*\[Editor\'s Note: This chapter provides an example of a cost/benefit
study prepared by a State and maintained in State files. It simply
serves to illustrate, in comparison to Chapter 3, that the information
submitted to ACF can be a summary of or extracts from the State\'s
study. This section in no way implies a standard, approach, or format
that States must use*.\]

**State Cost/Benefit Analysis**

**Part 1. General Information**

## 1.1 Summary

The system being assessed is the State\'s program benefits information
system. The current system has been in place for eight years, no longer
meets program requirements, will soon require sole source support
contracts, and is technically obsolete and operationally expensive. It
is not a viable alternative for future program operations.

This *status* *quo* system is written in COBOL and is running on an
eight year old IBM compatible (VM) mainframe. This system will be unable
to keep up with forecast increases in caseload. Further, this system
will require an expensive engineering upgrade in peripherals and systems
software during year 3. This upgrade is required by the manufacturer, in
order to continue hardware and software maintenance services beyond year
3. The status quo system requires operation of a raised-floor \"data
center,\" a moderate sized staff of systems programmers and operators,
and a moderate number of contract support personnel.

*Alternative 1* is based on the development of a LAN-based distributed
(client/server) relational database management system (RDBMS). This
alternative uses low-cost PC-based hardware and a network-server version
of a large-capacity RDBMS.

*Alternative 2* also represents a LAN-based client/server relational
data management system, but it differs from Alternative 1 in one
important aspect. Alternative 2 involves the use of a symmetric
multi-processing (SMP) RISC super-minicomputer as the RDBMS server.

*\[Editor\'s Note: This section identifies the existing system and all
alternatives evaluated for costs and benefits. System requirements for
the status quo and each alternative are briefly summarized. More
comprehensive descriptions are typically a part of the feasibility study
and requirements analysis.\]*

**1.2 Environment**

This project will support the future operations of the program benefits
information system for a five-year systems life. A competitively
selected contractor will develop the system under the supervision of the
State\'s management information systems staff. System programmatic
operations will be distributed by a client/server architecture
supporting . . .

*\[Editor\'s Note: This section identifies the project sponsor(s),
developers, users, and computer center or network where the software
will be implemented; summarizes the system input, output, processing,
and security/privacy requirements; and describes interactions with other
systems or organizations. Information flow and physical diagrams ease
presentation of the information.\]*

**1.3 References**

The primary references supporting and related to this cost/benefit study
include:

· State feasibility study and alternatives analysis, dated . . .

· Planning Advance Planning Document (APD) approval dated . . .

· State Budget (1994-1999)

· State project requisition, approved by . . .

· *Time Distribution of Casework* and *Time Distribution of Clerical
Duties* dated . . .

· *Performance Audit of Caseworkers,* dated . . .

· *Historical and Demographical Trends in Casework, Effect on the
Future,* dated . . .

· *State Caseworker Staffing Master Plan,* dated . . .

*\[Editor\'s Note: This section references the project request or
authorization, feasibility study, alternatives analysis, decision
criteria, operational performance requirements, estimation parameters,
and other related project documentation.\]*

**Part 2. Management Summary**

The State evaluated the feasibility of and alternatives for modernizing
the information technology and processing procedures supporting its
benefits programs. As detailed in the feasibility study, this systems
project has the following primary objectives:

· Reduce system operational costs, primarily in the area of caseworker
and clerical salaries,

· Eliminate delays caused by obsolete technology and system bottlenecks,
and

· Provide more timely services to the public.

During the alternatives analysis, the State selected (and justified the
selection of) two alternatives for evaluation of costs and benefits in
comparison to the status quo. Both alternatives are considered viable
solutions, serving to distribute processing and to achieve the system
objectives with equivalent quantitative benefits. Alternative 1 is the
State\'s selected approach for implementation because it is
cost-beneficial and will breakeven in the fifth year of the systems
life. See Figures 1 and 2.

Although the status quo (central data processing center and dumb
terminals) is not a viable alternative, it is costed out as required by
ACF instructions.

*\[Editor\'s Note: This section presents a concise overview of the
cost/benefit analysis, including a comparative summary such as that in
Figure 1.\]*

**2.1 Scope**

The purpose of this cost/benefit analysis is to determine the most
cost-beneficial alternative over a five year systems life for
modernizing the information technology and processing procedures
supporting the benefits program and for operating the system. The
analysis assesses two alternatives, both of which distribute processing
power closer to the desktop. Once developed, the application will no
longer be supported by the State\'s central data processing facility.

  ----------------------- --------------- --------------- ---------------
  **COMPARISON OF                                         
  ALTERNATIVES**                                          

  **Description**         **Status Quo**  **Alternative   **Alternative
                                          1**             2**

  Total Present Value     0               8,690,663       8,690,663
  Benefits                                                

  Less Total Present      7,658,159       8,497,668       10,651,811
  Value Costs                                             

  Net Benefit (Cost)      ‑7,658,159      192,995         ‑1,961,148

  Benefit/Cost Ratio      0               1.02            0.82

  Breakeven (Months)      N/A             52              N/A
  ----------------------- --------------- --------------- ---------------

**Figure 1**

*\[Editor\'s Note: This section states the purpose of the cost/benefit
analysis, the system life, and the ultimate effect of system development
on current operations.\]*

**2.2 Performance and Characteristics**

Under the current system, caseload processing is only marginally within
system capabilities. The workload is achieved at the expense of
significant delays for clients, support from outside processing services
to meet system overloads, and caseworker overtime.

Unfortunately, the current workload is not expected to remain level. It
will increase, from 55,200 to an estimated 80,800 cases annually. See
Figure 3.

The projected caseloads were analyzed in a study conducted this year
with contractor assistance, *Historical and Demographical Trends in
Casework: Effect on the Future.*[^1]

Both caseload burden and system inefficiency dramatically and negatively
affect caseworker productivity. Updated technology is expected to reduce
program and system operational costs in the areas of clerical and
caseworker salaries, elimination of outside service bureau support and
courier fees, and cancellation of the system engineering upgrade
required in three years for the current system.

*\[Editor\'s Note: This section states current and projected operational
problems and introduces the anticipated benefits of the project.\]*

![](media/image3.wmf)

**Figure 3**

**2.3 Assumptions**

There are five major assumptions related to this cost/benefit analysis:

· No major changes will take place in the duties assigned to caseworkers
over the systems life.[^2]

· Workload growth will remain within the projections stated in Benefit
3.[^3]

· There will be no new legislative or regulatory program mandates
requiring overtime.

> · Commercial network services will be installed by mid-year in the
> first year, cutting courier service costs in half.[^4]

· The system can be developed and implemented in a year and will remain
operationally effective for at least another four years --- resulting in
a five year systems life.

*\[Editor\'s Note: This section states the assumptions under which the
cost/benefit analysis was conducted.\]*

**2.4 Methodology**

This cost/benefit analysis was conducted by a team represented by the
State program office, the budget and accounting office, and the office
of economic analysis. The data was obtained by numerous methods,
including estimation, comparison, simulation, observation, and quotation
--- and from various sources, including the budget, current obligations,
work measurement (time and motion) studies, management records, and
current contracts.

For example, current operational costs . . .

*\[Editor\'s Note: This section first summarizes and then details the
procedures used for developing the cost/benefit analysis and the
techniques used in estimating and computing costs and benefits.\]*

**Part 3: Description of Alternatives**

**3.1 Current System**

The current system is written in COBOL and is running on an eight year
old IBM compatible (VM) mainframe. As a condition to continuing
maintenance support, the manufacturer requires an expensive system
engineering upgrade in peripherals and systems software during year 3.
This upgrade will only affect maintainability, *not increase system
capacity or capability to keep up with forecast increases in caseload.*
The status quo system resides in a central data processing facility. It
requires operation in a large, raised-floor site, supported by a
moderate sized staff of

systems programmers and operators and a moderate number of contract
support personnel . . .

*\[Editor\'s Note: This section first summarizes and then details the
technical and operational characteristics of the current system. System
diagrams or schematics simplify the presentation of information.\]*

**3.2 Alternative 1**

*Alternative 1* is a LAN-based distributed (client/server) relational
database management system (RDBMS). This alternative uses low-cost
PC-based hardware and a network-server version of a large-capacity RDBMS
. . .

*\[Editor\'s Note: This section first summarizes and then details the
technical and operational characteristics of the first alternative.
System diagrams or schematics simplify the presentation of
information.\]*

**3.3 Alternative 2**

*Alternative 2* is a LAN-based client/server relational database
management system, but it differs from Alternative 1 in one important
aspect. Alternative 2 involves the use of a symmetric multi-processing
(SMP) RISC super-minicomputer as the RDBMS server . . .

*\[Editor\'s Note: This section first summarizes and then details the
technical and operational characteristics of the second alternative.
System diagrams or schematics simplify the presentation of
information.\]*

**3.4 Proposed Alternative**

The State has chosen Alternative 1 because it meets the system
objectives, is cost-beneficial, and will breakeven in the fifth year of
the systems life.

*\[Editor\'s Note: This section summarizes the basis for selection of
the chosen alternative.\]*

**Part 4: Costs**

The costs evaluated in this analysis are those which *directly* relate
to the systems design, development, conversion, implementation, and
operation. For the status quo, recurring costs include site and
facility, equipment and software lease and maintenance, travel,
training, supplies, security, and personnel salaries and benefits and
support services *directly* supporting systems operations. The same
categories are evaluated for the alternatives.

Non-recurring costs for the status quo include a systems engineering
upgrade planned and budgeted for the third year of the systems life.
Non-recurring costs for the alternatives include costs for new site and
facilities, equipment, system testing, conversion, studies, procurement,
database preparation, and overhead. Figure 4 provides a table of
non-recurring and recurring costs.[^5]

As provided in ACF\'s cost/benefit guide, total project costs are
analyzed regardless of funding source (State and Federal) and regardless
of cost allowability for purposes of Federal Financial Participation,
both of which are addressed by other documents.

*\[Editor\'s Note: This section summarizes the developmental and
operational costs of the status quo and each alternative.\]*

**4.1 Non-Recurring Costs**

Non-recurring costs for the *status quo* are generated by the hardware
and software upgrade required by the manufacturer at year 3. The cost
categories affected are equipment purchase and fees, software purchase,
system testing, procurement and database preparation.

Non-recurring costs for the *alternatives* are caused by and relate to
the new system procurement in year one. The cost categories affected are
site and facility, equipment purchase and fees, system testing,
conversion, studies, procurement, database preparation, and training.
See Figure 5 for definitions.

*\[Editor\'s Note: This section provides more detail on non-recurring
costs applying to the status quo and each alternative.\]*

+------------------------------+---+---------------------------------+---+
| Non-Recurring Costs          |   |                                 |   |
+------------------------------+---+---------------------------------+---+
| Cost Categories              | F | Cost Categories                 | F |
|                              | x |                                 | x |
|                              | d |                                 | d |
+------------------------------+---+---------------------------------+---+
| Site and Facility            | • | Studies                         | • |
|                              |   |                                 |   |
| · Purchase                   | • | Procurement                     | • |
|                              |   |                                 |   |
| · Site                       | • | · Cost of Planning              | • |
| Preparation/Modification     |   |                                 |   |
|                              | • | · Cost of Conducting            | • |
| · Other                      |   |                                 |   |
|                              | • | Database Preparation            |   |
| Equipment Purchase/One Time  |   |                                 |   |
| Fees                         | • | Personnel                       |   |
|                              |   |                                 |   |
| · ADP                        | • | · Salaries                      |   |
|                              |   |                                 |   |
| · Data Communications        | • | · Benefits                      |   |
|                              |   |                                 |   |
| · Environ. Conditioning      | • | · Contract Support Services     |   |
|                              |   |                                 |   |
| · Security                   | • | · Extraordinary Personnel Costs |   |
|                              |   |                                 |   |
| · Other                      | • | Travel                          |   |
|                              |   |                                 |   |
| Shipping                     | • | Training                        |   |
|                              |   |                                 |   |
| Installation                 | • | · Development                   |   |
|                              |   |                                 |   |
| Software Purchase/One Time   |   | · Trainee Expenses              |   |
| Fees                         |   |                                 |   |
|                              |   | · Trainer Expenses              |   |
| · Operating System           |   |                                 |   |
|                              |   | Overhead / Indirect Costs       |   |
| · Applications               |   |                                 |   |
|                              |   | · Project and Technical         |   |
| · Utilities                  |   |                                 |   |
|                              |   | · Management                    |   |
| · Other                      |   |                                 |   |
|                              |   | · Incremental                   |   |
| System Testing               |   |                                 |   |
|                              |   | · Lost Productivity             |   |
| Conversion                   |   |                                 |   |
|                              |   |                                 |   |
| · Data                       |   |                                 |   |
|                              |   |                                 |   |
| · Software                   |   |                                 |   |
|                              |   |                                 |   |
| · Services                   |   |                                 |   |
+------------------------------+---+---------------------------------+---+

+-----------------------+---+---+---+---------------------------+---+---+---+
| Recurring Costs       |   |   |   |                           |   |   |   |
+-----------------------+---+---+---+---------------------------+---+---+---+
| Cost Categories       | V | A | F | Cost Categories           | V | A | F |
|                       | a | d | x |                           | a | d | x |
|                       | r | j | d |                           | r | j | d |
+-----------------------+---+---+---+---------------------------+---+---+---+
| Site and Facility     |   |   | • | Personnel                 |   |   | • |
|                       |   |   |   |                           |   |   |   |
| · Lease               |   |   | • | · Salaries                |   |   | • |
|                       |   |   |   |                           |   |   |   |
| · Maintenance Fees    |   |   | • | · Benefits                |   |   | • |
|                       |   |   |   |                           |   |   |   |
| · Other               |   |   | • | Direct Support Services   |   |   | • |
|                       |   |   |   |                           |   |   |   |
| Equipment Lease /     |   |   | • | · Contract                |   |   | • |
| Maintenance           |   |   |   |                           |   |   |   |
|                       |   |   | • | · Detailed/Tasked         |   |   | • |
| · ADP                 |   |   |   |                           |   |   |   |
|                       |   |   | • | Travel                    |   |   | • |
| · Data Communications |   |   |   |                           |   |   |   |
|                       |   |   | • | Training                  |   |   | • |
| · Environ.            |   |   |   |                           |   |   |   |
| Conditioning          |   |   | • | Supplies                  |   |   | • |
|                       |   |   |   |                           |   |   |   |
| · Security            |   |   | • | Utilities                 |   |   | • |
|                       |   |   |   |                           |   |   |   |
| · Other               |   |   |   | Security                  |   |   | • |
|                       |   |   |   |                           |   |   |   |
| Software Lease /      |   |   |   | · Primary Facilities      |   |   | • |
| Maintenance           |   |   |   |                           |   |   |   |
|                       |   |   |   | · Back-up Facilities      |   |   |   |
| · Operating System    |   |   |   |                           |   |   |   |
|                       |   |   |   | Overhead / Indirect Costs |   |   |   |
| · Applications        |   |   |   |                           |   |   |   |
|                       |   |   |   |                           |   |   |   |
| · Utilities           |   |   |   |                           |   |   |   |
|                       |   |   |   |                           |   |   |   |
| · Other               |   |   |   |                           |   |   |   |
+-----------------------+---+---+---+---------------------------+---+---+---+

**Figure 4**

+---------------------+------------------------------------------------+
| **NON-RECURRING     |                                                |
| COSTS**             |                                                |
+---------------------+------------------------------------------------+
| Cost Category       | Description                                    |
+---------------------+------------------------------------------------+
| Site and Facility   | Includes site preparation and purchase of      |
|                     | office furniture.                              |
+---------------------+------------------------------------------------+
| Equipment Purchase  | Includes the purchase of computer systems,     |
| / One Time Fees     | peripherals, and local communications          |
|                     | equipment. Also includes the costs of bundled  |
|                     | software, maintenance, and fees.               |
+---------------------+------------------------------------------------+
| Installation        | Includes the installation and set up of        |
|                     | equipment, software, furniture, and materials. |
+---------------------+------------------------------------------------+
| Software Purchase / | Includes the purchase or one-time licensing of |
|                     | systems programs, utilities, and applications  |
| One Time Fees       | programs for ADP and telecommunications        |
|                     | equipment.                                     |
+---------------------+------------------------------------------------+
| System Testing      | Includes all costs over and above normal       |
|                     | operational costs expended to test newly       |
|                     | installed equipment.                           |
+---------------------+------------------------------------------------+
| Conversion          | Includes one-time costs related to \"clean     |
|                     | up\" and conversion of software, data,         |
|                     | information, and media, not charged to other   |
|                     | categories (such as personnel).                |
+---------------------+------------------------------------------------+
| Studies             | Covers the cost of one-time studies conducted  |
|                     | during the systems design, development, and    |
|                     | implementation.                                |
+---------------------+------------------------------------------------+
| Procurement         | Includes the cost of planning for and          |
|                     | conducting procurements.                       |
+---------------------+------------------------------------------------+
| Database            | Covers the cost of preparing information for   |
| Preparation         | database management systems.                   |
+---------------------+------------------------------------------------+
| Training            | Includes one-time costs to train staff on new  |
|                     | equipment, software, testing procedures, and   |
|                     | operational processes.                         |
+---------------------+------------------------------------------------+

**Figure 5**

## 4.2 Recurring Costs

Recurring costs for the status quo and alternatives affect the following
cost categories: site and facility, equipment lease and maintenance,
software lease and maintenance, personnel salaries and benefits, direct
support services, travel, training, supplies, and security. See Figure 6
for definitions.

*\[Editor\'s Note: This section provides more detail on recurring costs
applying to the status quo and each alternative.\]*

  ------------------------- ---------------------------------------------
  **RECURRING COSTS**       

  Cost Category             Description

  Site and Facility         Includes the cost of space and a prorated
                            amount for building maintenance.

  Equipment Lease /         Includes maintenance fees for computer
  Maintenance               systems and peripherals, data and voice
                            communications equipment, and
                            telecommunications lines.

  Software Lease /          Entails recurring licensing fees for systems
  Maintenance               programs and a prorated amount for new
                            releases of commercial off-the-shelf
                            software.

  Personnel                 Includes costs of staff (salaries, overtime,
                            and benefits) devoted in full or in part to
                            the system.

  Direct Support Services   Includes contract support services staff
                            costs (labor hour, contract G&A costs, and
                            profit) dedicated in full or part to the
                            project or system.

  Travel                    Includes monthly travel allocations for
                            in-house personnel and contractors.

  Training                  Includes regularly scheduled training related
                            to equipment, software, testing, and
                            operational processes, initial and refresher.

  Supplies                  Includes monthly allocations to cover costs
                            of supplies.

  Security                  Includes prorated costs related to security
                            staff, *not* included under personnel costs
                            above. Includes the prorated costs of support
                            under the State\'s back-up contract and
                            regular testing of disaster recovery sites.
  ------------------------- ---------------------------------------------

**Figure 6**

## Part 5: Benefits

Both alternatives are expected to generate the same specific
quantitative benefits:

· Reduction in clerical staff,

· Reduction in caseworkers\' overtime pay,

· Controlled staff expenditures in meeting caseload growth,

· Reduction in service bureau\'s processing costs,

· Reduction in courier service costs, and

· System upgrade cost savings.

The program and system cost avoidances and cost savings offset the
systems development cost, thereby achieving net benefits for the
project. No benefits were identified for the status quo.

*\[Editor\'s Note: This section summarizes the benefits related to the
status quo (if any) and each alternative.\]*

**5.1 Non-Recurring Benefits**

Both alternatives would generate one non-recurring benefit: cost savings
in the third year resulting from de-obligating in the budget a planned
system engineering upgrade of the current system. Benefit 6 under
narrative descriptions of benefits in section 5.4 provides details.

There are no non-recurring benefits for the status quo.

*\[Editor\'s Note: This section summarizes the non-recurring benefits
applying to the status quo and each alternative.\]*

**5.2 Recurring Benefits**

Both alternatives would generate the same recurring benefits:

· Reduction in clerical staff (Benefit 1),

· Reduction in caseworkers\' overtime pay (Benefit 2),

· Controlled staff expenditures in meeting caseload growth (Benefit 3),

· Reduction in service bureau\'s processing costs (Benefit 4), and

· Reduction in courier service costs (Benefit 5).

Note that three benefits address the effect of the new system on
clerical and caseworker staff costs. Specifically, they project the
effect of the new system on:

· Current clerical staff,

· Caseworker overtime expenses, and

· Future caseworker staffing requirements.

By establishing three distinct benefits for the effect of the system on
staffing, the State has established three discrete, meaningful,
quantitative performance goals and measurement factors as well. In
addition, the effect of caseworker productivity improvements without an
immediate budgetary effect --- the State will not decrease current staff
--- will be measured as a qualitative benefit. The State values staff
productivity as both a system goal and performance measurement goal.

The narrative descriptions of benefits in section 5.4 provide details.

There are no non-recurring benefits for the status quo.

*\[Editor\'s Note: This section summarizes the recurring benefits
applying to the status quo and each alternative.\]*

**5.3 Non-Quantifiable Benefits**

Both alternatives are expected to generate qualitative benefits in
addition to productivity improvement:

· Eliminating processing delays caused by obsolete technology,

· Providing more timely services to the public,

· Providing strategic support of agency program goals,

· Implementing systems architecture compatible with long-range
strategies,

· Ensuring system flexibility, and

· Implementing proven technology with access to off-the-shelf software.

Although these qualitative benefits cannot be measured in dollars for
offsetting systems development costs, several provide performance
measurement goals and will be measured by the State. These goals are
addressed by the State\'s cost/benefit measurement plan described in
part 8 of this cost/benefit analysis.

*\[Editor\'s Note: This section summarizes the non-quantifiable
(intangible) benefits applying to the status quo and each alternative.
The status quo may not necessarily generate benefits.\]*

**5.4 Narrative Descriptions of Benefits**

The narrative descriptions of benefits begin on the next page.

*\[Editor\'s Note: This section summarizes in detailed narrative the
benefits expected from the systems project. The basis for the
calculations and the supporting documentation are provided or
referenced. In addition, the State addresses how it will measure
performance against the benefit.\]*

**Benefit 1:**

**Reduction in Clerical Staff**

**\[Effect of New System on Current Staff\]**

+---------------+------------------------------------------------------+
| Scenario:     | Under the current system, clerical staff support     |
|               | caseworkers in routine clerical functions, such as   |
|               | filing, typing letters, and copying. The new system  |
|               | will reduce the need for these services through      |
|               | capabilities such as centralized electronic files,   |
|               | automatic notice generation, and on-demand, on-site  |
|               | printing.                                            |
|               |                                                      |
|               | These improvements will result in a clerical staff   |
|               | reduction of 13 positions. \[Clerical staff will be  |
|               | reassigned from the benefits program to the State\'s |
|               | consumer services program.\]                         |
+---------------+------------------------------------------------------+

+---------------+------------------------------------------------------+
| Basis for     | Clerical workload distribution was documented using  |
|               | automated work measurement techniques and time and   |
| Numbers:      | motion analysis conducted over two week intervals at |
|               | four separate review periods during the last fiscal  |
|               | year. Management records and observation were used   |
|               | to verify that the performance of duties did not     |
|               | vary significantly from the norm during this time    |
|               | period.                                              |
|               |                                                      |
|               | Once the distribution of work by category and time   |
|               | was known, the effect of elimination of certain      |
|               | functions through automation was assessed. With      |
|               | automated filing, notice, and printing, the State    |
|               | has planned to transfer thirteen clerical staff      |
|               | outside the benefits program.                        |
|               |                                                      |
|               | The analysis and findings are documented in the      |
|               | State\'s study, *Time Distribution of Clerical       |
|               | Duties.* A copy of this study will be retained in    |
|               | the State\'s files as an aid to future cost and      |
|               | benefit measurement.                                 |
+---------------+------------------------------------------------------+
| Assumptions:  | No major changes will take place in the duties       |
|               | assigned to clerical staff over the systems life.    |
+---------------+------------------------------------------------------+

+---------------+------------------------------------------------------+
| Initial       | The current average clerical salary of \$25,100,     |
|               | times the State\'s average fringe rate of 25.5%,     |
| Calculations  | times 13 clerical positions, yields an annual cost   |
| of Benefit\'s | savings of \$409,507.                                |
|               |                                                      |
| Value:        | \[Data on average salary and current fringe rate     |
|               | were provided by the State\'s personnel office.\]    |
|               |                                                      |
|               | This information is shown in the cost/benefit        |
|               | analysis for both alternatives, as indicated by the  |
|               | following excerpt. There is no corresponding benefit |
|               | for the status quo. \[Note that constant dollars are |
|               | used, since State personnel salary increases over    |
|               | the time period have not been approved by the        |
|               | legislature and budgeted.\]                          |
+---------------+------------------------------------------------------+

  ----------------- -------- --------- --------- --------- --------- -----------
  **SYSTEM LIFE                                                      
  BENEFITS PROFILE:                                                  
  ALTERNATIVES**                                                     

  **Description**   **Year   **Year    **Year    **Year    **Year    **Total**
                    1**      2**       3**       4**       5**       

  Benefit 1         \-       409,507   409,507   409,507   409,507   1,638,028
  ----------------- -------- --------- --------- --------- --------- -----------

  ---------------- ------------------------------------------------------
  Measurement      Once the new system is operational, clerical staff
  Plan:            workers will be reassigned and the benefits claimed as
                   program cost savings.

  ---------------- ------------------------------------------------------

**Quantified Benefits Worksheet: Systems Life**

<table>
<colgroup>
<col style="width: 10%" />
<col style="width: 1%" />
<col style="width: 10%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 13%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="11"><strong>BENEFIT CATEGORY / DESCRIPTION</strong></td>
</tr>
<tr class="even">
<td colspan="11"><p><strong>Benefit Number:</strong> 1</p>
<p><strong>Description:</strong> Reduce Clerical Staff</p></td>
</tr>
<tr class="odd">
<td colspan="11"><strong>STATUS QUO BENEFIT VALUE</strong></td>
</tr>
<tr class="even">
<td colspan="11"><strong>Assumptions:</strong> None. No benefit is
claimed for the status quo</td>
</tr>
<tr class="odd">
<td colspan="4"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="3"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="4">Current Measure/Volume:</td>
<td colspan="4"></td>
<td colspan="3"></td>
</tr>
<tr class="odd">
<td colspan="4">Projected Increase /Decrease Over Time:</td>
<td colspan="4"></td>
<td colspan="3"></td>
</tr>
<tr class="even">
<td colspan="4">Current Value:</td>
<td colspan="4"></td>
<td colspan="3"></td>
</tr>
<tr class="odd">
<td colspan="11"><strong>System Life Benefits Profile: Status
Quo</strong></td>
</tr>
<tr class="even">
<td colspan="2">Year 1</td>
<td>Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td>Year 7</td>
<td>Year 8</td>
<td>Total</td>
</tr>
<tr class="odd">
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td colspan="11"><strong>ALTERNATIVE 1 BENEFIT VALUE</strong></td>
</tr>
<tr class="odd">
<td colspan="4"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="3"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="4"><p>Measure/Volume</p>
<p>at Implementation: 13 clerical staff transferred</p></td>
<td colspan="4">Staff reduction projected as result of automated system
support improvements.</td>
<td colspan="3">"Time Distribution of Clerical Duties" (program
office)</td>
</tr>
<tr class="odd">
<td colspan="4"><p>Projected Increase/Decrease</p>
<p>Over Time: Stable</p></td>
<td colspan="4">No change anticipated</td>
<td colspan="3">"Time Distribution of Clerical Duties" (program
office)</td>
</tr>
<tr class="even">
<td colspan="4">Initial Value at Implementation: $409,507</td>
<td colspan="4">$25,100 average annual salary X 1.255 to calculate
loaded rate X 13 staff = $409,507</td>
<td colspan="3">Loaded hourly rate from personnel office</td>
</tr>
<tr class="odd">
<td colspan="11"><strong>Systems Life Benefits Profile: Alternative
1</strong></td>
</tr>
<tr class="even">
<td>Year 1</td>
<td colspan="2">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td colspan="2">Year 5</td>
<td>Year 6</td>
<td>Year 7</td>
<td>Year 8</td>
<td>Total</td>
</tr>
<tr class="odd">
<td>-</td>
<td colspan="2">409,507</td>
<td>409,507</td>
<td>409,507</td>
<td colspan="2">409,507</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td>1,638,028</td>
</tr>
</tbody>
</table>

**Benefit 2:**

**Reduction in Caseworkers\' Overtime Pay**

**\[Effect of New System on Overtime Expenses\]**

+---------------+------------------------------------------------------+
| Scenario:     | Under the current system, caseworkers spend 20% of   |
|               | their time performing routine administrative         |
|               | functions, including tickler file maintenance,       |
|               | routine work scheduling, and manual tracking of      |
|               | cases. (See graph below.)                            |
|               |                                                      |
|               | ![](media/image4.wmf)                                |
|               |                                                      |
|               | The new system will automate these functions,        |
|               | reducing caseworker administrative overhead 50%, to  |
|               | 10% of their time, enabling more time to be spent on |
|               | case analysis. The most immediate effect of          |
|               | productivity improvement will be the reduction in    |
|               | caseworkers\' overtime pay.                          |
|               |                                                      |
|               | Under the current system, the State budgets          |
|               | \$150,000 annually for overtime pay to caseworkers.  |
|               | The State projects that overtime pay for caseload    |
|               | processing will not be required after system         |
|               | implementation, due to reductions in administrative  |
|               | duties.                                              |
+---------------+------------------------------------------------------+
| Basis for     | The workload distribution information was documented |
|               | using automated work measurement techniques and time |
| Numbers:      | and motion analysis conducted over two week          |
|               | intervals at four separate review periods during the |
|               | last fiscal year. Management records and observation |
|               | were used to verify that the performance of duties   |
|               | did not vary significantly from the norm during this |
|               | time period. The analysis and findings are           |
|               | documented in the State\'s study, *Time Distribution |
|               | of Casework.* A copy of this study will be retained  |
|               | in the State\'s files as an aid to future cost and   |
|               | benefit measurement.                                 |
|               |                                                      |
|               | Components of the administrative duties category     |
|               | include maintaining tickler files, performing work   |
|               | scheduling, manually tracking cases, and reporting   |
|               | to management. The time distribution of              |
|               | administrative duties, by caseworker per week, is    |
|               | shown in the table below. Expected improvements are  |
|               | reflected in the column to the right. (These         |
|               | improvements will be monitored and measured as       |
|               | qualitative benefits under the State\'s Cost/Benefit |
|               | Measurement Plan.)                                   |
+---------------+------------------------------------------------------+

+-----------------------+-----------------------+-----------------------+
| **Average Weekly      |                       |                       |
| Distribution of       |                       |                       |
| Administrative        |                       |                       |
| Duties**              |                       |                       |
|                       |                       |                       |
| **in Hours by         |                       |                       |
| Caseworker**          |                       |                       |
+-----------------------+-----------------------+-----------------------+
| **Description**       | **Current**           | **Proposed**          |
+-----------------------+-----------------------+-----------------------+
| Maintaining Tickler   | 1                     | 0                     |
| Files                 |                       |                       |
+-----------------------+-----------------------+-----------------------+
| Work Scheduling       | 2                     | 1                     |
+-----------------------+-----------------------+-----------------------+
| Manual Tracking       | 2                     | 1                     |
+-----------------------+-----------------------+-----------------------+
| Internal Reporting    | 3                     | 2                     |
+-----------------------+-----------------------+-----------------------+
| **TOTAL**             | 8                     | 4                     |
+-----------------------+-----------------------+-----------------------+

+---------------+------------------------------------------------------+
| Assumptions:  | Projected overtime is based on the State\'s most     |
|               | recent five-year budget (1994 - 1999), except that   |
|               | figures are expressed here in constant dollars.      |
|               | Copies of budgetary materials remain archived in the |
|               | State.                                               |
|               |                                                      |
|               | No major changes will take place in the duties       |
|               | assigned to caseworkers over the systems life.       |
|               |                                                      |
|               | \[This assumption is supported by a prior assessment |
|               | of caseworkers\' duties, conducted in 1987 as part   |
|               | of a personnel audit. The study, *Performance Audit  |
|               | of Caseworkers,* is attached to the time and motion  |
|               | study and will be retained in State files.\]         |
|               |                                                      |
|               | Workload growth will remain within the projections   |
|               | stated in Benefit 3 and there will be no new program |
|               | mandates requiring overtime.                         |
+---------------+------------------------------------------------------+

+---------------+------------------------------------------------------+
| Initial       | The current average caseworkers\' salary of          |
|               | \$42,000, divided by 2080 hours (working hours in    |
| Calculations  | year), yields an average salary rate per hour of     |
|               | \$20.19. With the addition of the State\'s average   |
| of Benefit\'s | fringe rate of 25.5%, the average loaded pay rate    |
|               | per hour of caseworkers\' time is \$25.34.           |
| Values:       |                                                      |
|               | Given an average of 46 weeks worked per year, times  |
|               | 4 hours saved per week, each worker can be projected |
|               | to have 184 hours freed from routine administrative  |
|               | duties. Multiplying 184 hours times 120 caseworkers  |
|               | yields 22,080 hours times the loaded hourly rate of  |
|               | \$25.34 equals annual savings of \$559,507, more     |
|               | than enough to eliminate budgeted overtime           |
|               | expenditures of \$150,000. No claim is made for the  |
|               | additional \"savings\" since current staff will not  |
|               | be reassigned or laid off. Instead, the effect of    |
|               | productivity improvement on future staffing is set   |
|               | forth in Benefit 3.                                  |
|               |                                                      |
|               | \[Data on average salary, current fringe rate, and   |
|               | average weeks worked were provided by the State\'s   |
|               | personnel office.\]                                  |
|               |                                                      |
|               | This benefit has an annual program cost savings      |
|               | value of \$150,000. There are no benefit values for  |
|               | the status quo.                                      |
+---------------+------------------------------------------------------+

  ----------------- -------- --------- --------- --------- --------- -----------
  **SYSTEM LIFE                                                      
  BENEFIT PROFILE:                                                   
  ALTERNATIVES**                                                     

  **Description**   **Year   **Year    **Year    **Year    **Year    **Total**
                    1**      2**       3**       4**       5**       

  Benefit 2         0        150,000   150,000   150,000   150,000   600,000
  ----------------- -------- --------- --------- --------- --------- -----------

  ---------------- ------------------------------------------------------
  Measurement      The State is preparing to adopt a new procedure for
  Plan:            approving overtime work which will track overtime
                   against a set of standard work categories. Under the
                   new procedure, overtime requests which specify the
                   purpose of \"caseload processing\" will require
                   explanation and special management approvals. Since
                   the new system is intended to reduce overtime caseload
                   processing, management controls can ensure that other
                   measures, such as reallocating workload, are taken
                   before overtime is approved. Records will be kept and
                   evaluated annually to determine whether this benefit
                   has been achieved.

                   Productivity improvements will be measured as
                   qualitative benefits under the Cost/Benefit
                   Measurement Plan. Once the new system is operational,
                   the caseworkers\' workload distribution will be
                   reassessed annually, using the same measuring tools
                   and methodology used for projecting these benefits.
  ---------------- ------------------------------------------------------

**Quantified Benefits Worksheet: Systems Life**

<table>
<colgroup>
<col style="width: 10%" />
<col style="width: 1%" />
<col style="width: 10%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 9%" />
<col style="width: 13%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="11"><strong>BENEFIT CATEGORY / DESCRIPTION</strong></td>
</tr>
<tr class="even">
<td colspan="11"><p><strong>Benefit Number:</strong> 2</p>
<p><strong>Description:</strong> Reduction in Caseworkers' Overtime
Pay</p></td>
</tr>
<tr class="odd">
<td colspan="11"><strong>STATUS QUO BENEFIT VALUE</strong></td>
</tr>
<tr class="even">
<td colspan="11"><strong>Assumptions:</strong> None. No benefit is
claimed for the status quo. Figures below on current performance were
used to determine cost savings for the alternatives.</td>
</tr>
<tr class="odd">
<td colspan="4"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="3"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="4">Current Measure/Volume:</td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="3">Budget office</td>
</tr>
<tr class="odd">
<td colspan="4">Projected Increase /Decrease Over Time:</td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="3">Budget office</td>
</tr>
<tr class="even">
<td colspan="4">Current Value:</td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="3">Budget office</td>
</tr>
<tr class="odd">
<td colspan="11"><strong>System Life Benefits Profile: Status
Quo</strong></td>
</tr>
<tr class="even">
<td colspan="2">Year 1</td>
<td>Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td>Year 7</td>
<td>Year 8</td>
<td>Total</td>
</tr>
<tr class="odd">
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td colspan="2">0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td colspan="11"><strong>ALTERNATIVE 1 BENEFIT VALUE</strong></td>
</tr>
<tr class="odd">
<td colspan="4"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="3"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="4"><p>Measure/Volume</p>
<p>at Implementation: $150,000 annually</p></td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="3">Budget office</td>
</tr>
<tr class="odd">
<td colspan="4"><p>Projected Increase/Decrease</p>
<p>Over Time: Stable</p></td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="3">Budget office</td>
</tr>
<tr class="even">
<td colspan="4">Initial Value at Implementation: $150,000 annually</td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="3">Budget office</td>
</tr>
<tr class="odd">
<td colspan="11"><strong>Systems Life Benefits Profile: Alternative
1</strong></td>
</tr>
<tr class="even">
<td>Year 1</td>
<td colspan="2">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td colspan="2">Year 5</td>
<td>Year 6</td>
<td>Year 7</td>
<td>Year 8</td>
<td>Total</td>
</tr>
<tr class="odd">
<td>-</td>
<td colspan="2">150,000</td>
<td>150,000</td>
<td>150,000</td>
<td colspan="2">150,000</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td>600,000</td>
</tr>
</tbody>
</table>

**Benefit 3:**

**Controlled Staff Expenditures in Meeting Caseload Growth**

**\[Effect of New System on Future Staff Requirements\]**

+---------------+------------------------------------------------------+
| Scenario      | Under the current system, caseload processing is     |
|               | only marginally within system capabilities. The      |
|               | workload is achieved at the expense of significant   |
|               | delays for clients, support from outside processing  |
|               | services to meet system overloads, and caseworker    |
|               | overtime. (The latter was described in Benefit 2.)   |
|               |                                                      |
|               | Unfortunately, the current workload is not expected  |
|               | to remain level. It will increase, from 55,200 to an |
|               | estimated 80,800 cases annually. See the graph       |
|               | below.                                               |
|               |                                                      |
|               | ![](media/image5.wmf)                                |
|               |                                                      |
|               | If management were to take no action, the caseworker |
|               | burden would increase approximately 10% annually,    |
|               | from 460 to 673 cases per year. See the chart on the |
|               | following page for the annual projected burden by    |
|               | caseworker, if no action is taken.                   |
|               |                                                      |
|               | This situation is considered untenable by State      |
|               | management. The problem was analyzed and addressed   |
|               | in an internal State staffing plan. This plan        |
|               | addresses the number and timing of additional        |
|               | required staff and the manner in which they would be |
|               | recruited and trained.                               |
|               |                                                      |
|               | ![](media/image6.wmf)                                |
|               |                                                      |
|               | The results of this plan, showing the projected      |
|               | staff increase for the                               |
|               |                                                      |
|               | status quo, is depicted in the top chart on the next |
|               | page. In order to maintain a ratio of about 460      |
|               | cases annually per caseworker, staffing would        |
|               | increase from 120 caseworkers to 176 over five       |
|               | years.                                               |
|               |                                                      |
|               | However, with the new system, reductions in          |
|               | administrative duties (described in Benefit 2) would |
|               | enable staff to handle more cases per year --- from  |
|               | 460 cases annually per year to 560 cases per year.   |
|               | This would reduce the overall staff requirements     |
|               | projected as necessary --- down from 176 in the      |
|               | fifth year to 144 --- and delay recruitment of       |
|               | additional personnel until the fourth year of the    |
|               | system life. See the bottom chart on the following   |
|               | page for a comparison of projected staffing between  |
|               | the status quo and the alternatives. \[Both          |
|               | alternatives would support the same staffing         |
|               | pattern.\]                                           |
|               |                                                      |
|               | ![](media/image7.wmf){width="3.826388888888889in"    |
|               | height="3.1819444444444445in"}                       |
|               |                                                      |
|               | ![](media/image8.wmf)                                |
|               |                                                      |
|               | 7                                                    |
|               |                                                      |
|               | 8                                                    |
+---------------+------------------------------------------------------+

+---------------+------------------------------------------------------+
| Basis for     | Projected caseloads are documented in a study        |
|               | conducted this year with contractor assistance,      |
| Numbers:      | *Historical and Demographical Trends in Casework:    |
|               | Effect on the Future.* Next the State examined the   |
|               | effect of the projected caseload increase on current |
|               | staff and devised a strategic staffing plan. The     |
|               | *State Caseworker Staffing Master Plan* was          |
|               | developed by a team represented by State management, |
|               | personnel specialists, caseworker professional       |
|               | organization representatives, and contractor         |
|               | specialists. These studies will remain on file in    |
|               | the State throughout the development,                |
|               | implementation, and operation of this project.       |
|               |                                                      |
|               | Average case processing time is currently just over  |
|               | three hours, based on program management records on  |
|               | file in the State. Under the current system,         |
|               | caseworkers working 46 weeks per year at 32 hours    |
|               | per week on casework would have 1,472 hours,         |
|               | allowing them to process about 460 cases. Given the  |
|               | weekly gain of four hours for case processing that   |
|               | will accrue from the elimination of administrative   |
|               | duties (see Benefit 2), current staff working 46     |
|               | weeks per year, 36 hours per week, with an average   |
|               | case processing time of under 3 hours, will be able  |
|               | to process management\'s projected goal of 560 cases |
|               | per year. These figures are considered conservative  |
|               | based on the fact that other system improvements     |
|               | have not been factored in --- and based on other     |
|               | States\' records of processing similar cases in 2.5  |
|               | hours, once modern technology was employed.          |
+---------------+------------------------------------------------------+
| Assumptions:  | No major changes will take place in the duties       |
|               | assigned to caseworkers over the systems life.       |
|               | Workload growth will remain within the projections   |
|               | cited herein. There will be no new program mandates. |
+---------------+------------------------------------------------------+
| Initial       | If no action is taken, the State\'s caseworker staff |
|               | will increase from 120 to 176 over five years. The   |
| Calculations  | average annual salary for the current staff is       |
|               | \$42,000. According to the State\'s staffing plan,   |
| of Benefit\'s | new caseworkers would be hired under the State\'s    |
|               | three-year training program with annual salaries of  |
| Values        | \$32,000, \$34,000, and \$36,000, for the first,     |
|               | second, and third years respectively. All dollars    |
|               | are constant dollars. No cost-of-living adjustments  |
+---------------+------------------------------------------------------+

  ---------------- ------------------------------------------------------
                   or other salary increases are currently approved and,
                   therefore, have not been factored into these
                   calculations. See the top table on the following page.

                   If the new system is adopted, the State\'s caseworker
                   staff will remain stable for three years, then
                   increase by 11 in year 4 and 13 in year 5 to a total
                   of 144 caseworkers. See the bottom table on the
                   following page.

                   The difference between the total loaded salary
                   projections establishes the estimated program cost
                   avoidance reported as a benefit for the alternatives.
                   See below. There is no corresponding benefit for the
                   status quo.
  ---------------- ------------------------------------------------------

  ----------------- ----------- ----------- ----------- ----------- ----------- ------------
  **SYSTEM LIFE                                                                 
  BENEFITS PROFILE:                                                             
  ALTERNATIVES**                                                                

  **Description**   **Year 1**  **Year 2**  **Year 3**  **Year 4**  **Year 5**  **Total**

  Status Quo        6,325,200   6,807,120   7,359,320   8,024,470   8,737,310   37,253,420
  Salaries                                                                      

  Alternatives\'    6,325,200   6,325,200   6,325,200   6,766,960   7,316,650   33,059,210
  Salaries                                                                      

  Benefit 3         0           481,920     1,034,120   1,257,510   1,420,660   4,194,210
  ----------------- ----------- ----------- ----------- ----------- ----------- ------------

  ---------------- ------------------------------------------------------
                   \[Note that caseworker costs are not included on the
                   cost side of the cost/benefit analysis, since those
                   costs do not directly support the systems project. The
                   program cost differential effected by the systems
                   project is claimed as a cost avoidance of the
                   alternatives.\]

  ---------------- ------------------------------------------------------

  ---------------- ------------------------------------------------------
  Measurement      The State will measure actual staffing salaries at the
  Plan:            loaded rate and deduct the actuals from the projected
                   status quo salaries, to determine whether the
                   projected cost avoidance benefit has been achieved.

  ---------------- ------------------------------------------------------

  ------------- ----------- ------------ ----------- ----------- --------- ---------- -----------
  **Projected                                                                         
  Caseworker                                                                          
  Expenses:                                                                           
  Status Quo**                                                                        

  **Year**      **Staff**   **Salary**   **Total**   **Annual    **Total   **Fringe   **Loaded
                                                     Salary**    Staff**   Rate**     Salary**

  1             120         42,000       5,040,000   5,040,000   120       0.255      6,325,200

  2             120         42,000       5,040,000   5,424,000   132       0.255      6,807,120

                12          32,000       384,000                                      

  3             120         42,000       5,040,000   5,864,000   145       0.255      7,359,320

                12          34,000       408,000                                      

                13          32,000       416,000                                      

  4             120         42,000       5,040,000   6,394,000   160       0.255      8,024,470

                12          36,000       432,000                                      

                13          34,000       442,000                                      

                15          32,000       480,000                                      

  5             120         42,000       5,040,000   6,962,000   176       0.255      8,737,310

                25          36,000       900,000                                      

                15          34,000       510,000                                      

                16          32,000       512,000                                      
  ------------- ----------- ------------ ----------- ----------- --------- ---------- -----------

  ---------------- ----------- ------------ ----------- ----------- --------- ---------- -----------
  **Projected                                                                            
  Caseworker                                                                             
  Expenses:                                                                              
  Alternatives**                                                                         

  **Year**         **Staff**   **Salary**   **Total**   **Annual    **Total   **Fringe   **Loaded
                                                        Salary**    Staff**   Rate**     Salary**

  1                120         42,000       5,040,000   5,040,000   120       0.255      6,325,200

  2                120         42,000       5,040,000   5,040,000   120       0.255      6,325,200

  3                                                     5,864,000   145       0.255      7,359,320

  4                120         42,000       5,040,000   5,392,000   131       0.255      6,766,960

                   11          32,000       352,000                                      

  5                120         42,000       5,040,000   5,830,000   144       0.255      7,316,650

                   11          34,000       374,000                                      

                   13          32,000       416,000                                      
  ---------------- ----------- ------------ ----------- ----------- --------- ---------- -----------

**Quantified Benefits Worksheet: Systems Life**

<table>
<colgroup>
<col style="width: 10%" />
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 1%" />
<col style="width: 8%" />
<col style="width: 2%" />
<col style="width: 11%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="14"><strong>BENEFIT CATEGORY / DESCRIPTION</strong></td>
</tr>
<tr class="even">
<td colspan="14"><p><strong>Benefit Number:</strong> 3</p>
<p><strong>Description:</strong> Controlled Staff Expenditures in
Meeting Caseload Growth (See narrative for further detail on
calculations.)</p></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>STATUS QUO BENEFIT VALUE</strong></td>
</tr>
<tr class="even">
<td colspan="14"><strong>Assumptions:</strong> None. No benefit is
claimed for the status quo. Figures below on projected staffing costs
for the status quo were used to determine cost avoidance for the
alternatives.</td>
</tr>
<tr class="odd">
<td colspan="5"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="5"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="5">Current Measure/Volume: 120 caseworkers</td>
<td colspan="4">State Staffing Plan</td>
<td colspan="5">State Caseworker Staffing Master Plan</td>
</tr>
<tr class="odd">
<td colspan="5">Projected Increase/Decrease Over Time: 10% to 176</td>
<td colspan="4">State Staffing Plan</td>
<td colspan="5">State Caseworker Staffing Master Plan</td>
</tr>
<tr class="even">
<td colspan="5">Current Value: $6,325,200 with variable cost
increase</td>
<td colspan="4">State Staffing Plan</td>
<td colspan="5">State Caseworker Staffing Master Plan</td>
</tr>
<tr class="odd">
<td colspan="14"><strong>System Life Projected Caseworker Costs: Status
Quo</strong></td>
</tr>
<tr class="even">
<td colspan="3">Year 1</td>
<td>Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td>Year 7</td>
<td colspan="2">Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="odd">
<td colspan="3">6,325,200</td>
<td>6,807,120</td>
<td>7,359,320</td>
<td>8,024,470</td>
<td>8,737,310</td>
<td colspan="2">-</td>
<td>-</td>
<td colspan="2">-</td>
<td colspan="2">37,253,420</td>
</tr>
<tr class="even">
<td colspan="14"><strong>ALTERNATIVE 1 BENEFIT VALUE</strong></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>Assumptions:</strong> Workload growth will stay
within the projections stated in Benefit 3. No new program mandates
requiring overtime.</td>
</tr>
<tr class="even">
<td colspan="5"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="5"><strong>Source</strong></td>
</tr>
<tr class="odd">
<td colspan="5"><p>Measure/Volume</p>
<p>at Implementation: 120</p></td>
<td colspan="4">State Staffing Plan</td>
<td colspan="5">State Caseworker Staffing Master Plan</td>
</tr>
<tr class="even">
<td colspan="5"><p>Projected Increase/Decrease</p>
<p>Over Time: Stable til year 4</p></td>
<td colspan="4">State Staffing Plan</td>
<td colspan="5">State Caseworker Staffing Master Plan</td>
</tr>
<tr class="odd">
<td colspan="5">Initial Value at Implementation: $6,325,000</td>
<td colspan="4">State Staffing Plan</td>
<td colspan="5">State Caseworker Staffing Master Plan</td>
</tr>
<tr class="even">
<td colspan="14"><strong>System Life Projected Caseworker Costs:
Alternatives</strong></td>
</tr>
<tr class="odd">
<td colspan="2">Year 1</td>
<td colspan="2">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td colspan="2">Year 7</td>
<td colspan="2">Year 8</td>
<td>Total</td>
</tr>
<tr class="even">
<td colspan="2">6,325,200</td>
<td colspan="2">6,325,200</td>
<td>6,325,200</td>
<td>6,766,960</td>
<td>7,316,650</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td>33,059,210</td>
</tr>
<tr class="odd">
<td colspan="14"><strong>Systems Life Benefits Profile: Alternative
1</strong></td>
</tr>
<tr class="even">
<td>Year 1</td>
<td colspan="3">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td colspan="2">Year 5</td>
<td>Year 6</td>
<td>Year 7</td>
<td colspan="2">Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="odd">
<td>0</td>
<td colspan="3">481,920</td>
<td>1,034,120</td>
<td>1,257,510</td>
<td colspan="2">1,420,660</td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2">4,194,210</td>
</tr>
</tbody>
</table>

**Benefit 4:**

**Reduction in Service Bureau\'s Processing Costs**

+---------------+------------------------------------------------------+
| Scenario:     | Under the current system, backlogs in caseload       |
|               | processing are transferred to an outside service     |
|               | bureau. This is required since current processing    |
|               | resources are unable to handle peak processing loads |
|               | at certain times of the year. See the chart below.   |
+---------------+------------------------------------------------------+
|               | ![](media/image9.wmf)                                |
|               |                                                      |
|               | The new system will have sufficient capacity and     |
|               | capability to process all workload.                  |
+---------------+------------------------------------------------------+
| Basis for     | The information in the chart was provided by the     |
|               | State\'s procurement office, based on the State\'s   |
| Numbers:      | current five-year service bureau contract. (This     |
|               | contract is used for other purposes, so eliminating  |
|               | service for caseload processing will not result in   |
|               | contract termination charges.) Between program       |
|               | workload and service bureau fixed-fee contract       |
|               | rates, the fixed                                     |
+---------------+------------------------------------------------------+

+---------------+------------------------------------------------------+
|               | price costs for service bureau processing will       |
|               | increase at about 15% per year. The contracts are    |
|               | maintained in the State\'s procurement office.       |
+---------------+------------------------------------------------------+
| Assumptions:  | No major changes will take place in the duties       |
|               | assigned to caseworkers over the systems life.       |
|               | Workload growth will remain within the projections   |
|               | cited in Benefit 3. There will be no new program     |
|               | mandates.                                            |
+---------------+------------------------------------------------------+
| Initial       | Figures are from the State\'s five-year, fixed-price |
|               | contract, and are in the State\'s current budget.    |
| Calculation   | (Dollars stated reflect fixed price contract rates   |
| of            | and have not been adjusted by the State for          |
|               | inflation.) Since these figures are budgeted and     |
| Benefit\'s    | approved systems-related costs, they are shown as    |
|               | costs for the status quo and first year of the       |
| Value:        | alternatives and as system cost savings benefits for |
|               | years 2 - 5 of the alternatives.                     |
+---------------+------------------------------------------------------+

  ----------------- --------- --------- --------- --------- --------- -----------
  **SYSTEM LIFE                                                       
  COST PROFILE:                                                       
  STATUS QUO**                                                        

  **Description**   **Year    **Year    **Year    **Year    **Year    **Total**
                    1**       2**       3**       4**       5**       

  Support Services: 531,300   610,995   702,644   808,041   929,247   3,582,227
  Service Bureau                                                      
  Fees                                                                
  ----------------- --------- --------- --------- --------- --------- -----------

  ----------------- --------- -------- -------- -------- -------- -----------
  **SYSTEM LIFE                                                   
  COST PROFILE:                                                   
  ALTERNATIVES**                                                  

  **Description**   **Year    **Year   **Year   **Year   **Year   **Total**
                    1**       2**      3**      4**      5**      

  Support Services: 531,300   0        0        0        0        531,300
  Service Bureau                                                  
  Fees                                                            
  ----------------- --------- -------- -------- -------- -------- -----------

  ----------------- -------- --------- --------- --------- --------- -----------
  **SYSTEM LIFE                                                      
  BENEFIT PROFILE:                                                   
  ALTERNATIVES**                                                     

  **Description**   **Year   **Year    **Year    **Year    **Year    **Total**
                    1**      2**       3**       4**       5**       

  Benefit 4         0        610,995   702,644   808,041   929,247   3,050,927
  ----------------- -------- --------- --------- --------- --------- -----------

  ---------------- ------------------------------------------------------
  Measurement      Service bureau charges in support of program
  Plan:            operations are projected to be eliminated by the
                   second year. The finance department maintains records
                   by expenditure category and program office and will be
                   able to confirm elimination of these costs.

  ---------------- ------------------------------------------------------

**Quantified Benefits Worksheet: Systems Life**

<table>
<colgroup>
<col style="width: 10%" />
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 1%" />
<col style="width: 8%" />
<col style="width: 2%" />
<col style="width: 11%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="14"><strong>BENEFIT CATEGORY / DESCRIPTION</strong></td>
</tr>
<tr class="even">
<td colspan="14"><p><strong>Benefit Number:</strong> 4</p>
<p><strong>Description:</strong> Reduction in Service Bureau's
Processing Costs</p></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>STATUS QUO BENEFIT VALUE</strong></td>
</tr>
<tr class="even">
<td colspan="14"><strong>Assumptions:</strong> None. No benefit claimed
for the status quo. Figures below on current and future service bureau
processing fees were used to determine cost savings for the
alternatives.</td>
</tr>
<tr class="odd">
<td colspan="5"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="5"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="5">Current Measure/Volume: $531,000</td>
<td colspan="4">State Budget (1994-1999) &amp; Service Contract</td>
<td colspan="5">Budget and Procurement offices</td>
</tr>
<tr class="odd">
<td colspan="5">Projected Increase/Decrease Over Time: 15% annually to
$929,247</td>
<td colspan="4">State Budget (1994-1999) &amp; Service Contract</td>
<td colspan="5">Budget and Procurement offices</td>
</tr>
<tr class="even">
<td colspan="5">Current Value: $531,000</td>
<td colspan="4">State Budget (1994-1999) &amp; Service Contract</td>
<td colspan="5">Budget and Procurement offices</td>
</tr>
<tr class="odd">
<td colspan="14"><strong>System Life Costs Profile: Status
Quo</strong></td>
</tr>
<tr class="even">
<td colspan="3">Year 1</td>
<td>Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td>Year 7</td>
<td colspan="2">Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="odd">
<td colspan="3">531,300</td>
<td>610,995</td>
<td>702,644</td>
<td>808,041</td>
<td>929,247</td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td colspan="2">3,582,227</td>
</tr>
<tr class="even">
<td colspan="14"><strong>ALTERNATIVE 1 BENEFIT VALUE</strong></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>Assumptions</strong>: No major changes will
take place in caseworker's duties. Workload growth will remain within
the projections stated in Benefit 3. No new program mandates.</td>
</tr>
<tr class="even">
<td colspan="5"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="5"><strong>Source</strong></td>
</tr>
<tr class="odd">
<td colspan="5"><p>Measure/Volume</p>
<p>at Implementation: $531,300</p></td>
<td colspan="4">State Budget (1994-1999) &amp; Service Contract</td>
<td colspan="5">Budget and Procurement offices</td>
</tr>
<tr class="even">
<td colspan="5">Projected Increase/Decrease Over Time: Eliminated in
second year.</td>
<td colspan="4">State Budget (1994-1999) &amp; Service Contract</td>
<td colspan="5">Budget and Procurement offices</td>
</tr>
<tr class="odd">
<td colspan="5">Initial Value at Implementation: -$531,000</td>
<td colspan="4">State Budget (1994-1999) &amp; Service Contract</td>
<td colspan="5">Budget and Procurement offices</td>
</tr>
<tr class="even">
<td colspan="14"><strong>System Life Projected Costs Profile:
Alternatives</strong></td>
</tr>
<tr class="odd">
<td colspan="2">Year 1</td>
<td colspan="2">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td colspan="2">Year 7</td>
<td colspan="2">Year 8</td>
<td>Total</td>
</tr>
<tr class="even">
<td colspan="2">531,300</td>
<td colspan="2">-</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td colspan="2">-</td>
<td colspan="2">-</td>
<td colspan="2">-</td>
<td>531,300</td>
</tr>
<tr class="odd">
<td colspan="14"><strong>Systems Life Benefits Profile: Alternative
1</strong></td>
</tr>
<tr class="even">
<td>Year 1</td>
<td colspan="3">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td colspan="2">Year 5</td>
<td>Year 6</td>
<td>Year 7</td>
<td colspan="2">Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="odd">
<td>-</td>
<td colspan="3">610,995</td>
<td>702,644</td>
<td>808,041</td>
<td colspan="2">929,247</td>
<td>-</td>
<td>-</td>
<td colspan="2">-</td>
<td colspan="2">3,050,927</td>
</tr>
</tbody>
</table>

**Benefit 5:**

**Reduction in Courier Service Costs**

+---------------+------------------------------------------------------+
| Scenario:     | Since the current system lacks statewide             |
|               | telecommunications support, the program relied on    |
|               | courier services last year to deliver time-sensitive |
|               | material to meet new mandates for information        |
|               | timeliness. Since these costs were not anticipated   |
|               | nor budgeted, the expenses could only be met by      |
|               | reprogramming funds from a State emergency operating |
|               | expense account.                                     |
|               |                                                      |
|               | To meet this expense in current or future years,     |
|               | funds would have to be reprogrammed from the program |
|               | accounts. However, with the new system, electronic   |
|               | transmission will be used, eliminating the need to   |
|               | budget for this expense --- resulting in a system    |
|               | cost avoidance.                                      |
|               |                                                      |
|               | ![](media/image10.wmf)                               |
+---------------+------------------------------------------------------+

+---------------+------------------------------------------------------+
| Basis for     | Projected courier service costs are based on the     |
|               | State\'s most recent expenditures. Figures are       |
| Numbers:      | expressed in constant dollars. Spending records are  |
|               | archived in the State. (A management study conducted |
|               | at the time that courier services were adopted       |
|               | indicated that there were no more economical         |
|               | alternatives to meet this requirement, given the     |
|               | State\'s current technological limitations.)         |
+---------------+------------------------------------------------------+
| Assumptions:  | Commercial network services will be installed by     |
|               | mid-year in the first year, cutting courier service  |
|               | costs in half.                                       |
+---------------+------------------------------------------------------+
| Initial       | The benefit has an average yearly value of           |
| Calculations  | \$130,000, based on past expenditures. There are no  |
| of Benefit\'s | benefit values for the status quo; however, costs    |
| Value:        | are reflected since they are direct systems          |
|               | operational costs requiring funding. See the         |
|               | following excerpts.                                  |
+---------------+------------------------------------------------------+

  ----------------- --------- --------- --------- --------- --------- -----------
  **SYSTEM LIFE                                                       
  COST PROFILE:                                                       
  STATUS QUO**                                                        

  **Description**   **Year    **Year    **Year    **Year    **Year    **Total**
                    1**       2**       3**       4**       5**       

  Courier Service   130,000   130,000   130,000   130,000   130,000   650,000
  Fees                                                                
  ----------------- --------- --------- --------- --------- --------- -----------

  ----------------- -------- -------- -------- -------- -------- -----------
  **SYSTEM LIFE                                                  
  COST PROFILE:                                                  
  ALTERNATIVES**                                                 

  **Description**   **Year   **Year   **Year   **Year   **Year   **Total**
                    1**      2**      3**      4**      5**      

  Courier Service   65,000   0        0        0        0        65,000
  Fees                                                           
  ----------------- -------- -------- -------- -------- -------- -----------

  ----------------- -------- --------- --------- --------- --------- -----------
  **SYSTEM LIFE                                                      
  BENEFIT PROFILE:                                                   
  ALTERNATIVES**                                                     

  **Description**   **Year   **Year    **Year    **Year    **Year    **Total**
                    1**      2**       3**       4**       5**       

  Benefit 5         65,000   130,000   130,000   130,000   130,000   585,000
  ----------------- -------- --------- --------- --------- --------- -----------

  ---------------- ------------------------------------------------------
  Measurement      Courier service charges in support of program
  Plan:            operations are projected to be eliminated by mid-year
                   in the first year. The finance department maintains
                   records by expenditure category and program office and
                   will be able to confirm elimination of these costs.

  ---------------- ------------------------------------------------------

**Quantified Benefits Worksheet: Systems Life**

<table>
<colgroup>
<col style="width: 10%" />
<col style="width: 0%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 1%" />
<col style="width: 8%" />
<col style="width: 2%" />
<col style="width: 11%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="14"><strong>BENEFIT CATEGORY / DESCRIPTION</strong></td>
</tr>
<tr class="even">
<td colspan="14"><p><strong>Benefit Number:</strong> 5</p>
<p><strong>Description:</strong> Reduction in Courier Service
Costs</p></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>STATUS QUO BENEFIT VALUE</strong></td>
</tr>
<tr class="even">
<td colspan="14"><strong>Assumptions:</strong> None. No benefit is
claimed for the status quo. Figures below on current and future courier
service fees were used to determine cost savings for the
alternatives.</td>
</tr>
<tr class="odd">
<td colspan="5"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="5"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="5">Current Measure/Volume: $130,000</td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="odd">
<td colspan="5">Projected Increase/Decrease Over Time: Stable</td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="even">
<td colspan="5">Current Value: $130,000</td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="odd">
<td colspan="14"><strong>System Life Costs Profile: Status
Quo</strong></td>
</tr>
<tr class="even">
<td colspan="3">Year 1</td>
<td>Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td>Year 7</td>
<td colspan="2">Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="odd">
<td colspan="3">130,000</td>
<td>130,000</td>
<td>130,000</td>
<td>130,000</td>
<td>130,000</td>
<td colspan="2"></td>
<td></td>
<td colspan="2"></td>
<td colspan="2">650,000</td>
</tr>
<tr class="even">
<td colspan="14"><strong>ALTERNATIVE 1 BENEFIT VALUE</strong></td>
</tr>
<tr class="odd">
<td colspan="14"><strong>Assumptions:</strong> Commercial network
services will be installed by mid-year in the first year, cutting
courier service costs in half.</td>
</tr>
<tr class="even">
<td colspan="5"><strong>Numbers</strong></td>
<td colspan="4"><strong>Basis</strong></td>
<td colspan="5"><strong>Source</strong></td>
</tr>
<tr class="odd">
<td colspan="5"><p>Measure/Volume</p>
<p>at Implementation: $130,000</p></td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="even">
<td colspan="5">Projected Increase/Decrease Over Time: Halved first
year, eliminated second year.</td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="odd">
<td colspan="5">Initial Value at Implementation: -$65,000</td>
<td colspan="4">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="even">
<td colspan="14"><strong>System Life Projected Costs Profile:
Alternatives</strong></td>
</tr>
<tr class="odd">
<td colspan="2">Year 1</td>
<td colspan="2">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td colspan="2">Year 6</td>
<td colspan="2">Year 7</td>
<td colspan="2">Year 8</td>
<td>Total</td>
</tr>
<tr class="even">
<td colspan="2">65,000</td>
<td colspan="2">-</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td colspan="2">-</td>
<td colspan="2">-</td>
<td colspan="2">-</td>
<td>65,000</td>
</tr>
<tr class="odd">
<td colspan="14"><strong>Systems Life Benefits Profile: Alternative
1</strong></td>
</tr>
<tr class="even">
<td>Year 1</td>
<td colspan="3">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td colspan="2">Year 5</td>
<td>Year 6</td>
<td>Year 7</td>
<td colspan="2">Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="odd">
<td>65,000</td>
<td colspan="3">130,000</td>
<td>130,000</td>
<td>130,000</td>
<td colspan="2">130,000</td>
<td>-</td>
<td>-</td>
<td colspan="2">-</td>
<td colspan="2">585,000</td>
</tr>
</tbody>
</table>

**Benefit 6:**

**System Engineering Upgrade Cost Savings**

+---------------+------------------------------------------------------+
| Scenario:     | Under the current system\'s plans and budgets, the   |
|               | status quo computer system is scheduled for a        |
|               | hardware and software engineering upgrade in the     |
|               | third year. This upgrade is required by the          |
|               | manufacturer, in order to continue hardware and      |
|               | software maintenance services beyond year 3. This    |
|               | upgrade does not affect the capacity or capability   |
|               | of the system\'s processing power. It simply makes   |
|               | the equipment eligible for continued maintenance     |
|               | support.                                             |
|               |                                                      |
|               | The upgrade is budgeted at \$655,000, with           |
|               | expenditures for equipment and software purchase and |
|               | fees, installation, system testing, studies, and     |
|               | procurement. See the graph below.                    |
|               |                                                      |
|               | ![](media/image11.wmf)                               |
+---------------+------------------------------------------------------+

+---------------+------------------------------------------------------+
|               | By implementing the alternative, the upgrade will    |
|               | not be made --- resulting in a system cost savings.: |
+---------------+------------------------------------------------------+
| Basis for     | The figures were taken from the latest approved      |
|               | State budget. A copy will be maintained in the       |
| Numbers       | State.                                               |
+---------------+------------------------------------------------------+
| Assumptions:  | None.                                                |
+---------------+------------------------------------------------------+

+---------------+------------------------------------------------------+
| Initial       | The benefit has a value of \$655,000, as a           |
|               | cost-savings from the status quo.                    |
| Calculation   |                                                      |
| of            |                                                      |
|               |                                                      |
| Benefit\'s    |                                                      |
|               |                                                      |
| Value:        |                                                      |
+---------------+------------------------------------------------------+

  ----------------- -------- -------- --------- -------- -------- -----------
  **SYSTEM LIFE                                                   
  COST PROFILE:                                                   
  STATUS QUO**                                                    

  **Description**   **Year   **Year   **Year    **Year   **Year   **Total**
                    1**      2**      3**       4**      5**      

  System upgrade    0        0        655,000   0        0        655,000
  ----------------- -------- -------- --------- -------- -------- -----------

  ----------------- -------- -------- --------- -------- -------- -----------
  **SYSTEM LIFE                                                   
  BENEFIT PROFILE:                                                
  ALTERNATIVES**                                                  

  **Description**   **Year   **Year   **Year    **Year   **Year   **Total**
                    1**      2**      3**       4**      5**      

  Benefit 6         0        0        655,000   0        0        655,000
  ----------------- -------- -------- --------- -------- -------- -----------

  ---------------- ------------------------------------------------------
  Measurement      None required. Budgeted funds will be de-allocated and
  Plan:            cost savings claimed in the third year.

  ---------------- ------------------------------------------------------

**Quantified Benefits Worksheet: Systems Life**

<table>
<colgroup>
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 10%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 11%" />
<col style="width: 9%" />
<col style="width: 1%" />
<col style="width: 8%" />
<col style="width: 2%" />
<col style="width: 11%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="12"><strong>BENEFIT CATEGORY / DESCRIPTION</strong></td>
</tr>
<tr class="even">
<td colspan="12"><p><strong>Benefit Number:</strong> 6</p>
<p><strong>Description:</strong> System Upgrade Cost Savings</p></td>
</tr>
<tr class="odd">
<td colspan="12"><strong>STATUS QUO BENEFIT VALUE</strong></td>
</tr>
<tr class="even">
<td colspan="12"><strong>Assumptions:</strong> No benefit is claimed for
the status quo. Figures below reflect costs budgeted for the status quo
and used to determine cost savings for the alternatives.</td>
</tr>
<tr class="odd">
<td colspan="4"><strong>Numbers</strong></td>
<td colspan="3"><strong>Basis</strong></td>
<td colspan="5"><strong>Source</strong></td>
</tr>
<tr class="even">
<td colspan="4"><p>Current Measure/Volume:</p>
<p>$655,000 (third year)</p></td>
<td colspan="3">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="odd">
<td colspan="4">Projected Increase/Decrease Over Time:
Non-recurring</td>
<td colspan="3">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="even">
<td colspan="4">Current Value: $655,000</td>
<td colspan="3">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>System Life Costs Profile: Status
Quo</strong></td>
</tr>
<tr class="even">
<td colspan="2">Year 1</td>
<td>Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td>Year 6</td>
<td>Year 7</td>
<td colspan="2">Year 8</td>
<td colspan="2">Total</td>
</tr>
<tr class="odd">
<td colspan="2">-</td>
<td>-</td>
<td>655,000</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td colspan="2">-</td>
<td colspan="2">655,000</td>
</tr>
<tr class="even">
<td colspan="12"><strong>ALTERNATIVE 1 BENEFIT VALUE</strong></td>
</tr>
<tr class="odd">
<td colspan="12"><strong>Assumptions:</strong> None</td>
</tr>
<tr class="even">
<td colspan="4"><strong>Numbers</strong></td>
<td colspan="3"><strong>Basis</strong></td>
<td colspan="5"><strong>Source</strong></td>
</tr>
<tr class="odd">
<td colspan="4"><p>Measure/Volume</p>
<p>at Implementation: None</p></td>
<td colspan="3">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="even">
<td colspan="4">Projected Increase/Decrease Over Time: Non-recurring
(third year)</td>
<td colspan="3">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="odd">
<td colspan="4">Initial Value at Implementation: None — $655,000 (third
year)</td>
<td colspan="3">State Budget (1994-1999)</td>
<td colspan="5">Budget office</td>
</tr>
<tr class="even">
<td colspan="12"><strong>Systems Life Benefits Profile: Alternative
1</strong></td>
</tr>
<tr class="odd">
<td>Year 1</td>
<td colspan="2">Year 2</td>
<td>Year 3</td>
<td>Year 4</td>
<td>Year 5</td>
<td>Year 6</td>
<td colspan="2">Year 7</td>
<td colspan="2">Year 8</td>
<td>Total</td>
</tr>
<tr class="even">
<td>-</td>
<td colspan="2">-</td>
<td>655,000</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td colspan="2">-</td>
<td colspan="2">-</td>
<td>655,000</td>
</tr>
</tbody>
</table>

**Part 6: Comparative Cost/Benefit Summary**

The table below summarizes the total present value costs and benefits,
net benefit (or cost), benefit/cost ratio, and breakeven for the status
quo and two alternatives. Alternative 1 is the State\'s chosen
alternative because it yields a net benefit and will breakeven in the
fifth year.

  ----------------- ----------------- ----------------- -----------------
  **COMPARISON OF                                       
  ALTERNATIVES**                                        

  **Description**   **Status Quo**    **Alternative 1** **Alternative 2**

  Total Present     0                 8,690,663         8,690,663
  Value Benefits                                        

  Less Total        7,658,159         8,497,668         10,651,811
  Present Value                                         
  Costs                                                 

  Net Benefit       ‑7,658,159        192,995           ‑1,961,148
  (Cost)                                                

  Benefit/Cost      0                 1.02              0.82
  Ratio                                                 

  Breakeven         N/A               52                N/A
  (Months)                                              
  ----------------- ----------------- ----------------- -----------------

The following pages provide cost/benefit profiles for the status quo and
each alternative. These tables indicate annual and system life
non-recurring and recurring cost, annul and system life total costs,
annual and system life present value cost, annual and system life
projected benefits, annual and system life present value benefits,
cumulative total projected costs, and brief descriptions of quantitative
benefits.

*\[Editor\'s Note: This section provides the comparative costs and
benefits for the status quo and each alternative.\]*

**Cost/ Benefit Profile: Status Quo**

<table>
<colgroup>
<col style="width: 23%" />
<col style="width: 9%" />
<col style="width: 2%" />
<col style="width: 12%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 13%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="12"><strong>SYSTEM LIFE COST PROFILE: STATUS
QUO</strong></td>
</tr>
<tr class="even">
<td><strong>Description</strong></td>
<td colspan="2"><strong>Year 1</strong></td>
<td><strong>Year 2</strong></td>
<td colspan="2"><strong>Year 3</strong></td>
<td colspan="2"><strong>Year 4</strong></td>
<td colspan="2"><strong>Year 5</strong></td>
<td colspan="2"><strong>Total</strong></td>
</tr>
<tr class="odd">
<td>Non-Recurring Costs</td>
<td colspan="2">0</td>
<td>0</td>
<td colspan="2">655,000</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">655,000</td>
</tr>
<tr class="even">
<td>Recurring Costs</td>
<td colspan="2">1,621,868</td>
<td>1,621,868</td>
<td colspan="2">1,621,868</td>
<td colspan="2">1,721,868</td>
<td colspan="2">1,821,868</td>
<td colspan="2">8,409,340</td>
</tr>
<tr class="odd">
<td>Total Projected Costs</td>
<td colspan="2">1,621,868</td>
<td>1,621,868</td>
<td colspan="2">2,276,868</td>
<td colspan="2">1,721,868</td>
<td colspan="2">1,821,868</td>
<td colspan="2">9,064,340</td>
</tr>
<tr class="even">
<td>Total Present Value Costs</td>
<td colspan="2">1,567,860</td>
<td>1,465,358</td>
<td colspan="2">1,922,587</td>
<td colspan="2">1,358,726</td>
<td colspan="2">1,343,628</td>
<td colspan="2">7,658,159</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>SYSTEM LIFE BENFITS PROFILE</strong></td>
</tr>
<tr class="even">
<td><strong>Description</strong></td>
<td colspan="2"><strong>Year 1</strong></td>
<td><strong>Year 2</strong></td>
<td colspan="2"><strong>Year 3</strong></td>
<td colspan="2"><strong>Year 4</strong></td>
<td colspan="2"><strong>Year 5</strong></td>
<td colspan="2"><strong>Total</strong></td>
</tr>
<tr class="odd">
<td>Total Projected Benefits</td>
<td colspan="2">0</td>
<td>0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
</tr>
<tr class="even">
<td>Total Present Value Benefits</td>
<td colspan="2">0</td>
<td>0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>CUMULATIVE BENEFIT/COST PROFILE</strong></td>
</tr>
<tr class="even">
<td><strong>Description</strong></td>
<td colspan="2"><strong>Year 1</strong></td>
<td><strong>Year 2</strong></td>
<td colspan="2"><strong>Year 3</strong></td>
<td colspan="2"><strong>Year 4</strong></td>
<td colspan="2"><strong>Year 5</strong></td>
<td colspan="2"><strong>Total</strong></td>
</tr>
<tr class="odd">
<td>Cumulative Total Projected Benefits</td>
<td colspan="2">0</td>
<td>0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">N/A</td>
</tr>
<tr class="even">
<td>Cumulative Total Projected Costs</td>
<td colspan="2">1,621,868</td>
<td>3,243,736</td>
<td colspan="2">5,520,604</td>
<td colspan="2">7,242,472</td>
<td colspan="2">9,064,340</td>
<td colspan="2">N/A</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>QUALITATIVE BENEFITS</strong></td>
</tr>
<tr class="even">
<td colspan="2" rowspan="2">Benefits</td>
<td colspan="3" rowspan="2"><p>Related System</p>
<p>Objectives</p></td>
<td colspan="7">Measure of Effectiveness</td>
</tr>
<tr class="odd">
<td colspan="2"><p>Very</p>
<p>Effective</p></td>
<td colspan="2">Effective</td>
<td colspan="2"><p>Minimally</p>
<p>Effective</p></td>
<td><p>Not</p>
<p>Effective</p></td>
</tr>
<tr class="even">
<td colspan="2">None</td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
</tbody>
</table>

**Cost/ Benefit Profile: Alternative 1**

<table>
<colgroup>
<col style="width: 23%" />
<col style="width: 9%" />
<col style="width: 2%" />
<col style="width: 12%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 13%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="12"><strong>SYSTEM LIFE COST PROFILE</strong></td>
</tr>
<tr class="even">
<td><strong>Description</strong></td>
<td colspan="2"><strong>Year 1</strong></td>
<td><strong>Year 2</strong></td>
<td colspan="2"><strong>Year 3</strong></td>
<td colspan="2"><strong>Year 4</strong></td>
<td colspan="2"><strong>Year 5</strong></td>
<td colspan="2"><strong>Total</strong></td>
</tr>
<tr class="odd">
<td>Non-Recurring Costs</td>
<td colspan="2">3,700,000</td>
<td>0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">3,700,000</td>
</tr>
<tr class="even">
<td>Recurring Costs</td>
<td colspan="2">1,621,868</td>
<td>1,621,868</td>
<td colspan="2">796,145</td>
<td colspan="2">796,145</td>
<td colspan="2">796,145</td>
<td colspan="2">5,632,171</td>
</tr>
<tr class="odd">
<td>Total Projected Costs</td>
<td colspan="2">5,321,868</td>
<td>1,621,868</td>
<td colspan="2">796,145</td>
<td colspan="2">796,145</td>
<td colspan="2">796,145</td>
<td colspan="2">9,332,171</td>
</tr>
<tr class="even">
<td>Total Present Value Costs</td>
<td colspan="2">5,144,650</td>
<td>1,465,358</td>
<td colspan="2">672,265</td>
<td colspan="2">628,238</td>
<td colspan="2">587,157</td>
<td colspan="2">8,497,668</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>SYSTEM LIFE BENFITS PROFILE</strong></td>
</tr>
<tr class="even">
<td><strong>Description</strong></td>
<td colspan="2"><strong>Year 1</strong></td>
<td><strong>Year 2</strong></td>
<td colspan="2"><strong>Year 3</strong></td>
<td colspan="2"><strong>Year 4</strong></td>
<td colspan="2"><strong>Year 5</strong></td>
<td colspan="2"><strong>Total</strong></td>
</tr>
<tr class="odd">
<td>Total Projected Benefits</td>
<td colspan="2">65,000</td>
<td>1,782,422</td>
<td colspan="2">3,081,271</td>
<td colspan="2">2,755,058</td>
<td colspan="2">3,039,414</td>
<td colspan="2">10,723,165</td>
</tr>
<tr class="even">
<td>Total Present Value Benefits</td>
<td colspan="2">62,836</td>
<td>1,610,418</td>
<td colspan="2">2,601,825</td>
<td colspan="2">2,174,016</td>
<td colspan="2">2,241,568</td>
<td colspan="2">8,690,663</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>CUMULATIVE BENEFIT/COST PROFILE</strong></td>
</tr>
<tr class="even">
<td><strong>Description</strong></td>
<td colspan="2"><strong>Year 1</strong></td>
<td><strong>Year 2</strong></td>
<td colspan="2"><strong>Year 3</strong></td>
<td colspan="2"><strong>Year 4</strong></td>
<td colspan="2"><strong>Year 5</strong></td>
<td colspan="2"><strong>Total</strong></td>
</tr>
<tr class="odd">
<td>Cumulative Total Projected Benefits</td>
<td colspan="2">65,000</td>
<td>1,847,422</td>
<td colspan="2">4,928,693</td>
<td colspan="2">7,683,751</td>
<td colspan="2">10,723,165</td>
<td colspan="2">N/A</td>
</tr>
<tr class="even">
<td>Cumulative Total Projected Costs</td>
<td colspan="2">5,321,868</td>
<td>6,943,736</td>
<td colspan="2">7,739,881</td>
<td colspan="2">8,536,026</td>
<td colspan="2">9,332,171</td>
<td colspan="2">N/A</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>QUALITATIVE BENEFITS</strong></td>
</tr>
<tr class="even">
<td colspan="2" rowspan="2">Benefits</td>
<td colspan="3" rowspan="2"><p>Related System</p>
<p>Objectives</p></td>
<td colspan="7">Measure of Effectiveness</td>
</tr>
<tr class="odd">
<td colspan="2"><p>Very</p>
<p>Effective</p></td>
<td colspan="2">Effective</td>
<td colspan="2"><p>Minimally</p>
<p>Effective</p></td>
<td><p>Not</p>
<p>Effective</p></td>
</tr>
<tr class="even">
<td colspan="2"><p>Enhanced use of technology to speed up input,
processing and transmission</p>
<p>Support program goals and long range strategies</p>
<p>Ensure flexibility and proven technology</p></td>
<td colspan="3"><p>Eliminate processing delays</p>
<p>Provide more timely service</p></td>
<td colspan="2"><p>√</p>
<p>√</p>
<p>√</p>
<p>√</p></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
</tbody>
</table>

**Cost/ Benefit Profile: Alternative 2**

<table>
<colgroup>
<col style="width: 23%" />
<col style="width: 9%" />
<col style="width: 2%" />
<col style="width: 12%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 0%" />
<col style="width: 13%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="12"><strong>SYSTEM LIFE COST PROFILE</strong></td>
</tr>
<tr class="even">
<td><strong>Description</strong></td>
<td colspan="2"><strong>Year 1</strong></td>
<td><strong>Year 2</strong></td>
<td colspan="2"><strong>Year 3</strong></td>
<td colspan="2"><strong>Year 4</strong></td>
<td colspan="2"><strong>Year 5</strong></td>
<td colspan="2"><strong>Total</strong></td>
</tr>
<tr class="odd">
<td>Non-Recurring Costs</td>
<td colspan="2">5,765,000</td>
<td>0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">5,765,000</td>
</tr>
<tr class="even">
<td>Recurring Costs</td>
<td colspan="2">1,621,868</td>
<td>1,621,868</td>
<td colspan="2">862,745</td>
<td colspan="2">862,745</td>
<td colspan="2">862,745</td>
<td colspan="2">5,831,971</td>
</tr>
<tr class="odd">
<td>Total Projected Costs</td>
<td colspan="2">7,386,868</td>
<td>1,621,868</td>
<td colspan="2">862,745</td>
<td colspan="2">862,745</td>
<td colspan="2">862,745</td>
<td colspan="2">11,596,971</td>
</tr>
<tr class="even">
<td>Total Present Value Costs</td>
<td colspan="2">7,140,885</td>
<td>1,465,358</td>
<td colspan="2">728,502</td>
<td colspan="2">680,792</td>
<td colspan="2">636,274</td>
<td colspan="2">10,651,811</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>SYSTEM LIFE BENFITS PROFILE</strong></td>
</tr>
<tr class="even">
<td><strong>Description</strong></td>
<td colspan="2"><strong>Year 1</strong></td>
<td><strong>Year 2</strong></td>
<td colspan="2"><strong>Year 3</strong></td>
<td colspan="2"><strong>Year 4</strong></td>
<td colspan="2"><strong>Year 5</strong></td>
<td colspan="2"><strong>Total</strong></td>
</tr>
<tr class="odd">
<td>Total Projected Benefits</td>
<td colspan="2">65,000</td>
<td>1,782,422</td>
<td colspan="2">3,081,271</td>
<td colspan="2">2,755,058</td>
<td colspan="2">3,039,414</td>
<td colspan="2">10,723,165</td>
</tr>
<tr class="even">
<td>Total Present Value Benefits</td>
<td colspan="2">62,836</td>
<td>1,610,418</td>
<td colspan="2">2,601,825</td>
<td colspan="2">2,174,016</td>
<td colspan="2">2,241,568</td>
<td colspan="2">8,690,663</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>CUMULATIVE BENEFIT/COST PROFILE</strong></td>
</tr>
<tr class="even">
<td><strong>Description</strong></td>
<td colspan="2"><strong>Year 1</strong></td>
<td><strong>Year 2</strong></td>
<td colspan="2"><strong>Year 3</strong></td>
<td colspan="2"><strong>Year 4</strong></td>
<td colspan="2"><strong>Year 5</strong></td>
<td colspan="2"><strong>Total</strong></td>
</tr>
<tr class="odd">
<td>Cumulative Total Projected Benefits</td>
<td colspan="2">65,000</td>
<td>1,847,422</td>
<td colspan="2">4,928,693</td>
<td colspan="2">7,683,751</td>
<td colspan="2">10,723,165</td>
<td colspan="2">N/A</td>
</tr>
<tr class="even">
<td>Cumulative Total Projected Costs</td>
<td colspan="2">7,386,868</td>
<td>9,008,736</td>
<td colspan="2">9,871,481</td>
<td colspan="2">10,734,226</td>
<td colspan="2">11,596,971</td>
<td colspan="2">N/A</td>
</tr>
<tr class="odd">
<td colspan="12"><strong>QUALITATIVE BENEFITS</strong></td>
</tr>
<tr class="even">
<td colspan="2" rowspan="2">Benefits</td>
<td colspan="3" rowspan="2"><p>Related System</p>
<p>Objectives</p></td>
<td colspan="7">Measure of Effectiveness</td>
</tr>
<tr class="odd">
<td colspan="2"><p>Very</p>
<p>Effective</p></td>
<td colspan="2">Effective</td>
<td colspan="2"><p>Minimally</p>
<p>Effective</p></td>
<td><p>Not</p>
<p>Effective</p></td>
</tr>
<tr class="even">
<td colspan="2"><p>Enhanced use of technology to speed up input,
processing and transmission</p>
<p>Support program goals and long range strategies</p>
<p>Ensure flexibility and proven technology</p></td>
<td colspan="3"><p>Eliminate processing delays</p>
<p>Provide more timely service</p></td>
<td colspan="2"><p>√</p>
<p>√</p>
<p>√</p>
<p>√</p></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
</tbody>
</table>

**Part 7: Sensitivity Analysis**

The sensitivity analysis conducted as part of this cost/benefit analysis
centered on the factors expected to have the most effect on the net
present value determination:

-   Cost estimates for new equipment

-   Workload projections and effect on staffing, and

-   Project implementation schedule.

The results of the sensitivity analysis indicate that the selected
alternative remains the best choice, even considering a range of factors
...

*\[Editor\'s Note: this section introduces the State\'s approach to the
sensitivity analysis, indicating the factors tested and the results\]*

**7.1 Methodology**

The state used four steps in testing the sensitivity of each factor and
assessing its effect on the cost/benefit determination:

-   Select the factor to be tested

-   Hold all other factors in the analysis constant

-   Rework the analysis, varying the estimates for the factor under
    consideration; and

-   Check the results to see if the ranking of alternatives is
    materially affected.

*\[Editor\'s Note: this section describes the approach, assumptions and
the model used for conducting the sensitivity analysis. This section
describes in more detail than the introductory passage the factors
tested. Examples of factors which could be considered during the
sensitivity analysis are length of system life: volume, mix, or pattern
of workload; requirements; system configuration and assumptions\]*

**7.2 Sources of Information**

The information used to test the factors ...

*\[Editor\'s Note: this section details the sources of data used in the
sensitivity analysis\]*

**7.4 Results**

The results of the sensitivity analysis indicate that the selected
alternative remains the best choice within a range of factors ...

*\[Editor\'s Note: this section details the results of the sensitivity
analysis in more detail than the introductory passage. Normally a
complete description and complete set of spreadsheets testing the effect
of a range of numbers are included as a discreet section or an appendix
to a cost/benefit analysis.\]*

**7.5 Evaluation and Conclusion**

The State has determined that the chosen alternative has a high
probability of cost-effective implementation and will breakeven in the
fifth year of the systems life. The selected system is expected to have
a useful life of at least five years, and will more likely be in
operation for six years. Detailed information on the sensitivity
analysis is retained in the State files for reference during
cost/benefit measurement.

*\[Editor\'s Note: This summarizes the results of the State\'s
sensitivity analysis and chosen course of action\]*

**Part 8: Cost/Benefit Measurement Plan**

Actual Costs will be measured against the selected alternative\'s
projected costs by the finance office, subject to review and approval by
the program office. Costs will be measured by category, but reported in
the aggregate annually to ACF. Variances of over 10% will be explained
by supporting documentation which addresses expenditures by category.

Th chart and tables below depict the cumulative and annual baselines
against which actual project costs will be measured.

  --------------- -------------------------------------------------------
  Benefits will   ![](media/image12.wmf)
  be measured in  
  accordance with 
  the measurement 
  plan listed at  
  the end of each 
  narrative       
  benefit         
  description in  
  the preceding   
  pages. The      
  chart and table 
  below depict    
  the cumulative  
  and annual      
  baselines       
  against which   
  actual project  
  benefits will   
  be measured.    

  --------------- -------------------------------------------------------

+---------------+--------+--------+--------+--------+--------+---------+
| **SYSTEM LIFE |        |        |        |        |        |         |
| ANNUAL COST   |        |        |        |        |        |         |
| BASELINE**    |        |        |        |        |        |         |
+---------------+--------+--------+--------+--------+--------+---------+
| **            | **Year | **Year | **Year | **Year | **Year | **      |
| Description** | 1**    | 2**    | 3**    | 4**    | 5**    | Total** |
+---------------+--------+--------+--------+--------+--------+---------+
| Projected     | 5,3    | 1,6    | 7      | 7      | 7      | 9,      |
| Costs:        | 21,868 | 21,868 | 96,145 | 96,145 | 96,145 | 332,171 |
|               |        |        |        |        |        |         |
| Alternative 1 |        |        |        |        |        |         |
+---------------+--------+--------+--------+--------+--------+---------+

  ----------------- -------- ----------- ----------- ----------- ----------- ------------
  **ANNUAL AND                                                               
  SYSTEM LIFE                                                                
  BENEFITS                                                                   
  BASELINE**                                                                 

  **Description**   **Year   **Year 2**  **Year 3**  **Year 4**  **Year 5**  **Total**
                    1**                                                      

  Benefit 1         0        409,507     409,507     409,507     409,507     1,638,028

  Benefit 2         0        150,000     150,000     150,000     150,000     600,000

  Benefit 3         0        481,920     1,034,120   1,257,510   1,420,660   4,194,210

  Benefit 4         0        610,995     702,644     808,041     929,247     3,050,927

  Benefit 5         65,000   130,000     130,000     130,000     130,000     585,000

  Benefit 6         0        0           655,000     0           0           655,000

  Total             65,000   1,782,422   3,081,271   2,755,058   3,039,414   10,723,165
  ----------------- -------- ----------- ----------- ----------- ----------- ------------

![](media/image13.wmf)

The State also plans to measure whether qualitative improvements are
achieved. Specifically, the State has established project goals to
improve productivity, eliminate processing delays, and provide more
timely services to the public.

Currently, the State experiences processing delays in three categories:
input processing, internal control checks, and report transmission.
Input processing is the time taken from receipt of information from the
client until the data has been entered into the central database.
Internal control checks involve the steps taken to verify client
identity and eligibility and cross-check for duplicative entry. Report
transmission begins after system processing is complete and continues
until receipt of the information by the requesting party.

Regarding more timely provision of services to the public, two measures
are critical: the time elapsed from initial client contact until (1)
notification of acceptance of client data and (2) delay until provision
of benefits.

The table on the next page shows the current operational performance and
the target performance for the new system. Current data was developed
based on management records on file in the State.

  ----------------------- ----------------------- -----------------------
  **PERFORMANCE BASELINE                          
  AND TARGET**                                    

  **Category**            **Baseline Average**    **Target Average**

  Administrative overhead 8 hours per week        4 hours per week

  Input Processing        7 days                  Same day

  Internal control checks 3 days                  1 day

  Report transmission     4 days                  Same day

  Delay to notification   3 weeks                 1 week

  Delay to benefits       3 months                1 month
  ----------------------- ----------------------- -----------------------

*In summary, this cost/benefit measurement plan provides that the State
will measure performance against both program and system goals - and
against cost and benefit values. (See the table on the next page.) This
information will serve as the baseline for reporting \"actuals\" in
future APD Updates.*

  ----------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------
  **SYSTEM LIFE                                                                                                                               
  COST BASELINE**                                                                                                                             

  **Description**   **Year 1**  **Year 2**              **Year 3**              **Year 4**              **Year 5**               **Total**    

  Non-Recurring     3,700,00    0                       0                       0                       0                        0            
  Costs                                                                                                                                       

  Recurring Costs   1,621,868   1,621,868               796,145                 796,145                 796,145                  5,632,171    

  Total Projected   5,321,868   1,621,868               796,145                 796,145                 796,145                  9,332,171    
  Costs                                                                                                                                       

  **SYSTEM LIFE                                                                                                                               
  BENFITS                                                                                                                                     
  BASELINE**                                                                                                                                  

  **Description**   **Year 1**  **Year 2**              **Year 3**              **Year 4**              **Year 5**               **Total**    

  Total Projected   65,000      1,782,422               3,081,271               2,755,058               3,039,414                10,723,165   
  Benefits                                                                                                                                    

  **CUMULATIVE                                                                                                                                
  BENEFIT / COST                                                                                                                              
  BASELINE**                                                                                                                                  

  **Description**   **Year 1**              **Year 2**              **Year 3**              **Year 4**              **Year 5**                **Total**

  Cumulative Total  65,000                  1,847,422               4,928,693               7,683,751               10,723,165                N/A
  Projected                                                                                                                                   
  Benefits                                                                                                                                    

  Cumulative Total  5,321,868               6,943,736               7,739,881               8,536,026               9,332,171                 N/A
  Projected Costs                                                                                                                             
  ----------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ ------------ -----------

*\[Editor\'s Note: Note that only projected - not present value -
numbers establish the baseline. Present value numbers and present value
discounting are not used once the most cost-beneficial alternative is
chosen.\]*

9

[^1]:
    > ^?^ Further information on the effect of projected workload
    > increases on staffing is detailed in Benefit 3.

[^2]:
    > ^?^ This assumption is supported by the fact that caseworkers\'
    > duties have been stable since 1987, proven by review of a
    > personnel audit conducted at that time --- \"Performance Audit of
    > Caseworkers.\"

[^3]:
    > ^?^ This assumption is supported by the study \"Historical and
    > Demographical Trends in Casework: Effect on the Future.\"

[^4]:
    > ^?^ This assumption is based on the current project management
    > plan.

[^5]:
    > ^?^ Details on system specifications are provided in the
    > requirements analysis.