# Presentation: 661900

## Slide 1

## PAPD   Feasibility Study – a means to compare	    alternatives in order to select one

**PAPD****   ****Feasibility Study – a means to compare****	****    alternatives in order to select one**
**IAPD****    ****A plan and process to measure****	****   costs/benefits and calculate breakeven**
**APDU****   ****Measures projected and actual costs****	****    and benefits each year, explaining****               variances from original plan, and****	****    calculates breakeven**

## Functional Model

**Functional Model**
**Works well for start-up projects under FSA88 and PRWORA**
**Provides insight into task detail**
**Revenue Stream Model**
**Works well for post-implementation monitoring and enhancement projects**
**Provides summary of project progress **

## Slide 4

|   | Functional Model | Revenue Stream Model |
| --- | --- | --- |
| Data level | Task level data | Project level data |
| Frequency | Capture data monthlySummarize quarterlyReport annually | Report annually |
| Requires | Dedicated process and dataSpecialized training | Uses data from OCSE FormsNo specialized training |
| Accuracy | Accurate at task levelLess accurate for multi-task,    multi-year projectsDifficult to reconcile task-level    and project-level data | Not accurate for task level dataEasy to summarize multi-task,    multi-year projectsUses only project-level data |
| Level of effort | High maintenance | Little time and effort required |

## With a New or Replacement System

**With a New or Replacement System**
- A new system transfer always requires an IAPD that includes a Feasibility Study, Alternatives Analysis and a Cost-Benefits Analysis (CBA).
**CSES Enhancement**
- Can be treated as a continuation of the existing system and thus of the existing APD, with update of existing APD and CBA, or State may opt to open a new APD, and thus a new CBA

**After PRWORA Certification**

## Cost-Benefit Analysis:  

**Cost-Benefit Analysis:  **

**Recurring**
- All costs related to system operations and maintenance (_O&M_): lease and maintenance of site, facility, equipment and software, travel, training, supplies, security, salary and benefits, support services
**Non-Recurring**
- All costs related to _**System Development**_**:  **design, development, testing, conversion, studies, procurement, implementation, new facilities and equipment

**Cost Elements**

## Cost-Benefit Analysis:  

**Cost-Benefit Analysis:  **

**Quantitative**
- Increased Revenue – i.e., collections (expected to be sufficient for CSE systems to breakeven)
- Reduced Costs
**Qualitative **
- Customer/Client Satisfaction
- Improved Morale
- Avoiding Technology Obsolescence, Etc.

**Benefit Elements**

## Cost-Benefit Analysis:

**Cost-Benefit Analysis:**

**Actual costs and benefits must be monitored and reported-on at least yearly**
**Costs and Benefits must be measured against the baseline used in the IAPD **
**Variances over 10% should be explained by including any supporting documentation**

**Cost-Benefit Monitoring**

## Cost-Benefit Analysis:

**Cost-Benefit Analysis:**

**Occurs when cumulative benefits from system exceed cumulative costs over same period**
**Reported in Annual APDU (AAPDU)**
**Verified by OCSE**
**Further APDU’s are not required when:****  **
**CSES is federally, unconditionally certified,**
**All outstanding, significant CSES development is complete, and **
**OCSE has verified breakeven data in AAPDU**

**The Breakeven Point**

## Cost-Benefit Analysis:

**Cost-Benefit Analysis:**

- Provides detailed measurements specific to task-level effort
- Provides insight into specifically where system revenues and cost savings are derived

- Provides summary view of project progress toward breakeven
- Uses summary data required for OCSE Forms; relatively easy to develop, measure, and verify

**The Revenue Stream Model  (RSM)**

**Two Benefit Models**

## The RSM Uses Summary Data

**Cost-Benefit Analysis:**

- Annual caseload and collections as identified in APD and OCSE Forms 157 and 34A
- Net Administrative costs, ADP O&M costs as identified in APD and OCSE Form 396A
- Total system development/enhancement as identified in IAPD
- Operational life of system identified in IAPD
- The year prior to system implementation is used as the RSM Base Year

**The RSM Uses Summary Data**

**Revenue Stream Model**

## Revenue Stream Model:

**Revenue Stream Model:**

**Growth of Net Administrative operating costs and ADP Operations and Maintenance costs is estimated based on inflation index prior to implementation or on historical data**
**Total system development/enhancement cost is identified from Annual APD Updates**
**The IAPD identifies the system costs that will be tracked in the Revenue Stream Model (RSM)**

**Cost**** ****Data**

## Revenue Stream Model:

**Revenue Stream Model:**

**Growth of revenue (collections) is estimated by the model based on historical collections data and historical collections growth data leading up to the CSES’ implementation **
**The IAPD’s CBA (Revenue Stream Model) provides the vehicle that will track benefits growth and accumulation automatically**** **
**RSM is automated and can be easily printed for submission in Annual APD Updates**

**Benefits**** ****Data**

## Revenue Stream Model:

**Revenue Stream Model:**

**Tracks actual costs and benefits**
**Applies growth factors based on historical data or inflation index to project (predict) future costs/benefits**
**Amortizes costs of system development/ enhancement over the projected system life **
**Calculates the proportion of all revenue increases that are attributable to automation**
**Projects breakeven point for costs and benefits**

**What The RSM Does**

## Revenue Stream Model:

**Revenue Stream Model:**

**Retrieve Project Cost Data for Base Year Input**
- System Development Cost
- System Life (in Years)
- Operations and Maintenance for Base Year
**Retrieve Program Caseload, Collections and Net Administrative Cost for Base Year Input**
- Annual Caseload for Base Year
- Annual Collections for Base Year
**Retrieve Growth Rate Data 3 to 5 Years Prior to Year One of Operation of the CSES (up to and including the Base Year)**

**Setting Up The RSM**

## Sources for Base Year Data

- Child Support Enforcement
- Annual Reports to Congress

**Sources for Base Year Data**

## Sources for Base Year Data

**OCSE Website:  **_**http://www.acf.hhs.gov/programs/cse/**_
- 			_**Forms, Reports & Other Resources**_

**Sources for Base Year Data**

## Sources for Base Year Data

**Sources for Base Year Data**

## Sources for Base Year Data

**Sources for Base Year Data**

## Sources for Base Year Data

**Sources for Base Year Data**

## Sources for Base Year Data

**Sources for Base Year Data**

## Sources for Base Year Data

**RSM Data Sources – a desk reference tool**

**Sources for Base Year Data**

## Growth Data

**Growth Data**
- Used To Calculate Rates Of Growth Of ***Net*** Program Administrative Costs), System Maintenance and Operations (M&O) Costs, and Caseload and Collections On A Year-to-Year Basis:
-   prior to beneficial use of the system
-   create average using at least 3 prior years
-   use the same years for all calculations

**Base Year Growth Rate Data**

**Notes:**
(or longer if advantageous to the State)

## Growth Formulas

| Caseload and Collections Growth Rates |  |
| --- | --- |
|    2002 Caseload Growth Rate = (2002 Caseload - 2001 Caseload) / 2001 Caseload |  |
|    2001 Caseload Growth Rate = (2001 Caseload - 2000 Caseload) / 2000 Caseload  |  |
|    2000 Caseload Growth Rate = (2000 Caseload - 1999 Caseload) / 1999 Caseload |  |
|   |  |
| (3-yr) Caseload Growth Rate = |  |
|   ((2000 Growth Rate + 2001 Growth Rate + 2002 Growth Rate) / 3) / 100 |  |

**Sources for Base Year Growth Rate Data**

## Growth Formulas

| Admin and ADP O & M Growth Rates |  |
| --- | --- |
|    2002  Growth Rate = (2002 Inflation Index) |  |
|    2001 Growth Rate = (2001 Inflation Index) |  |
|    2000  Growth Rate = (2000 Inflation Index) |  |
|  |   |
| (3-yr) Inflation Index Growth Rate = |  |
| ((2000 Growth Rate + 2001 Growth Rate + 2002 Growth Rate) / 3) / 100 |  |

**Sources for Base Year Data**

## Growth Parameters

**Growth Parameters**
- Caseload Growth %  (3-10%)
- Collections Growth %  (3-10%)
- Administration Cost Growth %  (inflation +/- 2%)
- Annual ADP Cost Growth %     (inflation +/- 1%)
- Variances outside these parameters need to be explained in APD

**Base Year Growth Rate Data**

**Notes:**
(or longer if advantageous to the State)

## Creating an RSM

- Gather data from OCSE reports and APD’s Enter data to RSM data-entry dialogs
- Print out benefit year worksheets
- Summarize progress in CBA section narrative
**Yearly updates to RSM data**
- Update RSM with actual prior year caseload and collections data, and administrative and ADP costs
- Print out benefit year worksheets
- Summarize progress in CBA section narrative.

**Using The Revenue Stream Model**

**Notes:**
(or longer if advantageous to the State)

## RSM Construction and Use:

**RSM Construction and Use:**

**Project Data**
- System Development Cost
- System Life
- Base Year for RSM
**Base Year Data**
-  Annual Caseload
-  Annual Collections
-  Net Administration Cost
-  ADP Operations and Maintenance Cost
**Growth Data**
- Rates of growth

**An Exercise**

**Notes:**
(or longer if advantageous to the State)

## Slide 29

**Notes:**
(or longer if advantageous to the State)

## Open The Revenue Stream Model Main Menu

**Open The Revenue Stream Model Main Menu**

**Using The Revenue Stream Model **

**Notes:**
(or longer if advantageous to the State)

## Enter Data To RSM Base Year Input Screen

**Enter Data To RSM Base Year Input Screen**

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- 1.   RSM applies Growth Rates
-       to Base Year values...

**Caseload increase of 5.2% per year**
**312,503**
-  **(+ 5.2%)      (+ 5.2%)       (+ 5.2%)       (+ 5.2%)       (+ 5.2%)**
**        **
**=  328,753   345,848   363,832    382,751    402,654**
**     ****Year 1     Year 2      Year 3     Year 4       Year 5**

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- ... to estimate Caseload, Collections, Admin, and ADP O&M for all years

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

**   ****82,234,576****   **
**    ****(*****divided by*****)  **
**   ****11**** ****	****=      ****7,481,325**** ****amortized amount**** **
**	****	****              **

- RSM projects system costs for each year by
-      ...amortizing Development Cost over the years of system life ...

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- ...and adding (actual or projected) ADP O&M

**   **
**  **
** **
**     ****	****	****           **
** ****ADP O&M           ****8,664,882****  **
**Plus growth         **_**  **__**+ 2.73%**_**    **
**	****          ****8,901,433****  ****Year 1**** ****projection****               **
**	****	****                **

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- ...and adding (actual or projected) ADP O&M
- ... to calculate annual system costs

** ****82,234,576****   **
**  ****(*****divided by*****)  **
** ****11 ****	****=       ****7,481,325 amortized amount****  **
**     ****	****	****           *****plus***
** ****ADP O&M****        **_**8,901,433**_**    Year 1 projection**
**	****       ****16,382,207 ****   ****annualized system**
**	****	****             ****cost for Year 1**** **

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- RSM projects annualized system costs for each year ...

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- RSM calculates benefits in terms of the increase between
-      240,386,560  Base Year and
-      _268,271,401_  Current Year
-         27,884,841    Collections

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- 4.  The RSM attributes benefits according to the ratio between Net Administrative costs and Annualized System costs

- 57,527,174
-                       =    .2217 or 22.17%
- 16,382,758

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- ... and calculates the portion of benefits attributable to automation for each year ...

-           22.17%
- _x  27,884,841_
-       6,180,190

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- 5.	The RSM accumulates costs and benefits each year...

- ... identifying progress toward breakeven as a percentage

**Notes:**
(or longer if advantageous to the State)

## How The Model Works

**How The Model Works**

- The RSM also charts breakeven data automatically.

**Notes:**
(or longer if advantageous to the State)

## RSM Yearly Updates:  The RSM Update Process

**RSM Yearly Updates:  The RSM Update Process**

- Each year, enter data for the prior year
- Caseload
- Collections
- Administrative expenditures (net)
- ADP Operations and Maintenance
- Update the total system development cost
- Print out all RSM Benefit Years to-date and the Chart
- And update the narrative in CBA Section of APDU

**Notes:**
(or longer if advantageous to the State)

## RSM Update Process

**RSM Update Process**

- Enter data
- for the
- prior year ...

**Notes:**
(or longer if advantageous to the State)

## RSM Update Process

**RSM Update Process**

- Update the total
- system development
- cost

**Notes:**
(or longer if advantageous to the State)

## RSM Update Process

**RSM Update Process**

- Print out all RSM Benefit Years to-date and the Chart

**Notes:**
(or longer if advantageous to the State)

## RSM Update Process

**RSM Update Process**

- And ...
-   Update the narrative in the CBA section of theAPD with whiz-bang statistics and narratives that describe all the great things the program is   achieving since the implementation of the system!!!!!

**Notes:**
(or longer if advantageous to the State)

## RSM Update Process

**RSM Update Process**

- Annual
- Admin Costs

- Annual
- Amortization of System
- Development

**Notes:**
(or longer if advantageous to the State)

## RSM Update Process

**RSM Update Process**

- Benefit Due
- to Automation

- Collections Growth
- Not Due to Automation

**Notes:**
(or longer if advantageous to the State)

## Let’s Go Use The RSM For The State of Euphoria

**Let’s Go Use The RSM For The State of Euphoria**

**Notes:**
(or longer if advantageous to the State)

## Questions

**Questions**

**End of the Session**

**Notes:**
(or longer if advantageous to the State)