[House Hearing, 109 Congress]
[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

                    U.S. GOVERNMENT PRINTING OFFICE
30-442                      WASHINGTON : 2006
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
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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 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            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.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Please Note: Any person(s) and/or organization(s) wishing to submit 
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April 19, 2006. Finally, please note that due to the change in House 
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FORMATTING REQUIREMENTS:

      
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materials in alternative formats) may be directed to the Committee as 
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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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).
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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


                                  
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