Assistance.
We have seen improvements in quality of services in a variety of
measures. Our food stamp error rate has been reduced and we have also
seen reductions in the error rate in cash assistance payments. For
example, in our TANF program the payment error rate declined from 6.2%
in 2001 to 2.87% in 2005. The food stamp error rate fell from 9.8% in
2001 to an estimated 7.02% in 2005. This improvement in quality
occurred even though the state was hit with seven hurricanes and had to
shift tremendous amounts of resources to disaster relief.
As I stated in my testimony, we include a customer survey at the
conclusion of the web application and 90% of customers indicated they
would use the web application again. In addition, our Quality Control
staff surveyed customers on their use of the self-service areas of our
service centers. 92% of those who used the self-service area reported
that it was convenient and easy to use.
Regarding caseworkers affected by the improved efficiency of our
operation, the significant majority of the reductions in staff were
accomplished through attrition and elimination of vacancies. Where
attrition was not sufficient to achieve appropriate reductions, we
formed teams to facilitate the job change process. These included Human
Resources staff as well as staff from local Workforce agencies. These
teams worked to assist employees in finding other opportunities within
our agency, or in other positions within either government or the
private sector. Approximately 400 employees were affected by layoffs.
Some chose to retire, but most were able to find other employment.
Fortunately, through this period, Florida was a leader in job growth
and experienced record low unemployment.
Question: What defines the difference between states that have
taken steps to improve their use of technology in public benefit
systems and those that haven't yet? Does it boil down to resources,
leadership, vision, or something else? All states have access to the
same federal funding rules when it comes to paying for systems; so that
seems to suggest that funding is not the key issue. So what drives
state differences on this?
Answer: Resources, leadership, vision and other factors all played
a role in shaping Florida's approach to modernizing the public benefits
system. Governor Bush and the Florida Legislature provided very high
level leadership and direction on this issue. Proviso language in the
2003 Appropriations Act directed the department to achieve efficiencies
in the public benefits system. Additionally, Florida was fortunate to
have some highly talented and creative staff who were able to envision
a new system and create the necessary technological tools to achieve
it. As I indicated in my testimony, the need to respond to disasters
also played a role. The 2004 hurricane season, in which four major
hurricanes struck the state in only 6 weeks, and the ensuing disaster
food stamp programs created an environment where the state was forced
to test new approaches to meet emergency needs. The web-based tool
developed for this need became the prototype of the web application
that is in operation today.
Question: Your testimony notes that today about 77 percent of
public assistance applications in Florida are submitted over the
Internet. That's compared with 41 percent in July 2005. That's a huge
leap in a short time.
What do you do to ensure that with the increased
electronic applications there aren't ore people improperly claiming
benefits, such as by claiming benefits from another state, or under
someone else's Social Security number, or some other scheme?
Are the systems in place to prevent fraud and abuse in
the electronic world stronger than when paper applications were the
norm?
Answer: We use multiple mechanisms to reduce improper payments and
improve the integrity of public benefit programs. One mechanism is to
designate cases that meet certain ``error-prone'' criteria as ``red
track cases''. These situations are subject to more rigorous review
through the application process. Another important mechanism is data
exchange. We perform approximately 20 data matches with external
sources. These include the Benefit Earnings Exchange Reports System
(BEERS), the Beneficiary Data Exchange Title II (Bendex) system, the
Numident system to validate Social Security numbers, IRS unearned
income data, Unemployment Compensation benefits, UI Wage data, and so
forth. Seven of the data exchanges are part of the Income Eligibility
Verification System (IEVS) and the remainder are additional matches
done with federal and state sources. We currently perform a match with
the State Directory of New Hires and we are in the process of
implementing use of the National Directory of New Hires.
We have reengineered our program integrity and front-end fraud
prevention programs as part of modernization. These staff have access
to more electronic data than the typical employee and are specially
trained to find inconsistencies in information and follow up to prevent
and uncover fraudulent activities.
Florida also is one of 36 states participating in the Public
Assistance Report Information System (PARIS) to identify potential
duplicate program participation.
The use of electronic data matching provides improved program
integrity over the days when paper applications and paper verifications
were the norm.
Question: What are Florida's future plans to continue improving
efficiency in providing public benefits? How can the federal government
help?
Answer: We are constantly working to improve the model and achieve
greater efficiency. We think there are great opportunities to use
electronic data matching in better ways including verification of
identity. On-line, real-time matches with the Department of Motor
Vehicles are planned. We are working on a process whereby customers can
report changes on touch tone telephones, complete an eligibility review
by updating information currently in their case, and receive more
information on their applications using speech interactive technology.
Secure authentication of the person's identity will make this two-way
information highway possible. Centralized mail centers that interface
with our Electronic Filing System for scanning and indexing of case
file documents are also being considered for future streamlining
enhancements.
The federal government can help in a number of ways. Federal
agencies can continue to be supportive and work with states to test new
ideas and grant waivers where needed. For example, the Department of
Agriculture has granted waivers to certain interview requirements to
facilitate implementation of the web application. It is important to
focus on outcomes rather than procedural requirements. States have been
the laboratories of innovation in program design. States can also be
the laboratories of innovation in use of technology. We believe Florida
is an excellent example of what states can accomplish.
______
Questions from Chairman Wally Herger to Mr. Dennis Fecci
Question: Is data matching such as that practiced in New York or
Indiana cost effective? In short, do the program savings from data
matching more than offset any costs of running the matches? Do
individuals benefit, for example when states are better able to target
work supports like child care to people who just got a job?
Answer: Data machining is extremely cost effective in New York.
Technical and operational cost are clearly offset by revenues
intercepted, and changes in eligibility status of individuals due to
new and more accurate information. Large amounts of newly acquired or
undisclosed assets are reveled through this process. New York has
recovered many millions of dollars from bank accounts, court awards,
inheritances, and lottery winnings, and so forth. The cost benefit of
the new data matching imitative in Indiana will be determined in the
third quarter of 2006 as the imitative is its initial stages, but is
expected to yield substantial savings and be cost effective. Although
some of the information obtained in the data matching process has been
used to assist clients, data matching in New York, and thus far in
Indiana, has focused on correcting and updating applicant and recipient
eligibility information such as new and undisclosed assets ( salaries,
bank accounts, awards, third party health insurance, and so forth.).
Question: Why do you think more states haven't used data matching
to ensure the public benefits they pay are correct?
Answer: I believe that many states do not aggressively pursue data
matching because they have limited resources and more pressing
priorities. The process to obtain access to external data is difficult
and time consuming. External entities are protective of their
information, and are not familiar with the privacy, confidentiality and
legal precedents regarding the release of information to states.
Experience has shown that obtaining access to external data files takes
many times longer than the technical tasks required to perform the
match.
Question: I note the closing comment in your testimony that
``States need assistance to promote this exchange of data.'' What sort
of assistance? What specifically should the federal government do to
better promote data matching?
Answer: Data matching and its substantial financial benefits can be
greatly accelerated nationwide if the Federal Government were to
promulgate legislation and/or HHS regulations that would require
private sector organizations to share data for the sole purpose of
promoting applicant and recipient caseload integrity.
Question: You note that a study in Indiana ``revealed that over 25%
of Medicaid recipients in long term care had assets that were unknown
to the state.'' What did the state do after learning this information?
Did any savings result?
Answer: It is my understanding that the state is in the process of
determining what course of action should be taken to ameliorate this
problem.
Question: Does New York use biometrics to confirm an individual's
identity or otherwise better ensure proper payments? What are the
advantages of that approach?
Answer: Approximately 10 years ago, New York implemented the
Automated Finger Imaging System (AFIS) to positively identify
applicants and recipients for the sole purpose of preventing
duplication of benefits. AFIS has achieved this goal, has added to the
integrity of the eligibility process in New York, resulting in the
closing of several thousand cases. AFIS has also provided information
which has led to many hundreds of arrests, prosecutions, and
convictions for benefit fraud.
Question: What defines the difference between states that have
taken steps to improve their use of technology in public benefit
systems and those that haven't yet? Does it boil down to resources,
leadership, vision, or something else? All states have access to the
same federal funding rules when it comes to paying for systems; so that
seems to suggest that funding is not the key issue. So what drives
state differences on this?
Answer: I believe that the major differences between states that
emphasize technology to improve public benefit programs and those that
do not, are necessity and the availability of resources. In New York,
for example, with its large volume of applicants, recipients and
multitude of programs, technology is a key to efficient management and
control. In forward thinking states, technology is seen as the way to
ease the burden on operational staff and increase productivity. This
vision as a motivator would be meaning less with out the technical and
financial resources to design, develop, and implement automated data
processing solutions. Large states such as New York have sufficient
resources to elevate technology as a high priority without sacrificing
other priorities. Regarding Federal funding, I do not agree that all
states are on equal footing. This occurs only when a project is 100%
federally funded. I have seen examples where states do not have the
necessary budget to fund the substantial state share required to begin
a data processing project.
[Submissions for the record follow.]
ACS Government Solutions
April 17, 2006
We were privileged to attend the hearing led by Chairman Herger on
April 5 addressing the use of technology to improve public benefit
programs, and we appreciate this opportunity to submit written comments
that we hope will provide additional clarity on the policy implications
of the testimony presented at the hearing.
The use of electronic payments for distributing benefits to
families has skyrocketed. As Congressman Herger pointed out,
``electronic payments exceeded payments by paper checks for the first
time in 2003.'' ACS is a strong proponent of electronic payment and
electronic benefit delivery technology, and we have successfully
implemented such technology in states throughout the country. We are
proud to enable families to receive benefits more efficiently, more
securely, and more cost-effectively.
Virtually all of the invited witnesses commented on the value of
electronic benefits delivery, pointing out cost savings, delivery
reliability (especially in the face of natural disasters), and
enthusiasm of benefit recipients. However, interactions at the hearing
did not make clear an important distinction between the use of
electronic cards to disburse cash assistance, food stamps, and other
benefits and the use of such cards to pay fees for specific services.
Cash assistance, unemployment compensation, and other benefits may be
spent as recipients see fit. Food stamps may be spent for a limited
purpose, and the use of electronic benefit cards helps ensure that
inappropriate purchases are not made. The use of electronic payment
cards for payment of state and Federal subsidies for specific services
should be understood as a distinct use for such cards, presenting clear
opportunities for reduction of erroneous payments. The testimony
provided at the hearing by Lisa Henley, of the Oklahoma Department of
Human Services, illustrated the potential impact of this use of
electronic payment cards, and we are submitting this additional
testimony to draw attention to the policy implications.
While we believe that it may be valuable for the Federal government
to provide incentives for states to move toward electronic benefit
disbursement methods generally, we wish to point out the particular
value of providing incentives for states to pay providers for
subsidized services using electronic ``time and attendance'' payment
systems, so as to reduce errors, fraud, and abuse. In fact, without
utilizing the proven ``time and attendance'' card technologies readily
available to prevent overpayments and fraud, electronic cards may
simply accelerate the disbursement of unjustified overpayments.
In her testimony before the Subcommittee, Ms. Henley, Project
Director of the Oklahoma EBT Project, indicated that by coupling policy
changes with technology that allows child care service benefits to be
distributed and tracked electronically, the Oklahoma Department of
Human Services was able to significantly reduce the amount of
overpayments made to child-care providers. The policies and technology
employed by Oklahoma enabled State officials to:
Exclude ineligible providers and clients at the point of
serviced delivery, before service was provided
Prevent invoicing for service hours not provided
Create real-time, online audit documentation at the point
of service delivery
Significantly reduce expenditures by preventing erroneous
and improper payments.
Oklahoma is now able to provide child care services to more
children at a 10% reduction in the average cost per child--from $249.06
per month before implementation to $224.46 after implementation. In
addition, the Oklahoma Department of Human Services was able to
eliminate administrative positions, since payment and auditing are
completely automated. The cost to implement the time and attendance
system was recouped by eliminating over-payments to service providers
within only six months of operation (within the fiscal year during
which the project was implemented.) The State is saving about $1
million a month. The Department has invested these savings into
provider training and increased provider rates, which means better care
is provided for Oklahoma's children.
Savings such as those experienced by Oklahoma are easily achieved
when actual time and attendance is tracked for services provided. The
swiping of electronic cards at the child-care center or home when a
child arrives and departs creates an electronic invoice that the State
uses to pay the provider. The automatic invoices completely replaces
the time-consuming paperwork that was necessary to document attendance
and prepare and submit invoices in the past, and the State never pays
for hours of care that were not, in fact, provided. There is no need
for after-the-fact audits of attendance records and recoupment of over-
payments that were never made. Providers benefit by receiving prompt
payments via direct deposit from the State, without ever submitting
invoices or tolerating attendance record audits.
Potential savings are by no means limited to child care services.
In fact, the same simple, proven technology can be applied toward many
other fee-for-service subsidy programs. Medicaid services that involve
recurring transactions (such as drug and alcohol therapy, in-home
health services) and TANF job-search/job-training participation can
make good use of simple electronic payment cards to track time and
attendance and ensure that fees paid to service providers are for
services actually used.
When considering legislation that encourages states to expand
electronic delivery of subsidy payments and benefits, we urge the
members of the Subcommittee to make the distinction between benefits
distribution and fee-for-service payments and to provide specific
incentives for states that establish effective fraud and abuse
deterrence programs, such as the child care time and attendance
tracking system that Oklahoma implemented. Such incentives can prevent
improper payments from ever being made by preventing an erroneous
invoice from ever being submitted.
The hearing made it clear that electronic distribution of benefits
produces postal savings and other cost-efficiencies that states are
already recognizing. The opportunity to reduce erroneous payments by
using electronic cards to document service usage before paying fees for
service mentioned but not highlighted at the hearing, and we believe
that it may not get much attention from state officials without a
Federal push. Perhaps state officials are not focusing on eliminating
wasteful spending when the funding source is a Federal block grant, or
perhaps they are so focused on eliminating paper checks that they
haven't realized the other potential benefits of moving to electronic
payment cards, including accurate invoicing for fee-for-service
subsidies and elimination of payments for services not actually
provided.
Thank you for permitting us to draw attention to this opportunity.
We urge those drafting legislation addressing electronic benefits
distribution to encourage states implementing electronic payment cards
to promptly adopt use of this simple and proven technology to
significantly reduce erroneous payments in fee-for-service programs
such as child care and Medicaid and to also use it for tracking time
and attendance in work participation activities in the TANF program.
Respectfully submitted,
Sherri Z. Heller, Ed.D.
Vice President, Children and Youth Services
Gregory Cohen
Business Development Manager
Social Security Administration
April 5, 2006
Mr. Chairman and Members of the Subcommittee:
Thank you for allowing me to discuss the Social Security
Administration's (SSA) effort to move from a paper-based disability
claims process to an electronic one. Our disability programs provide
income security to over 11 million Americans with disabilities through
the disability insurance program and the supplemental security income
program. Commissioner Jo Anne B. Barnhart has made improving the
disability determination process one of her highest priorities
throughout her tenure as Commissioner. Our new electronic disability
process--eDib--is central to our efforts to make those improvements.
Shortly after she became Commissioner in 2001, Commissioner
Barnhart asked for a detailed analysis of the entire disability
determination process from the time that a claim is filed with SSA to
the time that a review is under taken by a United States district
court. This analysis showed that SSA's reliance on old-fashioned paper
files was limiting the Agency's ability to efficiently manage this
vital workload.
This review showed a disability determination process tied to a
paper folder that grew larger and larger as the process continued. The
disability determination process started with a call to our ``800''
number or a visit to one of SSA's 1300 field offices. Claimants were
asked to fill out several forms providing the necessary information.
Six-part paper folders were established for each claim. These forms
along with signed authorizations for release of records were filed in
these paper folders and then mailed to the State Disability
Determination Services (DDSs)--the state agencies charged with making
initial disability determinations. DDSs then mailed a request for
medical evidence to the treatment sources, who then mailed paper copies
of their records back to them for review. A DDS might also contact
third parties and arrange consultative examinations to obtain more
evidence, also by mail and also on paper. After reviewing all the
evidence and making an initial disability determination, the DDS would
then mail the disability folder back to the SSA field office. All of
the forms and documents obtained during the process were shipped and
stored in a traditional paper folder.
A person dissatisfied with an initial determination made by a DDS
could pursue an appeal through three administrative levels and the
Federal courts.
At each point, the process would start over again: paper forms
completed and mailed, requests for evidence mailed and paper replies
reviewed, and paper files transferred between offices. All this mailing
back and forth was time consuming and often resulted in important
evidence, or even entire files, getting damaged or lost.
At the time of that analysis the Agency was on a 7-year timeframe
to implement an electronic disability process that would replace the
traditional paper folders. Seven years was too long to wait, so
Commissioner Barnhart asked me and other members of her senior staff
how soon we could roll out eDib if the necessary resources were
provided and we told her two years. I want to thank the Members of this
subcommittee who supported providing those resources, because with them
and with a lot of hard work we in fact rolled out the electronic
disability process in two years instead of seven.
Reaching this goal required the coordination of enormously complex
computer systems. To make this new system work, we had to do an
extraordinary amount of programming not just on SSA's computers but on
the different hardware and software used by the DDSs. This was and
continues to be a monumental task. There were serious technical issues
to overcome, especially in the early days. We aggressively worked to
resolve all those issues. I want you to know that we are aggressively
looking for and addressing problem areas.
Implementation of the electronic disability folder began in January
2004, and as of January 31, 2006, all 50 State DDSs have rolled out the
electronic disability folder and more than half are working in a
completely electronic environment for new cases.
I want to note at the outset that eDib does not replace the
millions of paper files that SSA already maintains. We will be working
with them to conduct post-entitlement eligibility actions, such as
continuing disability reviews, for years to come. But with eDib, we are
seeing the beginning of the end of paper files, and the burden and
expense associated with them.
I would like to highlight for you the key elements of the new
electronic disability process, and provide an overview of where we are
with the rollout of that process.
Before I begin, I would like to especially recognize the people
responsible for the successful implementation of eDIB--SSA's dedicated
employees and its partners in the State DDSs. The computer systems and
software behind eDIB are incredibly complicated, and eDIB is a tribute
to the talent of the men and women at SSA who analyzed the disability
determination process, developed the software and hardware platforms,
tested it and then rolled it out in a very controlled process.
Overview of eDib
eDib starts with the submission of an application for disability
benefits to SSA. Once this application is received field office staff
enter information that used to be collected on several paper forms into
a central Electronic Disability Collect System (EDCS). The information
gathered to make a disability determination is stored in an electronic
folder organized along the lines of the traditional paper folder. Forms
that were once printed and signed by hand are created and stored in the
electronic folder. The data are automatically shared with the DDS
systems in a way that eliminates the need for re-keying. So far, over
12.9 million claims have been processed through EDCS.
The contents of the electronic folder can be accessed by field
office staff, quality assessment reviewers, and State and Federal
adjudicators (and support staff) from anywhere in the country without
the need to physically transfer the file. This provides greater
flexibility and protects against lost or damaged folders.
Electronic Disability Collect System (EDCS)
With eDib, SSA offers an option to those comfortable with using the
Internet of starting the application process on-line. By
visitingwww.socialsecurity.gov, claimants can provide or start to
provide the information on their medical, work, and education history
necessary to adjudicate their claims. At a minimum, this option
familiarizes claimants with what is needed to determine their claims,
and optimally, it makes for a much more efficient disability
determination process once the claimant does visit the field office to
complete the application. Since the first Internet applications were
taken beginning August, 2002, SSA has taken over 500,000 disability
claims over the Internet.
All of the information provided by the claimant either over the
Internet or in person at one of our field offices is automatically
entered into EDCS. During the field office review of the application,
EDCS ensures that the SSA claims representative obtains all necessary
information from the claimant through a system of alerts. While
resolving these alerts take extra time, EDCS results in better
documented claims and makes for more efficient processing during
subsequent steps of adjudication. In addition, this information is
electronically stored and propagates to other computer applications
later in the process, avoiding the need for re-keying the information.
100 percent of SSA's field offices are using EDCS, and over 97
percent of initial claims are taken using EDCS Approximately 20,000
disability claims a day are taken in this manner.
Electronic Disability Folder
One of the most important aspects of eDib is the electronic
disability folder and the flexibility it offers SSA in managing the
disability workload. Specifically, an individual's electronic
disability folder can be accessed at any time by decision makers with
authorized access. Multiple users in multiple locations may view the
information they need even though they do not physically have the
folder. I cannot overemphasize the importance of the flexibility
afforded by the electronic disability folder, and I further want to
emphasize that it is being done in a secure environment.
For our decision makers, the heart of eDib is the electronic
disability folder. We worked hard to make sure that the information in
the folder was presented in a manner that was familiar and easy to
understand by our decision makers. In the electronic folder, there are
sections for payment information, queries, non-disability development,
medical records, and so forth. Despite the underlying technical
complexity, on the surface the electronic disability folder looks
fairly simple, is organized along the same lines as the traditional
paper claims folder, and contains both information from EDCS and images
of medical records.
Medical evidence enters the electronic disability folder in two
ways. Those medical sources that maintain traditional paper files can
either send the records to SSA electronically by facsimile or through
paper documents. The paper documents must be scanned into an electronic
format and then entered into the electronic folder. SSA has secured the
services of a contractor to take care of the bulk of the scanning while
SSA and DDS offices have the capability to do on-site or low volume
scanning. For the growing number of medical sources that maintain their
records electronically, electronic medical evidence may be forwarded to
the electronic disability folder via a secure Internet website or bulk
transfer facility.
Already, the electronic claims folder is the official Agency record
in more than half of the DDSs. The medical information we capture
electronically is the world's largest repository of electronic medical
records, with over 36.5 million records. SSA's goal is to move toward
more electronic submissions. As part of its efforts to encourage
medical providers to submit medical evidence electronically, SSA has
conducted several outreach programs to the medical community to allay
privacy law fears that medical professionals have concerning the
provisions of HIPAA, the Health Insurance Portability and
Accountability Act of 1996.
Once medical evidence is received, eDib allows SSA to
electronically capture, index, route, store, and retrieve medical
evidence. The electronic disability folder offers adjudicators a wide
array of tools that enables them to view, annotate, bookmark, paginate,
categorize, and work with evidence electronically. For example, as an
adjudicator reviews the medical evidence in the electronic disability
folder, he or she has the ability to mark and highlight key pieces of
evidence, making it easier to refer back to that evidence during the
disability determination process.
Finally, SSA has taken the forms used in the disability
determination process and converted them into an electronic format. The
use of electronic forms provides decision makers convenient access to
them and ensures that they are always using the latest, most up-to-date
version. The forms can be filled out on-line, electronically signed by
the employee completing the form, and easily filed in the electronic
disability folder.
Quality Assurance
eDib also improves SSA's ability to manage quality assurance.
eDib's Disability Case Adjudication and Review System automates all
aspects of the disability quality review function. Specifically, the
system identifies cases for review, interfaces with the electronic
disability folder, tracks processing, and provides reviewers with
electronic versions of forms needed for the quality assurance review.
eDib also provides electronic routing between the quality assurance
office and DDS, replacing the old folder mailing process. Access to the
electronic disability folder offers reviewers greater flexibility,
which will allow SSA to transition to a quality assurance system that
relies on both in-line and end-of-line reviews and will provide more
timely and efficient feedback on quality.
Office of Hearings and Appeals (OHA) Improvements
At OHA, eDib required the development of the Case Processing and
Management System (CPMS) to replace an outdated system that required
manual data entry. CPMS eliminates much of the manual data entry, and
provides improved case control and better management information. In
addition, CPMS provides Administrative Law Judges with the ability to
access the electronic disability folder.
In addition to CPMS, OHA has rolled out the use of digital audio
recording equipment and software in all our hearing offices, replacing
the outdated analog cassette recording equipment that has been in place
for over 20 years. Although most digital recordings are being stored on
compact disc, we are beginning to store digital recordings in the
electronic folder.
Implementation Status
All of these steps in the eDib process are being rolled out
carefully and quickly. Roll-out was staggered to ensure that SSA was
able to provide each DDS with the support necessary for successful
implementation. After initial roll out in a DDS, the number of DDS
decision makers working with electronic folders gradually expanded as
the DDS developed expertise with the process. To date, all of the 50
States have implemented the electronic disability folder. Nationally,
over 92% of DDS staff adjudicate cases in an electronic environment.
We have developed a certification process, called the Independence
Day Assessment (IDA), to determine when each State is ready to use eDib
exclusively as the official Agency record and no longer maintain paper
folders for new cases. In January of 2005, the Mississippi DDS became
the first DDS in which new disability claims are processed in a totally
electronic environment. We currently have more than half of the State
DDSs in a fully electronic environment, with the remainder scheduled to
be IDA certified by the end of calendar year 2006.
At OHA, all but five hearing offices now have the equipment to
conduct video hearings. From October 2005 through February 2006, SSA
conducted approximately 15,000 video hearings. CPMS has been rolled out
in all of the hearing offices and is being used to control case flow
and provide management information. In addition, 75% of our hearing
offices have been trained on using electronic disability folders and
are working electronic cases. To date, the volume of hearings involving
electronic disability folders has been low (approximately 3,200 as of
February 2006), but the initial response from OHA's administrative law
judges, and claimants and their representatives has been positive.
Next Steps
This year, I expect each of the DDSs and OHA to be using electronic
disability folders on a regular basis, and I expect all 50 states to be
fully IDA certified by the end of calendar year 2006. The President's
FY 2007 administrative budget of $9.496 billion for SSA would provide
the resources to allow SSA to make the necessary technological
investments in eDib to maintain service levels and continue to improve
the way we do business in the disability process.
Conclusion
As I noted earlier, eDib allows adjudicators in the disability
determination process to view an individual's claims file anywhere in
the country. This flexibility affords SSA a new opportunity to make
changes to improve the administrative efficiency of the program.
Let me share with you a real-life story that makes obvious the
necessity of eDib. In the aftermath of Hurricane Katrina--while issuing
almost 74,000 immediate benefits payments for displaced persons and
setting up response units at the Houston Astrodome and other evacuation
centers--SSA provided further relief. Of the 5,000 cases in the New
Orleans office of the Louisiana Disability Determination Services,
1,500 had already been stored electronically through eDib. These
records were immediately transferred to other offices to be processed.
Ultimately, we gained access to the building, packed the remaining
3,500 folders in 400 boxes, and carted those down six flights of stairs
by flashlight.
In closing, I believe that eDib is vital. Thank you for the
opportunity to discuss this important initiative. I would be happy to
answer any written questions that you may have.
Martin H. Gerry
Deputy Commissioner for Disability and Income Security Programs
Statement of Donald V. Hammond, U.S. Department of the Treasury
I am pleased to submit this statement for the record to the
Subcommittee on Human Resources. The Committee should be commended for
the attention and focus it is placing on how technology can be
leveraged to improve the delivery and access to public benefit
services. Treasury is on the technological forefront in its use of
automated systems and is committed to integrating the latest technology
across all our business lines to increase efficiencies and improve
services to individuals.
The Fiscal Service, within the Department of the Treasury, is
comprised of the Office of the Fiscal Assistant Secretary; and, two
Treasury bureaus: the Bureau of the Public Debt (BPD) and the Financial
Management Service (FMS). Our mission is to develop policy for and to
operate the financial infrastructure of the federal government. FMS
provides central payment services to federal program agencies, operates
the federal government's collections and deposit systems, provides
governmentwide accounting and reporting services, and manages the
collection of delinquent debt.
FMS disburses 85 percent of the federal government's payments,
including income tax refunds, Social Security benefits, veterans'
benefits, and other federal payments to individuals and businesses. In
FY 2005, this represented over 952 million non-Defense payments with a
dollar value of nearly $1.5 trillion, with more than 76 percent of
these payments being issued electronically. FMS also manages the
collection of revenues such as individual and corporate income tax
deposits, customs duties, loan repayments, fines and proceeds from
leases. Through its collection network, FMS receives more than $2.67
trillion annually, of which more than $2.11 trillion, nearly 80
percent, is transacted electronically.
This statement focuses on the electronic delivery of federal
benefit payments. Direct deposit is a payment program for consumers who
authorize the deposit of payments automatically into a checking or
savings account via the Automated Clearing House (ACH) network\1\
Direct deposit is safe, convenient and reliable. The benefits became
all too clear in the wake of last summer's hurricanes when direct
deposit worked flawlessly.
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\1\The Automated Clearing House (ACH) network is a secure funds
transfer system which provides for the interbank clearing of electronic
entries for participating financial institutions.
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Benefits of Direct Deposit: Direct deposit is, without question,
the best way for all Americans to get their money because it eliminates
the risk of lost or stolen checks, reduces fraud, and gives more people
control over their money.
It's safer. Direct deposit protects people from fraud and
identity theft. In fact, check recipients are 30 times more likely to
have a problem with a federal check than with a direct deposit payment.
Last year alone, half a million people called Treasury to report
problems with checks.
It's easier. Payments go straight to the recipient's bank
account, so they don't have to go to the bank or credit union to
deposit a check.
It gives control. Direct deposit is completely
predictable. The payment is deposited at the same time each month and
the money is immediately available wherever and when ever it is needed.
Savings to the Government: Direct deposit represents significant
savings over checks--75 cents per federal benefit payment. If the
almost 159 million benefit checks, of which 147 million were Social
Security and Supplemental Security Income (SSI) payments, that FMS
issued in FY 2005 were converted to direct deposit, the savings to the
American taxpayer would total an additional $120 million. The vast
majority of these savings ($110 million) would accrue to the Social
Security Trust Fund.
Certainty in Uncertain Times: The benefits of direct deposit were
reaffirmed and came sharply into focus in the wake of hurricanes
Katrina and Rita, which displaced thousands of federal benefit
recipients days before their checks were scheduled to arrive. In
preparation for uncertain times, a simple action like enrolling in
direct deposit can offer much-needed peace of mind to people who get
federal benefits, most of whom are seniors, the disabled or people with
low incomes. While Treasury and the federal program agencies were able
to make check payments available to individuals on a timely basis,
extraordinary logistical challenges had to be overcome to deliver the
payments in the disaster areas or to the individuals who had been
relocated to other areas of the country. FMS used its technology during
the Katrina recovery to identify for the Social Security Administration
specific persons and areas where Treasury check payments were not being
cashed. This assisted SSA in quickly arranging replacement payments for
beneficiaries. However, the special handling of the check payments in
the disaster areas was labor intensive and inefficient. The inherent
delays in delivering checks caused inconvenience and hardship for the
evacuees. Individuals who had direct deposit were able to access their
funds immediately on the payment date from almost anywhere.
Go Direct Campaign: Today, around 80 percent of the federal benefit
payments are made by direct deposit. However, the direct deposit growth
rate for federal benefit payments has leveled off to a rate of less
than one percent a year compared to the five percent per year increase
between FY 1997 through FY 1999. As the government prepares for the
enormous increase in retiring baby boomers in the years to come, it is
critical that the government reverse the low direct deposit growth rate
trend. To increase the use of direct deposit for federal benefit
payments, FMS, partnering with the Federal Reserve, has a nationwide
campaign called Go Direct.
Go Direct is a nationwide, grassroots marketing campaign designed
to motivate Americans to use direct deposit for Social Security, SSI
and other federal benefit payments. The campaign champions Treasury's
longstanding efforts to shift from paper to electronic payments.
Enrollment made Easy: Treasury uses technology to make the direct
deposit sign up process fast, easy and convenient for everyone
involved. Individuals may call our Go Direct toll-free number (800-333-
1795) or use the recently launched online enrollment tool available at
www.godirect.org. The online enrollment tool is available to financial
institutions, nursing homes, community service organizations, and other
organizations that would be completing multiple sign-ups. It greatly
streamlines the process by allowing organization to set up a one-time
secure profile that can be used time and again by to sign up federal
benefit recipients for direct deposit. Each time an enrollment is
entered, the profile provides basic information, which means faster
enrollments with fewer errors. From the Go Direct campaign launch in
June 2005 through mid-March, over 326,000 individuals signed up for
direct deposit, of which approximately 44,000 have signed up through
the online enrollment tool.
In summary, the underlying technology used for direct deposit
program is efficient, safe, and secure. Direct deposit effectively
improves the delivery of public benefits to U.S. citizens. Increasing
the growth rate of direct deposit participation for Social Security and
other federal benefit payments will continue to improve service while
saving taxpayer funds.
Statement of Kentucky Cabinet for Health and Family Services,
Frankfort, Kentucky
During the past year and a half, the Kentucky Cabinet for Health
and Family Services has been actively exploring the use of mobile and
Web-based computer technology with the goals of improving the quality
and timeliness of child protection service investigations and of
electronically verifying visits by social workers in child protection
cases. This study consisted of a proof of concept using mobile
technology including PDAs and laptops equipped with digital cameras and
GPS capability; a field test using tablet PCs and laptop technology and
a pilot project in one of six Cabinet regions in the state.
During this 18-month process, a ``tool kit'' consisting of a laptop
computer loaded with an investigation template; digital cameras with
docking stations and date/time stamping capabilities; and state-of-the-
art cell phones was created and is currently being used by 50 social
workers in the field. The ``tool kits'' have the combined benefits of
guiding social workers through the investigation process to assure
accuracy and completeness, of date/time stamping the high resolution
pictures taken at the referred child's location and condition, and of
direct downloading of information collected into the mainframe-based
worker information system (SACWIS). As a result, accuracy and
timeliness of documentation is greatly improved, social worker
efficiency is increased and electronic verification of home visits can
be provided. A report of the results of the ``tool kit'' pilot will be
completed on May 15th of this year and funding has been included in
both the Kentucky House and Senate budgets and is awaiting passage.
With funding secured, the refined ``tool kits'' will be distributed to
all 1,500 of Kentucky's child protective service workers during the
next state fiscal year (SFY '07).
In a related project, Kentucky's worker information system is in
the process of being upgraded to allow for remote access using Web-
based technology. When fully operational, social workers will be able
to access the mainframe system that contains all of the case
information on a child and family from any personal computer with Web
access capability. Again, having critical information available to all
social workers concerned with a case enhances the Cabinet's ability to
protect the children of the Commonwealth.
Statement of Brian Kibble-Smith, J.P. Morgan Chase Treasury Services,
Chicago, Illinois
Introduction
JPMorgan Chase Bank, N.A. (JPMorgan) has had a long and productive
history as the industry pioneer in the use of debit cards for the
delivery of government funds and services. For over 17 years, one unit
of the company has specialized in the delivery of public assistance
benefits and entitlements through Electronic Benefits Transfer (EBT).
More than 30 states and territories have selected JPMorgan to provide
the EBT debit cards and related services that have replaced paper Food
Stamp coupons nationwide. In most states, EBT has also replaced the
paper checks once relied upon by programs such as Temporary Assistance
to Needy Families (TANF).
Nationally, JPMorgan is responsible for supporting about eight
million EBT accounts, handling over $1 billion per month in benefit
payments, and for disbursements under the Food Stamp and TANF programs,
among others, that support more than 60% of our country's neediest
households and individuals. Working closely with its state clients,
JPMorgan operates EBT services that have repeatedly won the agencies
using them recognition for excellence in technology and government.
For example, in 2004, Government Technology magazine wrote of one
of JPMorgan's clients: ``The California [EBT] program is an excellent
example of a tremendous effort that involved all levels of government
and the private sector.'' That year, the California EBT project,
supporting nearly 900,000 California EBT cases under the Food Stamp
program, TANF and others, received the Electronic Funds Transfer
Association's ``EBT Project of the Year'' award and a state award for
``excellence in technology.''
Debit Cards in Government Generally
Debit cards provide the convenience, safety and reliability of
direct deposit for their users. For governments, they are a tool for
cost reduction, fraud control, greater accountability and improved
services. In contrast, checks and vouchers are labor intensive,
expensive to issue and replace, easily lost or stolen, and subject to
forgery. Paper checks can also be expensive or difficult for recipients
to cash. Americans without bank accounts reportedly spend roughly $8
billion annually for check cashing and similar services. Debit cards
are an excellent way to serve consumers who have no other banking
relationship, reducing the consumer's cost of accessing funds while
enhancing convenience and safety.
EBT is just one of many government roles for debit cards.
Governments at all levels are using debit cards to deliver funds as
diverse as:
Federal entitlements, like Social Security, Supplemental
Security Income (SSI) and Veterans Administration (VA) payments
Employee payroll and expense advances and reimbursements
Child support payments
Unemployment compensation
Pensions and annuities, and
Incidental fees and payments, such as those to trial
witnesses and election judges
Other government-related payments and programs suitable for debit
cards include healthcare savings accounts, workers compensation, in-
home care providers, subsidized foster care and child care payments,
and check (and sometimes cash) disbursements to former inmates released
from correctional centers. The use of debit cards only recently began
reaching into some of these areas.
The federal government took an initial, significant step toward
debit cards in 1991, when the JPMorgan unit responsible for EBT was
selected by the U.S. Treasury Department to conduct a pilot program for
delivery of federal payments and entitlements, including Social
Security, SSI, VA, Railroad Retirement, and others through a debit
card-accessed, direct deposit account. The program was a success and
led to a steady expansion in the application of debit cards to
government payments. Over 50,000 of these accounts remain active with
JPMorgan.
In 2006, JPMorgan extended its debit card service one step further,
rolling out a pre-paid debit card to speed payment of tax refunds
geared especially for people who qualify for refunds under the Earned
Income Tax Credit (EITC) and who do not have bank accounts. The card
allows taxpayers to get their EITC refund through a debit card instead
of a paper check, eliminating check cashing fees and allowing consumers
to access their funds directly at retailers through Point-of-Sale (POS)
purchases and from ATMs.
The card was made available in numerous cities across the country
in a partnership between JPMorgan and community organizations that
gathered together under the Volunteer Income Tax Assistance (VITA)
program for free tax preparation services. The money is available to
consumers as soon as the IRS deposits the EITC refunds electronically.
Consumers who also received a federal payment such as Social Security,
SSI or VA could enroll for direct deposit of future payments in the
same account as they received their EITC.
As the public and private sectors have continued their movement
toward increased debit card usage, consumers' groups have expressed
concerns at times about debit cards and regulatory compliance. In
JPMorgan's debit card business, compliance is an important focus. For
years JPMorgan debit cards for payroll, Social Security and more recent
applications like child support and unemployment compensation have
essentially replicated the process of direct deposit banking. This has
included compliance with applicable banking and consumer protection
regulations.
These laws and regulations include, for example, the requirements
of Federal Reserve Regulation E, FDIC insurance for individual
accounts, Gramm-Leach-Bliley privacy notices, ``Know Your Customer''
requirements and name checks against Office of Foreign Assets Control
watch lists. Federal and state policy-makers and regulators have paid
considerable attention lately to laws and regulations as they pertain
to emerging uses of debit, stored value and pre-paid cards. JPMorgan
has been very much involved over the years in helping to develop new
regulations and reform existing ones to make card-based payments work
at their best for all stakeholders. The company intends to stay
involved in this area and lend its expertise wherever it is beneficial.
Debit Cards in Emergencies and Disasters
One use of debit cards that JPMorgan has been engaged in since 1999
but which only recently received national attention is the large-scale
issuance of cards in an emergency. Hurricanes Katrina and Rita
magnified the importance of debit and EBT cards as a part of our
country's emergency response infrastructure. JPMorgan is the EBT
contractor for Louisiana, and so was directly involved in the use of
EBT and debit cards issued after these two disasters. Some of the ways
JPMorgan deployed debit cards included:
Working with Louisiana Parish staff, JPMorgan issued over
414,000 emergency Food Stamp benefit EBT cards in that state for
victims of both hurricanes
JPMorgan converted Louisiana unemployment checks to debit
cards, rapidly issuing over 300,000 cards which allowed unemployed
Louisianans to access their funds even if they had relocated to another
state
JPMorgan is now replacing Louisiana child support checks
with up to 50,000 debit cards
JPMorgan added a first-of-a-kind state cash benefit, the
``Emergency Transition Assistance Program'' to the EBT service in
Louisiana, serving 10,000 people
In other states where JPMorgan is the EBT contractor,
JPMorgan issued thousands of EBT cards to Gulf Coast evacuees, notably
in Tennessee, issuing 5,000 EBT cards and could have issued 30,000 if
needed
JPMorgan issued several hundred thousand cards for the
American Red Cross to provide financial assistance to disaster victims
and for staff and volunteers to pay their expenses
In Texas, JPMorgan issued about 12,000 disaster relief
cards, each with $2,000 in federal cash benefits, to Katrina evacuees
in shelters
Finally, JPMorgan issued payroll cards on behalf of
numerous public and private sector clients not able to send payroll
checks to employees in the affected areas, including McDonald's, the
Teamsters Union and the City of New Orleans itself
JPMorgan had the expertise to respond because the company had
initiated the concept of the emergency debit card, first by issuing
75,000 EBT cards for Food Stamp benefit access in North Carolina after
Hurricane Floyd, then 100,000 cards in Virginia after Hurricane Isabel,
and 400,000 cards in Florida during the 2004 hurricane season before
expanding the service's scope and reach last year. In addition, through
novel emergency measures, JPMorgan quickly restored EBT services to
over 1,200 small retailers in Lower Manhattan after the attacks of 9/11
destroyed telecommunication switches in the World Trade Center,
shutting off these retailers' ability to accept EBT cards. JPMorgan
coordinated with retailers and government to keep benefits flowing at
this crucial time.
Today, of JPMorgan's current EBT client states, benefit agencies in
Alaska, California, Florida, Georgia, Guam, Hawaii, Louisiana, South
Carolina and Tennessee have each added high-volume, emergency EBT card
issuance services to their regular EBT contracts. The company works
closely with state agencies in pre-planning to ensure it can deliver
both the cards and additional support needed for their effective use.
After Katrina, for example, California increased its emergency card
requirement from 400,000 to 1,000,000 so JPMorgan is increasing its
delivery and support capacity for that state should it see its time of
greatest need.
In addition to these large-scale uses, JPMorgan has conducted many
smaller-scale emergency card issuances, beginning with its replacement,
chapter-by-chapter, of the checks and vouchers formerly used by the
American Red Cross. Prior to Katrina, these cards were used for local
emergencies affecting families and individuals. JPMorgan has issued
emergency EBT cards for victims of tornados and even issued
approximately 200 cash-value cards for evacuees from Haiti during that
country's recent civil unrest.
JPMorgan views EBT, debit, stored value and pre-paid cards as more
than a ``best practice'' for government and an effective access
mechanism for funds recipients. They have proven themselves to be a
reliable, resilient, and mobile component of our national disaster
response capabilities.
EBT and WIC Benefits Delivery
The next frontier for EBT is the federally-funded, state-
administered Supplemental Nutrition Program for Women, Infants and
Children (WIC). WIC has historically relied on cumbersome paper
``prescriptions'' to enable expecting mothers or those with small
children to buy specific food items for themselves and their children
as prescribed by WIC clinics in addition to the pre- and post-natal
care the clinics provide.
For benefit recipients, these paper forms are stigmatizing and
inefficient, often forcing WIC mothers to choose between purchasing an
entire food prescription at once or risk seeing portions of the monthly
prescription go unused and expire. For WIC-participating retailers, the
paper forms are labor intensive to process and cause them unnecessary
write-offs when completed or submitted incorrectly, even in a minor
respect. There is clearly a need for improvements in WIC benefit access
and management.
In addition, WIC is one of the largest ``discretionary'' USDA
budget items. It is important to use cost-effective technology to
relieve funding pressures on taxpayers wherever possible. An online EBT
solution for WIC can emulate the savings, management efficiencies and
reductions in benefit fraud and diversion experienced as the Food Stamp
program converted from paper to plastic. JPMorgan and the USDA's Food
and Nutrition Service both regard EBT as a key part of a long-term WIC
strategy.
Due to the information-intensive requirement for in-lane
verification of specific WIC items, price and quantities, it was long
believed that using expensive chip-imbedded ``smart cards'' was the
only way to bring EBT to WIC. Smart cards can cost up to ten times as
much as ordinary magnetic stripe cards to produce. They also require
special equipment at participating retailers and WIC clinics to allow
for loading and accessing information on the chip at an additional,
significant cost.
The far less expensive magnetic stripe cards, however, are
universally used by consumers in the national retail POS and ATM
infrastructures. For this reason, they have long been the standard
technology for government benefits delivery in the U.S. In sharp
contrast, numerous smart card EBT projects have ended or are winding
down, having failed to establish the technology as a preferred benefits
delivery solution for government.
In July 2005, JPMorgan launched a successful WIC pilot program in
Michigan that uses standard magnetic stripe EBT cards to replace paper
food prescriptions for more than 3,500 WIC families at over 30 retail
locations in Jackson County. The pilot is going very well and has
proven the effectiveness of the JPMorgan magnetic stripe solution for
all stakeholders. JPMorgan hopes to extend the technology to additional
states through more pilots and, eventually, statewide WIC EBT services.
Using magnetic stripe cards for WIC avoids the national retrofit
that would be needed to make retailers smart-card ready and eliminates
the need for specialized smart card equipment in WIC clinics. Magnetic
stripe cards are already used with the POS infrastructure grocers have
in place, making WIC benefits potentially redeemable on a uniform basis
with other benefits accessed by standard EBT cards. Market forces may
eventually bring about expanded use of smart cards, and at that time,
the technology may become appropriate for a variety of debit
applications. Unless and until that happens, however, promoting smart
cards for WIC also requires committing to a substantial, almost
exclusively federal expense.
Conclusion
There are many areas of state and local government that could
benefit from greater use of debit and EBT cards. JPMorgan has even
extended the government card concept overseas, replacing with debit
cards the Social Security checks formerly sent to expatriated
recipients in several countries, and the United Kingdom's former
``coupon-based'' system for government pension issuance to 4,000,000
annuitants. Debit cards have proven their worth to government millions
of times over in both day-to-day usage and under the most extreme
emergency conditions.
JPMorgan appreciates the opportunity to submit these comments.
Statement of National Association of State Workforce Agencies
The National Association of State Workforce Agencies (NASWA)
appreciates the opportunity to submit written testimony addressing how
technology is used to serve beneficiaries and taxpayers of public
benefit programs under the Subcommittee's jurisdiction.
The mission of NASWA is to serve as an advocate for state workforce
programs and policies, a liaison to federal workforce system partners,
and a forum for the exchange of information and practices. Our
organization was founded in 1937. Since 1973, it has been a private,
non-profit corporation financed by annual dues from member state
agencies.
The workforce development system has come a long way in offering
services through automated systems. Externally, change is driven by
consumer's expectations of modern service delivery, ever changing
federal funding and legislative mandates. Internally, change is driven
by Governors' e-government initiatives founded on providing private
sector caliber services. Pressure is also exerted from the decline in
the purchasing power of annual appropriations for workforce development
programs and an increasing number of customers. These forces have led
state agencies to embrace information technology (IT) modernization as
an answer to providing improved customer service.
Gone are the days of waiting in line to register for unemployment
benefits, and gone are the days when workers and their families waited
long periods for the arrival of their benefit checks. Unemployed
workers now apply for their benefits online or by telephone; have their
funds electronically deposited in their checking accounts (or receive
payments on a debit card); and, register with an internet job bank to
search for employment. Employers can register, calculate their tax
liability, remit payments, and file their quarterly wage reports
online.
Although the workforce development system strives to continue
improving services through IT modernization, annual under funding by
the federal government limits states' ability to modernize fully. The
result is states often are forced to develop a patchwork of systems
rather than a comprehensive modern infrastructure. Illustrative of this
patchwork are states with the latest automated customer interfaces
supported by antiquated mainframe and storage capability. Other states
have improved automated systems to assist workers, but cannot afford to
do so for employers. While the examples of modernization provided below
are indeed successes, they represent only part of how the workforce
development system could transform services if sufficient and
consistent federal funding were appropriated.
Information contained in this testimony was obtained from workforce
agency Unemployment Insurance Directors and Information Technology
Directors. The testimony also used information collected by the
Information Technology Support Center (ITSC)--a collaboration of the
U.S. Department of Labor, Mitretek Systems, Affiliated Computer
Services, Inc., and the University of Maryland. ITSC is supported by
the U.S. Department of Labor. Finally, information was gleaned from the
state submitted Performance and Capital Investement (PCIs) requests to
the U.S. Department of Labor based on the Resource Justification Model
(RJM).
MODERNIZATION EFFORTS
States have undertaken IT modernization in the UI Benefits and UI
Tax Systems. Modernization of these systems involves a replacement of
states ``core'' mainframe systems (which are obsolete) to more robust
client-server systems. When possible, state workforce agencies
undertake the redesign of both systems. At other times, they undertake
development separately because of a lack of funds. A mapping of
business processes and reengineering within the framework of the
Governor's enterprise model and federal reporting requirements must
occur before new e-systems are built. Some of the states engaged in
comprehensive UI systems redesign are New Jersey, New York, Indiana,
Illinois, Ohio, Pennsylvania, Kansas, New Mexico, Michigan, and
Colorado.
The Utah Department of Workforce Services (DWS) recently completed
a total redesign of their UI benefit system. Utah's Comprehensive
Unemployment Benefit System (CUBS) replaced a mainframe plagued by
excessive maintenance costs, inadequate accounting systems, and
antiquated technology. The system includes electronic workflow, imaging
and expanded functionality for Benefit Payment Control (BPC) and
Benefit Accuracy Measurement (BAM). Claims enter the system via
Interactive Voice Recognition (IVR) application, Internet, or manually
by customer service representatives (if the claimant is unable to
complete the filing). Some decisions are automated (when no additional
fact finding is required). The system, which went into production on
January 1, 2006, generates and stores electronic documents and
automatically creates workflow queues for adjudication, wage
investigation and more. Benefit payments and adjustments are generated
in real time and users are able to view results immediately. No paper
checks are printed.
California's Employment Development Department (EDD) is working to
modernize their Internet initial and continued claims system. These
initiatives will provide a self-service filing system for UI claimants
that do not require staff intervention. This will allow claimants to
view and select available appointments for adjudication matters,
electronically deposit benefit payments, redesign thirty-year old
payment and check printing programs, develop a claims activity database
to improve EDD's reporting capability, and develop a claim registry
database to store claimant banking information for the direct deposit
option. These improvements will help protect the state's UI trust fund
by reducing improper payments and fraud and abuse. Cost savings for
both of these projects is projected to total $72,959,746 over a six
year period.
States are also creating various Internet applications for their
employers, often incorporated into comprehensive UI Tax System
modernization efforts. A sampling of employer focused Internet
applications include: on-line employer registration systems to allow
new employers to open their UI accounts--a total of 33 states are
currently offering employer registrations services, while 15 states are
in the development phase; Internet wage reporting systems to allow
employers to report on quarterly wages of their workers; Internet Tax
Reporting to allow employers to calculate their tax liability and
complete necessary forms--a total of 38 states are operational with
wage and tax reporting systems and another 11 states are in the
planning and development phase; and Electronic Funds Transfer (EFT) for
tax payments to allow employers to remit their tax liability to the
state--a total of 24 states are operational, 15 are accepting credit
cards and 4 states are in the planning and development phase.
The Connecticut Department of Labor has built an Internet system to
allow employers to register online for UI taxes, another to report
changes in status, and another to file their tax returns, report wages
and pay their UI taxes. It is in effect a suite of Internet services
for employers. These systems make liability determinations and compute
taxes due for employers. The information once completed is brought into
an electronic document management system for storage and retrieval.
Connecticut is also working to augment another tax and wage reporting
system which allows employers who use commercially available payroll
software applications to electronically file their UI and State Revenue
Service returns together along with electronic payments. Currently this
system works browser to server. Connecticut is modifying it to work
server to server. These systems enable the state to meet national
performance goals, register employers more timely and accurately,
eliminate paper processing and reduce required number of staff
necessary in the registration process. The total cost of the projects
is estimated at about $1,000,000, while the total cost savings is
$360,000 per year.
In Nebraska the Workforce Development--Department of Labor replaced
their Automated Tax Report Preparation and Calculation systems.
Preparation of the UI Employer Tax Report includes somewhat difficult
calculations of gross, excess and taxable wages paid, not just during
the quarter but also on a calendar year basis. Web-based reporting
tools automated the task, saving employers an estimated one hour for
each report. In Nebraska, 15,226 reports were filed in the most recent
quarter. By utilizing current technology Nebraska employer time-saved
per quarter is 15,226 hours. Time saved annually totals 60,904 hours.
Bookkeeping, accounting and auditing clerks in Nebraska earn an average
hourly wage of $12.95. Thus, total employer savings from electronic
filing of wage reports is estimated at $788,706 annually in Nebraska
alone.
The Oklahoma Employment Security Commission (OESC) is engaged in an
effort to provide quicker and safer payment of funds and decrease the
time processing checks via mail. The OESC is also building hyperlink
capabilities to provide quicker access to employer information and
better customer service. In addition, a planned Interactive Voice
Recognition (IVR) Tax script would increase customer service and
decrease ``live real-time'' customer support. Among many other
functionalities it is enhancing the wage file to display wage source
code, re-designing data entry screens to establish continuity and
conformity, and re-designing the Employer Payment Plan to increase
worker efficiency in research and processing data. The cost of
implementation is $3 million, while cost savings will be $500,000 per
year.
Most workforce agencies also have implemented call centers
(handling specific geographic areas) and virtual call centers (call
centers linked to receive the next call in queue regardless of
geographic location). Such centers offer initial and continued claims
services, adjudication of claims, general help, and much more for
beneficiaries and employers. Today, 47 states operate call centers--
with nine states having one call center. In addition, 15 states are
operating virtual call centers, while eight states are in the
development phase. Many workforce agencies have implemented Internet
systems for unemployed workers to apply for and manage their continued
UI claims. These systems have reduced customer wait periods and payment
problems. Most states report great popularity among customers for
Internet based systems. A total of 43 states are operational with
Internet initial claims systems, while 7 are in the planning phase. A
total of 37 states are operational with Internet continued claims,
while 10 states are in the development phase.
Other technology-related work involves the use of Interactive Voice
Recognition (IVR) within call centers and virtual centers to help
offset staff costs and combat UI fraud. For example, the State of
Washington redesigned its two IVR applications for the following
business reasons:
Implement fraud detection capability;
Consolidate two IVR applications;
Implement a ``One telephone number'' approach for
customer service; and,
Improve how calls are routed.
The fraud detection-tracking tool saves and stores the telephone
call details for each transaction made to the IVR. The call detail
includes the telephone number used to make the call, the social
security number (SSN), and the transaction type. This allow
investigators to find cases of multiple telephone calls from the same
phone number using different SSN's, calls from out of the country, and
calls from collections companies illegally trying to obtain
confidential information. In addition, it allows investigators to
disprove or prove cases of alleged forgery.
Other technology modernization includes imaging applications to
reduce storage needs; SUTA dumping software implementation; record
cross-match technology with the Department of Motor Vehicles, both the
State and National Directory of New Hire, Social Security
Administration, reemployment services technology, implementation of new
emergency preparedness and disaster recovery processes, and replacement
of older technology.
In Idaho, the Department of Commerce & Labor envisioned replacing
outdated laptop computers used for Unemployment Insurance (UI) tax
work. The state had used these laptop computers for UI audits since
1990 to implement its computer-assisted audit program (CAAP) designed
around the UI audit process. Idaho anticipated the use of modern laptop
computers would help it consistently meet the stringent Tax Performance
System (TPS) standards, believing the $104,208 would result in a return
on investment of $571,453. When the USDOL was unable to fund Idaho's
Performance and Capital Investments (PCI) request, it invested its own
state money (approximately $70,000). Many of the originally anticipated
benefits have been realized.
CUSTOMER SERVICE AND COST SAVINGS
Newer systems ensure improved customer service by avoiding systemic
failures that older automated systems often experience. New electronic
benefit payment systems provide claimants faster access to accurate
payments. In addition, new technology increases a state's ability to
offer customers multiple self-service options. Claimants using the web
to file their claims are able to view and understand their claim
information online or they can print copies of their IRS 1099 forms
(instead of requesting staff to prepare and mail forms). Employers also
heavily use online access to information. By using current technology
to provide more information on the monthly charge statements, employers
can identify what type of charges they have, as well as the reason for
any credits.
The structure of current technologies is scalable and allows state
agencies to respond quickly and fairly cheaply to legislative requests
(e.g., UI extensions) and national emergencies (e.g., hurricanes), or
other mandates. Current technology systems allow states to respond
quickly to changes because the systems lend themselves to rapid
development processes as a result of modular and object-oriented design
architectures. Finally, current technology grants state staff access to
accurate information and staff can therefore respond quicker to
legislative, employer and claimant inquiries further improving service.
IT investment in state workforce agencies' infrastructure results
in cost savings to the taxpayer and improved service quality to
beneficiaries and employers. Cost-savings result primarily from reduced
fraud, error, and staff costs and enhanced service delivery efficiency.
Employers also experience a substantial cost savings, stemming from
improved compliance processes. Like cost, many aspects of customer
service quality are impacted by investments in technology. Quality
areas impacted include ability to avoid failure of automated systems;
ability to provide self service options to the public; and ability to
respond to legislative or other changes.
On-line wage-reporting systems enable employers to submit their
data electronically and quickly make information available to state
decision makers. This facilitates accurate benefit payment decisions
and reduces error rates. Newly implemented cross match technology
improves detection of benefit overpayments and cost-recovery
operations, and stops additional fraudulent payments. IVR technology
associates telephone numbers to specific claims, helping identify those
who fraudulently submit more than one claim from the same telephone
number.
New equipment is cheaper to maintain, but mostly new technologies
save on staff time and associated costs. IT investments also positively
impact reporting requirements. Aging technologies greatly complicate
federal and state reporting. It is labor intensive to modify older
systems to meet new reporting requirements. Over time, a vast array of
specialized systems was created, many times using desktop applications,
increasing the complexity of meeting consolidated reporting
requirements. Further, the impact of technology investment on staff
costs is substantial. Finding staff fluent in old technology is
difficult and comes at a premium price. Training new staff in old
technology is even more difficult and does not promote enterprise
knowledge growth. New technology investment eliminates such issues.
Electronic tax payment systems decrease state workloads by
eliminating the need for labor intensive processes like opening
envelopes, completing data entry forms, encoding treasury forms,
preparing batch deposits, and transferring checks to bank accounts.
Electronic benefits payment systems limit the number of outstanding and
cancelled warrants to track, and save on banking fees and treasury
charges. As customers increase their use of the on-line systems the
number of phone calls and requests for assistance is also greatly
reduced, generating more cost-savings. Finally, offering employers the
capability of on-line account creation provides states more accurate
information on workers and wages and requires less staff follow up.
Employers benefit from IT investments primarily from improved
automation of services and the need for less staff time to comply to
state and federal program requirements. Electronic filing of wage
reports saves employers' time in collecting employee wage data,
completing forms, verifying data, copying, and mailings. Automated tax
reporting systems simplify difficult calculations of gross, excess and
taxable wages paid, again saving on time associated with bookkeeping,
accounting and auditing clerks. Electronic tax payment curbs employer
costs for check preparation, verification, mailing, staff and banking
fees. Finally, on-line systems for establishing new UI accounts are
less time consuming.
THE NEED FOR SUFFICIENT FUNDING
Secretary of Labor Elaine Chao stressed in her recent statement
submitted to the House Labor, Health and Human Services and Education
Appropriations Subcommittee a desire to improve the financial integrity
of the UI system. NASWA supports this goal, but states are finding it
increasingly difficult to accomplish. Since 1995, appropriations for UI
state operations have not been adjusted for inflation. Although it is
true the UI program operates more efficiently today than it did ten
years ago, further improvements in program integrity and productivity
are increasingly difficult to attain with marginal changes to out-of-
date computer systems in many states, some of which are more than 30
years old. Further, rising personnel and service costs without
corresponding increases to federal level appropriations are forcing
states to cut staff, reduce integrity efforts, and seek other sources
of funding.
To help achieve Secretary Chao's goal, NASWA has requested of
Congress $3.023 billion for state administration of UI in fiscal year
2007 and $100 million for computer system modernization. NASWA
understands the pressures Congress faces as it confronts the task of
cutting the federal budget deficit. However, we believe the performance
of the workforce development system and the benefits of this investment
warrant Congressional support.
Accuity Inc.
Skokie, Illinois 60076
April 18, 2006
The following Statement is submitted for the hearing record and
references the Hearing on the Use of Technology to Improve Public
Benefit Programs dated April 5, 2006.
Brent Newman on behalf of Accuity Inc. of Skokie, IL is submitting
this Statement for the hearing record. Mr. Newman is a Managing
Director of Accuity.
Since 1911, Accuity has been the Official Registrar of the American
Bankers Association U.S. Routing and Transit Codes, a role that
requires it to assign ABA codes to every bank, credit union, and
savings and loan. In its role as ABA registrar, Accuity is required to
maintain up to date information on more than 110,000 bank, credit union
and savings & loan locations across the United States. In a commercial
capacity, Accuity provides the most comprehensive databases and
software to assist financial institutions in processing electronic
funds transfers and abide by U.S. banking regulations. As such, Accuity
has earned a unique reputation as the trusted source for information
about, and for, the banking industry. In addition to providing data
solutions the Federal Reserve, the FDIC, and the Small Business
Administration, Accuity manages a technology service to aid the SSA's
SSI benefit program.
Accuity strongly supports the use of technology to improve public
benefit programs and clearly understands the challenges associated with
determining eligibility based on the value of applicants' financial
assets held at financial institutions.
In September 2003, Accuity took on a contract to design, develop
and operate a pilot program to replace the existing Social Security
Administration (SSA), Supplemental Security Income (SSI) benefits
application and re-determination approval process. SSI is a federal
income-supplement program funded by general tax revenues and provides
financial benefits to low-income aged, blind and disabled persons.
There are approximately seven million SSI benefit recipients in the
United States. Eligibility requirements are based on both income and
current financial resources. For an applicant to be eligible for SSI
payments, the applicant must not have financial asset resources in
excess of $2,000. As part of the eligibility process, the SSA is must
determine the total value of an applicant's financial assets held at
financial institutions.
Prior to the Accuity solution, the SSA's asset verification process
deployed paper-based forms filled in with information provided by the
SSI applicant. The SSA would mail an asset verification request form
(SSA Form e4641) to the applicant's financial institution. Under this
process, response time to the e4641 request form averaged between 30-60
days while the financial institution response rate was varied from 10%
to a rate less than 50 percent.\1\ When the financial institution
response time exceeds 90 days, it is SSA policy to approve payments of
SSI benefits to the applicant (with a re-determination performed after
one year).
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\1\ Response times and rates are unofficial estimates received from
SSA personnel. Prior to the Accuity Asset verification System, SSA had
no system in place to track actual SSI program statistics.
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The stated goals of the SSA to improve the SSI Asset Verification
Process were:
1. Increase the efficiency of the account verification request and
response process
2. Maximize the financial institution response rates
3. Minimize the paperwork and paper flow through automation
4. Improve the applicant experience
5. Improve the ability to detect undisclosed applicant accounts
and accurately verify financial assets thereby preventing overpayment
of SSI benefits to ineligible recipients
6. Provide analysis tools to measure efficiency, effectiveness and
cost of the financial asset verification process.
The Accuity Asset Verification System included three main
components:
1. A secure web-based application for processing asset
verification requests and responses between the SSA and the financial
institution;
2. A comprehensive database of registered financial institutions
participating in the asset verification program; and
3. Geographic coding logic developed to maximize the detection of
undisclosed financial assets
Accuity designed, developed and implemented on February 17, 2004,
an automated, secure, web-based application to facilitate the e4641
asset verification request and response process. The application
supports an automated paperless transmission of all asset verification
requests from an SSA field office to the respective financial
institution and the corresponding response from the financial
institution back to the SSA field office. The financial institution is
able to receive a request via an easy-to-use and secure online
interface that will notify the financial institution immediately when a
request has been submitted from the SSA. The information is provided as
a form that emulates the current paper form used by the SSA. After
retrieving the account information related to the SSI applicant, the
financial institution enters the information into an efficient online
form and clicks submit to instantly deliver it to the SSA.
Application security for the Asset Verification System was designed
and implemented to comply with SSA security requirements as defined by
the United States Commerce Department's National Institute of Standards
and Technology (NIST). The Accuity application and associated network
have undergone independent security audits from two financial
institutions (Citibank and Bank of America). Additionally, Accuity
instituted a third party ``ethical hack'' test, performed by an
independent leading industry organization (International Network
Services). All three audits received positive opinions. Accuity's Asset
Verification System has the capability to process millions of asset
verification requests for the SSA. The application includes a robust
analytics and reporting module that allows SSA to analyze volumes,
trends, costs, and statistics on both a macro and micro level.
The initial phases of the SSA project were rolled out to all SSA
field offices in New York and New Jersey (a total of 120 SSA field
offices and 1200 SSA field personnel). Leveraging our position as the
official registrar of ABA U.S. Routing and Transit Numbers, and our
unique relationships with all U.S. financial institutions, Accuity
recruited and registered to the program approximately 80% of all
financial institutions in New York and New Jersey (NY/NJ). There are a
total of 10,325 unique financial institution locations in NY/NJ
participating in the automated asset verification program. This
includes 100 percent of the largest 25 institutions in NY/NJ. In many
cases, Accuity worked closely with the larger institutions to
consolidate multiple-branch processing of e4641 requests to a single
centralized processing site, thus further streamlining the end-to-end
process. Each e4641 request for asset verification can now be sent
electronically from the SSA to an assigned representative at an
assigned financial institution location. Instead of mailing a paper
request form to a general financial institution address indicated by
the SSI applicant, the request is now sent and received instantaneously
through Accuity's Asset Verification System, instantaneously reaching
the correct person at the correct financial institution location; the
location and person directly responsible for processing asset
verification requests. In all cases, Accuity's comprehensive financial
institutions database drives the routing of all asset verification
requests to the appropriate financial institution location and
respective personnel within the financial institution.
In addition to a standard request being sent to the financial
institution designated by the SSI applicant, Accuity designed and
implemented geographic-centric logic that allows the SSA to drive
alternate request routing to institutions not defined by the applicant.
The system searches Accuity's database, and routes alternate multiple
sub-requests to financial institutions within certain geographic
distance parameters from the designated institution. This process
ensures that financial institutions within a reasonable proximity to
the applicant's home are canvassed for possible undetected financial
assets.
The following results were achieved from Accuity's Asset
Verification System:
1. Overall financial institution response rate of 96% versus
previously experienced 10% to 50% rate
2. Average financial institution response time of 11 days versus
30-60 days
3. In excess of 60% of all responses received in one week or less
4. A 40% decrease in the time required for SSA personnel to
process a verification request
5. An 80% reduction in postage costs (a potential savings of $1.4
million)
6. A 100% reduction in paper flow to and from the SSA
7. One of five asset verification requests disclosed an undetected
account yielding potential annual savings through suspension of
benefits. This detection of improper benefit payments has potential to
yield annual savings in excess of $300 million dollars.
Due to the successful results, SSA continues to expand the SSI
Asset Verification System developed and operated by Accuity. SSA's
stated goal is to expand the process on a national basis as they
continue to study the overall SSI Benefits Program.
The Accuity Asset Verification System has potential benefits for a
myriad of government programs administered at both the federal and
state level. This would include public benefit programs such as
Medicare, Medicaid, Food Stamps and Child Care programs.
Accuity's proven Asset Verification System can be implemented to
assist other public benefit programs by providing the secure
infrastructure to connect the government sector to the financial
institution community. The Accuity system can allow federal and state
agencies to simply and effectively provide external data matches for
recipient and/or applicant eligibility determination.
As Dennis Fecci, former Chief Information Officer, New York City
Human Resources Administration, discussed with the Subcommittee in
recent testimony, there are many challenges facing states and
localities as they develop eligibility determination systems. The use
of new technologies and data matches such as those perfected by Accuity
can ensure that only eligible person receive needed benefits and
significantly decrease improper payments and improve federal
stewardship
We appreciate this opportunity to inform the Committee's
deliberations and would be pleased to provide any additional
information regarding the Accuity Asset Verification System upon your
request.
Brent Newman
Managing Director
Statement of SAS Institute Inc., Cary, North Carolina
Thank you Chairman Herger, Ranking Member McDermott, and members of
the Panel for this opportunity to provide comments on ``The Use of
Technology to Improve Public Benefit Programs''. SAS commends the
subcommittee for beginning this important line of inquiry. The
witnesses that provided testimony at the hearing raised important
considerations with respect to how technology might be used to better
deliver government services. We respectfully offer, however, that this
is only the first part of the discussion, albeit an important first
step. As described in greater detail below, technology can and should
be used to help government decision-makers not only administer their
programs more effectively and efficiently, but to ensure that their
programs are being properly administered in the first place.
Introduction
With tight budgets and increasingly restricted resources,
government agencies strive to work better, faster, and smarter. As
noted in detail by the witnesses, technology can be used in a myriad of
ways to help achieve this mandate. One example that was given was the
use of ``smart card'' technology to ``better track'' services being
provided to children. Technology increases the availability of this
service data, yet the data alone and without context, actually provides
little informational value. It cannot provide any insight into whether
the program is serving its intended beneficiaries or meeting its
program objectives, or whether the demands or requirements for the
program may change under different future scenarios. We offer for
consideration by the committee that the application of technology can
provide robust answers to these questions and, by doing so, can help
decision-makers make better programmatic decisions for the future while
targeting and eliminating areas of fraud, waste, abuse, and improper
payments. Just this month, GAO released a report discussing the need
for coordination between federal and state governments to report on
improper payments within federal programs administered by the state.
While SAS has helped many agencies with data integration and
advanced analytics for an array of business problems, in the essence of
brevity, we have chose to focus our response on a few areas under the
subcommittee's jurisdiction, including improper payments, purchase card
fraud, and Medicare/Medicaid fraud.
About SAS
SAS Institute Inc. is the world's largest privately held software
company; our vision is to deliver strategic value throughout public,
private, and government organizations. We are the market leader in
providing a new generation of business intelligence software and
services that create true enterprise intelligence. Enterprise
Intelligence optimally integrates individual technology components
within your existing IT infrastructure into a single, unified system.
The result is an information flow that transcends organizational silos,
diverse computing platforms and niche tools--and delivers new insights
that drive value for your agency.
SAS solutions are used at about 40,000 sites, including 96 of the
top 100 companies on the FORTUNE Global 500'. Working
through its Government Operations division, SAS provides world-class
solutions for civilian, defense, state and local government
organizations. SAS software is used at all 15 U.S. federal departments,
within all 50 states and at many local governments. For three decades,
SAS has been giving customers around the world The Power to Know .
Overview of improper payments, fraud, waste, and abuse
Billions of tax dollars paid by hardworking citizens are lost each
year due to improper payments, fraud, waste and abuse. Governments at
all levels--federal, state and local--face the enormous challenge of
rectifying this situation. They are under scrutiny by the President,
Congress, state legislatures and taxpayers. Government agencies now are
being held accountable for the misuse of funds originally intended to
provide services and programs to citizens.
This scrutiny is a primary driver for agencies to determine anti-
fraud strategies. The call for accountability also requires that
agencies consider and find answers to complex questions. For instance,
how can the agency not only uncover fraud but stop fraudulent or
ineligible payments before they are paid? Prevention requires a
different strategy and process for predicting the likelihood that a
transaction is improper or fraudulent. In addition, prevention is more
cost-effective than recouping payments that have already been issued.
The use of analytics can provide government agencies with the robust
capability to prevent improper payments, and can also be utilized to
help enforcement with recoupment once the payment has been made.
What can agencies do to improve collection rates? How do they
increase the productivity, effectiveness and efficiency of their
auditors and investigators? By identifying a prioritized list of
accounts that have a high likelihood of being fraudulent, agencies can
optimize investigators' time and increase the funds collected. These
are just a few objectives of an anti-fraud strategy.
``Building an Anti-fraud Strategy'' (this topic will be covered in
a later section) discusses these tactics and other strategies for
creating a comprehensive, continuous process to curtail fraud, waste,
abuse and improper payments.
Improper payments
The Government Accountability Office estimates that $38 billion was
lost to improper payments in 2005 alone. Eliminating improper
paymentsis a key component of the President's Management Agenda. In
fact, FY 2004 was the first full year of the Improper Payments
Information Act (IPIA) implementation. The IPIA and the Program
Assessment Rating Tool (PART) require agencies to identify and resolve
improper payment and resource productivity issues or run the risk of
budget cuts.
Agencies are feeling the pressure of increased accountability for
the misappropriation of funds.
After all, this misuse depletes money from services and programs
for citizens who rely on the government for help. With rising costs for
programs and services such as healthcare and an aging baby boomer
population, agencies are increasing spending and, thus, increasing
their vulnerability to improper payments. In fact, for programs with
estimated improper payments exceeding $10 million, agencies are
required to report certain information to Congress including the causes
of the improper payments, actions taken to correct those causes and the
results of those actions.
Many public and private entities in the states are responsible for
administering federal programs that report on improper payments,
including support for millions of low-income families, people on
disability, those out of work and children who need medical care.
Programs such as the Temporary Assistance for Needy Families (TANF) and
the Child Care and Development Fund (CCDF) are administered by state
agencies; these programs expend about $34 billion in state and federal
funds annually. The GAO recently reported on the importance of
minimizing improper payments in this area, but stated that the U.S.
Department of Health and Human Services (HHS), which oversees these two
programs, is hampered by a lack of adequate information on the internal
controls in place within each state to identify and prevent improper
payments.
HHS programs are not the only areas where states determine
eligibility and disburse funds, however. Another sizeable area for
improper payments is unemployment insurance. The U.S. Department of
Labor randomly reviews state unemployment insurance claims and
estimates that
2.5 percent of benefit overpayments in 2004 were fraud-related. On
average, this is nearly a $5 million problem in each state.
Purchase card fraud
In 2001, the GAO testified and reported that significant weaknesses
in internal controls made agencies vulnerable to fraud, waste and abuse
due to inefficient purchasing actions. Since then, numerous GAO reports
have cited agencies for inadequate control resulting in fraud, waste
and abuse. The government is held liable for the value of each purchase
card transaction. In addition, there has been steady growth in the
amount charged to government purchase cards, from $1 billion in FY 1994
to $16.4 billion in FY 2003, a 1,540 percent increase in just eight
years.
Although it is difficult to track compliance, agencies face the
risk of a GAO audit and testimony of the audit's findings before House
or Senate subcommittees. Thus, government agencies need increased
oversight of purchase card management and the ability to quickly
identify purchase patterns that indicate misuse, whether intentional or
unintentional. Improved management tools, along with an overall program
of polices, procedures, disciplinary actions and accountability, can
lead to fraud deterrence and help to achieve a culture of compliance.
Medicare and Medicaid fraud
The GAO estimates that of the $1.7 trillion Americans spend on
healthcare each year, between 3 and 10 percent is fraud-related. The
National Health Care Anti-Fraud Association offers a similar estimate
of between 5 and 10 percent. That amounts to a $51 billion to $170
billion problem nationwide. At the same time, demand for Medicare and
Medicaid services will only grow substantially with the aging baby
boomer population. In addition, Medicare accounts for nearly half of
the improper payments reported in FY 2004.
Fraud, waste, abuse, and improper payments have plagued the U.S.
healthcare system since its inception. These issues have caused
substantial financial losses to states and the federal government. The
result is that budget resources are diverted from citizens who rely on
and expect healthcare and services. Meanwhile, ''bad actors'' are
becoming more sophisticated and savvy with their techniques. More
advanced fraud controls, better tools, and enhanced technology are
needed to proactively and continuously uncover and deter these
practices, prosecute offenders, recoup misdirected funds, with the
ultimate goal of providing more and better services to eligible
recipients.
Each step in the complicated healthcare billing process is
vulnerable to fraud, waste, abuse, and improper payments. Healthcare
providers themselves have taken advantage of the system for illegal or
unethical financial gain. For example, many cases have been found of
overbilling, double-billing, or upcoding in order to bilk the system.
Analytics can help government agencies detect and deter such behaviors
by uncovering patterns of suspicious activities and predicting or
forecasting future patterns and behaviors. It thus can provide agencies
with a powerful tool to prevent improper spending before it occurs.
What's Working
Government agencies and commercial organizations around the world
are working to detect and prevent fraud, improper payments, waste, and
abuse. Below are two stories that describe a few of the challenges that
real government and private industry organizations face and the best
practices they apply to overcome a variety of obstacles.
Case study: U.S. Offic eof Personnel Management
One example of success in the federal government involves the U.S.
Office of Personnel Management (OPM). The OPM Office of the Inspector
General is responsible for conducting a nationwide program of audits on
the more than 400 health insurance companies participating in the
Federal Employees Health Benefits Program (FEHBP). The program serves
more than 9 million federal employees and their families. The Office of
the Inspector General's challenge is to determine which claims
represent instances of fraud, waste or abuse. Using SAS, OPM identifies
bogus claims or administrative problems in healthcare claims that
result from illegal activities. As a result, OPM officials estimate a
50 percent time savings; this in turn frees the auditors' time to
perform other analyses.
While this example describes how a government agency uses targeted
technology solutions to successfully meet specific challenges, models
of excellence in the fight against improper payments do not exist
solely in the public sector, nor must they be confined to such targeted
approaches. Both government and commercial organizations are applying
complete solution packages that address the challenge of improper
payments enterprise-wide.
Case study: HSBC Holdings plc
HSBC Holdings plc is one of the largest banking and financial
services organizations in the world.
With a credit and debit card portfolio of more than 100 million
cards, HSBC is also one of the world's largest plastic card issuers.
Each year, banks and financial organizations across the globe lose more
than $2 billion to payment card fraud. The challenge for HSBC was to
detect and deter rapidly evolving types of payment card fraud. In July
2005, SAS and HSBC announced a long term partnership to transform the
payment card fraud-detection market.
HSBC will be rolling out the enterprise-wide fraud solution in all
of its key markets, and it will become its key defense in the fight
against credit card and debit card fraud. The major benefit for HSBC
will be the significant reduction in fraud-related losses, while also
lowering the overall cost of fighting fraud by having a common platform
operating in all of its markets. By handling fraud in a faster, cleaner
and more effective way, HSBC will be able to provide even better
service to its customers because this approach is inherently customer-
centric. Customers shouldn't have to experience any interruption of
legitimate transactions; they will only realize the benefits of
preventing those activities which are fraudulent. In addition to
happier customers and earning the reputation of providing the most
secure card in the world, HSBC's shareholders are likely to find the
measurable results to be very pleasing indeed! For more information,
read ``Fraud Detection: In real Time. Right Now''.
This example describes how a commercial organization uses targeted
technology solutions to successfully fight payment card fraud. The same
technology solutions would be applicable within government agencies to
detect and deter purchase card or travel card fraud and improper
payments.
Building an anti-fraud strategy
The diversity of challenges and solutions represented in the
examples of OPM and HSBC illustrates the fact that--when it comes to
combating fraud, waste, and abuse--the anti-fraud strategy and
technology framework that is applied must be flexible enough to address
the unique objectives and business processes of each agency as well as
the increasingly devious and evolving mechanisms that fraudsters
employ. As fraud schemes constantly change, fraud detection requires
continuous vigilance. The process and strategy for fraud detection need
consistent monitoring and refinement. A wide range of approaches to
combat fraud are needed--ranging from a variety of individual solutions
that organizations can implement in an iterative manner for meeting
targeted objectives to an enterprise-wide solution, such as the
approach employed by HSBC, in which a customer receives a complete
solution package.
Regardless of the specific approach, it is imperative that agencies
establish an analytical and business intelligence framework for fraud
detection--an enterprise intelligence platform. The enterprise
intelligence platform is the foundation upon which organizations can
implement other strategies and solutions. Once this platform is
established, agencies can take the next step: extending specific fraud
detection efforts to enhance operations across the enterprise through
financial management and performance management solutions. By
supplementing the enterprise intelligence platform with financial
intelligence and performance management, agencies can tie together all
the essential areas of fraud management and organizational management
into a cohesive strategy for control, discovery, investigation
prioritization and deterrence.
The enterprise intelligence platform
An enterprise intelligence platform includes several components, or
steps, that serve as a proven framework to assist government agencies
as they institute business strategies and technology solutions to
eliminate improper payments, fraud, waste and abuse. The following
steps in the framework are always evolving. For example, if the data
analysis process discovers a new fraud pattern, new information about
the pattern needs to be captured in the data for further use in
analysis. However, by considering each component of the framework in
terms of the individual capability it provides as well as how each
component fits into a larger solution plan, government leaders can
construct a comprehensive strategy.
Improve data effectiveness
Improving data effectiveness means giving government organizations
a consistent version of the truth. This enables critical decisions to
be made on accurate, concise, trustworthy information more efficiently
and with less risk. Often, the most immediate challenge that agencies
face is that data systems containing information relevant to fraud,
waste, and abuse cannot share information with one another. This often
results in an incomplete, inaccurate view of data that allows errors or
fraudulent actions to ``slip through the cracks.'' By using data
integration solutions along with sophisticated data matching and
standardization routines that reach across multiple platforms and
formats, agencies can create a single version of the truth so that the
information upon which analyses and decisions are made is accurate and
complete.
Another essential step in reducing error and fraud is to verify the
identity, eligibility, and authentication of payees. This ensures that
the right people are receiving the right services. Using data quality
solutions, organizations can standardize and augment data while
identifying duplicate names, addresses and other identifying
information, thereby validating key citizen information.
This process of authenticating the citizen also reduces
overpayments, underpayments, and duplicate billings.
For example, North Carolina Department of the State Treasurer is
using data quality to support the NCCash program, which was implemented
to meet mandates for delivering unclaimed property dollars to often
unsuspecting owners. This program requires accurate information to
ensure funds are properly paid to citizens. Using intelligence
solutions, the Department quickly matches names and addresses from
different data sources and on different platforms for accurate
identification and location of owners. For more information, read
``Forgotten, but not gone: N.C. state treasurer returns unclaimed cash
using SAS ' Data Quality''.
Visualize data and analyze outliers
Using various visualization and analysis techniques, agencies can
determine visual patterns and aberrations. Outlier analysis is often
used to determine the ``low-hanging fruit.'' These are the obvious
activities--such as billing for more than 24 hours in a day--that need
immediate perusal.
Next, it is important for agencies to monitor information to
identify fraudulent activity. Once fraudulent activity is identified,
agencies can institute business rules to prevent the fraud from
recurring. Many agencies have business rules associated with documented
fraud schemes. As part of the anti-fraud strategy, these rules can be
automated and scheduled to run. They will flag cases that need
investigative follow-up. In addition, agencies can analyze data across
peer groups to determine abnormalities. For instance, physician-billing
practices can be compared to physicians in the same field for the same
diagnostic codes to determine unusual practices.
Other techniques can add value in determining unusual patterns or
practices. Sequence analysis and association analysis uncover events
that tend to occur together or in sequence. Link analysis can identify
relationships among citizens, organizations and services, thereby
uncovering interactions that might need closer inspection. For example,
link analysis can uncover personal injury attorneys who repeatedly send
clients to the same clinics or doctors for diagnosis.
All of these techniques mentioned above are integral parts of an
ongoing, continuously improving monitoring process.
Enhance audit and investigation effectiveness
With analytical intelligence, fraud detection is taken one step
further to improve audit and investigation effectiveness. A variety of
advanced analytical techniques can be utilized depending on the
agency's data. If the agency has not captured data surrounding known
fraud schemes, then cluster analysis can used. This analysis determines
unusual aberrations within the data. Once these patterns are uncovered,
they need further scrutiny to deem them fraudulent or not.
However, if an agency has documentation of known fraud patterns,
then predictive analytics can be used to identify and predict future
fraud risks. Agencies can ease the burden of validating false
positives, maximizing recovery and prosecution while reducing
processing time and recovery costs.
Analyzing both structured and unstructured data with data mining
and text mining respectively helps agencies to use both their
quantitative and qualitative data to better identify fraudulent claims.
By doing so, they are able to stop fraudulent payments before they are
paid. Additionally, they can prioritize cases that appear to be
improper for further investigation. Thus, agencies can rapidly detect
new fraud schemes and patterns before they cause major problems.
Once analysis has determined a likely fraud scheme, the next steps
are audit and investigation.
After fraudulence is determined, these new fraud schemes can then
be incorporated into the known fraud business rules, as discussed
previously. Then, the process begins again. Fraud detection is an
ongoing, cyclical process of analysis and refinement.
Spark insight with business intelligence
A vital piece of developing an overall strategy to eliminate fraud,
waste, and abuse is applying business intelligence (BI). BI empowers
organizations to deliver insight to the right people, at the right time
and in the appropriate form to help its people make effective decisions
with greater confidence. This is instrumental when it comes to fraud
detection, since inaccurate information or delays can leave agencies at
risk. BI capabilities provide a flexible and extensible set of business
interfaces to its information and supporting services, turning the
information that has been collected and enriched into intelligence that
it can quickly utilize. Whether an agency requires electronic
distribution of reports, interactive query environments, content
delivery via a Web-based portal, or publish-and-subscribe channel
distribution, BI provides seamless access to reports and analysis,
saving time and driving results for the agency.
Financial management and performance management
Agencies are not only concerned with detecting and deterring fraud.
They also want to ensure that their processes are effective. In
addition, monitoring expenditures allows for tightened internal
controls on costs. Going beyond data analysis and analytics enables
agencies to scrutinize financials and processes across the enterprise.
Vigilance across multiple organizational functions and throughout the
agency creates a culture of accountability, compliance, and deterrence.
Optimize financial management
The American public wants wasteful spending stopped. There is
public outcry at reports of expenditures of tax money on frivolous
items or preventable losses.
With financial management, agencies develop a consistent approach
to the spectrum of financial reporting requirements. This ultimately
enables greater accountability and transparency and reduces public
scrutiny.
Financial management enhances the reporting and control environment
with financial statements that enable agencies to receive a clean
audit. By proactively managing risk, agencies can examine risk before
complications arise. Early intervention in the cycle reduces the risk
that funds will be misappropriated. Applying a financial intelligence
strategy, the U.S. Department of the Treasury received its first
unqualified or ``clean'' auditor's opinion on its department-wide
financial statements in 2001. Since then, the agency has continually
received clean audit opinions.
Tightening internal controls is another way to reduce fraud--so
much so that OMB has revised its Circular A-123 to include additional
internal control measures for the federal government. OMB decided that
some of the existing controls were weak. Furthermore, the influence of
Sarbanes Oxley in the commercial sector prompted the agency to make
significant changes to the circular.
Therefore, it is highly likely that the Government Auditing
Standards (the Yellow Book) for 2003 will be revised accordingly to
incorporate requirements set forth in the revised Circular A-123.
Once adopted, these new rules will greatly influence how government
organizations manage and document internal controls. This renewed focus
on an internal control framework is intended to ensure that control
risk is mitigated, thereby reducing opportunities for fraud to go
undetected.
Agencies will have a clearer picture of how effectively funds flow
throughout their organizations, where possible weakness or process gaps
exist and who might be affected.
Measure program performance and monitor fraudulent activity
Incorporating a performance management strategy helps agencies
monitor key performance metrics to determine program effectiveness and
efficiency. This allows the agencies to define metrics in a dashboard
environment and to monitor activities and threats proactively in order
to curtail fraud. As a result, government leaders can identify sources
of organizational failure and can isolate best practices that lead to
success. A performance management solution provides a strategic heads-
up that keeps organizations on course and stops fraudulent activity
before it occurs.
Fraud detection: An iterative process
The management and control of improper payments and fraud requires
an iterative process of constant, consistent monitoring. Each agency's
unique culture and business processes require the implementation of an
anti-fraud strategy that is flexible to meet both the variety of
internal business processes and the ever-changing ways that fraudsters
try to exploit those processes.
In fact, there are various approaches to counteract fraud, waste,
abuse, and improper payments, ranging from solutions for which agencies
implement individual strategies in a step-by-step manner to address
targeted challenges to an enterprise-wide approach in which agencies
receive a complete solution package for solving a variety fraud
challenges across the organization.
No matter where the agency is in developing an anti-fraud strategy,
leaders can identify and implement key technology components and
solutions that allow them to use and augment current infrastructure
resources and refine and monitor existing organizational processes to
stop fraud, waste and abuse ``before'' money is lost.
Summary and conclusion
SAS is committed to working with government to ensure that
hardworking taxpayers receive the benefits and services they deserve,
when they need them. The SAS anti-fraud strategy curtails fraud, waste,
abuse, and improper payments so agencies have the resources to fund
programs, provide services to citizens, and ultimately judge whether
these programs and initiatives are meeting their goals and are being
administered effectively.
SAS commends the subcommittee for the attention it has brought to
the use of technology in enhancing service delivery. As a
recommendation, SAS submits these written comments to stimulate further
dialogue and consideration as to other benefits that technology can
bring to bear--notably in ensuring that taxpayer dollars are indeed
being spent wisely. SAS has a wealth of history and a record of
accomplishment in using technology--notably enterprise-wide
technology--to help reduce instances of improper payments by using data
to predict, prevent, and deter unacceptable or ineligible behaviors and
patterns. We would welcome the opportunity to provide more insight to
the subcommittee as to our experiences, and commend to the
subcommittee's attention a number of our white papers, including
``Combating Improper Payments, Fraud, Waste and Abuse: A Best Practices
Approach for Government''.
Statement of Visa Inc.
Visa appreciates the opportunity to submit this written testimony
to address the important issues raised by today's hearing on the use of
technology to improve public benefit programs.
The Visa Payment System, of which Visa U.S.A. is a part, is a
leading consumer payment system, and plays a pivotal role in advancing
new payment products and technologies, including the growing category
of prepaid cards. Visa U.S.A. is an association of 14,000 U.S.
financial institutions who issue credit, debit and prepaid cards and
who work with merchants to ensure the acceptance of these cards for
transactions. Visa itself does not have relationships with cardholders
or merchants.
This is important for understanding the use of prepaid cards for
government benefit programs. While Visa establishes the technical
platform for the use of prepaid cards and the standards that enable the
cards to be used at merchant locations and ATM machines, it is the
financial institutions who work directly with state, local and federal
agencies to issue cards to government beneficiaries. The terms and
conditions of the issuance of the cards, including terms and conditions
to the cardholders, are set by contracts between these financial
institutions and their government agency customers. There are a variety
of possible contractual relationships and a large degree of competition
among financial institutions interested in serving this growing market.
The prepaid Card Market
The growth of prepaid cards is one element in the
electronicifcation of payments. In December 2004, the Federal Reserve
System announced that electronic transactions had surpassed checks as
the consumer's preferred noncash method of payment. Fifty-five percent
of these noncash transactions were completed using a debit or credit
card, through an automated clearing house (ACH) transaction, or an
electronic benefit transfer (EBT). The remaining forty-five percent of
these transactions were made by check. The trend toward electronic
payments is well underway.
Prepaid cards can bring the benefits of electronic transactions to
consumers who are unserved or underserved by financial institutions,
that is, to those without a credit card or a checking or a savings
account that can be accessed through a debit card or the ACH. Prepaid
cards that access the same electronic payment networks as credit and
debit cards can be used to meet the financial transactions needs of the
unbanked in a highly efficient fashion. These prefunded financial
services products are used to withdraw monies through ATMs, make point-
of-sale debit transactions, pay bills, and transmit funds through
account-to-account electronic transfers.
Prepaid payment cards are a broad series of products which
represent the expansion of choice and convenience in how consumers,
businesses and the public sector make and receive payments. While the
category started with consumer-to-consumer gift cards, it has expanded
to include:
A payroll card, direct deposit alternative to both
employers and employees
Disbursement of government benefits programs like child
support, unemployment benefits and other social services
Consumer management of benefits funds including flexible
spending accounts (FSA) and healthcare reimbursement accounts (HRA)
Corporate rewards, rebate, incentive or bonus programs
Prepaid cards are different from both credit cards and debit cards.
Credit cards offer consumers the ability to draw on a line of credit
and pay their bills later--at the end of the month or over time. Debit
cards provide customers with convenient access to their depository
account to pay for purchases or to obtain cash at ATM machines. Prepaid
cards provide customers with access to a pre-defined amount of money
without drawing on a traditional banking account.
The funds associated with a prepaid card are stored in a central
location by the financial institution that issues the card. There is no
value on the card itself. The card functions as an access device to the
funds.
In a face-to-face point of sale transaction, the card is swiped at
a regular point of sale terminal. The merchant does not need to install
special point of sale equipment, and no PIN number is entered. The
transaction is routed over the Visa network, and is approved if the
cardholder has sufficient funds to cover the purchase. ATM access is
accomplished through the use of the card in conjunction with a PIN
number. Visa prepaid cards are accepted wherever Visa debit cards are
accepted--worldwide, online or offline.
Some prepaid cards like gift cards are not reloadable. They are
designed to be used until their value is exhausted. Other cards such as
payroll cards or government benefit cards are designed to be reloaded
on a regular basis.
Visa estimates that the current market for all bank-issue prepaid
cards (Visa, MasterCard and American Express) is less than $25 billion.
The bulk of that is government benefit cards. The market is in its
infancy now, but the potential growth over the next several years is
likely to be substantial.
Government Prepaid Card Programs
Visa estimates that there are approximately 80 million underserved
customers who receive about $1 trillion in wages and government
benefits in the form of checks. This delivery method imposes
unnecessary costs on the recipients and it is costly and inefficient
for the entity disbursing the funds. The prepaid card is a way to
improve the efficiency of this market.
The first government prepaid card program was implemented in 2002.
The program used a reloadable prepaid Visa card to disburse Child
Support payments. The program was with the state of Colorado and the
issuer was U.S. Bank. There are now 27 states that are using or are in
the process of using a reloadable prepaid Visa card to disburse
payments such as Child Support, Unemployment Insurance, Temporary
Assistance to Needy Families and Payroll. See the attached chart for a
current list of programs.
States are quickly adopting this method of disbursing payments to
underserved recipients because of the significant cost savings and
increased processing efficiencies compared to checks (cost savings from
postage, check handling, processing lost/stolen checks and paying
caseworkers to track down recipients). Recipients also like the
benefits of receiving payments via direct deposit to a prepaid Visa
card compared to receiving their benefit in the form of a check. They
receive faster access to their funds and do not have to worry about
paying check cashing fees. Additionally, unlike cash, if the card is
lost or stolen, cardholders receive a replacement card and are
protected from unauthorized transactions with Visa's Zero Liability
program.
Visa estimates that there are about 2 million prepaid Visa cards in
use by underserved customers through payroll cards, government benefit
cards and general purpose prepaid cards. Visa issuing banks have issued
about 1 million of these prepaid as part of government benefit
programs, and about 600,000 of them are currently in active use by
program beneficiaries.
Overall a prepaid card program saves money for the state agencies.
There are, of course, expenses associated with a prepaid card program.
For instance, there are costs, which vary by program, for producing and
mailing prepaid cards and educating beneficiaries on their use. The
allocation of these costs is subject to the contractual agreement
between the state agencies and the financial institutions issuing the
cards. In some cases, the state agency does not have a direct payment
for these production and distribution costs. The results from the
existing prepaid programs show cost savings for the state agencies from
the switch away from paper check delivery of benefits, even taking into
account these and other costs of administering the program.
Consumer protections can also be an expense of administering the
program. The cards are protected by zero liability, and are subject to
replacement if lost of stolen. But these costs are minimal. Fraud
losses from government prepaid Visa cards are low and stable, averaging
less than $.03 cents for every $100 of transactions. In Visa's
experience beneficiaries are protective of their card; they like the
benefits and convenience of receiving payment through this method. Visa
has not seen a lot of instances of lost or stolen cards in these
government prepaid programs.
Benefits to Program Recipients
Visa prepaid cards are accepted at merchant locations and
ATM machines worldwide.
Visa prepaid cards are Visa cards, and are subject to
Visa operating rules and regulations, including all the Visa Consumer
Protections.
Zero liability applies. If a Visa prepaid card is used
fraudulently, without the cardholder's authorization, the cardholder is
not liable for the fraudulent transactions.
Visa prepaid cards can be replaced if lost or stolen. The
cardholder simply follows the normal procedure for notifying the
issuing financial institution, and the old card will be canceled and a
new one issued.
Funds are available immediately after the card is loaded.
There is no waiting period as there often is with check disbursements.
Cardholder has the convenience, prestige and versatility
of a Visa card. This is especially important to those who do not have a
relationship with a financial institution.
Cardholders have safer, less expensive access to their
money. Those without a bank account do not need to go to risky, costly
check cashing locations to cash their payroll or government benefit
checks.
Check-cashing costs are especially troublesome for the unbanked and
one of the major advantages of prepaid government benefit programs is
to enable unbanked beneficiaries to avoid these fees. They can be
relatively inexpensive in some states such as New York State, where
fees are capped at 1.5 percent of the value of the check. In some
states, however, fee limits are much higher and in eighteen states no
fee limits are imposed. In addition to check-cashing fees, unbanked
customers will pay fees for bill payment services, money orders, and
money transfer services.
Benefits to Government
Prepaid cards reduce costs. There are no paper checks to
issue, or re-issue if they are lost or stolen.
Funds disbursement is superior to paper check. The funds
reach employees or beneficiaries in a faster, safer and more secure
electronic fashion.
Prepaid cards enhance risk management. Fraudulent use can
be detected much earlier by sophisticated Visa fraud detection systems
and those operated by the issuing financial institution.
Prepaid cards provide better tracking and reporting of
card use. This enables cardholders and government to understand the
pattern of spending with the cards, thereby improving budgeting and
other expenditure control systems.
State Prepaid Programs (as of 3/7/06)
Program Status
State Use Issuer
Alabama Child Support In rollout Amsouth
Alaska Child Support Implemented JPMC
Arizona Child Support Implemented JPMC
California Child Support In BofA
implementatio
n
Colorado Child Support Implemented USB
Iowa Child Support Implemented USB
Kentucky Child Support In USB
implementatio
n
Louisiana Child Support In rollout JPMC
Louisiana Unemployment Implemented JPMC
Maryland Child Support Implemented BofA
Massachusetts Child Support Implemented JPMC
Michigan Child Support In rollout USB
Minnesota Child Support Implemented USB
Nebraska Child Support Implemented USB
Nebraska Child Care Launch pending USB
Credits
Nebraska State Employee In rollout USB
Payroll
Nevada Child Support Implemented JPMC
North Dakota Child Support Implemented USB
North Dakota TANF Implemented USB
Ohio Unemployment In USB
implementatio
n
Oregon Child Support In rollout USB
Oregon Unemployment Implemented USB
South Dakota Child Support Implemented USB
Tennessee Child Support Implemented JPMC
Texas Child Support In WFB
implementatio
n
Washington Child Support Implemented USB
West Virginia Child Support Implemented BB&T