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30–442 2006

USE OF TECHNOLOGY 

TO IMPROVE PUBLIC BENEFIT PROGRAMS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HUMAN RESOURCES 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED NINTH CONGRESS 

SECOND SESSION 

APRIL 5, 2006 

Serial No. 109–69 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

BILL THOMAS, California, Chairman 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

THOMAS M. REYNOLDS, New York 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

BOB BEAUPREZ, Colorado 

MELISSA A. HART, Pennsylvania 

CHRIS CHOCOLA, Indiana 

DEVIN NUNES, California 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

WILLIAM J. JEFFERSON, Louisiana 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

STEPHANIE TUBBS JONES, Ohio 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

RAHM EMANUEL, Illinois 

ALLISON H. GILES, Chief of Staff 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HUMAN RESOURCES 

WALLY HERGER, California, Chairman 

NANCY L. JOHNSON, Connecticut 

BOB BEAUPREZ, Colorado 

MELISSA A. HART, Pennsylvania 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

PHIL ENGLISH, Pennsylvania 

DEVIN NUNES, California 

JIM MCDERMOTT, Washington 

BENJAMIN L. CARDIN, Maryland 

FORTNEY PETE STARK, California 

XAVIER BECERRA, California 

RAHM EMANUEL, Illinois 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

iii 

C O N T E N T S 

Page 

Advisory of March 29, 2006, announcing the hearing .......................................... 2 

WITNESSES 

Texas Workforce Commission, Diane Rath, Chair and Commissioner Representing the Public, Austin, Texas .................................................................... 7 

Louisiana Department of Social Services, Marketa Gautreau, Assistant Secretary of Community Services, Baton Rouge, Louisiana .................................. 12 

Florida Department of Children and Families, Don Winstead, Deputy Secretary, Tallahassee, Florida ................................................................................ 16 

Oklahoma Department of Human Services, Lisa Henley, Project Director 

of the Oklahoma EBT Project, Oklahoma City, Oklahoma .............................. 28 

New York City Human Resources Administration, Dennis Fecci, Former Chief 

Information Officer, New York, New York ........................................................ 32 

SUBMISSIONS FOR THE RECORD 

Cohen, Gregory, and Sherri Heller, ACS Government Solutions, joint letter .... 48 

Gerry, Hon. Martin, Social Security Administration, letter ................................ 49 

Hammond, Hon. Donald V., U.S. Department of the Treasury, statement ........ 53 

Kentucky Cabinet for Health and Family Services, Frankfort, KY, statement . 54 

Kibble-Smith, Brian, J.P. Morgan Chase Treasury Services, Chicago, IL, 

statement .............................................................................................................. 55 

National Association of State Workforce Agencies, statement ............................ 58 

Newman, Brent, Accuity Inc., Skokie, IL, statement ........................................... 62 

SAS Institute, Cary, NC, statement ...................................................................... 64 

Visa U.S.A. Inc., statement ..................................................................................... 70 

(1) 

USE OF TECHNOLOGY 

TO IMPROVE PUBLIC BENEFIT PROGRAMS 

WEDNESDAY, APRIL 5, 2006 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HUMAN RESOURCES, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 3:04 p.m., in room 

B–318, Rayburn House Office Building, Hon. Wally Herger (Chairman of the Subcommittee) presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HUMAN RESOURCES 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1025 

March 29, 2006 

HR–7 

Herger Announces Hearing on the Use of 

Technology to Improve Public Benefit Programs 

Congressman Wally Herger (R–CA), Chairman, Subcommittee on Human Resources of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on the use of technology to improve public benefit 

programs. The hearing will take place on Wednesday, April 5, 2006, in room 

B–318 Rayburn House Office Building, beginning at 3:00 p.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. Witnesses will include program administrators and other experts familiar with how technologies have been used to improve public benefit programs. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by 

the Subcommittee and possible inclusion in the printed record of the hearing. 

BACKGROUND: 

Recent improvements in technology can offer better service to individuals seeking 

a variety of public benefits. 

Some technologies already have been applied widely. For example, electronic payments exceeded payments by paper checks for the first time in 2003. In its application in government programs, this increasing use of electronic payments has accelerated individuals’ access to needed funds while creating billions of dollars in program 

savings for taxpayers and reducing fraud and abuse. Surveys suggest benefit recipients are 30 times less likely to experience a payment problem with electronic payments compared to paper checks, which is essential in programs that assist low-income individuals or those recently laid off from work. 

Other technologies are still under development. Some States and agencies recently implemented more efficient application, identity verification, and service 

monitoring processes designed to provide better services to those in need. For example, pilot programs using child care ‘‘smart card’’ technology can better track services provided to children, making better use of existing resources. Other States are 

poised to make more extensive use of data matching to better ensure the provision 

of benefits to eligible individuals, and to more efficiently target additional services 

such as work supports to those who recently found a job. 

In announcing the hearing, Chairman Herger stated, ‘‘Americans from all walks 

of life have experienced in recent years the benefits of new technologies in their 

homes and workplaces. These improvements have led to better, less expensive and 

more accessible services. Families and individuals in need of government assistance 

should benefit from the same revolutionary advances in getting the help they need. 

This hearing will explore how programs and agencies are using these new technologies to better serve beneficiaries and taxpayers alike. It also will provide an opportunity to review what can be done to further improve services, which is what the 

American people rightly expect.’’ 

3 

FOCUS OF THE HEARING: 

The hearing will focus on the use of technology to improve public benefit programs 

under the Subcommittee’s jurisdiction. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘109th Congress’’ from the menu entitled, 

‘‘Hearing Archives’’ (http://waysandmeans.house.gov/Hearings.asp?congress=17). Select the hearing for which you would like to submit, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, completing all informational forms and clicking ‘‘submit’’ on the 

final page, an email will be sent to the address which you supply confirming your 

interest in providing a submission for the record. You MUST REPLY to the email 

and ATTACH your submission as a Word or WordPerfect document, in compliance 

with the formatting requirements listed below, by close of business Wednesday, 

April 19, 2006. Finally, please note that due to the change in House mail policy, 

the U.S. Capitol Police will refuse sealed-package deliveries to all House Office 

Buildings. For questions, or if you encounter technical problems, please call (202) 

225–1721. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons, and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

f 

Chairman HERGER. Welcome. At today’s hearing we will review 

ways technology can be used in public benefits programs to improve customer service, better prevent fraud and abuse, and even 

produce savings for taxpayers. This may seem like rocket science 

to some, but the advantages of using technology are both obvious 

and necessary for programs to work successfully. Consider how 

4 

people apply for welfare or other unemployment benefits. The old 

way involved going to and waiting your turn in a government office, providing information face to face to a caseworker who fills out 

a paper form, and then waiting to see if you qualified. This is time 

intensive and labor intensive for applicants and government workers. It is also expensive to administer and often frustrating to all 

involved. Despite those flaws, some States and programs still operate this way. 

The new way involves encouraging individuals to apply for key 

benefits either over the phone or online. This is easier, faster, and 

more convenient for applicants. It is also cheaper, as several States 

will describe today, and it allows States to focus more resources on 

what people really need, like helping find a job, getting job training 

or referring individuals to substance abuse treatment. The new 

way also has other important benefits. Consider disaster preparedness. States and agencies that have moved to online application for 

and the electronic payment of benefits are able to serve more people better and faster under the very worst circumstances. As we 

saw following Hurricane Katrina and other storms, programs that 

maintained only paper files effectively lost recipients. Paper checks 

sat unopened in post offices or mailboxes, and coordinating benefits 

people needed was even harder than under normal circumstances. 

Today we will explore what several States have done to improve 

their use of technology in these programs, and what more remains 

to be done. We will learn about how technology can improve service 

delivery at every stage of the benefit process, whether it is application, payment, or ensuring program integrity. We will learn how 

real people benefit along the way, which is the most important 

part. For instance, surveys suggest people who receive benefits the 

old way, by paper check, are 30 times more likely to encounter a 

payment problem than people who receive electronic payments. 

Checks get lost, damaged or stolen. Checks take days to arrive in 

the mail. Checks need to be signed, delivered and deposited. 

Checks cost programs more in the process and too many recipients 

need to pay fees just to get their check cashed. 

It is no wonder States are increasingly turning to direct deposit 

or other electronic payments for welfare, unemployment, child support and other benefits. Recipients who get electronic payments are 

the biggest beneficiaries of this improved benefit delivery system. 

Today we will learn more about how we can use these and other 

improvements and technology to better serve all Americans. On a 

day-to-day basis and in times of disaster such as Hurricane 

Katrina, it turns out that it is smarter, cheaper, and faster than 

the old way, both for recipients and taxpayers alike. That is the 

kind of win-win solution we should be looking for across all public 

benefit programs. Mr. McDermott, would you care to make a statement? 

Mr. MCDERMOTT. Thank you, Mr. Chairman. For too many 

Americans, we are the last line of defense. That is painfully true 

after the hurricanes which devastated the Gulf Coast last year. 

Thousands of hurricane victims were scattered by the winds to cities across the country, put in my city of Seattle, and no doubt, Mr. 

Chairman, to the communities in your own congressional district. 

It was estimated that we had about 5,000 people in Seattle from 

5 

New Orleans, and that is a long way from Louisiana. I recently 

held a town meeting in Seattle, where displaced Americans recounted their stories of their personal triumphs and public malfunction. I have to agree after touring the region—we went down 

with the Speaker and Nancy Pelosi, the Minority Leader—that during that trip we saw things that confirmed what I heard from people in Seattle. 

Now, in New Orleans a member of the clergy told us their biggest fear was that they would drop off the front page of the newspaper, and drop off page ten, and drop off the paper all together. 

I went back and looked at my own Seattle newspaper, there was 

not a thing in there about Katrina of New Orleans or anything 

else. It is a real problem that the problems that we see as acute 

in event, become chronic and are soon forgotten by most of the 

country. One extraordinary public servant you will meet shortly, 

told me how she lived, not just afraid, but really terrified for weeks 

after the storm because hundreds of foster kids were missing and 

they had to find them one by one. It was going out looking for the 

sheep one at a time. 

Maybe it is because I represent the city that is at the forefront 

of our technological transformation with Microsoft and all the rest 

of what goes on in Seattle, I firmly believe technology can have a 

profound and positive influence in our lives if used appropriately. 

I really welcome today’s hearing to explore the role technology can 

play in how public benefit programs are implemented. We cannot 

forget for a second that we must translate the ones and zeros of 

computerese into the meaning of the needs of people especially children. This is not a theoretical discussion. If we learned anything 

from Katrina and Rita, it is that we need electronic lifelines and 

homing beacons to better protect foster and disadvantaged kids 

during and after natural disasters. We really need to build an electronic levee, if you will, around the vulnerable kids, and we need 

guidance and real-world experience to help us do it right, and that 

is why I am pleased to have someone here from the Gulf Coast, the 

head of Louisiana’s State Child Welfare Program to join us today. 

Marketa Gautreau is someone who lived through the nightmare of 

locating hundreds of missing kids, and someone whose advice and 

counsel we should heed. 

When we were in New Orleans, this is about a month ago the 

largest radio station was already doing the countdown to the beginning of the hurricane season again. We are talking 57 days and it 

starts all over again. Now, technology can undoubtedly help us 

track kids and better understand their backgrounds, but what 

comes next? Well, remember, it is about meeting the needs of vulnerable Americans in the wake of a crisis. We think of a hurricane, 

but an abuse event is the same kind of crisis in a family. We have 

critical questions that have to be answered. How can we help families get past the emotional trauma they experience during and 

after a disaster? How do we better support the children and families outside the child welfare system? What more should we be 

doing to ensure that children can be safely maintained in their own 

homes? How can we ensure the children, who must be placed in 

foster care, are safe and their needs met, and are reunited with 

6 

parents or are permanently placed with their loved ones on a timely basis? 

Technology can help, but we need a dedicated and qualified 

workforce to determine the needs of every vulnerable child, and 

you got to do it one at a time. You can’t do it in groups. When we 

know what needs to be done, we must act, especially if we have to 

remove a child from his or her parents. It is about action. That becomes more and more difficult for States as the Congress reduces 

its commitment to child welfare programs, to Medicaid and to the 

Social Services Block Grant (SSBG). Against that backdrop of congressional withdrawal, ordinary Americans stepped in to nurture 

vulnerable children as foster parents. They have opened their 

homes and hearts even as the Republican leadership in this Congress has closed their eyes and wallet, and you will see it in the 

budget that we pass this week. When I was in New Orleans I met 

foster parents who told me about the challenges they faced. The 

first storm was forecast in the Gulf. The second storm was not forecast out of Washington, D.C. Good, decent, ordinary Americans 

leaped in, but the Federal Government ducked out, and the burden 

is too great to be carried by the American people alone or by technology. Technology would not have fixed much of what went on 

down there. 

To meet the needs of vulnerable children we need to recruit and 

retain foster parents and adoptive parents. We need the adequately 

fund services aimed to help vulnerable children and their families. 

We are not adequately doing any of those things now, in my opinion. I look forward to hearing more about that technology can meet 

our responsibility to kids, but ones and zeros will never replace 

hearts and minds. As we know in Seattle, and lots of other American citizens know, the Gulf Coast is certainly not the only place 

where a natural disaster can and will strike. In Seattle we are 

waiting for the big one, the big shaker. We had a shaker on the 

26th of October 2001. It was an 8.6, and we know that we will have 

one. I am looking at this not as something in other places, but 

what affects my area. Mr. Chairman, you also live on the West 

Coast so you know about shakers too. I look forward to hearing the 

testimony of the witnesses. Thank you. 

Chairman HERGER. Thank you, Mr. McDermott. Before we 

move on to our testimony today I want to remind our witnesses to 

limit their oral statements to 5 minutes. However, without objection, all the written testimony will be made a part of the permanent record. We have one panel today, and our witnesses who are 

seated at the table. To introduce our first witness, the gentleman 

from Texas, Mr. Johnson. 

Mr. JOHNSON OF TEXAS. Thank you, Mr. Chairman. I appreciate that. Diane Rath, Chairwoman of the Texas Workforce Commission (TWC), we are glad to have you here today. She has overseen implementation of welfare reforms, and the rolls have decreased 71 percent since 1996. She understands the importance of 

local involvement. Most of her budget is in control of the local 

workforce boards, who know the needs of their neighbors. In the 

wake of Katrina, she has been working to get evacuees from Louisiana trained and back into the workforce. We have done our best 

here in Congress to make sure Texas is able to continue to offer 

7 

those services as long as they are necessary. I will tell you what, 

her staff reflects the kind of leader a person is, and I have heard 

nothing but great things about your staff here in Washington. 

Thank you for being here. We are glad to hear you testify. Thank 

you, Mr. Chairman, for allowing me to make the introduction. 

Chairman HERGER. You are welcome. Thank you. The gentleman from Louisiana, Mr. McCrery, to introduce one of our witnesses. 

Mr. MCCRERY. Thank you, Mr. Chairman. We are also delighted to have with us today, Ms. Marketa Gautreau from Baton 

Rouge, the Assistant Secretary of Community Services, Louisiana 

Department of Social Services. I think, as my colleague from Washington pointed out, this is a timely hearing based on the experience 

we have had on the Gulf Coast with, frankly, having a lack of technology to assist us in the aftermath. The State of Louisiana, along 

with others, had a difficult time, to say the least, putting back together all of our records, locating children and so forth. This is in 

fact a timely hearing. 

I think, Ms. Gautreau would join me though in thanking Dr. 

McDermott, Chairman Herger, the Congress, not the Republican 

Congress, but the Congress, because Democrats and Republicans 

worked together to try to get immediate aid in the form of unemployment compensation, money. Louisiana got about $400 million 

quickly there to bolster our fund, getting about $220 million for social services. Those kinds of quick responses that we join together 

here in the Congress to provide, were, I think, indispensable to my 

State, Ms. Gautreau’s State, just really surviving in those first few 

months following Katrina. I want to thank Dr. McDermott for 

going with us down to Louisiana, and for his efforts to really get 

into the nitty-gritty details of what the needs are, and for offering 

very constructive suggestions, really, since September 1st, on ways 

to help. It is very much appreciated. This Congress, and this Committee particularly, the staff on both sides of the aisle, Democrat 

and Republican, responded admirably to my call for help and others’ calls for help. Ms. Gautreau, welcome, and we are delighted to 

have you and looking forward to your testimony. 

Chairman HERGER. I thank the gentleman from Louisiana. We 

would also like to welcome Mr. Don Winstead, Deputy Secretary of 

the Florida Department of Children and Families (DCF), from Tallahassee, Florida; Ms. Lisa Henley, Project Director of the Oklahoma EBT Project for the Oklahoma Department of Human Services, from Oklahoma City, Oklahoma; and Mr. Dennis Fecci, 

Former Chief Information Officer for the New York City Human 

Resources Administration, from New York, New York. With that, 

the gentleman from Louisiana, to inquire. Excuse me. 

[Laughter.] 

Ms. Rath to testify, please. 

STATEMENT OF DIANE RATH, CHAIR AND COMMISSIONER 

REPRESENTING THE PUBLIC, TEXAS WORKFORCE COMMISSION, AUSTIN, TEXAS 

Ms. RATH. Thank you. Good afternoon, Mr. Chairman, Members 

of the Committee, and thank you for that introduction, Mr. Johnson. I appreciate it. I am Diane Rath, and I am Chair and CommisVerDate Aug 31 2005 00:17 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 E:\HR\OC\30442.XXX 30442
8 

sioner of TWC, and we appreciate being invited to share the experience of Texas in using technology to more efficiently serve our residents. We no longer have unemployment offices in Texas. In 1998 

we established Tele-Centers that allow Texans to file unemployment claims and to file for payments online or over the telephone. 

We also created a comprehensive online capability for our unemployment insurance program. Claimants and employers can complete all their business with TWC online if they so choose. 90 percent of our users now access our service without having to go to 

an office or stand in line. 

One of the Commission’s most valuable tools is the Workforce Information System of Texas (TWIST). The TWIST is a centralized 

point of intake, case management, service delivery and reporting 

for our employment and training programs. In addition to the advantage of integrated case management, it eliminates duplication 

in enrollment. Folks only have to give us information one time, and 

it provides real-time access to information. Any time we need to 

check enrollment figures for a particular program, workforce board, 

or individual, we can do so without any time lag. The linchpin of 

our employment services program is our award-winning 

WorkInTexas.com, a real-time website designed to match employers of all sizes and all industries, at no charge, with qualified job 

candidates, and we have separate sections for both employers and 

job seekers. WorkInTexas is fully integrated with our TWIST, so 

that participants in various employment and training programs are 

automatically registered. All unemployment claimants are required 

to register and make a minimum of three work searches per week. 

Since its debut almost 2 years ago, more than 147,000 employers— 

that is about one out of three employers in Texas—have used 

WorkInTexas.com. More than 415,000 people have found jobs using 

WorkInTexas. 

Our agency’s total capabilities were tested like never before last 

fall with Hurricanes Katrina and Rita. No matter how you plan, 

nothing can prepare you for nearly a million people to cross over 

your State line with no advance notice and no timeline for returning home. Almost half a million have remained in Texas. Our resources and manpower have been challenged, but we have been 

able to provide employment and support services to tens of thousands of our neighbors who had nowhere else to turn, and we were 

able to do that only because of our commitment to technology and 

our ability to adapt. The TWC immediately stepped forward to 

spearhead a multi-State effort to process a massive of Louisiana 

unemployment claims. We created a separate toll free number for 

Louisiana callers that went into our Texas Unemployment Insurance (UI) Tele-Centers, and then were either handled by our representatives or routed to other States that had volunteered to help. 

Our use of technology allowed us to reroute those calls to other 

States in a way that was seamless. The caller didn’t know if they 

were speaking to someone from Rhode Island or Washington unless 

they picked up on the accents. 

The hotline we established received more than 2.6 million calls, 

of which Texas employees handled nearly half. We also helped Louisiana development an Internet application for both regular and 

disaster UI, used by their residents or our staff. To date, Texas has 

9 

processed nearly 68,000 unemployment claims for Louisiana. On 

the workforce side, our local workforce boards established temporary workforce shelter centers at the major hurricane shelters. 

These centers allowed evacuees to file for unemployment, to receive 

job counseling, conduct a job search, prepare a resume, meet with 

employers, and attend job fairs on site. Each center had computers 

available, and we encouraged job seekers to use WorkInTexas to 

identify opportunities for employment. Our local boards also deployed mobile workforce units, each equipped with computers and 

satellite Internet access. 

We adapted WorkInTexas to allow Louisiana job seekers to indicate their evacuee status, and allow employers to indicate a preference to hire Katrina evacuees. We partnered with the Louisiana 

Association of Business and Industry on an initiative to recruit 

workers to fill their members’ critical labor shortage. Now we have 

Louisiana employers and Louisiana job seekers looking for and 

finding each other on WorkInTexas.com. We have also created a 

separate tracking system for these Louisiana job matches. Technology has helped us integrate our various programs and provide 

a more comprehensive and coherent approach to helping people 

find work. Service integration had kept Texas on a leading edge of 

workforce service delivery, and we believe that other States can 

achieve similar results if they are willing to abandon their old models and embrace technology and service integration. More details 

about our initiatives are found in the written testimony, and I appreciate the chance to share our story and look forward to your 

questions. 

[The prepared statement of Ms. Rath follows:] 

Statement of Diane Rath, Chair and Commissioner Representing the 

Public, Texas Workforce Commission, Austin, Texas 

Chairman Herger, Ranking Member McDermott and members, good afternoon. 

My name is Diane Rath, and I am the Chair and Commissioner Representing the 

Public for the Texas Workforce Commission. Thank you for inviting me to share 

with you how TWC is creatively using technology to provide high-quality services 

to Texans. 

By way of background, the Texas Workforce Commission celebrated its 10th anniversary last month. Prior to 1995, the state’s 28 employment and training programs 

were spread across 10 different state agencies, but then-Governor George W. Bush 

believed that Texans would be better served by bringing all the traditional labor 

programs—payday, UI, etc.—all employment services—including TANF, Food 

Stamp, Wagner-Peyser, and state funded—and child care under a single umbrella. 

The Commission was created as that umbrella, and we were additionally charged 

with developing a new model for integrated delivery of those services. We have now 

block-granted nine of those programs—representing $800 million of our total budget 

of $1.1 billion—to our network of 28 Local Workforce Development Boards. 

First of all, we no longer have local unemployment offices in Texas. In 1998, TWC 

established ‘‘Tele-Centers’’ that allow Texans to file unemployment claims and request payments over the telephone. In 2002, we also created a comprehensive online 

capability for our UI program. Not only can claimants file their claims online, but 

employers can also create new tax accounts, file their tax reports, respond to separation requests, and report unemployment fraud online. Instead of having to drive 

across town or to a different county to wait in line at an unemployment office, claimants and employers can transact their business with us from their homes or offices. 

We have two major initiatives that will make extensive use of technology to improve our unemployment program. First, we are transitioning from paper checks to 

direct deposit and debit cards for unemployment benefits. The Lone Star Card, 

Texas’ debit card for social service benefits, has been accepted by the public and reduced both administrative costs and fraud associated with delivering benefits. We 

10 

have also started work towards a complete integration of our Unemployment Insurance and Employment Services programs. 

One of the Texas Workforce Commission’s most valuable tools is TWIST, The 

Workforce Information System of Texas. TWIST is a centralized point of intake, case 

management, service delivery, and reporting for six of our largest employment and 

training programs. Besides the obvious advantage of integrated case management, 

this system helps us in three critical ways. First, it eliminates duplication in enrollment. If someone enrolls in one of our programs and then wants to enroll in others, 

they only have to provide us the information the first time. Second, it creates economies of scale. Third, it provides us with real-time access to performance data. Any 

time we want to check enrollment figures for a particular program, workforce board, 

or individual, we can do so without any time lag in the data. 

The linchpin of our Employment Services program is WorkInTexas.com, a realtime web site designed to match employers of all sizes and industries with qualified 

job candidates. We have separate sections for employer and job seeker resources, 

and because it is on the Internet, it is available 24 hours a day, 7 days a week, 

365 days a year. 

WorkInTexas.com takes a unique approach as a recruitment and employment resource. The job posting format allows employers to match on multiple combinations 

of occupation experience and education, view detailed comparisons of each job seeker 

to their job’s requirements, and create customized screening questions to obtain specific information from interested job seekers. Employers can set up multiple accounts for different hiring groups within their organization, manage their account 

and its users, and manage their job postings. Even without posting a job, they can 

test the workforce and training available in potential new job sites, or perform keyword searches to find specific skills. 

Job seekers can create multiple matching combinations for different location and 

pay preferences, use a wizard to create a professional resume, view detailed comparisons of their qualifications to each job posting, and email job postings to their 

friends. Job seekers interested in career planning can link to a skills-assessment 

test, research the suggested occupations and available training, and select occupations to add to their matching profile in WorkInTexas.com. 

WorkInTexas.com is fully integrated with TWIST so that the participants in our 

various employment and training programs are automatically registered for 

WorkInTexas.com. All unemployment claimants are required to register with 

WorkInTexas.com and make a minimum of three work searches per week. 

Since its debut not quite two years ago, more than 147,000 employers—roughly 

one-third of the state’s total—have registered on WorkInTexas.com. These employers have access to nearly 4.2 million job seekers. More than 410,000 people have 

been hired through the site—about one-third of these people had been receiving unemployment at the time of their hiring. WorkInTexas.com was selected by Harvard 

University’s Ash Institute as one of the ‘‘Top 50 Government Innovations for 2006,’’ 

and took first place for the Government-to-Business category in the 2004 Digital 

Government Achievement Awards, a national award program recognizing outstanding government Web sites and services. 

Our agency’s total capabilities were tested last fall like never before by Hurricanes Katrina and Rita. No matter how many worst-case scenarios you plan, nothing can prepare you for having nearly a million people cross over your state line 

with no advance notice, and no timetable for returning home. Almost half a million 

have remained in Texas. Our resources and manpower were challenged, but we 

have been able to provide employment and support services to tens of thousands of 

our neighbors who had nowhere else to turn. And we were able to do that only because of our commitment to technology and our ability to adapt it to situations for 

which we could not possibly prepare. 

Immediately after the storm, TWC stepped forward to spearhead a multi-state effort to process the massive number of Louisiana unemployment claims. We created 

a separate toll-free number for Louisiana callers that went into our UI Tele-Centers, 

and then were either handled by our Texas claims representatives or routed to other 

states that had volunteered to process claims. Our use of Voice Over Internet Protocol (or VoIP) in the Tele-Centers allowed us to route those calls to other states 

in a way that was seamless to the client. The caller didn’t know they were speaking 

to someone from Rhode Island or Montana unless they picked up on the accents. 

The hotline we established received more than 2.6 million calls, of which Texas 

Tele-Center employees handled nearly half. We also helped Louisiana develop an 

Internet application for both regular and disaster unemployment that either their 

residents could fill out online or that our claims takers could do in our Tele-Centers. 

To date, Texas has processed nearly 68,000 unemployment claims for Louisiana. 

11 

On the workforce side, our local Workforce Boards established temporary workforce centers at the major hurricane shelters. These centers allowed evacuees to file 

for unemployment, receive career and professional counseling, conduct a job search, 

prepare a resume ́, and meet with prospective employers. Each of these centers had 

computers available, and we encouraged the job seekers to use WorkInTexas.com to 

identify opportunities for temporary and permanent employment. We also established voice mailboxes to which evacuees could call in and receive personalized job 

referrals. Our local boards also deployed five mobile workforce units—each equipped 

with computers and satellite Internet access—to assist with overflow at the larger 

centers and to provide services in communities with smaller shelter operations. 

These mobile units later served as temporary replacements for the Southeast Texas 

one-stop centers that were badly damaged by Hurricane Rita. 

We adapted WorkInTexas.com to allow Louisiana job seekers to indicate their 

evacuee status and to allow employers to indicate a preference to hire Katrina evacuees. And as the number of Louisiana residents registered on WorkInTexas.com surpassed 30,000, we partnered with the Louisiana Association of Business & Industry 

on an initiative to recruit workers to fill their members’ critical labor shortages. 

Now we have Louisiana employers and Louisiana job seekers looking for and finding 

each other on WorkInTexas.com. We have also created a separate tracking system 

for these Louisiana job matches. 

At the Texas Workforce Commission, we have made the cultural shift and are 

steadfast believers in the power of technology to improve the quality of services we 

deliver Texans. The main lesson from our experience is that technology must be central to program design. Technology not only makes programs run more efficiently, 

but it allows for easier scalability—you can expand or shrink capacity based on demand with relatively limited costs. Related to that is the importance of VoIP. We 

gave the example for the Katrina calls, but when Hurricane Rita looked like it was 

headed for the southern tip of Texas, we had to make contingency plans to close 

our McAllen Tele-Center. In the old days, that would have presented a major disruption to our network, but with VoIP, we can instantly route the calls to our other 

five centers and continue with barely a hitch. 

Our agency has switched from a personal-service model (where you have to go to 

a person to get help) to a self-service model (where you can help yourself but also 

have the option to talk to someone if you need to). In the unemployment program, 

employers and job seekers can complete all their business electronically, if they 

choose. But if they want personal service, the staff in our workforce centers is available to assist them. More than 90 percent of our users are now accessing our services without having to go to a local office or stand in line. This maximizes our staff 

resources and allows us to invest less in bricks, mortar, and overhead, which, in 

turn, makes more of our limited resources available for direct services. 

Technology has helped us to integrate our various programs and provide a more 

comprehensive and coherent approach to helping people find work. Service integration has kept Texas on the leading edge of the workforce service delivery, and we 

believe that other states can achieve similar results if they are willing to abandon 

their old models and embrace technology and service integration. 

The last item I want to share with you is our recent rollout of the first online 

version of the Transition Assistance Program, which provides job-search assistance, 

employment services, labor market information and other forms of assistance to separating service members and their spouses during their transition into civilian life. 

Traditionally, this has been offered in the form of 2- to 3-day seminars, which we 

operate at 13 sites in conjunction with the U.S. Department of Defense. But TWC 

has now taken that material and developed a six-chapter, self-directed course that 

any service member or spouse can access at any time, from any computer, anywhere 

in the world. The eTAP program has already become extremely popular with service 

members, and is particularly important for the returning Reserves and National 

Guard. 

I appreciate the chance to share our story with you today, and I will look forward 

to answering any questions you might have. 

f 

Chairman HERGER. Thank you very much, Ms. Rath, and we 

certainly appreciate the job you did in being so helpful during this 

tragic time we had. Now, Ms. Gautreau. 

12 

STATEMENT OF MARKETA GARNER GAUTREAU, ASSISTANT 

SECRETARY OF COMMUNITY SERVICES, LOUISIANA DEPARTMENT OF SOCIAL SERVICES, BATON ROUGE, LOUISIANA 

Ms. GAUTREAU. Thank you, Mr. Chairman, and Members, and 

thank you, Texas. I do not know what we would have done without 

this. I am Marketa Garner Gautreau, and I am the Assistant Secretary of the Office of Community Services, which houses the child 

welfare system in Louisiana. On behalf of my Governor, Ms. Blanco, I appreciate the opportunity to be here. I would like to talk 

about technology in the context of who we are in child welfare and 

what we did before the storm. We have 1,800 employees that investigate about 35,000 allegations of child abuse and neglect each 

year. On any given day, I have 5,200 to 5,400 children in foster 

care, 7,000 in subsidized adoption, and another 500 in the Young 

Adult Program, which is the program of foster children aging out 

of the system. We had a budget of $255 million before the storm. 

60 percent of that is title IV–E eligible, which shows the very high 

penetration rate that we have. 

At the height of the storm, 73 percent of my foster care population evacuated. 2,000 children had to leave the Greater Orleans 

area. Another 500 had to evacuate yet less than a month later in 

Rita. The Department of Social Services in Louisiana is charged 

with staffing shelters. Our of my 1,800 employees, 600 evaluated 

in the first hurricane. 900 of them went to work in shelters for 1 

month. 600 stayed for the next 6 weeks. Our workforce was very, 

very impacted by the storm. Our highest priority was finding those 

2,000 children, and then, of course, we had those famous missing 

children that you heard so much about in the national media, the 

thousands of Katrina orphans supposedly that were floating around 

somewhere in Louisiana. Those were the first things that happened. 

In technology, I am not a technology expert, but I want to tell 

you what didn’t work. What didn’t work was that I had no capacity 

to reach my staff in real time. Cell phones were down. Land lines 

were down. Technologies that we had always relied on were not 

available to us. There was no accurate real-time data to track these 

children where they were and where they were going and how they 

were getting there. I needed geo-mapping so I could track people 

and find out if they were in Texas or Washington or Minnesota. We 

didn’t have any of that. 

The main technology lessons that we learned from Rita is that 

the traditional systems failed. Cell phone towers were down. Land 

lines were down. Blackberries worked, but unfortunately, the Department of Social Services doesn’t staff every single one of our 

1,800 child welfare workers with Blackberries. We needed policies 

and procedures in place in our registration sites and shelters that 

were uniform and systematic. We used paper registration. Red 

Cross used a different form. Different State agencies used different 

forms, and so nobody matched and nobody knew where anybody 

was when we tried to call a shelter across town to find a child. 

Those need to be standardized. That needs to be done by technology and not by paper. We needed centralized reporting outside 

of the affected area, call centers that would not be blown away by 

the winds. Finally, we recognize very clearly that paper is no 

13 

match for a Category three, and the records, the precious life books 

of our foster care children and their case files, and the court documents that were lost in Katrina will take us forever to replace and 

to redocument. 

The other issues that we dealt with that the Federal Government 

could help us with are very clear to me. First of all, our Children’s 

Bureau was hampered greatly by the lack of authority to waive, extend or otherwise adjust Federal reporting. Under the Child and 

Family Service Review, we are evaluated on the major metro area, 

which became the smallest metro area in the State, and there was 

a report due September 1st. If you remember, Katrina struck August 29th. It was a little difficult for us to try to meet the Federal 

requirements of a form to fill out that many days after the storm, 

and yet there was no ability for the Bureau to waive that requirement. Child welfare workers are not deemed emergency responders, and that hampered us in our work tremendously. We did not 

have the same priority for housing, for offices, or for communication systems that other first responders had, and yet, we were on 

the frontline looking for those children, trying desperately to reunite them with their families. We need a new way for rapid distribution of supplemental funds. We are extremely grateful for the 

220 million that just came into Louisiana, but it came 7 months 

after the storm. We needed that money faster than that. I believe 

that Congress can help us with that. I believe that the SSBG is 

money that is absolutely critical, and title IV–E money is absolutely critical to the State, and we must address those issues at 

this level. Thank you, and I will be glad to answer questions later. 

[The prepared statement of Ms. Gautreau follows:] 

Statement of Marketa Gautreau, Assistant Secretary of Community 

Services, Louisiana Department Of Social Services, Baton Rouge, Louisiana 

Mr. Chairman and Members of the committee, my name is Marketa Garner 

Gautreau and I am the Assistant Secretary of Louisiana’s Department of Social 

Services (DSS). On behalf of Governor Kathleen Babineaux Blanco and that state 

of Louisiana, I thank you for the opportunity to be here. I am responsible for DSS’ 

Office of Community Services (OCS) which administers our state’s child welfare system. We investigate allegations of child abuse and neglect, provide prevention services, place children in foster care and residential services, and help children achieve 

permanency as quickly as possible—by reunification with their birth families, adoption, or placement in independent living. 

OCS handles about 35,000 allegations of abuse and neglect a year and has roughly 5,400 children in care at any point in time. Under the best of circumstances, ours 

is difficult and challenging work. Roughly 1,800 staff care for children who have 

lived through traumatic situations. Dealing with displaced and disrupted families 

is our stock and trade on a daily basis—the aftermath of Hurricanes Katrina and 

Rita forced us to cope with these issues on a much broader and more urgent scale, 

but it remained work with which we are intimately familiar. 

I consider myself an advocate for children who has entered public service to further their interests. I am not an information technology specialist. But as head of 

a $250 million state human services agency, I can easily define what I need from 

technology as a routine matter. I need: 

• The ability to reach my subordinates and field staff (and for them to reach me) 

24/7. 

• Accurate, real time information about the status of abuse allegations. 

• Accurate real time contact information for our children, their foster parents, 

birth parents and other caregivers. 

• Reliable data on our costs. 

• Historical information about caseload, services, child outcomes, staffing, and 

other operational issues. 

14 

• Geo-based mapping so that we can track the physical location of our population 

and analyze the nature of abuse and neglect by area. 

• Excellent management reports to allow us to be strategic as well as tactical in 

making program and policy decisions. 

DSS is the agency responsible (under the state’s emergency management plan) for 

operating special needs shelters for children, the elderly and the disabled during 

natural disasters or other emergencies. These situations require special communications technology as well as information systems that can handle evacuee registration and tracking, rapidly dispense emergency aid and ensure that there are central 

data collection and reporting centers so that separated families can make contact 

and have a better chance for rapid reunification. 

Louisiana’s existing technology systems are not adequate to fully meet our day 

to day needs or support ‘‘typical emergencies’’ (average storms with shelter needs 

of a few hours to a few days) let alone the massive crises created by Katrina and 

Rita. 

On a day-to-day basis we do not yet have a real time case tacking and management system. While I can generally rely on phones and e-mail for 24/7 communication with the field, we remain very weak in management reporting, cost analysis 

and currently have no geo-based technology available. In emergencies these weaknesses are magnified. The most important lessons we have learned about technology 

from the Katrina/Rita experience are: 

1. Land-lines, traditional cell phones, and e-mail and other web-based communications, cannot be relied on during a large scale natural disaster. The only 

reliable communication we had between the central office and the field staff 

in affected areas was through wireless text messaging using PDA devices. A 

very small percentage of OCS and DSS staff have access to such devices as 

that technology is expensive and generally considered non-essential for all levels of staff. This severely hampered our ability to know where staff or clients 

were or to respond quickly where staff, materials, or other resources were most 

needed. 

2. Systematic registration and tracking of evacuees is essential if families are to 

be kept together, highest need people appropriately triaged, and missing persons reunited as quickly as possible. No common procedure existed between the 

public special needs shelters and privately operated regular shelters (e.g., Red 

Cross, church-based) for registering evacuees and few lap-top based or other 

technology was available to manage this process. 

3. Existing legacy systems used for child welfare caseload management are not 

sufficiently accurate or timely to be relied upon in an emergency as a source 

for contact information and child status. There can be lag-times of a few days 

to several weeks in entering new information about birth parents, child placement, investigation status, and related contact information. Individual social 

workers almost always have timely information about all cases in their care. 

But the data may not get entered into our systems as it is difficult and time 

consuming to do and there is no reporting capacity from the system that makes 

any individual worker’s job better. As a consequence, the most accurate information is sometimes off-line, in the caseworker’s possession. It works reasonably well under normal circumstances. But in an emergency of the scale of 

Katrina and Rita—when as many as 600 of our 1800 staff (and virtually all 

of the staff in the affected areas) were themselves missing or out of communication—it makes the ability to ‘‘find’’ our children extremely difficult. 

4. Paper record keeping is simply not tenable in this day and age in weather 

emergency prone areas. We had whole offices where all of the case records 

were totally destroyed. The history of the child’s care, records of legal status, 

treatment related information, and similar critical information about a child’s 

history were permanently lost. 

To be fully prepared in a new emergency situation, we need wide spread wireless 

messaging capability; policies, procedures and systems support for the management 

of evacuee populations that is shared between federal, state and local agencies and 

among and between public and private non-profit shelter providers; better core systems so that we can centrally access accurate, real-time contact and status information about our clients; and electronic record keeping with back-up in areas unlikely 

to be affected by natural disasters. 

To prepare for the upcoming hurricane season, our Department is currently planning to test a product this season in a limited number of locations that can scan 

drivers’ licenses or ID’s and can issue a bar coded wristband allowing for registration. It has the ability to link families to a head of household that could be used 

15 

to match child to parent should they become separated. The system is web based 

and all updates are back to a central database so that all sites have access to the 

same information. This kind of registration solution would be most helpful in tracking people from evacuation points to shelter or other sites to meet their needs. 

The best solution of course would be that all agencies responsible for shelter registration could use compatible systems so that information can be shared. Legislation allowing the sharing of information may be appropriate since privacy issues in 

the sharing of data such as shelter registrations, may arise as they did in the post 

Katrina event when thousands were missing and being sought by family members. 

An imaging solution is being planned for areas below Interstate 10, the areas 

most prone to hurricane damage. This would allow the Department to reestablish 

an office virtually anywhere else in the state and have full access to the case file 

and proceed with needed services base on the facts of the case history. This information can be made available via the web for both front line workers and management. 

I’d like to share some of the other issues that have emerged in the aftermath of 

Katrina and Rita—particularly as they relate to OCS and its interaction with the 

Federal government. 

• The Federal Administration of Children and Families (ACF) has been very supportive since the storms but their ability to be helpful has been constrained by 

lack of authority to waive, change, or amend Federal program rules and requirements in emergency situations. We have been mutually frustrated by the 

lack of authority to waive reporting requirements and submission deadlines 

that result in financial penalties—or waive the penalties themselves for programs such as: 

• ASFA 

• Title IVE (eligibility documentation requirements) 

• CFSR Program Improvement Plan 

• Title IVE Program Improvement Plan 

• Child and Family State Plan 

In lieu of simply being able to waive penalties and requirements, the Children’s 

Bureau staff worked tirelessly with our state to re-write the CFSR Program Improvement Plan and are to be commended for their efforts to lessen the impact of 

the original plan for the state of Louisiana. 

• A second problem involves the timeliness of supplemental funding for emergency needs of children in custody. Our population has special housing, clothing, transportation and medical needs. While we now have supplemental social 

services block grant funding to cover some of the extraordinary expenses being 

incurred post-storms, that funding took more than seven months to be authorized and received. Certain other expenses—such as the transportation costs for 

caseworkers to visit children in out-of-state settings—have not been deemed 

storm related by FEMA and may not be reimbursed. These visits are court-ordered and generally cannot be done by substitute staff in other jurisdictions. 

• Child welfare workers are not deemed ‘‘first responders’’ or critical staff under 

most Federal emergency programs. Consequently, they have not been high on 

the priority lists for temporary housing or other access related resources. The 

ability to get offices in the affected areas back up and running has been severely constrained by the lack of staff housing. 

• The ability to meet matching requirements for federal programs has been severely affected by the magnitude of the state’s fiscal crisis. In some cases Federal dollars will have to be forgone even when they are many multiples of the 

state match required simply because of the lack of state general funds. 

Based on our experience the past six months, Federal oversight agencies for child 

welfare are very constrained in their ability to waive, except, or otherwise amend 

reporting, penalties, matching and other compliance requirements when an extraordinary emergency has occurred. While we hope America never has to witness a dislocation on the scale of the New Orleans and Lake Charles devastation again, responsible leadership demands that we all plan for such circumstances. That planning needs to recognize that abused and neglected children, their foster parents and 

caregivers—and the public agencies responsible for their care—need special support 

in times of emergency in order to avoid further trauma to these children. 

I believe the funding issues Congress can address are clear: 

Child welfare agencies responsible for the care, custody, and safety of minor children need immediate response to disasters of this magnitude. Louisiana did receive 

supplemental emergency funds through the Social Services Block Grant—seven 

16 

months after the disaster. This was the first and only supplemental child welfare 

funding received to date. 

The Budget Reconciliation Act resulted in a projected reduction in Title IVE benefits for LA for an estimated $3.5 million. Reducing our ability to claim IVE reduces 

the basic services we are able to provide children and families in our care. 

There are on-going discussions to cap the Title IVE entitlement program. Title 

IVE is the only uncapped revenue for the child welfare population and maintenance 

and administrative costs increase each year. Capping that program severely impacts 

every state’s child welfare agency in their ability to provide the most basic services. 

There are also efforts to cut the Social Services Block Grant—funds that are used 

entirely for child welfare in Louisiana. I would like to advocate for the current level 

of SSBG funding to states remain unchanged. Recent budget proposals included 

$7M reduction which for LA would be almost 30% of total SSBG. 

Because our children in foster care are among the most vulnerable and have complex mental health issues, I also ask that you consider promoting legislation that 

would designate a percentage of mental health/Medicaid funds to child welfare clients. This would help prioritize the services for these children. 

In closing, I would like to ask the committee to consider support of prevention 

funding for child welfare. Because of funding limitations, most child welfare systems 

focus on response once abuse and neglect has happened and children are in the 

state’s custody. We believe that investments in prevention would help stabilize families before tragedies occur. I strongly support an expansion of funding opportunities 

for states to move toward more prevention focused child welfare system. (However 

not at the expense of entitlement programs such as IVE.) 

I am happy to answer any questions about the Louisiana experience and will be 

happy to work with the committee and its staff as you address issues of technology 

and human services administration and consider special needs for child welfare 

management in large-scale emergencies. 

f 

Chairman HERGER. Thank you. Don Winstead, Deputy Secretary of the Florida Department of Children and Families, from 

Tallahassee, Florida. Mr. Winstead. 

STATEMENT OF DON WINSTEAD, DEPUTY SECRETARY, FLORIDA DEPARTMENT OF CHILDREN AND FAMILIES, TALLAHASSEE, FLORIDA 

Mr. WINSTEAD. Mr. Chairman, Mr. McDermott, Members of 

the Committee, I am pleased to be here today to discuss the use 

of technology to improve public benefit programs. I am Don 

Winstead, Deputy Secretary of the DCF. We are the State agency 

in Florida that, among other programs, is responsible for determining eligibility for benefit programs including Temporary Assistance for Needy Families (TANF), food stamps, and Medicaid. 

Mr. Chairman, the world of customer service has changed. When 

I flew to Washington for this hearing, I traveled on an electronic 

ticket purchased online. At the airport I checked myself in the computer terminal, and printed out my boarding pass. Although there 

were a few employees there to assist if I needed help, I was able 

to manage the process pretty efficiently. In Florida, we have been 

using many of the same technologies used in airports, retail outlets 

and other businesses to improve customer service, while decreasing 

cost and improving effectiveness. We call our business model ACCESS FLORIDA. Let me contrast how ACCESS FLORIDA works 

compared with traditional public benefit approaches. As you said, 

Mr. Chairman, in the old, traditional public benefit model, people 

apply at agency offices. They fill out a lengthy paper application, 

spend an inordinate amount of time waiting—probably in an unVerDate Aug 31 2005 00:17 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 E:\HR\OC\30442.XXX 30442
17 

comfortable blue plastic chair—and then go through an extensive 

interview and provide additional information to verify key items. 

In Florida, in contrast, families needing help can apply anywhere, anytime, using ACCESS FLORIDA, our Web application. 

Customers enter their own information. While people may apply 

from computers anywhere that can access the Web, they also can 

go to a wide variety of other sites. In addition to our offices, the 

ACCESS FLORIDA program includes over 2,500 community partner sites around the State. Partner sites include Workforce OneStops, community centers, health clinics, hospitals, homeless service centers, domestic violence shelters, public libraries, faith-based 

and community-based organizations, and on and on. My written 

statement describes the process, and I have attached some copies 

of some of our computer screens to give you a better idea of what 

the customer sees. Part of the process is when our eligibility staff 

review the Web application. They are assisted by a process the 

technology folks call ‘‘data streaming.’’ As an old public assistance 

worker, I call it ‘‘magic.’’ 

The Web application flows the information at lightning speed 

into our legacy computer system, pausing when necessary for the 

eligibility worker to make decisions or authorize benefits. This 

minimizes duplicate data entry and greatly improves efficiency. 

Our agency staff have also constructed a Web-based document imaging system to better manage information. statewide implementation is underway and will result in the electronic storage of 1.25 

million records with $4.5 million in annual savings. Savings have 

already more than paid for the equipment necessary and have produced a net gain to the State. So far, our other results have been 

remarkable. Since 2002, we have reduced positions from 7,200 to 

less than 4,200 today that are filled, and our target is 4,109 positions by June 30. This is over a 40-percent reduction in staff; at 

the same time, our workload has increased by over 20 percent. We 

have gone from about 1.9 million recipients unduplicated in July 

2002 to about 2.3 million today. Since inception, ACCESS FLORIDA implementation has reduced costs to taxpayers over $83 million. 

Since we implemented the Web application in 2005, the acceptance and use by Floridians has been astounding. In February, 77 

percent of our applications for public assistance were e-signed Web 

applications. Of the Web applications, over half came via the Internet rather than the intranet. This means that over half came 

through home computers or computers in partner sites rather than 

computers in our offices. High utilization is one measure of acceptance. In addition, we ask customers to complete a customer satisfaction survey at the conclusion of the application process. The last 

page attached to my written statement gives you a recap of the results. Importantly, 90 percent of the respondents said they would 

use the application again. In conclusion, we say that ACCESS 

FLORIDA is supported by technology and powered by partnerships. 

DCF staff have transformed customer services in Florida. Working 

with thousands of community-based partners, we have improved 

access, increased efficiency, reduced costs, and improved performance. Mr. Chairman, we are far from finished. I appreciate the opportunity to testify today and provide the Committee with informaVerDate Aug 31 2005 00:17 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00021 Fmt 6633 Sfmt 6602 E:\HR\OC\30442.XXX 30442
18 

tion about ACCESS FLORIDA, and I would be happy to respond 

to any questions. 

[The prepared statement of Mr. Winstead follows:] 

Statement of Don Winstead, Deputy Secretary, Florida Department of 

Children and Families, Tallahassee, Florida 

Mr. Chairman, Mr. McDermott, and Members of the Committee, I am pleased to 

appear before you to discuss the use of technology to improve public benefit programs. My name is Don Winstead. I am Deputy Secretary of the Florida Department of Children and Families (DCF). DCF is the state agency in Florida responsible for determining eligibility for public benefit programs including Temporary Assistance for Needy Families (TANF), Food Stamps and Medicaid. 

Mr. Chairman, the world of customer service has changed. When I flew to Washington for this hearing, I traveled on an electronic ticket, purchased on-line. When 

I arrived at the airport, I checked myself in at a computer terminal and printed out 

my boarding pass. Although there were a few employees there to assist if I needed 

help, I was able to navigate the process easily and efficiently. 

In Florida, we are using many of the same technologies used in airports, retail 

outlets and many other businesses to improve customer service while decreasing 

cost and improving effectiveness. We call our business model, ACCESS FLORIDA. 

Let me contrast how ACCESS FLORIDA works compared with traditional public 

benefit approaches. 

In the old, traditional public benefit model, people apply at agency offices. They 

generally fill out a lengthy paper application, spend an inordinate amount of time 

waiting to be interviewed—probably in an uncomfortable, blue plastic chair—go 

through an extensive interview and provide additional information to verify key 

items. While the interview might be conducted with the aid of a computer terminal, 

the agency employee asks the questions and, based on the application and the information provided by the customer, goes through the tedious process of key-entering 

the information into the legacy computer system. At the end of the process, the family may be ultimately approved for benefits and issued an EBT card. We used to 

call this ‘‘technology’’. 

Our Focus: Customer Service 

In Florida, families needing help can now apply anywhere, anytime using the ACCESS FLORIDA web application. Customers enter their own information. While 

people may apply from any computer that can access the web, they also can go to 

a wide variety of other sites. In addition to our offices, the ACCESS FLORIDA program includes over 2,500 community partner sites around the state. Partner sites 

include Workforce One-Stops, community centers, health clinics, hospitals, homeless 

service centers, domestic violence shelters, public libraries, faith-based and community-based organizations, and so on. 

At a community partner site, applicants can access a computer to apply or check 

on the status of a previous application, drop off or fax verification information to 

us, access a help-line telephone or get assistance in using the technology. 

Customers can also visit agency offices but they won’t find the same process they 

did a few years ago. Today our lobbies have self-service computer terminals, greeters and helpers to answer questions or assist in the process, telephones to access 

help-lines and printers so that applicants can print out copies of information they 

have submitted. Plastic chairs are being replaced by upholstery and seating areas 

have been redesigned to reflect a more professional environment. 

To improve customer service, call center agents are available by toll free number. 

We have three customer call centers, in Jacksonville, Tampa and Miami with over 

500 employees to assist customers. In addition we have developed telephone and 

web based automated response units, so that people can find out key information 

about the status of their application or review without needing to talk to a live 

agent. 

When customers enter information into the web application, the information is reviewed by eligibility staff. In some cases, people still will need to come into an office 

for a face-to-face interview and in other situations, needed information can be obtained by telephone, fax or mail. Full interviews are required in complex or errorprone situations. These cases are called ‘‘red track’’ and require more detailed review. Simpler and less error-prone situations are designated ‘‘green track’’ and simplified or abbreviated processes can be used. Of course, if the applicant is applying 

for temporary cash assistance and is required to participate in work activities, he 

or she will have to go into one of our Workforce One-Stop centers. 

19 

When our eligibility staff review the web application, they are assisted by an 

automated process the technology folks call ‘‘data streaming.’’ As an old public assistance worker, I call it ‘‘magic.’’ The web application flows the information at lightning speed into our legacy computer system, pausing when necessary for the eligibility worker to make decisions or authorize benefits. This process minimizes duplicate data entry and greatly contributes to the efficiency of the process. Soon customers will also be able to report a change in their circumstances via the internet. 

Solutions: Staff-Driven Initiatives 

Another important part of the process is document imaging. Our agency staff have 

constructed a web-based document management system to which commercially 

available scanning devices can connect. These devices permit documents to be 

digitized and indexed so that the information is available to eligibility staff using 

our secure network anywhere in the state. There are no imaging software costs associated with the scanning since the software application was developed by agency 

employees in our Tampa Bay region. 

The Tampa Bay region designed, created, and implemented this comprehensive 

electronic filing system for the storage and retrieval of the region’s 190,000 public 

assistance case files. After trial and error with different models, the scanning equipment vendor secured a new machine (Ricoh IS760D) that had not previously been 

available in the United States. The first machine released in the U. S. was shipped 

directly from the manufacturer so the Tampa Bay region could use it for this 

project. The scanner performs high speed tray-fed images of approximately 100 

pages per minute. This enterprise solution, along with the software written by agency staff, has been implemented region-wide and is currently being adopted statewide. This system improves security and accessibility to case information yet eliminates costs associated with the creation, maintenance, location and retrieval of 

paper case files. In the pilot region, this technology saved $270,000 in the first year 

and is projected to save $930,000 over the next three years. Statewide implementation will result in the electronic storage of approximately 1.25 million records and 

nearly $4.5 million in annual savings. Savings more than paid for the equipment 

necessary for implementation, resulting in a net gain to the State. 

Recent and planned refinements to our technology include use of ‘‘screen scraper’’ 

technology in our call centers so that key information from multiple computer 

screens is collected in one place so that call center agents can see the most relevant 

data for a family without needing to scroll through multiple computer screens. This 

speeds customer response and reduces call wait time. We are working on additional 

innovations, such as speech interactive capability to make more information and 

services available by telephone and through the web. 

Results So Far: Remarkable 

So far, the results have been remarkable. In 2002, we had slightly over 7,200 positions in our Economic Self-Sufficiency program. Right now, we have about 4,173 

filled positions with a target of 4,109 by June 30, 2006. This means we will have 

over a 40 percent reduction in staff over this period of time. At the same time, our 

workload has increased over 20 percent. We had about 1.9 million public assistance 

clients in July 2002. Now we have about 2.3 million. Since inception, we have reduced costs to taxpayers over $83 million. 

While the TANF caseload has continued to decline, the food stamp and Medicaid 

caseloads have continued to increase. Like in the TANF program, the majority of 

the adults in these families are employed and are receiving benefits or health coverage to supplement their earnings. Those who are not employed or elderly are most 

likely to be disabled. A key benefit of our model is that it is consistent with program 

goals that emphasize work. 

Since we implemented the web application in mid 2005, the acceptance and use 

by Floridians has been astounding. In February, 77% of our applications for public 

assistance were e-signed, web applications. Of the web applications, over half came 

via the internet rather than the intranet. This means that over half came through 

home computers or computers in partner sites rather than from our offices. 

High utilization is one measure of acceptance. In addition, we ask customers to 

complete a customer satisfaction survey at the conclusion of the application process. 

In February 2006, 73 percent of respondents said they were able to complete the 

application without help. 57 percent said it took less than thirty minutes to complete the application with only 14% saying it took over an hour. 52 percent found 

the process easy and 87 percent rated the experience either easy or fairly easy. Importantly, 90 percent told us they would use the web application again. 

We say that ACCESS FLORIDA is supported by technology and powered by partnerships. Working with our thousands of community-based partners we have imVerDate Aug 31 2005 00:17 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00023 Fmt 6633 Sfmt 6621 E:\HR\OC\30442.XXX 30442
20 

proved access, increased efficiency, reduced costs and improved performance. And 

Mr. Chairman, we are far from finished. 

Background: How We Got Here 

Important to the development of the model was the direction of the Florida Legislature. The 2003 General Appropriations Act included proviso language requiring 

the department to develop a plan to outsource public assistance eligibility functions 

or to develop alternative service delivery and administrative approaches to achieve 

greater efficiency in these functions. Ultimately, in 2004, a detailed business case 

was developed showing an outsourced option and an in-sourced option. The insourced option included development of community partnerships while retaining 

core eligibility functions being performed by agency employees. 

Governor Bush examined the alternatives and on January 12, 2005 decided that 

Florida would pursue the in-sourced option. 

The other important factor in the development of ACCESS FLORIDA, was the 

hurricane season of 2004. That summer, visitors to Florida included Charley, 

Frances, Ivan and Jean, in rapid succession. To serve the affected citizens in our 

state, Florida had to implement a Disaster Food Stamp Program of unprecedented 

volume. The ‘‘Food for Florida’’ program was begun, but we were rapidly overwhelmed by applications. We quickly had tens of thousands of paper applications, 

far beyond our capacity to process. We needed an automated solution, and we needed it fast. Over the course of 72 hours, agency staff developed a prototype web application. We took paper applications at sites in affected counties and shipped them 

to back room processing centers outside the disaster areas where staff fed the information into the web application for processing. 

Two things emerged from this experience. First, the Food for Florida program provided desperately needed help to over 2 million Floridians. Secondly, the agency 

staff came out of the experience feeling like they could do just about anything. Since 

then, history has proved them right. 

The hurricane season of 2005 gave us more opportunity for learning. We used 

streamlined procedures from 2004 when Hurricane Dennis slammed into the Florida 

panhandle last July. We added functions to our web applications to provide simplified access to special food stamp, TANF and Medicaid benefits for Katrina evacuees from Alabama, Mississippi and Louisiana. Finally, Hurricane Wilma brought 

devastating power outages and damage to some of the most populated areas of our 

state. Again, our Food for Florida program was able to help about 3 million Floridians in addition to our guests from other Gulf states. 

Future Developments 

During this past year, we have focused on reengineering two of our three major 

business processes: applications and reported changes. During the coming year, we 

plan to reengineer the third process, complete redeterminations. We will continue 

to move towards a system where customers will manage their accounts on-line. This 

will be accomplished through a web-based system which has conversational 

functionality with our legacy system. 

We will be continuing to improve our processes in anticipation of the 2006 Hurricane season. We are looking at new ways to pre-register applicants to reduce the 

large crowds at disaster sites. We are examining use of point of sale devices to speed 

issuance of benefits and also to provide access to Florida’s drivers’ license database 

to improve verification of identity. As in the past, we plan to move the disaster-related innovations into the mainstream program. Using data matches to automate 

verification of identity and citizenship and using card swipe technology to access 

case files are part of this plan. 

To help illustrate how ACCESS FLORIDA works, I have attached copies of several computer screens to this testimony. Below is a list of attachments. A brief explanatory comment is shown at the top of each page. These selected screens do not, 

however, tell the full story. I invite any Member of the Committee to browse 

through the information on our web site to see the system for yourself. The easiest 

way to access the information is to go to the state’s web portal, www.myflorida.com. 

Select the tab, ‘‘Find an Agency’’ and click your way to the Department of Children 

and Families home page and from there to the ACCESS FLORIDA link. You can 

see the web application, get further information about partner sites, and find our 

offices by county or zip code. 

While at our web site, I would invite you to also check out our ‘‘Performance 

Dashboard’’. You, along with every citizen of Florida, can monitor our performance 

on a variety of measures. You can check how we’re doing with application processing 

standards and dozens of other metrics. Our goal is to measure key performance indiVerDate Aug 31 2005 00:17 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 E:\HR\OC\30442.XXX 30442
21 

cators and, not only make ourselves accountable for results, but be entirely transparent in the process. 

Supported by technology and powered by community partnerships, our staff has 

transformed customer services in Florida. Mr. Chairman, I appreciate the opportunity to testify today and provide the Committee with information about ACCESS 

FLORIDA. I would be happy to respond to any questions. 

Attachments 

Attachment #1—Welcome Screen (page 6). 

Attachment #2—Start Screen (page 7). 

Attachment #3—Benefit Information (page 8). 

Attachment #4—Household List (page 9). 

Attachment #5—Common Application Form and Eligibility Survey (page 10). 

Attachment #6—ACCESS Online Survey (page 11). 

Attachment #7—Survey Results (page 12). 

Attachment #1—Welcome Screen 

This welcome screen permits the customer to select a language and provides introductory information. 


30442A.001
22 

Attachment #2—Start Screen 

This screen starts the application process. Note that both screenlevel and item-level help are available. 


30442A.002
23 

Attachment #3—Benefit Information 

This screen permits the applicant to designate for whom he or 

she is applying and the benefits applied for. Some combinations of 

choices will activate additional drop-down options. 


30442A.003
24 

Attachment #4—Household List 

This screen shows an example of screen with customer-entered 

information. The tabs across the top show progress in the application process. By clicking on the ‘‘Save and Quit’’ button, the applicant can return later to finish the application 


30442A.004
25 

Attachment #5—Common Application Form 

Information from the web screens is placed on the common application form. The applicant can review all the information submitted and can print out a copy for her records. 


30442A.005
26 

Attachment #6—ACCESS Online Survey 

This screen provides customer feedback on the web application 

process. 


30442A.006
27 

Attachment #7—Survey Results 

These graphs summarize key data from the customer survey for 

February 2006 

f 


30442A.007
28 

Chairman HERGER. Thank you. Ms. Henley to testify. 

STATEMENT OF LISA HENLEY, PROJECT DIRECTOR, OKLAHOMA EBT PROJECT, OKLAHOMA DEPARTMENT OF HUMAN 

SERVICES, OKLAHOMA CITY, OKLAHOMA 

Ms. HENLEY. Thank you, Mr. Chairman and Members, for having Oklahoma in today to talk to you about our electronic benefit 

services for child care. The Oklahoma Department of Human Services began implementing an Electronic Benefit Transfer (EBT) 

child care system in fiscal year 2000. The factors that led to our 

decision to put child care on an EBT card were simple. We needed 

to reduce overpayments, whether those were done inadvertently because of the cumbersome paper process or were intentional overpayments by providers claiming for services that had not been rendered. We wanted to improve the quality of child care received by 

eliminating and reducing the paperwork required by providers to 

complete each month. We wanted to ensure that all participants in 

the system were accountable, including our staff, the providers, and 

our clients. We wanted to improve cash flow for our providers. In 

the current paper system, providers were paid on a monthly basis. 

We needed to get parents involved in child care. They needed to get 

into the centers and homes and see what was going on with their 

child care providers and their children. We wanted to reduce administrative costs. 

Did we accomplish these goals? Our system has been in effect 

now for 3 years and operates like a dream. Overpayments have 

been reduced by 10 percent. In Oklahoma, that is a $10 million 

saving. Those savings have been put back into the quality program, 

which affects all of Oklahoma’s kids. Everybody benefits. Providers 

no longer complete paper claims unless they have been granted an 

exception. We have approximately 47,000 kids in the program. We 

do fewer than 50 claims per month. Our staff have 2 working days 

to either approve or deny services, and we actually accomplish that 

in Oklahoma in 1.4 days. Parents are responsible for payment to 

providers for services if they fail to swipe their cards. Child care 

benefits are linked to their food stamp and TANF cards, which ensures or we hope ensures that parents will not be leaving their 

cards at a provider’s location. Providers know that the first swipe 

of every day if the child is approved for services, the co-pay amount 

that is to be paid by the parent, and the part-time and full-time 

rates that the provider will be paid for rendering those services. 

Providers are paid weekly now, 2 weeks in arrears, all via direct 

deposit. There are no paper checks given. Liquidated damages are 

applied to any providers who are found in receipt of a card. The 

parents must swipe in accordance with the child care facility’s requirements. They must at the very least conduct swipes once every 

10 days. We have eliminated eight staff, and we no longer mail 

monthly claim forms or warrants. The child care EBT system by 

itself has not produced significant savings. It has been in association with the agency’s policy changes that we have really seen 

some cost savings. The two together are a strong and powerful tool 

for reducing costs and putting those funds back in to improved 

quality child care. Thank you. 

[The prepared statement of Ms. Henley follows:] 

29 

Statement of Lisa Henley, Project Director of the Oklahoma EBT Project, 

Oklahoma Department of Human Services, Oklahoma City, Oklahoma 

OKDHS Electronic Benefits and Child Care Subsidy Fact Sheet—State Fiscal Year 2005 

The Program 

The Child Care Subsidy pays for part or all of childcare costs while parents or 

caretakers work, job search, attend school or receive training. Childcare services 

may also be provided as part of a protective service plan to prevent abuse, neglect 

or exploitation. The subsidy is paid directly to the childcare provider on the family’s 

behalf. The family may have a co-payment for the childcare based on their income, 

the number of family members and the number of family members needing services. 

Vendors and Rates 

The OKDHS Rates Schedule (OKDHS Appendix C–4), available at http:// 

www.policy.okdhs.org/home/, presents the payment tables listed with a variety of determining factors. Payment is scaled and tiered based on the age of the child, the 

county in which the vendor is located (standard and metropolitan market rates), the 

care setting (center or home), the quality of the provider and the type of authorization. Authorization type, such as part-time care, full-time care or special needs care 

is determined during the eligibility process. 

All childcare providers in the state of Oklahoma must meet the requirements to 

be licensed through the OKDHS Division of Child Care. Licensed providers are then 

able to request that Family Support Services Division execute a contract that allows 

their facility to receive payment for eligible clients through the subsidy program. 

• Approximately 70 new contracts were opened each month and 79 were closed 

• 5,103 contracts were in effect for some part of the fiscal year 

Child Care Quality—‘‘Reaching for the Stars 

Oklahoma was the first state to successfully implement a tiered reimbursement 

program that helps childcare providers succeed and improve childcare quality. 

Called Reaching for the Stars, licensed childcare programs that meet quality criteria 

receive a higher Star rating and higher reimbursement rates for child care services. 

• At the end of fiscal year 2005 nearly 94 percent of children supported by 

OKDHS Child Care Subsidy in childcare centers were in facilities rated higher 

quality as determined by independent raters. 

Eligibility System 

Prospective clients obtain an application for services from the county Human 

Services Center (there is at least one HSC in all Oklahoma counties), a childcare 

provider or online through www.okdhs.org/childcare. OKDHS Social Workers make 

an eligibility decision based on both need for services and financial status. The commitment is that an eligibility determination will be made within two working days 

of the receipt of a complete application packet, which consists of the application with 

accompanying verification documents. In SFY 2005 this timeliness goal was 

achieved on 88.5 percent of application approvals. 

Services are delivered by issuing an authorization that approves a specific child 

to attend a specific vendor for a number of days per month that is determined by 

service need. This authorization for care is processed in a statewide, real time and 

online system through the OKDHS Wide Area Network and an Electronic Benefits 

Transfer (EBT) application. Delivered care is recorded with magnetic cards produced 

by the HSC and Point of Sale (POS) devices that are present at each vendor location. This data is processed for a direct deposit payment on a weekly basis. 

• Clients took an average of 9.1 days to complete the application packet, the eligibility decision was returned in an average of 1.4 working days 

• Social Workers process an average of 5,160 approved authorizations per month 

Administration 

At the administrative level seven OKDHS divisions directly support operational 

aspects of the program. These divisions and their primary role are: 

Family Support Services Division Eligibility Policy, Provider Contracting 

Division of Child Care Provider Licensing and Quality 

Finance Division EBT and Payment Processing 

Field Operations Division Eligibility Determination 

Office of Inspector General Auditing and Program Integrity 

Data Services Division Systems and Application Support 

30 

• Administrative or state-office level staff assigned full time to subsidy functions 

number approximately 20 

• There are approximately 2,032 staff statewide devoted to eligibility determination and case management (these staff also perform the same function for a 

number of other programs including Food Stamps, Medicaid and Temporary Assistance for Needy Families) 

Electronic Benefit Services (EBT) Child Care 

The EBT System in Oklahoma 

The Oklahoma Department of Human Services began implementing Electronic 

Benefits for Child Care in 2000. Factors leading to our decision include— 

• Reducing overpayments. 

• Improving the quality of care received by eliminating/reducing the paperwork 

required by providers. 

• Insuring OKDHS staff, providers and clients were accountable for the services 

provided. 

• Improving cash flow for providers. Providers were paid monthly. 

• Getting parents involved in their children’s child care needs and environment. 

• Reducing administrative costs. 

Did we accomplish these goals? 

• Overpayments have been reduced by approx. 10%. 

• Providers no longer complete paper claims unless they have been granted an 

exception (OKDHS pays fewer than 50 paper claims for exceptions per month). 

• OKDHS staff have two (2) working days to either approve or deny eligibility. 

• Parents are responsible for payment to providers if they fail to swipe when services are received. 

• Child Care benefits are linked to the same card as Food Stamps and TANF 

making it less likely that parents will leave cards at a provider’s facility. 

• Providers know with the first swipe of each day if the child is approved for services, the copay amount to be paid by the parent and the part-time and full-time 

rates OKDHS will pay for that child. 

• Providers are paid weekly, two weeks in arrears. 

• Liquidated damages are charged to any provider found in receipt of a card. 

• Parents must swipe in accordance with the Child Care facility requirements but 

must at least conduct swipes once every ten days. 

• OKDHS has eliminated 8 FTE and no longer mails monthly claims forms or 

warrants. 

Brief Overview of the System 

Swipes can be conducted daily or within 10 days of the service or any combination 

thereof. Child Care facilities decide how swipes will be conducted with their facility. 

Parents can check in/out up to ten (10) children in a single swipe transaction. All 

members of a family are assigned ‘‘person numbers’’ and parents can conduct swipes 

for any combinations depending on which kids are in care on any given day. An example is listed below: 

Case #123456 has 3 children 

• Swipe Card 

• Enter PIN number 

• Select choice on key pad of check in/out 

• Enter child number 

• Enter child number if applicable 

• Enter child number if applicable 

• Hit enter again which informs POS that parent has no more child numbers to 

enter 

• System returns approved or denied message and prints info for each child 

checked in/out 

Providers can run daily exceptions reports that inform them of kids that are 

checked in but have not checked out. Detail weekly payment reports are printed on 

the POS terminal for providers with fewer than 20 kids. Providers with more than 

20 children receive a ‘‘summary’’ report with detail provided by the OKDHS Provider website. 

Broadcast messages can be sent to individual providers, providers in a specific 

county or to all providers statewide. Caseworkers can also send individual messages 

to specific parents, which is printed when they swipe in. 

31 

All swipes, whether approved or denied, can be seen by OKDHS staff. OKDHS 

staff can also determine how many subsidy kids are in care, at any given time, insuring Licensing requirements are being met. 

An Average Month 

Pre-Statewide Implementation 

Contracted Vendors 4,805 (Childcare Centers and Family Childcare Homes) 

Children Receiving Services 46,870 

Pay for Services $11,673,304 

• Services are delivered in all 77 of Oklahoma’s counties 

• $249.06 average per child 

• Recipient families are responsible for approximately $1.58 million in co-pays 

• There are approximately 27,570 recipient families 

Post-Statewide Implementation 

Contracted Vendors 4,348 (Childcare Centers and Family Childcare Homes)) 

Children Receiving Services 47,294 

Pay for Services $10,615,827 

• Services are delivered in all 77 of Oklahoma’s counties 

• $224.46 average per child 

• Recipient families are responsible for approximately $1.59 million in co-pays 

• There are approximately 27,300 recipient families 

EBT and Policy 

Electronic Benefit systems by themselves do not affect significant cost savings. 

Cost savings are based on the policies implemented, in conjunction with EBT, by 

the States. OKDHS initially built the EBT system based on current policy and procedures and the system failed. The success of the system is attributed to a favorable 

political environment, the backing of leadership, improvements in county operations 

and our commitment to a successful system. Policy changes include: 

• Two working days to approve or deny application 

• No payment for failure to swipe unless a medical emergency prevents swiping 

• Liquidated damages applied to any provider found in receipt of a card 

• Cancellation of subsidy contract after three possessions 

• Parent’s must enter Child Care facility at least once every ten days 

• Creation of new rates to facilitate swipe process 

System Costs 

The monthly Cost Per Case Month (CPCM) is $5.24 and includes: 

• Call Center Operations—located in Sandy City, Utah 

• Transaction Processing—Time and Attendance tracking 

• Settlement to providers 

• Reconciliation 

• Card stock 

• Embosser installation and maintenance 

• POS installation and maintenance 

• Training 

The average CPCM paid to the Contractor for above services is $247,993.48 

Original Contract Award (one-time funding)—$5.2m 

• Design $378,067.11 

• POS Terminals $3,600,000.00 

• Training $1,221,932.89 

The Department spent an additional $793,174.50 on enhancements during the life 

of the contract. 

f 

Chairman HERGER. Thank you. Mr. Fecci to testify. 

32 

STATEMENT OF DENNIS FECCI, FORMER CHIEF INFORMATION 

OFFICER, NEW YORK CITY HUMAN RESOURCES ADMINISTRATION, NEW YORK, NEW YORK 

Mr. FECCI. Mr. Chairman, Members of the Committee, my name 

is Dennis Fecci. I am former Deputy Commissioner and Chief Information Officer for New York City Human Resources Administration. I am here to talk to you today a little bit about external data 

matching for caseload integrity. Experience has shown us that 

many applicants and recipients supply information that is not accurate or current. By current, I mean that at the time of eligibility 

determination, the information was accurate, but changes in circumstances were not reported at all or not reported on a timely 

basis. A recent study in Indiana revealed that over 25 percent of 

the Medicaid recipients in long-term care had assets that were unknown to the State. We have seen that many States do not aggressively seek to externally verify information that is submitted by applicants and recipients. They depend on information supplied by 

the applicant or recipient and the documentation that they provide. 

We have also seen in New York and now in Indiana that it is possible to do a series of simple data matches to identify and correct 

critical information about the applicants and recipients. This results either in termination of the benefits or rebudgeting the case 

to the correct benefit levels. 

The process is very simple. The State eligibility database is 

matched against external databases using demographic keys. When 

a discrepancy is discovered, a letter is sent to the recipient requesting them to call in to discuss the discrepancy. They have 10 days 

to respond. If they do not respond within that 10-day period, another letter is sent to them stating the State’s intent to close that 

cases. If there is no response within 10 days, the case is closed. If 

the client verifies the match, they are asked to submit documentation. When the documentation is received, the case is rebudgeted, 

and the rebudgeting could result in a reduction in benefits of closing of the case. Indiana has embarked on a program to utilize as 

much information technology as possible to assure that only truly 

eligible persons receive benefits. 

Starting on February 9, 2006, Indiana modified some data 

matches, sent over 20,000 discrepancy letters to recipients, and so 

far we expect that in about 36.5 percent of these cases there will 

be a reduction of benefits or a temporary or permanent termination 

of benefits. Indiana plans to pursue about 35 different matches, 

which I have listed in the written testimony. We found both in New 

York and in Indiana that obtaining access to the external data can 

be very difficult and time-consuming. Many organizations do not 

understand the legal privacy and confidentiality regulations and, 

therefore, are hesitant to share the information. We found that it 

takes many times longer to get the access to the information and 

the technical issues of actually programming the match and 

operationalizing the match. Thank you very much. I will be pleased 

to answer questions. 

[The prepared statement of Mr. Fecci follows:] 

33 

Statement of Dennis Fecci, Former Chief Information Officer, New York 

City Human Resources Administration, New York, New York 

External Data Matching for Caseload Integrity 

• Experience has shown us that many applicants and recipients supply information that is not accurate or current. For example, a recent study in Indiana revealed that over 25% of Medicaid recipients in long term care had assets that 

were unknown to the state. 

• Many states do not aggressively seek to externally verify information submitted 

by applicants and recipients. 

• It is possible, using simple data matches, to identify and correct critical information that states have about applicants and recipients either terminating the 

ineligible or rebudgeting the case to the correct benefit grant levels. 

• Typical data matches seek: undisclosed assets; new employment; private medical benefits; actual addresses/living arrangements; etc. 

• Indiana is embarking on a program to utilize information technology to assure 

that only truly eligible persons receive benefits. 

• Starting on February 9, 2006 Indiana modified an existing data match alert relating to new employment of recipients and has sent over 20,000 information 

discrepancy letters to those recipients. In approximately 36.5% of these cases, 

this process has (will) resulted in: 

• Reduction of benefits 

• Temporary termination of benefits 

• Permanent termination of benefits 

• Indiana Plans to pursue the following external Data Matches: 

• Bank Match 

• Bureau of Motor Vehicles Match 

• Casino Winnings Match 

• Child Care Employment Match 

• County Employment Match 

• Credit Bureau Match 

• Home Attendant employment Match 

• Hoosier Lottery Match 

• Identity Unduplication Match 

• Inheritance Match 

• Insurance Award Match 

• Medicare Eligible 65+ Match 

• National Fleeing Felon Match 

• National New hire Match 

• Neighboring States Public Benefits Match 

• Outstanding Warrants Match 

• Personal Injury Awards Match 

• Professional License Match 

• Property Tax Match 

• PARIS Match 

• Quarterly Wage Reporting Match 

• Racing Winnings Match 

• SSA 40 Quarters CITIZENS Match 

• School Address/Guardian Match 

• Securities Match 

• Section 8/Public Housing Match 

• State Payroll/Pension Match 

• SAVE Match 

• TPHI Match 

• UIB Match 

• Utilities Match 

• VNS Employment Match 

• Vital Statistics Match 

• Worker’s Comp. Match 

• 24-Month Continuing Eligibility Match 

• Obtaining access to external data can be difficult and time consuming. States 

need assistance to promote this exchange of data. 

f 

34 

Chairman HERGER. Thank you. I want to thank each of you for 

your testimony and particularly for traveling to be with us here 

today. It seems that a key advantage of increased use of technology 

involves disaster preparedness, which is obviously something that 

Texas, Louisiana, and Florida have experienced firsthand. Would 

each of you please briefly address how the use of automation can 

help speed services and assistance to people when disaster strikes 

and comment on what we have learned from Katrina to help better 

prepare for future disasters? 

Ms. RATH. Mr. Chairman, I think it was important that the 

technology has to be very closely tied and an integrated part of the 

program service delivery. From our perspective, the most important 

aspect of it was the scalability. You can immediately increase your 

capacity and your capability for delivering services without being 

limited by your personnel, your location, or your offices. If you have 

that scalability, then you are able to respond to a sister State’s 

needs. We had our own Rita. We had 65,000 unemployment claims 

come in in 2 weeks, to immediately process those, not by the offices 

in the area, but we had centers in El Paso responding to that need. 

Technology allows us to do that very seamlessly and without the 

customer being aware of it. 

Chairman HERGER. Thank you. 

Ms. GAUTREAU. In Louisiana, we issued 500 million emergency 

food stamp applications in a very short period of time, and I know 

that the technology there to do that was critical for our State’s success in being able to handle that incredible volume. The technology 

failure, however, in the registration of people coming into shelters 

I think was one of the most glaring errors that really we saw so 

clearly with Texas because we were working with them multiple 

times during every day, trying to understand who was coming into 

their shelters. What we saw happen in the evacuation was, as the 

waters rose, children were taken from rooftops, from dangerous situations, and flown to Baton Rouge where we had an emergency 

children’s shelter. The helicopters that came back then took the 

parents to Texas. There was no way that we had any electronic 

means to register either those children or those parents at those 

shelters. If we had had some kind of common data system that we 

could have used for registration, then we would have been certainly 

better equipped in our reunification process. We are looking at 

maybe electronic bracelets. We have a new Permat system that we 

plan to hopefully not have to test in 56 days, but as the new season 

approaches, we are looking at more technology at the registration 

sites in those shelters, and we hope that that will give us an edge 

against that kind of destruction and separation. 

Chairman HERGER. Thank you. 

Mr. WINSTEAD. Mr. Chairman, the hurricane season of 2004 

was one of the important events that really led to the development 

of our Web application. Among the visitors to Florida in 2004 were 

Charley, Frances, Ivan, and Jeanne, and we were frankly devastated by that. In the Disaster Food Stamp Program, we were 

faced with having tens of thousands, if not hundreds of thousands 

of applications that we could not process. In a 72-hour period, our 

agency staff developed the prototype Web application that became 

the start of our ACCESS FLORIDA Web application. Ultimately, 

35 

we served 2 million Floridians in the Disaster Food Stamp Program in 2004. Then in 2005, with Hurricane Dennis that hit the 

Panhandle and then Hurricane Wilma that hit some of the most 

populated areas of Florida, we served an additional 3 million Floridians in 2005, and there we were able to apply those lessons. We 

took paper applications, but we drop-ship them to processing centers where we scan them in and then stream the data to our Web 

application for processing, and then issue benefits by EBT card. 

We are planning new things in anticipation of the hurricane season of 2006. We have enhancements to our Web application, looking at ways to do more issuance of EBT cards on sites, looking at 

point of sale terminals for card swipe technology, integrated with 

the Florida driver’s license database. All of our driver’s licenses 

now have magnetic strips on them, so we are working on technology so you can swipe your driver’s license to verify your identity, 

swipe your EBT card to validate your benefits there. We can associate the EBT card number, the case number, and the driver’s license number so that we can make sure we have got the right person and speed the application of benefits. We are also looking at 

some additional mobile technology, including satellite technology, 

to try to be ready to rapidly respond to the needs of people this 

hurricane season. 

Chairman HERGER. Thank you. Mr. Fecci, do you have any 

post-9/11 New York thoughts? 

Mr. FECCI. Yes, I do. I was very heavily involved in the recovery 

after 9/11 in the city. We were able to rebuild facilities that were 

heavily damaged very quickly and convert our systems over to the 

issuance of emergency benefits. One of the chief lessons I learned 

from that was that we were able to do that because we were able 

to suspend the very complex and time-consuming procurement regulations, and I would suggest that many States should have emergency contingency type contracts that would only be exercised in a 

time of emergency to get us the goods and services that we need 

to rebuild very quickly. 

Chairman HERGER. Thank you. Ms. Henley, do you have any 

comments? 

Ms. HENLEY. Well, as it relates to disasters? No, sir. I think 

that there are—one of the things that I would like to see with technology, especially with EBT and child care, is incentives offered. It 

would be a real shame to have saved the $10 million plus that we 

have saved in Oklahoma and pour it back into quality child care, 

just to have that taken back out, because all of our kids are benefiting now, so incentives would be a great opportunity. 

Chairman HERGER. Thank you. The gentleman from Washington, Mr. McDermott, to inquire. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. When I went to 

Louisiana, the trip was scheduled to see a lot of oil fields, and I 

sort of skipped all that and went to see foster kids and hospitals 

and the kinds of social services things. I would like to ask you a 

couple questions about that. There is a budget laying on the desk 

here in the Senate—or in the House right now that cuts 30 percent 

out of the SSBG. In light of that, talk about what the disaster did 

to your planning for technology and also your ability to give mental 

health services, because nobody here has said a single thing about 

36 

what happens to human beings emotionally in this, which we all 

know creates more turmoil, which creates more child abuse, which 

creates more foster kids. It is a system that is feeding itself, and 

unless you arrest that, the mental health issue has got to be there 

someplace in it. Talk about a 30-percent cut and where you are in 

putting your system back online since you have had a whole 7 

months to get it back all together, right? 

Ms. GAUTREAU. Yes, thank you, Dr. McDermott. We were in 

the process of doing an integrated case management system across 

the Department of Social Services called ‘‘No Wrong Door’’ that actually would have several of the ingredients that my colleagues 

here have talked about today. That project was put on hold in the 

financial constraints that hit Louisiana immediately after the 

storm. We are now going to have to—I believe the word is ‘‘hold’’ 

or ‘‘freeze’’ that contract. we are finishing up the first phase of it 

so that we will have a product to deliver, but it will not put us in 

statewide Automated Child Welfare Information System (SACWIS) 

compliance, which is the Federal standard for child welfare systems and our technology. The original product would have done 

that. It will not do that now, and that is due to our budget cuts. 

The cuts to the social services block grants mean an awful lot to 

a State that is already in fiscal constraints. Our use of those funds 

really does allow us to enhance our mental health services. Our Department of Health and Hospitals, which houses our mental health, 

can only meet the needs of about 14 percent of the population, of 

the identified need that we know we have. That was pre-storm. We 

have always used our money and the child welfare system to augment those mental health services. 

The children that come into the foster care system are already, 

by virtue of coming into the system, children that have been traumatized by abuse and neglect, and so their mental health needs 

certainly exceed those of most ordinary children. We have staff as 

well as foster families and foster children whose mental health is 

very fragile. The radio station that you referenced, counting down 

the days to the storm, I don’t think there is an Louisianian anywhere in this Nation that does not realize that hurricane seasons 

starts June 1st. People are frightened. They are fragile. They are 

worried. We are seeing an incredible increase in post-traumatic 

stress. We are seeing children that were adjusting well in other 

States getting frantic. We are seeing our incidence of child abuse 

in the resettled part of New Orleans going up exponentially. We 

took 13 children into care in 1 month in a city that has less than 

half of the population that it had before. We are just seeing the exponential repercussions of not addressing the mental health services of this population—not just the foster care population, but our 

staff and our regular citizenry. The technology that we need to 

move forward as SSBG, if that cut goes through, as the Budget 

Reconciliation Act (P.L. 109–171) impacts that, if title IV–E gets 

capped, as is often talked about in these hallowed halls, you are 

really putting a burden on States that are fiscally constrained by 

the aftermath of the storm. We were fiscally constrained before, 

but we certainly have a dual impact now. 

Mr. MCDERMOTT. Talk about the title IV–E cap, what that 

means to you. 

37 

Ms. GAUTREAU. The title IV–E cap would be an immediate $3.7 

million hit to my budget, and that is just in the first year, and then 

the outward progressions would change as—— 

Mr. MCDERMOTT. Is that salaries of employees or is that—— 

Ms. GAUTREAU. It is administrative cost, which includes some 

salary, but it also includes some service delivery. 

Mr. MCDERMOTT. Are you retaining foster parents or are you— 

how are you dealing with the 13 new ones you got? What do you 

do them? You just plop them on top of what you already have, or 

have you got foster parents standing out there waiting? 

Ms. GAUTREAU. No, we do not have foster parents sitting out 

there waiting. We hoped that we would with the aftermath of the 

storm when all of the people that called that wanted to adopt a 

Katrina orphan. We tried to sign them up and encourage them to 

become foster parents in their own States as well as Louisiana. We 

have a shortage of foster care families in the State. We still have 

about 136 foster families outside of the State that have not been 

able to come back into the State, and that leaves us a shortage of 

those families. We waived the normal restrictions for foster care 

about space and house size and room capacity so that we could 

double and triple up with our foster families who are in the State 

and who are willing to take extra children. We are in desperate 

need of foster care families, and that takes money to recruit them. 

Mr. MCDERMOTT. Thank you, Mr. Chairman. 

Chairman HERGER. Thank you. The gentleman from Louisiana, 

Mr. McCrery, to inquire. 

Mr. MCCRERY. Thank you, Mr. Chairman. I thank all of you for 

your testimony today and for trying to help us as we figure out the 

best way to proceed nationally on improving our social services 

benefit programs across the board. I want to assure all of you that, 

even though the President’s budget calls for a 30-percent cut in social services block grants, the President cannot pass anything. The 

Congress has to pass the budget and appropriate all moneys, and 

every once in a while we disagree with the President, whether he 

is Republican or Democrat. I cannot remember in 18 years in Congress when a President’s budget has been adopted by the Congress. 

Don’t worry about this 30-percent cut in the President’s budget. My 

guess is that when the Congress passes the real budget, there will 

not be a 30-percent cut in the SSBG. 

Ms. Gautreau, I want to explore just for a minute your reference 

to the SCWAS. As you know, this has been basically an open-ended 

entitlement for States. Initially, back in the early nineties, there 

was a 75-percent match. For every dollar spent by the State, the 

Government would put up 75 cents of it. Now it is a 50-percent 

match, 50 cents per dollar Government contribution, Federal Government contribution. Yet our State never got to the point where 

we were implementing a program. Of course, that is not your fault. 

That has been a number of years that that inaction has occurred. 

Where are we now? Why haven’t we been taking advantage of this 

open-ended entitlement? 

Ms. GAUTREAU. We were taking advantage of it in the No 

Wrong Door system that we were building that I referenced a moment ago. The program was put on hold because of the lack of the 

State’s ability to meet its 50-percent match now to move forward 

38 

in light of the budget constraints that we are under. The system 

that we were building would have been SACWIS compliant. We are 

one phase into a three-phase, 10-year project, and we were not 

quite 2 years in. We have the beginning of a SACWIS compliance 

system, but we will not be there with the implementation of this 

first phase. 

Mr. MCCRERY. If we were to have had a system fully operational before Katrina, would it have helped us deal with the effects of Katrina? 

Ms. GAUTREAU. Absolutely. We would have not been so reliant 

on the paper records. We lost the entire record system in St. Bernard Parish. We lost many of the records in Plaquemines Parish. 

We were fortunate that in Orleans our office was on the 15th floor 

of a building downtown, and so when we got the papers dried out, 

most of them were there. The courts lost a lot of documents, but 

between us we have been able to piece together case records. Had 

we been SACWIS compliant, had that technology been in place, all 

of that would have been computerized data, and we would have 

had no fear of losing any child’s record. 

Mr. MCCRERY. Have all the foster children been accounted for? 

Ms. GAUTREAU. Yes, sir. We found them all very, very quickly. 

They were scattered across our Nation, and they were—we still 

have quite a few children in Texas, Mississippi, and in Georgia. 

There are only 136 out of State now, so out of 2,000, we are thrilled 

to have them home. 

Mr. MCCRERY. We talked a little bit about the $220 million in 

additional social services coming to Louisiana. What do you plan to 

do with that? 

Ms. GAUTREAU. Fifteen million out of the $220 million will go 

to help us catch up with some of these children, the mental health 

services that we desperately need for these children we will use to 

kind of backfill some of our budget deficit. We will use that money 

to do the mental health. The travel—we have this unique dynamic 

now where we have a court of jurisdiction in New Orleans, we have 

a child maybe living in Texas, and then we have a birth parent in, 

say, Alabama. We have this unique triangular system, and courts 

require foster children see their birth parents monthly and they 

come to court monthly. We do not have the transportation dollars 

to manage this system, and we will be using some of that SSBG 

money to help us literally transport these children across State 

lines. We will also use some of it to implement some new prevention programs which we hope will in the long run keep children out 

of foster care and keep families stable and together. 

Mr. MCCRERY. All right. Thank you very much. 

Ms. GAUTREAU. Thank you. 

Chairman HERGER. Thank you. The gentleman from California, 

Mr. Stark, to inquire. 

Mr. STARK. Thank you, Mr. Chairman. Just very quickly, while 

I am intrigued and encouraged by information technology that can 

help us all do our work, sometimes I think that we have to be careful, particularly in dealing with children, that we not lose the 

human contact. Ms. Henley, you point out that your program gets 

parents involved in the children’s child care needs and environment. I suspect that means as a result of requiring them to be at 

39 

the child care facility at least once every 10 days and swipe a card. 

That does not mean that they are really getting in and involving 

themselves in the activities of the child care. It just means they 

have got to be there to put their key in the lock. That is better 

than nothing. Don’t misunderstand me, but I hope that you 

wouldn’t lose sight of the way that we could entice parents to become more actively involved. Mr. Winstead, while I am intrigued 

with the Florida system—and I am sure this is something you have 

heard more about than you care to, but it seems to me that your 

Statewide Child Welfare Automated System was fully working at 

the time you lost Rilya Wilson, wasn’t it? 

Mr. WINSTEAD. If I may—— 

Mr. STARK. Well, and you have not found her yet, as far as I 

know. Now, maybe it would be easier to find her with the electronic 

system, but I merely suggest that as a means of saying that losing 

contact with people that, particularly in your communities, you are 

charged with—and particularly with children, where I think that 

well-trained caseworkers still could be the quickest way to determine when children might need the services of Dr. McDermott. He 

is not going to be replaced very soon by a computer, I don’t think. 

I guess I would just like to—I would say the thing to Mr. Fecci, 

that while I am intrigued with how much money Indiana has saved 

by matching data, there is nothing in that list that says they have 

also found a lot of people who might be entitled to benefits who are 

unaware. The outreach was not emphasized. I guess I would just 

hope that with some of the savings that you get, Mr. Winstead, you 

would raise the pay of the workers who have face-to-face contact 

with your cases and in Louisiana that we would have some money 

left over from rebuilding to get preventative services to children 

who are going to be more traumatized than ever by being uprooted 

and moved to a strange community. God help them if they had to 

come to Oakland, California, from beautiful Louisiana. That could 

be a really traumatic experience for them. I am just suggesting 

that while we would like to help any way we can to encourage automation, that we don’t become so intrigued with the push-pull, 

click-click of the computers and our BlackBerries and all this that 

we lose sight of what you all are really charged with is at some 

point that human interrelation that only a well-trained caseworker 

who is interested, and particularly with children, can be the one to 

help. 

Mr. WINSTEAD. If I may? 

Mr. STARK. Please, Mr. Winstead. 

Mr. WINSTEAD. I think we would agree, and I would in no way 

try to do anything but agree that the Rilya Wilson situation was 

a tragedy, and I offer no excuse, no rebuttal. 

Mr. STARK. Probably not caused by data processing—— 

Mr. WINSTEAD. If I may quickly say a couple of things. First 

of all, yes, we have raised those frontline caseworker salaries. Governor Bush has led that charge. Secondly, one of the things that 

was not happening in Florida was proper attention in keeping up 

with monthly visits by caseworkers to children. That has been a 

real emphasis for us. The U.S. Departmant of Health and Human 

Services Inspector General did a report released in December about 

monthly visitation to children that noted Florida has the second 

40 

highest compliance in that, but that was far too low for us. Last 

month, in March 2006, out of over 47,000 children in in-home care 

and out-of-home care in our State, caseworkers visited 99.18 percent of them. That is what we are doing. The other thing, though, 

with technology that I would mention very quickly, Mr. Chairman, 

just to make you aware of a new project, it is a pilot using Nextel 

IH70 GPS-enabled camera/cell phone and Zora time track technology. 

Mr. STARK. You lost me. 

Mr. WINSTEAD. What it does—and I have seen it work. We 

right now are piloting—we have got 82 protective investigators in 

Florida using this technology. They have got GPS cell phones. The 

supervisor can call up on a computer screen. You can actually see 

a map, and you can watch where the caseworker goes. We have got 

a camera. The caseworker can take a picture of the child—— 

Mr. STARK. Don’t you tell my wife about that, Mr. Winstead, or 

I am in trouble. 

[Laughter.] 

Mr. WINSTEAD. The caseworker can also, when they go on annual leave or go to the doctor, enter a button to turn off the technology, but their supervisor knows it is turned off. The next version 

that we are getting in the pilot also will have a panic button so 

that if the caseworker gets in trouble in the field, we know where 

they are; we know to send help. Also, in rural counties, knowing 

where your caseworker is when a call comes in, you do not have 

to wait for somebody to come back to the office. You can look and 

see who is closest to that child and get somebody out there. That 

is a way that we are coupling the human contact that is so important—I agree completely about the training and the skill because 

it is really a people business. If we can give our workers the tools 

that they need and use the technology to help them do a better job, 

I think that is where you—— 

Mr. STARK. Great, and that is what I guess I just wanted to remind everybody. Thank you all for your testimony. Thanks, Mr. 

Chairman. 

Chairman HERGER. The gentleman from California, Mr. Becerra. 

Mr. BECERRA. Mr. Chairman, thank you very much, and thank 

you for holding this hearing. To the witnesses, thank you for your 

testimony, especially on how you have tried to respond under some 

very compelling circumstances in many cases, especially, I know, in 

certain States more than others, things have been very difficult. 

Applause to you for the work that you do because we know you are 

already overworked to begin with. Let me just add, I know we have 

a vote coming up, so I would just like to say one thing. I hope we 

can continue to make use of every piece of technology we can, because as I see it, we are losing social workers faster than we can 

train them. Unless we do something to provide them with a better 

environment and they do not feel so overburdened, all that technology is going to go for naught because we will not have the 

human face that the technology allows us to put before these individuals, whether it is a foster child or parents who are trying to 

help out, as quick as we should. 

41 

I hope that we can find ways or you can let us know ways that 

we can harness this technology to help you save money with other 

administrative costs, because if we do not figure out a way to have 

the average social worker stay on the job more than 2 years, we 

are in real trouble. There is no way that anyone can do a decent 

job of providing services when you have got 100 families you are 

trying to monitor, when you should really be looking at no more 

than 15 or so. Kudos to you if you have implemented some things. 

Congratulations if you have faced adversity and you overcame it. 

Then let us know how we can help you harness that technology 

sooner than later. With that, I will yield back the balance of my 

time because of the votes that we have coming up. Thank you very 

much for being here. 

Chairman HERGER. Thank you, and I want to thank each of you 

for the time you have taken for traveling here. Your information 

you have provided has been very interesting and will be helpful in 

the future as we look for ways to improve service delivery, achieve 

program efficiencies, and stretch taxpayer dollars. I would like to 

request of you, if we have some more written questions, if you 

would respond to those, please. Thank you again very much, and 

with that this Committee stands adjourned. 

[Whereupon, at 4:10 p.m., the hearing was adjourned.] 

[Questions submitted from Chairman Herger to Ms. Rath, Mr. 

Winstead, and Mr. Fecci, and their responses follow:] 

Questions from Chairman Wally Herger to Ms. Diane Rath 

Question: I understand that Texas plans to use electronic payments for 

unemployment benefits. How will receiving electronic payments help recipients? What type of savings do you expect to produce for taxpayers? 

Answer: Receiving electronic payment of benefits via a debit card will assist Unemployment Insurance (UI) claimants by: 

1. Eliminating lost or stolen warrants; 

2. Decreasing the time between payment authorization and availability of funds 

to the claimant; 

3. Eliminating check-cashing fees for claimants who do not have a bank account; 

4. Allowing the claimant 24-hours-a-day, 7-days-a-week access to the claim’s payment history through an interactive voice-response system, customer support, or the 

Internet; and 

5. Providing 24-hours-a-day, 7-days-a-week customer support for payment-related 

problems. 

TWC anticipates the following savings by transitioning to a debit card system of 

UI benefit payments: 

1. Elimination of postage associated with mailing a warrant every 2 weeks; 

2. Elimination of warrant cancelation and reissue expenses; 

3. Elimination of the need to store, print, process, and account for special warrant 

stock. 

Question: What is involved in Texas’s ‘‘complete integration of our Unemployment Insurance and Employment Services programs’’ that you note in 

your testimony? How long will that take? What do you expect that process 

to yield in terms of better services for recipients? Will taxpayers see additional savings? 

Answer: Complete integration is a large coordination and coding project intended 

to both combine and streamline the information collection processes for UI claim filing and work registration. One of the primary goals is increasing data integration 

and sharing between both components of the UI claim filing systems—telephone and 

Internet, and WorkInTexas.com, the state’s automated labor exchange system. TWC 

is also redesigning how job seekers input information into WorkInTexas.com to provide better quality re ́sume ́s and applications for UI claimants. 

42 

How long will that take? We estimate approximately 18 months for completion of 

the project as currently scoped. 

What do you expect that process to yield in terms of better services for recipients? 

The project envisions a single, more efficient, and essentially seamless claim filing 

and work registration process, resulting in a better quality work application. These 

integration efforts will provide a more user-friendly process for UI claimants and 

a more efficient method for Texas Workforce Center staff to match job seekers and 

employers. 

Will taxpayers see additional savings? Ultimately, our efforts at system integration will enhance the ability of our employers to fill their vacancies quickly, using 

the public workforce system they fund. We also believe that improving the quality 

and timeliness of UI claimants’ work registration will reduce the amount of time 

claimants are unemployed. 

Question: Your testimony notes that the ‘‘Lone Star Card’’ is now used for 

social service benefits and that administrative costs and fraud have been 

reduced. Can you tell us how much has been saved or made available for 

other benefits by this innovation? What were some examples of fraud and 

abuse that has been prevented? 

Answer: How much has been saved or made available for other benefits by using 

the ‘‘Lone Star Card’’ for payment of social service benefits, including savings 

achieved through reduced administrative costs and fraud? The Lone Star Card is 

used for food stamp benefits as well as Temporary Assistance for Needy Families 

cash assistance. Eligibility and payment of benefits are administered by the Texas 

Health and Human Services Commission. Although exact savings are difficult to calculate, during the first 7 years of implementation, according to information from the 

Texas State Comptroller, the Lone Star Card was estimated to save $126 million 

in administrative and other costs. In addition, data from electronic benefits transfer 

makes it easy to detect and eliminate duplicate accounts and redundant information. The computerized system can also quantify the amount of unused benefits from 

1 month to the next. As a result, in fewer than 3 years following implementation 

of the Lone Star Card, almost 900,000 dormant cases worth more than $28 million 

were removed from the Food Stamp rolls and cases worth more than $5.5 million 

were removed from the Temporary Assistance for Needy Families rolls. What are some examples of fraud and abuse that have been prevented? A $1 million illegal food stamp ring was uncovered at the end of the pilot project as a direct 

result of the electronic audit trail provided by the Lone Star Card. In addition, in 

1996, a U.S. Department of Agriculture investigation in Houston only disqualified 

9 percent of the area’s food stamp retailers, compared to 15 percent that were disqualified in cities in states using paper coupons. This discrepancy suggests that unscrupulous retailers might have voluntarily withdrawn for fear of exposure with the 

electronic benefits transfer system. 

Question: What differences have you seen since unemployed workers 

have been required to register with WorkInTexas.com? How do you verify 

that claimants are making at least three work searches per week? 

Answer: What differences have you seen since unemployed workers have been required to register with WorkInTexas.com? Texas has always maintained a requirement that UI claimants register for work in the state’s automated labor exchange 

system. Implementation of WorkInTexas.com has made that registration process 

much easier. Because WorkInTexas.com is Internet-based, UI claimants can access 

the labor exchange system 24-hours-a-day, 7-days-a-week, from any location that 

has an Internet connection. Additionally, feedback from users continues to validate 

that the WorkInTexas.com application compares extremely favorably to other Internet job search applications. We anticipate that the number of Texas employers and 

job seekers using the publicly funded labor exchange application will continue to 

grow. 

How do you verify that claimants are making at least three work searches per 

week? TWC uses a statistically valid, random sampling methodology to verify that 

UI claimants, who are required to do so, are making the appropriate weekly work 

searches. Each week, UI claimants are randomly selected to submit their work 

search logs to TWC. Staff verifies that (1) the requested log is received, (2) the log 

contains the appropriate number of work search contacts, and (3) the work search 

activities contained in the log are valid. TWC enacted state rules that integrate UI 

with each of our 28 Local Workforce Development Boards (Boards). TWC has determined that UI claimants must demonstrate that they are actively seeking work by 

making at least 3 weekly work search contacts. TWC has further determined that 

it may be appropriate to require more than three contacts per week, depending upon 

local labor market conditions as determined by the Boards. Boards, using various 

43 

economic and geographic factors within their local workforce development areas, 

may raise the required number of work search contacts. In addition, TWC also provided Boards with the ability to lower the number of work search contacts in rural 

counties. However, the vast majority of UI claimants in Texas are required to make 

a minimum of three work search contacts per week. UI claimants who have been 

temporarily laid off, with definite return-to-work dates, as well as UI claimants attached to nondiscriminatory union hiring halls, are not required to conduct weekly 

work searches 

Question: What efficiencies have you noted since Texas started running 

data matches using the National Directory of New Hires? Which programs 

are involved? What savings have you achieved? Do you have plans to use 

this information or similar data matching more broadly in the future? 

Answer: What efficiencies have you noted since Texas started running data 

matches using the National Directory of New Hires? Accessing the National Directory of New Hires (NDNH) database has contributed to TWC’s ongoing initiative for 

early fraud detection, while reducing the amount of overpayments. Since TWC entered into a computer-matching agreement with the Office of Child Support Enforcement (OCSE) in fall 2005, weekly new hire matches have increased by 75 percent. 

OCSE reports New Hire W–4 information 30 days from the date of hire, which is 

much timelier than acquiring employer wage information. Additionally, TWC has 

noted an increase in collection notices generated to UI claimants, which can be directly attributed to the additional new hire matches. 

Which programs are involved? Federal statute limits TWC’s use of the NDNH to 

administration of the unemployment compensation program. 

What savings have you achieved? In Federal Fiscal Year 2005, TWC recovered 

overpayments in excess of $3 million. Additionally, TWC estimates potential overpayments that were avoided of approximately $3.9 million. 

Do you have plans to use this information or similar data matching more broadly 

in the future? TWC is interested in expanding our use of the NDNH to confirm employment for individuals participating in other programs. However, our use of 

NDNH is limited based upon federal statute. TWC administers many workforce programs in addition to unemployment insurance. If the federal statute were amended 

to provide workforce agencies more flexibility in the use of NDNH for all programs 

they administer, TWC would be able to conduct cross matches for other income eligible programs, and determine if individuals were fraudulently receiving benefits. In 

addition, TWC has been working closely with the United States Department of 

Labor (DOL) and OCSE in developing the design for the quarterly wage cross 

match. OCSE anticipates that the new cross match design will be available in fall 

2006. TWC also is working to enhance the current data-sharing agreement with the 

Social Security Administration (SSA) to improve verification of identity, while obtaining additional personal characteristics to reduce fraud. These additional data 

elements include disability, death, and prison information. 

Question: What defines the difference between states that have taken 

steps to improve their use of technology in public benefit systems and 

those that haven’t yet? Does it boil down to resources, leadership, vision, 

or something else? All states have access to the same federal funding rules 

when it comes to paying for systems; so that seems to suggest that funding 

is not the key issue. So what drives state differences on this? 

Answer: What defines the difference between states that have taken steps to improve their use of technology in public benefit systems and those that have not yet? 

We can only speak to those factors that have driven technology decisions as they 

relate to the Texas workforce system. For Texas, the challenge to meet employer 

and job seeker needs counterpoised against very real budget constraints has led to 

the use of technology and automation. Additionally, Texas continues to foster a climate favorable to high-technology and science-oriented business. Enhanced use of 

technology by the public workforce system is a natural extension of that effort. 

Does it boil down to resources, leadership, vision, or something else? We believe 

that in Texas, it is a combination of all three. 

1. Resources: Texas receives less than 40 cents of every dollar paid by its employers in UI tax. With that rate of return, we have been driven toward finding efficiencies and process improvement through the strategic use of technology. Our efforts have helped us to simultaneously contain costs and improve the services we 

provide to employers and job seekers. 

2. Leadership: TWC is a leadership partner with the Governor in ensuring that 

the Texas workforce system effectively and efficiently serves employers and job 

seekers of Texas. Employing technology in innovative ways throughout the publicly 

44 

funded workforce system maintains services, contains costs, and positions Texas as 

a leader among states in economic and workforce development. 

3. Vision: The vision of Texas’ leadership is to ensure that it maintains a workforce and economic development infrastructure that makes Texas highly attractive 

to business, thereby generating high-growth, high-demand jobs for Texans. Successful deployment of automation and technology are key factors in realizing this vision. 

All states have access to the same federal funding rules when it comes to paying 

for systems, so that seems to suggest that funding is not the key issue. 

What drives state differences on this? As previously indicated, resources, leadership, and vision are the key drivers of the differences among states. However, we 

should note that Texas has long been concerned that federal funding rules do not 

drive states toward seeking the efficiencies that Texas has—particularly regarding 

UI. We have, for years, puzzled over the discrepancies between the allotment criteria in federal statute and the factors that DOL says it has relied upon to allot 

grant funds among the states. Indeed, two of the three factors set forth in section 

302 of the Social Security Act for allotting funds necessary for ‘‘proper and efficient 

administration’’ of each state’s UI laws have been ignored by DOL in awarding base 

grants to states. This allotment practice not only reinforces, but finances inefficiencies and inequity among states, while penalizing streamlining and cost-reductions. 

The population covered by state laws and the number of unemployed in a state 

should be key factors in any allocation methodology. While differences in states’ administrative costs are often attributable to choices that states have made regarding 

UI claimant eligibility, overall recipiency, and program administration—DOL methodology should not consider these cost factors ‘‘uncontrollable,’’ thereby allowing 

other states’ programs to be financed by tax proceeds from Texas’ employers. Texas 

has worked diligently to enhance services to employers and UI claimants while containing costs. Strategic deployment of technology and automation have been key to 

those service enhancements. 

Questions from Chairman Wally Herger to Mr. Don Winstead 

Question: What has Florida done with the estimated $83 million in savings you produced by improving your use of technology in public benefit 

programs? Are those state or federal funds? Did your saving state funds 

also reduce federal spending in Florida? 

Answer: The $83 million in savings was achieved from administrative costs due 

to reductions in personnel and related expenses, such as savings from reducing 

leased office space. These savings resulted in reductions in our agency’s budget requests to the Florida Legislature. The savings included state funds, Temporary Assistance for Needy Families (TANF) federal funds and federal matching funds for 

food stamp and Medicaid administrative expenditures. The state fund reductions 

permitted the Legislature to use the resources on other priorities and to reduce the 

overall budget. The TANF savings were redirected by the Legislature to other permissible uses and the portion consisting of federal matching funds resulted in reduced federal expenditures and savings for federal taxpayers. 

Question: How are welfare and food stamp benefits paid in Florida? Specifically, do you still use paper checks? How about benefits for Hurricane 

Katrina evacuees? What are the advantages to Florida of paying benefits 

electronically? 

Answer: Florida no longer uses paper checks for either welfare or food stamp benefits. Most of such benefits (including cash payments or food stamps to Hurricane 

Katrina evacuees) are paid using Electronic Benefit Transfer (EBT) cards. Cash assistance recipients also have the option of having their benefits deposited to their 

bank accounts through electronic funds transfer (EFT). Currently about 300 recipients choose EFT rather than EBT. Most cash assistance customers also receive food 

stamp benefits, so the EBT card provides the convenience of providing both benefits. 

Medicaid recipients receive ‘‘Gold Cards’’ through which they receive access to 

health care by authorized health providers. 

EBT and EFT services are a win-win for customers, retailers, financial institutions as well as federal and state agencies. Customer benefits are received more 

quickly and are less likely to be lost or stolen. It is also easier for customers to access benefits. Efficiencies in processing payments and recordkeeping provide savings 

for taxpayers. In addition, electronic payments enhance program integrity. This is 

particularly evident in the food stamp program where the use of EBT cards help 

assure that benefits are only used on authorized food items at participating retailers. 

45 

Question: What does Florida do to promote electronic payments? What do 

you do to help people without bank accounts who cannot receive direct deposits? Do you foresee a day when every government payment is made electronically, and none by paper check? 

Answer: Florida is a leader in promoting electronic payments. However, we believe we can do much more in this area. State statutes require most state employees 

to use direct deposit. Payments to contracted providers are also primarily issued via 

direct deposit. As indicated above, benefits are issued for the major Economic Selfsufficiency Programs electronically via EBT cards or EFT. While cash assistance recipients can choose the option of direct deposit into bank accounts, they do not have 

a choice to receive paper checks. Additionally, direct deposit is used for unemployment compensation payments to people with bank accounts and discussions are underway now to enable the use of EBT cards for others. The Department’s Strategic 

Plan also includes a cross functional workgroup to plan for use of electronic payments for Independent Living stipends, foster care and adoption subsidies, and selfdirected mental health and substance abuse services. Regarding assistance for people without bank accounts, bank accounts are not needed when benefits are issued 

on EBT cards. However, the department has worked with the State Comptroller’s 

office to encourage financial institutions to create low cost bank accounts for individual use. Finally, we do foresee a day when every government payment is made 

electronically and we are rapidly moving toward that day. 

Question: You note that in your Economic Self-Sufficiency programs you 

now serve more people, with literally thousands of fewer staff. If my math 

is correct, each worker now helps about 560 recipients per year, compared 

with about 260 recipients served per worker in 2002. 

• What programs are included in the Economic Self-Sufficiency plan? • What happened in terms of the quality of services? Is there any evidence that services suffered in the process? • What became of the caseworkers who formerly carried out these functions for applicants? 

Answer: The Economic Self-Sufficiency program includes determining eligibility 

for TANF, food stamps, Medicaid, Optional State Supplementation, Refugee Cash 

Assistance and Refugee Medical Assistance. 

We have seen improvements in quality of services in a variety of measures. Our 

food stamp error rate has been reduced and we have also seen reductions in the 

error rate in cash assistance payments. For example, in our TANF program the payment error rate declined from 6.2% in 2001 to 2.87% in 2005. The food stamp error 

rate fell from 9.8% in 2001 to an estimated 7.02% in 2005. This improvement in 

quality occurred even though the state was hit with seven hurricanes and had to 

shift tremendous amounts of resources to disaster relief. 

As I stated in my testimony, we include a customer survey at the conclusion of 

the web application and 90% of customers indicated they would use the web application again. In addition, our Quality Control staff surveyed customers on their use 

of the self-service areas of our service centers. 92% of those who used the self-service area reported that it was convenient and easy to use. 

Regarding caseworkers affected by the improved efficiency of our operation, the 

significant majority of the reductions in staff were accomplished through attrition 

and elimination of vacancies. Where attrition was not sufficient to achieve appropriate reductions, we formed teams to facilitate the job change process. These included Human Resources staff as well as staff from local Workforce agencies. These 

teams worked to assist employees in finding other opportunities within our agency, 

or in other positions within either government or the private sector. Approximately 

400 employees were affected by layoffs. Some chose to retire, but most were able 

to find other employment. Fortunately, through this period, Florida was a leader in 

job growth and experienced record low unemployment. 

Question: What defines the difference between states that have taken 

steps to improve their use of technology in public benefit systems and 

those that haven’t yet? Does it boil down to resources, leadership, vision, 

or something else? All states have access to the same federal funding rules 

when it comes to paying for systems; so that seems to suggest that funding 

is not the key issue. So what drives state differences on this? 

Answer: Resources, leadership, vision and other factors all played a role in shaping Florida’s approach to modernizing the public benefits system. Governor Bush 

and the Florida Legislature provided very high level leadership and direction on this 

issue. Proviso language in the 2003 Appropriations Act directed the department to 

achieve efficiencies in the public benefits system. Additionally, Florida was fortuVerDate Aug 31 2005 00:17 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00049 Fmt 6633 Sfmt 6621 E:\HR\OC\30442.XXX 30442
46 

nate to have some highly talented and creative staff who were able to envision a 

new system and create the necessary technological tools to achieve it. As I indicated 

in my testimony, the need to respond to disasters also played a role. The 2004 hurricane season, in which four major hurricanes struck the state in only 6 weeks, and 

the ensuing disaster food stamp programs created an environment where the state 

was forced to test new approaches to meet emergency needs. The web-based tool developed for this need became the prototype of the web application that is in operation today. 

Question: Your testimony notes that today about 77 percent of public assistance applications in Florida are submitted over the Internet. That’s 

compared with 41 percent in July 2005. That’s a huge leap in a short time. 

• What do you do to ensure that with the increased electronic applications there aren’t ore people improperly claiming benefits, such as by 

claiming benefits from another state, or under someone else’s Social Security number, or some other scheme? 

• Are the systems in place to prevent fraud and abuse in the electronic 

world stronger than when paper applications were the norm? 

Answer: We use multiple mechanisms to reduce improper payments and improve 

the integrity of public benefit programs. One mechanism is to designate cases that 

meet certain ‘‘error-prone’’ criteria as ‘‘red track cases’’. These situations are subject 

to more rigorous review through the application process. Another important mechanism is data exchange. We perform approximately 20 data matches with external 

sources. These include the Benefit Earnings Exchange Reports System (BEERS), the 

Beneficiary Data Exchange Title II (Bendex) system, the Numident system to validate Social Security numbers, IRS unearned income data, Unemployment Compensation benefits, UI Wage data, and so forth. Seven of the data exchanges are 

part of the Income Eligibility Verification System (IEVS) and the remainder are additional matches done with federal and state sources. We currently perform a match 

with the State Directory of New Hires and we are in the process of implementing 

use of the National Directory of New Hires. 

We have reengineered our program integrity and front-end fraud prevention programs as part of modernization. These staff have access to more electronic data 

than the typical employee and are specially trained to find inconsistencies in information and follow up to prevent and uncover fraudulent activities. 

Florida also is one of 36 states participating in the Public Assistance Report Information System (PARIS) to identify potential duplicate program participation. 

The use of electronic data matching provides improved program integrity over the 

days when paper applications and paper verifications were the norm. 

Question: What are Florida’s future plans to continue improving efficiency in providing public benefits? How can the federal government help? 

Answer: We are constantly working to improve the model and achieve greater efficiency. We think there are great opportunities to use electronic data matching in 

better ways including verification of identity. On-line, real-time matches with the 

Department of Motor Vehicles are planned. We are working on a process whereby 

customers can report changes on touch tone telephones, complete an eligibility review by updating information currently in their case, and receive more information 

on their applications using speech interactive technology. Secure authentication of 

the person’s identity will make this two-way information highway possible. Centralized mail centers that interface with our Electronic Filing System for scanning and 

indexing of case file documents are also being considered for future streamlining enhancements. 

The federal government can help in a number of ways. Federal agencies can continue to be supportive and work with states to test new ideas and grant waivers 

where needed. For example, the Department of Agriculture has granted waivers to 

certain interview requirements to facilitate implementation of the web application. 

It is important to focus on outcomes rather than procedural requirements. States 

have been the laboratories of innovation in program design. States can also be the 

laboratories of innovation in use of technology. We believe Florida is an excellent 

example of what states can accomplish. 

Questions from Chairman Wally Herger to Mr. Dennis Fecci 

Question: Is data matching such as that practiced in New York or Indiana cost effective? In short, do the program savings from data matching 

more than offset any costs of running the matches? Do individuals benefit, 

47 

for example when states are better able to target work supports like child 

care to people who just got a job? 

Answer: Data machining is extremely cost effective in New York. Technical and 

operational cost are clearly offset by revenues intercepted, and changes in eligibility 

status of individuals due to new and more accurate information. Large amounts of 

newly acquired or undisclosed assets are reveled through this process. New York 

has recovered many millions of dollars from bank accounts, court awards, inheritances, and lottery winnings, and so forth. The cost benefit of the new data matching 

imitative in Indiana will be determined in the third quarter of 2006 as the imitative 

is its initial stages, but is expected to yield substantial savings and be cost effective. 

Although some of the information obtained in the data matching process has been 

used to assist clients, data matching in New York, and thus far in Indiana, has focused on correcting and updating applicant and recipient eligibility information such 

as new and undisclosed assets ( salaries, bank accounts, awards, third party health 

insurance, and so forth.). 

Question: Why do you think more states haven’t used data matching to 

ensure the public benefits they pay are correct? 

Answer: I believe that many states do not aggressively pursue data matching because they have limited resources and more pressing priorities. The process to obtain access to external data is difficult and time consuming. External entities are 

protective of their information, and are not familiar with the privacy, confidentiality 

and legal precedents regarding the release of information to states. Experience has 

shown that obtaining access to external data files takes many times longer than the 

technical tasks required to perform the match. 

Question: I note the closing comment in your testimony that ‘‘States need 

assistance to promote this exchange of data.’’ What sort of assistance? What 

specifically should the federal government do to better promote data 

matching? 

Answer: Data matching and its substantial financial benefits can be greatly accelerated nationwide if the Federal Government were to promulgate legislation and/ 

or HHS regulations that would require private sector organizations to share data 

for the sole purpose of promoting applicant and recipient caseload integrity. 

Question: You note that a study in Indiana ‘‘revealed that over 25% of 

Medicaid recipients in long term care had assets that were unknown to the 

state.’’ What did the state do after learning this information? Did any savings result? 

Answer: It is my understanding that the state is in the process of determining 

what course of action should be taken to ameliorate this problem. 

Question: Does New York use biometrics to confirm an individual’s identity or otherwise better ensure proper payments? What are the advantages 

of that approach? 

Answer: Approximately 10 years ago, New York implemented the Automated Finger Imaging System (AFIS) to positively identify applicants and recipients for the 

sole purpose of preventing duplication of benefits. AFIS has achieved this goal, has 

added to the integrity of the eligibility process in New York, resulting in the closing 

of several thousand cases. AFIS has also provided information which has led to 

many hundreds of arrests, prosecutions, and convictions for benefit fraud. 

Question: What defines the difference between states that have taken 

steps to improve their use of technology in public benefit systems and 

those that haven’t yet? Does it boil down to resources, leadership, vision, 

or something else? All states have access to the same federal funding rules 

when it comes to paying for systems; so that seems to suggest that funding 

is not the key issue. So what drives state differences on this? 

Answer: I believe that the major differences between states that emphasize technology to improve public benefit programs and those that do not, are necessity and 

the availability of resources. In New York, for example, with its large volume of applicants, recipients and multitude of programs, technology is a key to efficient management and control. In forward thinking states, technology is seen as the way to 

ease the burden on operational staff and increase productivity. This vision as a 

motivator would be meaning less with out the technical and financial resources to 

design, develop, and implement automated data processing solutions. Large states 

such as New York have sufficient resources to elevate technology as a high priority 

without sacrificing other priorities. Regarding Federal funding, I do not agree that 

all states are on equal footing. This occurs only when a project is 100% federally 

48 

funded. I have seen examples where states do not have the necessary budget to fund 

the substantial state share required to begin a data processing project. 

f 

[Submissions for the record follow.] 

ACS Government Solutions 

April 17, 2006 

We were privileged to attend the hearing led by Chairman Herger on April 5 addressing the use of technology to improve public benefit programs, and we appreciate this opportunity to submit written comments that we hope will provide additional clarity on the policy implications of the testimony presented at the hearing. 

The use of electronic payments for distributing benefits to families has skyrocketed. As Congressman Herger pointed out, ‘‘electronic payments exceeded payments by paper checks for the first time in 2003.’’ ACS is a strong proponent of electronic payment and electronic benefit delivery technology, and we have successfully 

implemented such technology in states throughout the country. We are proud to enable families to receive benefits more efficiently, more securely, and more cost-effectively. 

Virtually all of the invited witnesses commented on the value of electronic benefits delivery, pointing out cost savings, delivery reliability (especially in the face of 

natural disasters), and enthusiasm of benefit recipients. However, interactions at 

the hearing did not make clear an important distinction between the use of electronic cards to disburse cash assistance, food stamps, and other benefits and the use 

of such cards to pay fees for specific services. Cash assistance, unemployment compensation, and other benefits may be spent as recipients see fit. Food stamps may 

be spent for a limited purpose, and the use of electronic benefit cards helps ensure 

that inappropriate purchases are not made. The use of electronic payment cards for 

payment of state and Federal subsidies for specific services should be understood 

as a distinct use for such cards, presenting clear opportunities for reduction of erroneous payments. The testimony provided at the hearing by Lisa Henley, of the Oklahoma Department of Human Services, illustrated the potential impact of this use 

of electronic payment cards, and we are submitting this additional testimony to 

draw attention to the policy implications. 

While we believe that it may be valuable for the Federal government to provide 

incentives for states to move toward electronic benefit disbursement methods generally, we wish to point out the particular value of providing incentives for states 

to pay providers for subsidized services using electronic ‘‘time and attendance’’ payment systems, so as to reduce errors, fraud, and abuse. In fact, without utilizing 

the proven ‘‘time and attendance’’ card technologies readily available to prevent 

overpayments and fraud, electronic cards may simply accelerate the disbursement 

of unjustified overpayments. 

In her testimony before the Subcommittee, Ms. Henley, Project Director of the 

Oklahoma EBT Project, indicated that by coupling policy changes with technology 

that allows child care service benefits to be distributed and tracked electronically, 

the Oklahoma Department of Human Services was able to significantly reduce the 

amount of overpayments made to child-care providers. The policies and technology 

employed by Oklahoma enabled State officials to: 

• Exclude ineligible providers and clients at the point of serviced delivery, before 

service was provided 

• Prevent invoicing for service hours not provided 

• Create real-time, online audit documentation at the point of service delivery 

• Significantly reduce expenditures by preventing erroneous and improper payments. 

Oklahoma is now able to provide child care services to more children at a 10% 

reduction in the average cost per child—from $249.06 per month before implementation to $224.46 after implementation. In addition, the Oklahoma Department of 

Human Services was able to eliminate administrative positions, since payment and 

auditing are completely automated. The cost to implement the time and attendance 

system was recouped by eliminating over-payments to service providers within only 

six months of operation (within the fiscal year during which the project was implemented.) The State is saving about $1 million a month. The Department has invested these savings into provider training and increased provider rates, which 

means better care is provided for Oklahoma’s children. 

Savings such as those experienced by Oklahoma are easily achieved when actual 

time and attendance is tracked for services provided. The swiping of electronic cards 

at the child-care center or home when a child arrives and departs creates an elecVerDate Aug 31 2005 00:17 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00052 Fmt 6633 Sfmt 6621 E:\HR\OC\30442.XXX 30442
49 

tronic invoice that the State uses to pay the provider. The automatic invoices completely replaces the time-consuming paperwork that was necessary to document attendance and prepare and submit invoices in the past, and the State never pays for 

hours of care that were not, in fact, provided. There is no need for after-the-fact audits of attendance records and recoupment of over-payments that were never made. 

Providers benefit by receiving prompt payments via direct deposit from the State, 

without ever submitting invoices or tolerating attendance record audits. 

Potential savings are by no means limited to child care services. In fact, the same 

simple, proven technology can be applied toward many other fee-for-service subsidy 

programs. Medicaid services that involve recurring transactions (such as drug and 

alcohol therapy, in-home health services) and TANF job-search/job-training participation can make good use of simple electronic payment cards to track time and attendance and ensure that fees paid to service providers are for services actually 

used. 

When considering legislation that encourages states to expand electronic delivery 

of subsidy payments and benefits, we urge the members of the Subcommittee to 

make the distinction between benefits distribution and fee-for-service payments and 

to provide specific incentives for states that establish effective fraud and abuse deterrence programs, such as the child care time and attendance tracking system that 

Oklahoma implemented. Such incentives can prevent improper payments from ever 

being made by preventing an erroneous invoice from ever being submitted. 

The hearing made it clear that electronic distribution of benefits produces postal 

savings and other cost-efficiencies that states are already recognizing. The opportunity to reduce erroneous payments by using electronic cards to document service 

usage before paying fees for service mentioned but not highlighted at the hearing, 

and we believe that it may not get much attention from state officials without a 

Federal push. Perhaps state officials are not focusing on eliminating wasteful spending when the funding source is a Federal block grant, or perhaps they are so focused 

on eliminating paper checks that they haven’t realized the other potential benefits 

of moving to electronic payment cards, including accurate invoicing for fee-for-service subsidies and elimination of payments for services not actually provided. 

Thank you for permitting us to draw attention to this opportunity. We urge those 

drafting legislation addressing electronic benefits distribution to encourage states 

implementing electronic payment cards to promptly adopt use of this simple and 

proven technology to significantly reduce erroneous payments in fee-for-service programs such as child care and Medicaid and to also use it for tracking time and attendance in work participation activities in the TANF program. 

Respectfully submitted, 

Sherri Z. Heller, Ed.D. 

Vice President, Children and Youth Services 

Gregory Cohen 

f 

Business Development Manager 

Social Security Administration 

April 5, 2006 

Mr. Chairman and Members of the Subcommittee: 

Thank you for allowing me to discuss the Social Security Administration’s (SSA) 

effort to move from a paper-based disability claims process to an electronic one. Our 

disability programs provide income security to over 11 million Americans with disabilities through the disability insurance program and the supplemental security income program. Commissioner Jo Anne B. Barnhart has made improving the disability determination process one of her highest priorities throughout her tenure as 

Commissioner. Our new electronic disability process—eDib—is central to our efforts 

to make those improvements. 

Shortly after she became Commissioner in 2001, Commissioner Barnhart asked 

for a detailed analysis of the entire disability determination process from the time 

that a claim is filed with SSA to the time that a review is under taken by a United 

States district court. This analysis showed that SSA’s reliance on old-fashioned 

paper files was limiting the Agency’s ability to efficiently manage this vital workload. 

This review showed a disability determination process tied to a paper folder that 

grew larger and larger as the process continued. The disability determination process started with a call to our ‘‘800’’ number or a visit to one of SSA’s 1300 field offices. Claimants were asked to fill out several forms providing the necessary information. Six-part paper folders were established for each claim. These forms along 

with signed authorizations for release of records were filed in these paper folders 

50 

and then mailed to the State Disability Determination Services (DDSs)—the state 

agencies charged with making initial disability determinations. DDSs then mailed 

a request for medical evidence to the treatment sources, who then mailed paper copies of their records back to them for review. A DDS might also contact third parties 

and arrange consultative examinations to obtain more evidence, also by mail and 

also on paper. After reviewing all the evidence and making an initial disability determination, the DDS would then mail the disability folder back to the SSA field 

office. All of the forms and documents obtained during the process were shipped and 

stored in a traditional paper folder. 

A person dissatisfied with an initial determination made by a DDS could pursue 

an appeal through three administrative levels and the Federal courts. 

At each point, the process would start over again: paper forms completed and 

mailed, requests for evidence mailed and paper replies reviewed, and paper files 

transferred between offices. All this mailing back and forth was time consuming and 

often resulted in important evidence, or even entire files, getting damaged or lost. 

At the time of that analysis the Agency was on a 7-year timeframe to implement 

an electronic disability process that would replace the traditional paper folders. 

Seven years was too long to wait, so Commissioner Barnhart asked me and other 

members of her senior staff how soon we could roll out eDib if the necessary resources were provided and we told her two years. I want to thank the Members of 

this subcommittee who supported providing those resources, because with them and 

with a lot of hard work we in fact rolled out the electronic disability process in two 

years instead of seven. 

Reaching this goal required the coordination of enormously complex computer systems. To make this new system work, we had to do an extraordinary amount of programming not just on SSA’s computers but on the different hardware and software 

used by the DDSs. This was and continues to be a monumental task. There were 

serious technical issues to overcome, especially in the early days. We aggressively 

worked to resolve all those issues. I want you to know that we are aggressively looking for and addressing problem areas. 

Implementation of the electronic disability folder began in January 2004, and as 

of January 31, 2006, all 50 State DDSs have rolled out the electronic disability folder and more than half are working in a completely electronic environment for new 

cases. 

I want to note at the outset that eDib does not replace the millions of paper files 

that SSA already maintains. We will be working with them to conduct post-entitlement eligibility actions, such as continuing disability reviews, for years to come. But 

with eDib, we are seeing the beginning of the end of paper files, and the burden 

and expense associated with them. 

I would like to highlight for you the key elements of the new electronic disability 

process, and provide an overview of where we are with the rollout of that process. 

Before I begin, I would like to especially recognize the people responsible for the 

successful implementation of eDIB—SSA’s dedicated employees and its partners in 

the State DDSs. The computer systems and software behind eDIB are incredibly 

complicated, and eDIB is a tribute to the talent of the men and women at SSA who 

analyzed the disability determination process, developed the software and hardware 

platforms, tested it and then rolled it out in a very controlled process. 

Overview of eDib 

eDib starts with the submission of an application for disability benefits to SSA. 

Once this application is received field office staff enter information that used to be 

collected on several paper forms into a central Electronic Disability Collect System 

(EDCS). The information gathered to make a disability determination is stored in 

an electronic folder organized along the lines of the traditional paper folder. Forms 

that were once printed and signed by hand are created and stored in the electronic 

folder. The data are automatically shared with the DDS systems in a way that 

eliminates the need for re-keying. So far, over 12.9 million claims have been processed through EDCS. 

The contents of the electronic folder can be accessed by field office staff, quality 

assessment reviewers, and State and Federal adjudicators (and support staff) from 

anywhere in the country without the need to physically transfer the file. This provides greater flexibility and protects against lost or damaged folders. 

Electronic Disability Collect System (EDCS) 

With eDib, SSA offers an option to those comfortable with using the Internet of 

starting the application process on-line. By visitingwww.socialsecurity.gov, claimants can provide or start to provide the information on their medical, work, and 

education history necessary to adjudicate their claims. At a minimum, this option 

51 

familiarizes claimants with what is needed to determine their claims, and optimally, 

it makes for a much more efficient disability determination process once the claimant does visit the field office to complete the application. Since the first Internet applications were taken beginning August, 2002, SSA has taken over 500,000 disability claims over the Internet. 

All of the information provided by the claimant either over the Internet or in person at one of our field offices is automatically entered into EDCS. During the field 

office review of the application, EDCS ensures that the SSA claims representative 

obtains all necessary information from the claimant through a system of alerts. 

While resolving these alerts take extra time, EDCS results in better documented 

claims and makes for more efficient processing during subsequent steps of adjudication. In addition, this information is electronically stored and propagates to other 

computer applications later in the process, avoiding the need for re-keying the information. 

100 percent of SSA’s field offices are using EDCS, and over 97 percent of initial 

claims are taken using EDCS Approximately 20,000 disability claims a day are 

taken in this manner. 

Electronic Disability Folder 

One of the most important aspects of eDib is the electronic disability folder and 

the flexibility it offers SSA in managing the disability workload. Specifically, an individual’s electronic disability folder can be accessed at any time by decision makers 

with authorized access. Multiple users in multiple locations may view the information they need even though they do not physically have the folder. I cannot overemphasize the importance of the flexibility afforded by the electronic disability folder, and I further want to emphasize that it is being done in a secure environment. 

For our decision makers, the heart of eDib is the electronic disability folder. We 

worked hard to make sure that the information in the folder was presented in a 

manner that was familiar and easy to understand by our decision makers. In the 

electronic folder, there are sections for payment information, queries, non-disability 

development, medical records, and so forth. Despite the underlying technical complexity, on the surface the electronic disability folder looks fairly simple, is organized along the same lines as the traditional paper claims folder, and contains both 

information from EDCS and images of medical records. 

Medical evidence enters the electronic disability folder in two ways. Those medical 

sources that maintain traditional paper files can either send the records to SSA 

electronically by facsimile or through paper documents. The paper documents must 

be scanned into an electronic format and then entered into the electronic folder. SSA 

has secured the services of a contractor to take care of the bulk of the scanning 

while SSA and DDS offices have the capability to do on-site or low volume scanning. 

For the growing number of medical sources that maintain their records electronically, electronic medical evidence may be forwarded to the electronic disability folder 

via a secure Internet website or bulk transfer facility. 

Already, the electronic claims folder is the official Agency record in more than half 

of the DDSs. The medical information we capture electronically is the world’s largest repository of electronic medical records, with over 36.5 million records. SSA’s 

goal is to move toward more electronic submissions. As part of its efforts to encourage medical providers to submit medical evidence electronically, SSA has conducted 

several outreach programs to the medical community to allay privacy law fears that 

medical professionals have concerning the provisions of HIPAA, the Health Insurance Portability and Accountability Act of 1996. 

Once medical evidence is received, eDib allows SSA to electronically capture, 

index, route, store, and retrieve medical evidence. The electronic disability folder offers adjudicators a wide array of tools that enables them to view, annotate, bookmark, paginate, categorize, and work with evidence electronically. For example, as 

an adjudicator reviews the medical evidence in the electronic disability folder, he or 

she has the ability to mark and highlight key pieces of evidence, making it easier 

to refer back to that evidence during the disability determination process. 

Finally, SSA has taken the forms used in the disability determination process and 

converted them into an electronic format. The use of electronic forms provides decision makers convenient access to them and ensures that they are always using the 

latest, most up-to-date version. The forms can be filled out on-line, electronically 

signed by the employee completing the form, and easily filed in the electronic disability folder. 

Quality Assurance 

eDib also improves SSA’s ability to manage quality assurance. eDib’s Disability 

Case Adjudication and Review System automates all aspects of the disability quality 

52 

review function. Specifically, the system identifies cases for review, interfaces with 

the electronic disability folder, tracks processing, and provides reviewers with electronic versions of forms needed for the quality assurance review. eDib also provides 

electronic routing between the quality assurance office and DDS, replacing the old 

folder mailing process. Access to the electronic disability folder offers reviewers 

greater flexibility, which will allow SSA to transition to a quality assurance system 

that relies on both in-line and end-of-line reviews and will provide more timely and 

efficient feedback on quality. 

Office of Hearings and Appeals (OHA) Improvements 

At OHA, eDib required the development of the Case Processing and Management 

System (CPMS) to replace an outdated system that required manual data entry. 

CPMS eliminates much of the manual data entry, and provides improved case control and better management information. In addition, CPMS provides Administrative Law Judges with the ability to access the electronic disability folder. 

In addition to CPMS, OHA has rolled out the use of digital audio recording equipment and software in all our hearing offices, replacing the outdated analog cassette 

recording equipment that has been in place for over 20 years. Although most digital 

recordings are being stored on compact disc, we are beginning to store digital recordings in the electronic folder. 

Implementation Status 

All of these steps in the eDib process are being rolled out carefully and quickly. 

Roll-out was staggered to ensure that SSA was able to provide each DDS with the 

support necessary for successful implementation. After initial roll out in a DDS, the 

number of DDS decision makers working with electronic folders gradually expanded 

as the DDS developed expertise with the process. To date, all of the 50 States have 

implemented the electronic disability folder. Nationally, over 92% of DDS staff adjudicate cases in an electronic environment. 

We have developed a certification process, called the Independence Day Assessment (IDA), to determine when each State is ready to use eDib exclusively as the 

official Agency record and no longer maintain paper folders for new cases. In January of 2005, the Mississippi DDS became the first DDS in which new disability 

claims are processed in a totally electronic environment. We currently have more 

than half of the State DDSs in a fully electronic environment, with the remainder 

scheduled to be IDA certified by the end of calendar year 2006. 

At OHA, all but five hearing offices now have the equipment to conduct video 

hearings. From October 2005 through February 2006, SSA conducted approximately 

15,000 video hearings. CPMS has been rolled out in all of the hearing offices and 

is being used to control case flow and provide management information. In addition, 

75% of our hearing offices have been trained on using electronic disability folders 

and are working electronic cases. To date, the volume of hearings involving electronic disability folders has been low (approximately 3,200 as of February 2006), but 

the initial response from OHA’s administrative law judges, and claimants and their 

representatives has been positive. 

Next Steps 

This year, I expect each of the DDSs and OHA to be using electronic disability 

folders on a regular basis, and I expect all 50 states to be fully IDA certified by 

the end of calendar year 2006. The President’s FY 2007 administrative budget of 

$9.496 billion for SSA would provide the resources to allow SSA to make the necessary technological investments in eDib to maintain service levels and continue to 

improve the way we do business in the disability process. 

Conclusion 

As I noted earlier, eDib allows adjudicators in the disability determination process 

to view an individual’s claims file anywhere in the country. This flexibility affords 

SSA a new opportunity to make changes to improve the administrative efficiency 

of the program. 

Let me share with you a real-life story that makes obvious the necessity of eDib. 

In the aftermath of Hurricane Katrina—while issuing almost 74,000 immediate benefits payments for displaced persons and setting up response units at the Houston 

Astrodome and other evacuation centers—SSA provided further relief. Of the 5,000 

cases in the New Orleans office of the Louisiana Disability Determination Services, 

1,500 had already been stored electronically through eDib. These records were immediately transferred to other offices to be processed. Ultimately, we gained access 

to the building, packed the remaining 3,500 folders in 400 boxes, and carted those 

down six flights of stairs by flashlight. 

53 

1The Automated Clearing House (ACH) network is a secure funds transfer system which provides for the interbank clearing of electronic entries for participating financial institutions. 

In closing, I believe that eDib is vital. Thank you for the opportunity to discuss 

this important initiative. I would be happy to answer any written questions that you 

may have. 

Martin H. Gerry 

Deputy Commissioner for Disability and Income Security Programs 

f 

Statement of Donald V. Hammond, U.S. Department of the Treasury 

I am pleased to submit this statement for the record to the Subcommittee on 

Human Resources. The Committee should be commended for the attention and focus 

it is placing on how technology can be leveraged to improve the delivery and access 

to public benefit services. Treasury is on the technological forefront in its use of 

automated systems and is committed to integrating the latest technology across all 

our business lines to increase efficiencies and improve services to individuals. 

The Fiscal Service, within the Department of the Treasury, is comprised of the 

Office of the Fiscal Assistant Secretary; and, two Treasury bureaus: the Bureau of 

the Public Debt (BPD) and the Financial Management Service (FMS). Our mission 

is to develop policy for and to operate the financial infrastructure of the federal government. FMS provides central payment services to federal program agencies, operates the federal government’s collections and deposit systems, provides governmentwide accounting and reporting services, and manages the collection of delinquent 

debt. 

FMS disburses 85 percent of the federal government’s payments, including income 

tax refunds, Social Security benefits, veterans’ benefits, and other federal payments 

to individuals and businesses. In FY 2005, this represented over 952 million nonDefense payments with a dollar value of nearly $1.5 trillion, with more than 76 percent of these payments being issued electronically. FMS also manages the collection 

of revenues such as individual and corporate income tax deposits, customs duties, 

loan repayments, fines and proceeds from leases. Through its collection network, 

FMS receives more than $2.67 trillion annually, of which more than $2.11 trillion, 

nearly 80 percent, is transacted electronically. 

This statement focuses on the electronic delivery of federal benefit payments. Direct deposit is a payment program for consumers who authorize the deposit of payments automatically into a checking or savings account via the Automated Clearing 

House (ACH) network1 Direct deposit is safe, convenient and reliable. The benefits 

became all too clear in the wake of last summer’s hurricanes when direct deposit 

worked flawlessly. 

Benefits of Direct Deposit: Direct deposit is, without question, the best way for 

all Americans to get their money because it eliminates the risk of lost or stolen 

checks, reduces fraud, and gives more people control over their money. 

• It’s safer. Direct deposit protects people from fraud and identity theft. In fact, 

check recipients are 30 times more likely to have a problem with a federal check 

than with a direct deposit payment. Last year alone, half a million people called 

Treasury to report problems with checks. • It’s easier. Payments go straight to the recipient’s bank account, so they don’t 

have to go to the bank or credit union to deposit a check. • It gives control. Direct deposit is completely predictable. The payment is deposited at the same time each month and the money is immediately available 

wherever and when ever it is needed. 

Savings to the Government: Direct deposit represents significant savings over 

checks—75 cents per federal benefit payment. If the almost 159 million benefit 

checks, of which 147 million were Social Security and Supplemental Security Income (SSI) payments, that FMS issued in FY 2005 were converted to direct deposit, 

the savings to the American taxpayer would total an additional $120 million. The 

vast majority of these savings ($110 million) would accrue to the Social Security 

Trust Fund. 

Certainty in Uncertain Times: The benefits of direct deposit were reaffirmed 

and came sharply into focus in the wake of hurricanes Katrina and Rita, which displaced thousands of federal benefit recipients days before their checks were scheduled to arrive. In preparation for uncertain times, a simple action like enrolling in 

direct deposit can offer much-needed peace of mind to people who get federal benefits, most of whom are seniors, the disabled or people with low incomes. While 

54 

Treasury and the federal program agencies were able to make check payments 

available to individuals on a timely basis, extraordinary logistical challenges had to 

be overcome to deliver the payments in the disaster areas or to the individuals who 

had been relocated to other areas of the country. FMS used its technology during 

the Katrina recovery to identify for the Social Security Administration specific persons and areas where Treasury check payments were not being cashed. This assisted SSA in quickly arranging replacement payments for beneficiaries. However, 

the special handling of the check payments in the disaster areas was labor intensive 

and inefficient. The inherent delays in delivering checks caused inconvenience and 

hardship for the evacuees. Individuals who had direct deposit were able to access 

their funds immediately on the payment date from almost anywhere. 

Go Direct Campaign: Today, around 80 percent of the federal benefit payments 

are made by direct deposit. However, the direct deposit growth rate for federal benefit payments has leveled off to a rate of less than one percent a year compared to 

the five percent per year increase between FY 1997 through FY 1999. As the government prepares for the enormous increase in retiring baby boomers in the years 

to come, it is critical that the government reverse the low direct deposit growth rate 

trend. To increase the use of direct deposit for federal benefit payments, FMS, 

partnering with the Federal Reserve, has a nationwide campaign called Go Direct. 

Go Direct is a nationwide, grassroots marketing campaign designed to motivate 

Americans to use direct deposit for Social Security, SSI and other federal benefit 

payments. The campaign champions Treasury’s longstanding efforts to shift from 

paper to electronic payments. 

Enrollment made Easy: Treasury uses technology to make the direct deposit 

sign up process fast, easy and convenient for everyone involved. Individuals may call 

our Go Direct toll-free number (800–333–1795) or use the recently launched online 

enrollment tool available at www.godirect.org. The online enrollment tool is available to financial institutions, nursing homes, community service organizations, and 

other organizations that would be completing multiple sign-ups. It greatly streamlines the process by allowing organization to set up a one-time secure profile that 

can be used time and again by to sign up federal benefit recipients for direct deposit. Each time an enrollment is entered, the profile provides basic information, 

which means faster enrollments with fewer errors. From the Go Direct campaign 

launch in June 2005 through mid-March, over 326,000 individuals signed up for direct deposit, of which approximately 44,000 have signed up through the online enrollment tool. 

In summary, the underlying technology used for direct deposit program is efficient, safe, and secure. Direct deposit effectively improves the delivery of public benefits to U.S. citizens. Increasing the growth rate of direct deposit participation for 

Social Security and other federal benefit payments will continue to improve service 

while saving taxpayer funds. 

f 

Statement of Kentucky Cabinet for Health and Family Services, 

Frankfort, Kentucky 

During the past year and a half, the Kentucky Cabinet for Health and Family 

Services has been actively exploring the use of mobile and Web-based computer 

technology with the goals of improving the quality and timeliness of child protection 

service investigations and of electronically verifying visits by social workers in child 

protection cases. This study consisted of a proof of concept using mobile technology 

including PDAs and laptops equipped with digital cameras and GPS capability; a 

field test using tablet PCs and laptop technology and a pilot project in one of six 

Cabinet regions in the state. 

During this 18-month process, a ‘‘tool kit’’ consisting of a laptop computer loaded 

with an investigation template; digital cameras with docking stations and date/time 

stamping capabilities; and state-of-the-art cell phones was created and is currently 

being used by 50 social workers in the field. The ‘‘tool kits’’ have the combined benefits of guiding social workers through the investigation process to assure accuracy 

and completeness, of date/time stamping the high resolution pictures taken at the 

referred child’s location and condition, and of direct downloading of information collected into the mainframe-based worker information system (SACWIS). As a result, 

accuracy and timeliness of documentation is greatly improved, social worker efficiency is increased and electronic verification of home visits can be provided. A report of the results of the ‘‘tool kit’’ pilot will be completed on May 15th of this year 

and funding has been included in both the Kentucky House and Senate budgets and 

is awaiting passage. With funding secured, the refined ‘‘tool kits’’ will be distributed 

55 

to all 1,500 of Kentucky’s child protective service workers during the next state fiscal year (SFY ’07). 

In a related project, Kentucky’s worker information system is in the process of 

being upgraded to allow for remote access using Web-based technology. When fully 

operational, social workers will be able to access the mainframe system that contains all of the case information on a child and family from any personal computer 

with Web access capability. Again, having critical information available to all social 

workers concerned with a case enhances the Cabinet’s ability to protect the children 

of the Commonwealth. 

f 

Statement of Brian Kibble-Smith, J.P. Morgan Chase Treasury Services, 

Chicago, Illinois 

Introduction 

JPMorgan Chase Bank, N.A. (JPMorgan) has had a long and productive history 

as the industry pioneer in the use of debit cards for the delivery of government 

funds and services. For over 17 years, one unit of the company has specialized in 

the delivery of public assistance benefits and entitlements through Electronic Benefits Transfer (EBT). More than 30 states and territories have selected JPMorgan to 

provide the EBT debit cards and related services that have replaced paper Food 

Stamp coupons nationwide. In most states, EBT has also replaced the paper checks 

once relied upon by programs such as Temporary Assistance to Needy Families 

(TANF). 

Nationally, JPMorgan is responsible for supporting about eight million EBT accounts, handling over $1 billion per month in benefit payments, and for disbursements under the Food Stamp and TANF programs, among others, that support more 

than 60% of our country’s neediest households and individuals. Working closely with 

its state clients, JPMorgan operates EBT services that have repeatedly won the 

agencies using them recognition for excellence in technology and government. 

For example, in 2004, Government Technology magazine wrote of one of 

JPMorgan’s clients: ‘‘The California [EBT] program is an excellent example of a tremendous effort that involved all levels of government and the private sector.’’ That 

year, the California EBT project, supporting nearly 900,000 California EBT cases 

under the Food Stamp program, TANF and others, received the Electronic Funds 

Transfer Association’s ‘‘EBT Project of the Year’’ award and a state award for ‘‘excellence in technology.’’ 

Debit Cards in Government Generally 

Debit cards provide the convenience, safety and reliability of direct deposit for 

their users. For governments, they are a tool for cost reduction, fraud control, greater accountability and improved services. In contrast, checks and vouchers are labor 

intensive, expensive to issue and replace, easily lost or stolen, and subject to forgery. 

Paper checks can also be expensive or difficult for recipients to cash. Americans 

without bank accounts reportedly spend roughly $8 billion annually for check cashing and similar services. Debit cards are an excellent way to serve consumers who 

have no other banking relationship, reducing the consumer’s cost of accessing funds 

while enhancing convenience and safety. 

EBT is just one of many government roles for debit cards. Governments at all levels are using debit cards to deliver funds as diverse as: 

• Federal entitlements, like Social Security, Supplemental Security Income (SSI) 

and Veterans Administration (VA) payments 

• Employee payroll and expense advances and reimbursements 

• Child support payments 

• Unemployment compensation 

• Pensions and annuities, and 

• Incidental fees and payments, such as those to trial witnesses and election 

judges 

Other government-related payments and programs suitable for debit cards include 

healthcare savings accounts, workers compensation, in-home care providers, subsidized foster care and child care payments, and check (and sometimes cash) disbursements to former inmates released from correctional centers. The use of debit 

cards only recently began reaching into some of these areas. 

The federal government took an initial, significant step toward debit cards in 

1991, when the JPMorgan unit responsible for EBT was selected by the U.S. Treasury Department to conduct a pilot program for delivery of federal payments and enVerDate Aug 31 2005 00:35 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00059 Fmt 6633 Sfmt 6621 E:\HR\OC\30442.XXX 30442
56 

titlements, including Social Security, SSI, VA, Railroad Retirement, and others 

through a debit card-accessed, direct deposit account. The program was a success 

and led to a steady expansion in the application of debit cards to government payments. Over 50,000 of these accounts remain active with JPMorgan. 

In 2006, JPMorgan extended its debit card service one step further, rolling out 

a pre-paid debit card to speed payment of tax refunds geared especially for people 

who qualify for refunds under the Earned Income Tax Credit (EITC) and who do 

not have bank accounts. The card allows taxpayers to get their EITC refund through 

a debit card instead of a paper check, eliminating check cashing fees and allowing 

consumers to access their funds directly at retailers through Point-of-Sale (POS) 

purchases and from ATMs. 

The card was made available in numerous cities across the country in a partnership between JPMorgan and community organizations that gathered together under 

the Volunteer Income Tax Assistance (VITA) program for free tax preparation services. The money is available to consumers as soon as the IRS deposits the EITC refunds electronically. Consumers who also received a federal payment such as Social 

Security, SSI or VA could enroll for direct deposit of future payments in the same 

account as they received their EITC. 

As the public and private sectors have continued their movement toward increased debit card usage, consumers’ groups have expressed concerns at times about 

debit cards and regulatory compliance. In JPMorgan’s debit card business, compliance is an important focus. For years JPMorgan debit cards for payroll, Social Security and more recent applications like child support and unemployment compensation have essentially replicated the process of direct deposit banking. This has included compliance with applicable banking and consumer protection regulations. 

These laws and regulations include, for example, the requirements of Federal Reserve Regulation E, FDIC insurance for individual accounts, Gramm-Leach-Bliley 

privacy notices, ‘‘Know Your Customer’’ requirements and name checks against Office of Foreign Assets Control watch lists. Federal and state policy-makers and regulators have paid considerable attention lately to laws and regulations as they pertain to emerging uses of debit, stored value and pre-paid cards. JPMorgan has been 

very much involved over the years in helping to develop new regulations and reform 

existing ones to make card-based payments work at their best for all stakeholders. 

The company intends to stay involved in this area and lend its expertise wherever 

it is beneficial. 

Debit Cards in Emergencies and Disasters 

One use of debit cards that JPMorgan has been engaged in since 1999 but which 

only recently received national attention is the large-scale issuance of cards in an 

emergency. Hurricanes Katrina and Rita magnified the importance of debit and 

EBT cards as a part of our country’s emergency response infrastructure. JPMorgan 

is the EBT contractor for Louisiana, and so was directly involved in the use of EBT 

and debit cards issued after these two disasters. Some of the ways JPMorgan deployed debit cards included: 

• Working with Louisiana Parish staff, JPMorgan issued over 414,000 emergency 

Food Stamp benefit EBT cards in that state for victims of both hurricanes 

• JPMorgan converted Louisiana unemployment checks to debit cards, rapidly 

issuing over 300,000 cards which allowed unemployed Louisianans to access 

their funds even if they had relocated to another state 

• JPMorgan is now replacing Louisiana child support checks with up to 50,000 

debit cards 

• JPMorgan added a first-of-a-kind state cash benefit, the ‘‘Emergency Transition 

Assistance Program’’ to the EBT service in Louisiana, serving 10,000 people 

• In other states where JPMorgan is the EBT contractor, JPMorgan issued thousands of EBT cards to Gulf Coast evacuees, notably in Tennessee, issuing 5,000 

EBT cards and could have issued 30,000 if needed 

• JPMorgan issued several hundred thousand cards for the American Red Cross 

to provide financial assistance to disaster victims and for staff and volunteers 

to pay their expenses 

• In Texas, JPMorgan issued about 12,000 disaster relief cards, each with $2,000 

in federal cash benefits, to Katrina evacuees in shelters 

• Finally, JPMorgan issued payroll cards on behalf of numerous public and private sector clients not able to send payroll checks to employees in the affected 

areas, including McDonald’s, the Teamsters Union and the City of New Orleans 

itself 

JPMorgan had the expertise to respond because the company had initiated the 

concept of the emergency debit card, first by issuing 75,000 EBT cards for Food 

57 

Stamp benefit access in North Carolina after Hurricane Floyd, then 100,000 cards 

in Virginia after Hurricane Isabel, and 400,000 cards in Florida during the 2004 

hurricane season before expanding the service’s scope and reach last year. In addition, through novel emergency measures, JPMorgan quickly restored EBT services 

to over 1,200 small retailers in Lower Manhattan after the attacks of 9/11 destroyed 

telecommunication switches in the World Trade Center, shutting off these retailers’ 

ability to accept EBT cards. JPMorgan coordinated with retailers and government 

to keep benefits flowing at this crucial time. 

Today, of JPMorgan’s current EBT client states, benefit agencies in Alaska, California, Florida, Georgia, Guam, Hawaii, Louisiana, South Carolina and Tennessee 

have each added high-volume, emergency EBT card issuance services to their regular EBT contracts. The company works closely with state agencies in pre-planning 

to ensure it can deliver both the cards and additional support needed for their effective use. After Katrina, for example, California increased its emergency card requirement from 400,000 to 1,000,000 so JPMorgan is increasing its delivery and 

support capacity for that state should it see its time of greatest need. 

In addition to these large-scale uses, JPMorgan has conducted many smaller-scale 

emergency card issuances, beginning with its replacement, chapter-by-chapter, of 

the checks and vouchers formerly used by the American Red Cross. Prior to Katrina, 

these cards were used for local emergencies affecting families and individuals. 

JPMorgan has issued emergency EBT cards for victims of tornados and even issued 

approximately 200 cash-value cards for evacuees from Haiti during that country’s 

recent civil unrest. 

JPMorgan views EBT, debit, stored value and pre-paid cards as more than a ‘‘best 

practice’’ for government and an effective access mechanism for funds recipients. 

They have proven themselves to be a reliable, resilient, and mobile component of 

our national disaster response capabilities. 

EBT and WIC Benefits Delivery 

The next frontier for EBT is the federally-funded, state-administered Supplemental Nutrition Program for Women, Infants and Children (WIC). WIC has historically relied on cumbersome paper ‘‘prescriptions’’ to enable expecting mothers or 

those with small children to buy specific food items for themselves and their children as prescribed by WIC clinics in addition to the pre- and post-natal care the 

clinics provide. 

For benefit recipients, these paper forms are stigmatizing and inefficient, often 

forcing WIC mothers to choose between purchasing an entire food prescription at 

once or risk seeing portions of the monthly prescription go unused and expire. For 

WIC-participating retailers, the paper forms are labor intensive to process and 

cause them unnecessary write-offs when completed or submitted incorrectly, even in 

a minor respect. There is clearly a need for improvements in WIC benefit access and 

management. 

In addition, WIC is one of the largest ‘‘discretionary’’ USDA budget items. It is 

important to use cost-effective technology to relieve funding pressures on taxpayers 

wherever possible. An online EBT solution for WIC can emulate the savings, management efficiencies and reductions in benefit fraud and diversion experienced as 

the Food Stamp program converted from paper to plastic. JPMorgan and the 

USDA’s Food and Nutrition Service both regard EBT as a key part of a long-term 

WIC strategy. 

Due to the information-intensive requirement for in-lane verification of specific 

WIC items, price and quantities, it was long believed that using expensive chipimbedded ‘‘smart cards’’ was the only way to bring EBT to WIC. Smart cards can 

cost up to ten times as much as ordinary magnetic stripe cards to produce. They 

also require special equipment at participating retailers and WIC clinics to allow 

for loading and accessing information on the chip at an additional, significant cost. 

The far less expensive magnetic stripe cards, however, are universally used by 

consumers in the national retail POS and ATM infrastructures. For this reason, 

they have long been the standard technology for government benefits delivery in the 

U.S. In sharp contrast, numerous smart card EBT projects have ended or are winding down, having failed to establish the technology as a preferred benefits delivery 

solution for government. 

In July 2005, JPMorgan launched a successful WIC pilot program in Michigan 

that uses standard magnetic stripe EBT cards to replace paper food prescriptions 

for more than 3,500 WIC families at over 30 retail locations in Jackson County. The 

pilot is going very well and has proven the effectiveness of the JPMorgan magnetic 

stripe solution for all stakeholders. JPMorgan hopes to extend the technology to additional states through more pilots and, eventually, statewide WIC EBT services. 

58 

Using magnetic stripe cards for WIC avoids the national retrofit that would be 

needed to make retailers smart-card ready and eliminates the need for specialized 

smart card equipment in WIC clinics. Magnetic stripe cards are already used with 

the POS infrastructure grocers have in place, making WIC benefits potentially redeemable on a uniform basis with other benefits accessed by standard EBT cards. 

Market forces may eventually bring about expanded use of smart cards, and at that 

time, the technology may become appropriate for a variety of debit applications. Unless and until that happens, however, promoting smart cards for WIC also requires 

committing to a substantial, almost exclusively federal expense. 

Conclusion 

There are many areas of state and local government that could benefit from greater use of debit and EBT cards. JPMorgan has even extended the government card 

concept overseas, replacing with debit cards the Social Security checks formerly sent 

to expatriated recipients in several countries, and the United Kingdom’s former 

‘‘coupon-based’’ system for government pension issuance to 4,000,000 annuitants. 

Debit cards have proven their worth to government millions of times over in both 

day-to-day usage and under the most extreme emergency conditions. 

JPMorgan appreciates the opportunity to submit these comments. 

f 

Statement of National Association of State Workforce Agencies 

The National Association of State Workforce Agencies (NASWA) appreciates the 

opportunity to submit written testimony addressing how technology is used to serve 

beneficiaries and taxpayers of public benefit programs under the Subcommittee’s jurisdiction. 

The mission of NASWA is to serve as an advocate for state workforce programs 

and policies, a liaison to federal workforce system partners, and a forum for the exchange of information and practices. Our organization was founded in 1937. Since 

1973, it has been a private, non-profit corporation financed by annual dues from 

member state agencies. 

The workforce development system has come a long way in offering services 

through automated systems. Externally, change is driven by consumer’s expectations of modern service delivery, ever changing federal funding and legislative mandates. Internally, change is driven by Governors’ e-government initiatives founded 

on providing private sector caliber services. Pressure is also exerted from the decline 

in the purchasing power of annual appropriations for workforce development programs and an increasing number of customers. These forces have led state agencies 

to embrace information technology (IT) modernization as an answer to providing improved customer service. 

Gone are the days of waiting in line to register for unemployment benefits, and 

gone are the days when workers and their families waited long periods for the arrival of their benefit checks. Unemployed workers now apply for their benefits online or by telephone; have their funds electronically deposited in their checking accounts (or receive payments on a debit card); and, register with an internet job bank 

to search for employment. Employers can register, calculate their tax liability, remit 

payments, and file their quarterly wage reports online. 

Although the workforce development system strives to continue improving services through IT modernization, annual under funding by the federal government 

limits states’ ability to modernize fully. The result is states often are forced to develop a patchwork of systems rather than a comprehensive modern infrastructure. 

Illustrative of this patchwork are states with the latest automated customer interfaces supported by antiquated mainframe and storage capability. Other states have 

improved automated systems to assist workers, but cannot afford to do so for employers. While the examples of modernization provided below are indeed successes, 

they represent only part of how the workforce development system could transform 

services if sufficient and consistent federal funding were appropriated. 

Information contained in this testimony was obtained from workforce agency Unemployment Insurance Directors and Information Technology Directors. The testimony also used information collected by the Information Technology Support Center 

(ITSC)—a collaboration of the U.S. Department of Labor, Mitretek Systems, Affiliated Computer Services, Inc., and the University of Maryland. ITSC is supported 

by the U.S. Department of Labor. Finally, information was gleaned from the state 

submitted Performance and Capital Investement (PCIs) requests to the U.S. Department of Labor based on the Resource Justification Model (RJM). 

59 

MODERNIZATION EFFORTS 

States have undertaken IT modernization in the UI Benefits and UI Tax Systems. 

Modernization of these systems involves a replacement of states ‘‘core’’ mainframe 

systems (which are obsolete) to more robust client-server systems. When possible, 

state workforce agencies undertake the redesign of both systems. At other times, 

they undertake development separately because of a lack of funds. A mapping of 

business processes and reengineering within the framework of the Governor’s enterprise model and federal reporting requirements must occur before new e-systems are 

built. Some of the states engaged in comprehensive UI systems redesign are New 

Jersey, New York, Indiana, Illinois, Ohio, Pennsylvania, Kansas, New Mexico, 

Michigan, and Colorado. 

The Utah Department of Workforce Services (DWS) recently completed a total redesign of their UI benefit system. Utah’s Comprehensive Unemployment Benefit 

System (CUBS) replaced a mainframe plagued by excessive maintenance costs, inadequate accounting systems, and antiquated technology. The system includes electronic workflow, imaging and expanded functionality for Benefit Payment Control 

(BPC) and Benefit Accuracy Measurement (BAM). Claims enter the system via 

Interactive Voice Recognition (IVR) application, Internet, or manually by customer 

service representatives (if the claimant is unable to complete the filing). Some decisions are automated (when no additional fact finding is required). The system, 

which went into production on January 1, 2006, generates and stores electronic documents and automatically creates workflow queues for adjudication, wage investigation and more. Benefit payments and adjustments are generated in real time and 

users are able to view results immediately. No paper checks are printed. 

California’s Employment Development Department (EDD) is working to modernize their Internet initial and continued claims system. These initiatives will provide a self-service filing system for UI claimants that do not require staff intervention. This will allow claimants to view and select available appointments for adjudication matters, electronically deposit benefit payments, redesign thirty-year old 

payment and check printing programs, develop a claims activity database to improve EDD’s reporting capability, and develop a claim registry database to store 

claimant banking information for the direct deposit option. These improvements will 

help protect the state’s UI trust fund by reducing improper payments and fraud and 

abuse. Cost savings for both of these projects is projected to total $72,959,746 over 

a six year period. 

States are also creating various Internet applications for their employers, often 

incorporated into comprehensive UI Tax System modernization efforts. A sampling 

of employer focused Internet applications include: on-line employer registration systems to allow new employers to open their UI accounts—a total of 33 states are currently offering employer registrations services, while 15 states are in the development phase; Internet wage reporting systems to allow employers to report on quarterly wages of their workers; Internet Tax Reporting to allow employers to calculate 

their tax liability and complete necessary forms—a total of 38 states are operational 

with wage and tax reporting systems and another 11 states are in the planning and 

development phase; and Electronic Funds Transfer (EFT) for tax payments to allow 

employers to remit their tax liability to the state—a total of 24 states are operational, 15 are accepting credit cards and 4 states are in the planning and development phase. 

The Connecticut Department of Labor has built an Internet system to allow employers to register online for UI taxes, another to report changes in status, and another to file their tax returns, report wages and pay their UI taxes. It is in effect 

a suite of Internet services for employers. These systems make liability determinations and compute taxes due for employers. The information once completed is 

brought into an electronic document management system for storage and retrieval. 

Connecticut is also working to augment another tax and wage reporting system 

which allows employers who use commercially available payroll software applications to electronically file their UI and State Revenue Service returns together along 

with electronic payments. Currently this system works browser to server. Connecticut is modifying it to work server to server. These systems enable the state to 

meet national performance goals, register employers more timely and accurately, 

eliminate paper processing and reduce required number of staff necessary in the 

registration process. The total cost of the projects is estimated at about $1,000,000, 

while the total cost savings is $360,000 per year. 

In Nebraska the Workforce Development—Department of Labor replaced their 

Automated Tax Report Preparation and Calculation systems. Preparation of the UI 

Employer Tax Report includes somewhat difficult calculations of gross, excess and 

taxable wages paid, not just during the quarter but also on a calendar year basis. 

Web-based reporting tools automated the task, saving employers an estimated one 

60 

hour for each report. In Nebraska, 15,226 reports were filed in the most recent 

quarter. By utilizing current technology Nebraska employer time-saved per quarter 

is 15,226 hours. Time saved annually totals 60,904 hours. Bookkeeping, accounting 

and auditing clerks in Nebraska earn an average hourly wage of $12.95. Thus, total 

employer savings from electronic filing of wage reports is estimated at $788,706 annually in Nebraska alone. 

The Oklahoma Employment Security Commission (OESC) is engaged in an effort 

to provide quicker and safer payment of funds and decrease the time processing 

checks via mail. The OESC is also building hyperlink capabilities to provide quicker 

access to employer information and better customer service. In addition, a planned 

Interactive Voice Recognition (IVR) Tax script would increase customer service and 

decrease ‘‘live real-time’’ customer support. Among many other functionalities it is 

enhancing the wage file to display wage source code, re-designing data entry screens 

to establish continuity and conformity, and re-designing the Employer Payment 

Plan to increase worker efficiency in research and processing data. The cost of implementation is $3 million, while cost savings will be $500,000 per year. 

Most workforce agencies also have implemented call centers (handling specific geographic areas) and virtual call centers (call centers linked to receive the next call 

in queue regardless of geographic location). Such centers offer initial and continued 

claims services, adjudication of claims, general help, and much more for beneficiaries and employers. Today, 47 states operate call centers—with nine states having one call center. In addition, 15 states are operating virtual call centers, while 

eight states are in the development phase. Many workforce agencies have implemented Internet systems for unemployed workers to apply for and manage their 

continued UI claims. These systems have reduced customer wait periods and payment problems. Most states report great popularity among customers for Internet 

based systems. A total of 43 states are operational with Internet initial claims systems, while 7 are in the planning phase. A total of 37 states are operational with 

Internet continued claims, while 10 states are in the development phase. 

Other technology-related work involves the use of Interactive Voice Recognition 

(IVR) within call centers and virtual centers to help offset staff costs and combat 

UI fraud. For example, the State of Washington redesigned its two IVR applications 

for the following business reasons: 

• Implement fraud detection capability; 

• Consolidate two IVR applications; 

• Implement a ‘‘One telephone number’’ approach for customer service; and, 

• Improve how calls are routed. 

The fraud detection-tracking tool saves and stores the telephone call details for 

each transaction made to the IVR. The call detail includes the telephone number 

used to make the call, the social security number (SSN), and the transaction type. 

This allow investigators to find cases of multiple telephone calls from the same 

phone number using different SSN’s, calls from out of the country, and calls from 

collections companies illegally trying to obtain confidential information. In addition, 

it allows investigators to disprove or prove cases of alleged forgery. 

Other technology modernization includes imaging applications to reduce storage 

needs; SUTA dumping software implementation; record cross-match technology with 

the Department of Motor Vehicles, both the State and National Directory of New 

Hire, Social Security Administration, reemployment services technology, implementation of new emergency preparedness and disaster recovery processes, and replacement of older technology. 

In Idaho, the Department of Commerce & Labor envisioned replacing outdated 

laptop computers used for Unemployment Insurance (UI) tax work. The state had 

used these laptop computers for UI audits since 1990 to implement its computerassisted audit program (CAAP) designed around the UI audit process. Idaho anticipated the use of modern laptop computers would help it consistently meet the stringent Tax Performance System (TPS) standards, believing the $104,208 would result 

in a return on investment of $571,453. When the USDOL was unable to fund Idaho’s Performance and Capital Investments (PCI) request, it invested its own state 

money (approximately $70,000). Many of the originally anticipated benefits have 

been realized. 

CUSTOMER SERVICE AND COST SAVINGS 

Newer systems ensure improved customer service by avoiding systemic failures 

that older automated systems often experience. New electronic benefit payment systems provide claimants faster access to accurate payments. In addition, new technology increases a state’s ability to offer customers multiple self-service options. 

Claimants using the web to file their claims are able to view and understand their 

61 

claim information online or they can print copies of their IRS 1099 forms (instead 

of requesting staff to prepare and mail forms). Employers also heavily use online 

access to information. By using current technology to provide more information on 

the monthly charge statements, employers can identify what type of charges they 

have, as well as the reason for any credits. 

The structure of current technologies is scalable and allows state agencies to respond quickly and fairly cheaply to legislative requests (e.g., UI extensions) and national emergencies (e.g., hurricanes), or other mandates. Current technology systems 

allow states to respond quickly to changes because the systems lend themselves to 

rapid development processes as a result of modular and object-oriented design architectures. Finally, current technology grants state staff access to accurate information and staff can therefore respond quicker to legislative, employer and claimant 

inquiries further improving service. 

IT investment in state workforce agencies’ infrastructure results in cost savings 

to the taxpayer and improved service quality to beneficiaries and employers. Costsavings result primarily from reduced fraud, error, and staff costs and enhanced 

service delivery efficiency. Employers also experience a substantial cost savings, 

stemming from improved compliance processes. Like cost, many aspects of customer 

service quality are impacted by investments in technology. Quality areas impacted 

include ability to avoid failure of automated systems; ability to provide self service 

options to the public; and ability to respond to legislative or other changes. 

On-line wage-reporting systems enable employers to submit their data electronically and quickly make information available to state decision makers. This facilitates accurate benefit payment decisions and reduces error rates. Newly implemented cross match technology improves detection of benefit overpayments and costrecovery operations, and stops additional fraudulent payments. IVR technology associates telephone numbers to specific claims, helping identify those who fraudulently 

submit more than one claim from the same telephone number. 

New equipment is cheaper to maintain, but mostly new technologies save on staff 

time and associated costs. IT investments also positively impact reporting requirements. Aging technologies greatly complicate federal and state reporting. It is labor 

intensive to modify older systems to meet new reporting requirements. Over time, 

a vast array of specialized systems was created, many times using desktop applications, increasing the complexity of meeting consolidated reporting requirements. 

Further, the impact of technology investment on staff costs is substantial. Finding 

staff fluent in old technology is difficult and comes at a premium price. Training 

new staff in old technology is even more difficult and does not promote enterprise 

knowledge growth. New technology investment eliminates such issues. 

Electronic tax payment systems decrease state workloads by eliminating the need 

for labor intensive processes like opening envelopes, completing data entry forms, 

encoding treasury forms, preparing batch deposits, and transferring checks to bank 

accounts. Electronic benefits payment systems limit the number of outstanding and 

cancelled warrants to track, and save on banking fees and treasury charges. As customers increase their use of the on-line systems the number of phone calls and requests for assistance is also greatly reduced, generating more cost-savings. Finally, 

offering employers the capability of on-line account creation provides states more accurate information on workers and wages and requires less staff follow up. 

Employers benefit from IT investments primarily from improved automation of 

services and the need for less staff time to comply to state and federal program requirements. Electronic filing of wage reports saves employers’ time in collecting employee wage data, completing forms, verifying data, copying, and mailings. Automated tax reporting systems simplify difficult calculations of gross, excess and taxable wages paid, again saving on time associated with bookkeeping, accounting and 

auditing clerks. Electronic tax payment curbs employer costs for check preparation, 

verification, mailing, staff and banking fees. Finally, on-line systems for establishing 

new UI accounts are less time consuming. 

THE NEED FOR SUFFICIENT FUNDING 

Secretary of Labor Elaine Chao stressed in her recent statement submitted to the 

House Labor, Health and Human Services and Education Appropriations Subcommittee a desire to improve the financial integrity of the UI system. NASWA supports this goal, but states are finding it increasingly difficult to accomplish. Since 

1995, appropriations for UI state operations have not been adjusted for inflation. Although it is true the UI program operates more efficiently today than it did ten 

years ago, further improvements in program integrity and productivity are increasingly difficult to attain with marginal changes to out-of-date computer systems in 

many states, some of which are more than 30 years old. Further, rising personnel 

62 

1 Response times and rates are unofficial estimates received from SSA personnel. Prior to the 

Accuity Asset verification System, SSA had no system in place to track actual SSI program statistics. 

and service costs without corresponding increases to federal level appropriations are 

forcing states to cut staff, reduce integrity efforts, and seek other sources of funding. 

To help achieve Secretary Chao’s goal, NASWA has requested of Congress $3.023 

billion for state administration of UI in fiscal year 2007 and $100 million for computer system modernization. NASWA understands the pressures Congress faces as 

it confronts the task of cutting the federal budget deficit. However, we believe the 

performance of the workforce development system and the benefits of this investment warrant Congressional support. 

f 

Accuity Inc. 

Skokie, Illinois 60076 

April 18, 2006 

The following Statement is submitted for the hearing record and references the 

Hearing on the Use of Technology to Improve Public Benefit Programs dated April 

5, 2006. 

Brent Newman on behalf of Accuity Inc. of Skokie, IL is submitting this Statement for the hearing record. Mr. Newman is a Managing Director of Accuity. 

Since 1911, Accuity has been the Official Registrar of the American Bankers Association U.S. Routing and Transit Codes, a role that requires it to assign ABA codes 

to every bank, credit union, and savings and loan. In its role as ABA registrar, 

Accuity is required to maintain up to date information on more than 110,000 bank, 

credit union and savings & loan locations across the United States. In a commercial 

capacity, Accuity provides the most comprehensive databases and software to assist 

financial institutions in processing electronic funds transfers and abide by U.S. 

banking regulations. As such, Accuity has earned a unique reputation as the trusted 

source for information about, and for, the banking industry. In addition to providing 

data solutions the Federal Reserve, the FDIC, and the Small Business Administration, Accuity manages a technology service to aid the SSA’s SSI benefit program. 

Accuity strongly supports the use of technology to improve public benefit programs and clearly understands the challenges associated with determining eligibility based on the value of applicants’ financial assets held at financial institutions. 

In September 2003, Accuity took on a contract to design, develop and operate a 

pilot program to replace the existing Social Security Administration (SSA), Supplemental Security Income (SSI) benefits application and re-determination approval 

process. SSI is a federal income-supplement program funded by general tax revenues and provides financial benefits to low-income aged, blind and disabled persons. 

There are approximately seven million SSI benefit recipients in the United States. 

Eligibility requirements are based on both income and current financial resources. 

For an applicant to be eligible for SSI payments, the applicant must not have financial asset resources in excess of $2,000. As part of the eligibility process, the SSA 

is must determine the total value of an applicant’s financial assets held at financial 

institutions. 

Prior to the Accuity solution, the SSA’s asset verification process deployed paperbased forms filled in with information provided by the SSI applicant. The SSA 

would mail an asset verification request form (SSA Form e4641) to the applicant’s 

financial institution. Under this process, response time to the e4641 request form 

averaged between 30–60 days while the financial institution response rate was varied from 10% to a rate less than 50 percent.1 When the financial institution response time exceeds 90 days, it is SSA policy to approve payments of SSI benefits 

to the applicant (with a re-determination performed after one year). 

The stated goals of the SSA to improve the SSI Asset Verification Process were: 

1. Increase the efficiency of the account verification request and response process 

2. Maximize the financial institution response rates 

3. Minimize the paperwork and paper flow through automation 

4. Improve the applicant experience 

5. Improve the ability to detect undisclosed applicant accounts and accurately 

verify financial assets thereby preventing overpayment of SSI benefits to ineligible recipients 

6. Provide analysis tools to measure efficiency, effectiveness and cost of the financial asset verification process. 

63 

The Accuity Asset Verification System included three main components: 

1. A secure web-based application for processing asset verification requests and 

responses between the SSA and the financial institution; 

2. A comprehensive database of registered financial institutions participating in 

the asset verification program; and 

3. Geographic coding logic developed to maximize the detection of undisclosed financial assets 

Accuity designed, developed and implemented on February 17, 2004, an automated, secure, web-based application to facilitate the e4641 asset verification request and response process. The application supports an automated paperless transmission of all asset verification requests from an SSA field office to the respective 

financial institution and the corresponding response from the financial institution 

back to the SSA field office. The financial institution is able to receive a request 

via an easy-to-use and secure online interface that will notify the financial institution immediately when a request has been submitted from the SSA. The information 

is provided as a form that emulates the current paper form used by the SSA. After 

retrieving the account information related to the SSI applicant, the financial institution enters the information into an efficient online form and clicks submit to instantly deliver it to the SSA. 

Application security for the Asset Verification System was designed and implemented to comply with SSA security requirements as defined by the United States 

Commerce Department’s National Institute of Standards and Technology (NIST). 

The Accuity application and associated network have undergone independent security audits from two financial institutions (Citibank and Bank of America). Additionally, Accuity instituted a third party ‘‘ethical hack’’ test, performed by an independent leading industry organization (International Network Services). All three 

audits received positive opinions. Accuity’s Asset Verification System has the capability to process millions of asset verification requests for the SSA. The application 

includes a robust analytics and reporting module that allows SSA to analyze volumes, trends, costs, and statistics on both a macro and micro level. 

The initial phases of the SSA project were rolled out to all SSA field offices in 

New York and New Jersey (a total of 120 SSA field offices and 1200 SSA field personnel). Leveraging our position as the official registrar of ABA U.S. Routing and 

Transit Numbers, and our unique relationships with all U.S. financial institutions, 

Accuity recruited and registered to the program approximately 80% of all financial 

institutions in New York and New Jersey (NY/NJ). There are a total of 10,325 

unique financial institution locations in NY/NJ participating in the automated asset 

verification program. This includes 100 percent of the largest 25 institutions in NY/ 

NJ. In many cases, Accuity worked closely with the larger institutions to consolidate 

multiple-branch processing of e4641 requests to a single centralized processing site, 

thus further streamlining the end-to-end process. Each e4641 request for asset 

verification can now be sent electronically from the SSA to an assigned representative at an assigned financial institution location. Instead of mailing a paper request 

form to a general financial institution address indicated by the SSI applicant, the 

request is now sent and received instantaneously through Accuity’s Asset 

Verification System, instantaneously reaching the correct person at the correct financial institution location; the location and person directly responsible for processing asset verification requests. In all cases, Accuity’s comprehensive financial institutions database drives the routing of all asset verification requests to the appropriate financial institution location and respective personnel within the financial institution. 

In addition to a standard request being sent to the financial institution designated 

by the SSI applicant, Accuity designed and implemented geographic-centric logic 

that allows the SSA to drive alternate request routing to institutions not defined 

by the applicant. The system searches Accuity’s database, and routes alternate multiple sub-requests to financial institutions within certain geographic distance parameters from the designated institution. This process ensures that financial institutions within a reasonable proximity to the applicant’s home are canvassed for possible undetected financial assets. 

The following results were achieved from Accuity’s Asset Verification System: 

1. Overall financial institution response rate of 96% versus previously experienced 10% to 50% rate 

2. Average financial institution response time of 11 days versus 30–60 days 

3. In excess of 60% of all responses received in one week or less 

4. A 40% decrease in the time required for SSA personnel to process a verification 

request 

64 

5. An 80% reduction in postage costs (a potential savings of $1.4 million) 

6. A 100% reduction in paper flow to and from the SSA 

7. One of five asset verification requests disclosed an undetected account yielding 

potential annual savings through suspension of benefits. This detection of improper benefit payments has potential to yield annual savings in excess of $300 

million dollars. 

Due to the successful results, SSA continues to expand the SSI Asset Verification 

System developed and operated by Accuity. SSA’s stated goal is to expand the process on a national basis as they continue to study the overall SSI Benefits Program. 

The Accuity Asset Verification System has potential benefits for a myriad of government programs administered at both the federal and state level. This would include public benefit programs such as Medicare, Medicaid, Food Stamps and Child 

Care programs. 

Accuity’s proven Asset Verification System can be implemented to assist other 

public benefit programs by providing the secure infrastructure to connect the government sector to the financial institution community. The Accuity system can allow 

federal and state agencies to simply and effectively provide external data matches 

for recipient and/or applicant eligibility determination. 

As Dennis Fecci, former Chief Information Officer, New York City Human Resources Administration, discussed with the Subcommittee in recent testimony, there 

are many challenges facing states and localities as they develop eligibility determination systems. The use of new technologies and data matches such as those perfected by Accuity can ensure that only eligible person receive needed benefits and 

significantly decrease improper payments and improve federal stewardship 

We appreciate this opportunity to inform the Committee’s deliberations and would 

be pleased to provide any additional information regarding the Accuity Asset 

Verification System upon your request. 

Brent Newman 

f 

Managing Director 

Statement of SAS Institute Inc., Cary, North Carolina 

Thank you Chairman Herger, Ranking Member McDermott, and members of the 

Panel for this opportunity to provide comments on ‘‘The Use of Technology to Improve Public Benefit Programs’’. SAS commends the subcommittee for beginning 

this important line of inquiry. The witnesses that provided testimony at the hearing 

raised important considerations with respect to how technology might be used to 

better deliver government services. We respectfully offer, however, that this is only 

the first part of the discussion, albeit an important first step. As described in greater detail below, technology can and should be used to help government decisionmakers not only administer their programs more effectively and efficiently, but to 

ensure that their programs are being properly administered in the first place. 

Introduction 

With tight budgets and increasingly restricted resources, government agencies 

strive to work better, faster, and smarter. As noted in detail by the witnesses, technology can be used in a myriad of ways to help achieve this mandate. One example 

that was given was the use of ‘‘smart card’’ technology to ‘‘better track’’ services 

being provided to children. Technology increases the availability of this service data, 

yet the data alone and without context, actually provides little informational value. 

It cannot provide any insight into whether the program is serving its intended beneficiaries or meeting its program objectives, or whether the demands or requirements 

for the program may change under different future scenarios. We offer for consideration by the committee that the application of technology can provide robust answers to these questions and, by doing so, can help decision-makers make better 

programmatic decisions for the future while targeting and eliminating areas of 

fraud, waste, abuse, and improper payments. Just this month, GAO released a report discussing the need for coordination between federal and state governments to 

report on improper payments within federal programs administered by the state. 

While SAS has helped many agencies with data integration and advanced analytics for an array of business problems, in the essence of brevity, we have chose 

to focus our response on a few areas under the subcommittee’s jurisdiction, including improper payments, purchase card fraud, and Medicare/Medicaid fraud. 

65 

About SAS 

SAS Institute Inc. is the world’s largest privately held software company; our vision is to deliver strategic value throughout public, private, and government organizations. We are the market leader in providing a new generation of business intelligence software and services that create true enterprise intelligence. Enterprise Intelligence optimally integrates individual technology components within your existing IT infrastructure into a single, unified system. The result is an information flow 

that transcends organizational silos, diverse computing platforms and niche tools— 

and delivers new insights that drive value for your agency. 

SAS solutions are used at about 40,000 sites, including 96 of the top 100 companies on the FORTUNE Global 500. Working through its Government Operations 

division, SAS provides world-class solutions for civilian, defense, state and local government organizations. SAS software is used at all 15 U.S. federal departments, 

within all 50 states and at many local governments. For three decades, SAS has 

been giving customers around the world The Power to Know . 

Overview of improper payments, fraud, waste, and abuse 

Billions of tax dollars paid by hardworking citizens are lost each year due to improper payments, fraud, waste and abuse. Governments at all levels—federal, state 

and local—face the enormous challenge of rectifying this situation. They are under 

scrutiny by the President, Congress, state legislatures and taxpayers. Government 

agencies now are being held accountable for the misuse of funds originally intended 

to provide services and programs to citizens. 

This scrutiny is a primary driver for agencies to determine anti-fraud strategies. 

The call for accountability also requires that agencies consider and find answers to 

complex questions. For instance, how can the agency not only uncover fraud but 

stop fraudulent or ineligible payments before they are paid? Prevention requires a 

different strategy and process for predicting the likelihood that a transaction is improper or fraudulent. In addition, prevention is more cost-effective than recouping 

payments that have already been issued. The use of analytics can provide government agencies with the robust capability to prevent improper payments, and can 

also be utilized to help enforcement with recoupment once the payment has been 

made. 

What can agencies do to improve collection rates? How do they increase the productivity, effectiveness and efficiency of their auditors and investigators? By identifying a prioritized list of accounts that have a high likelihood of being fraudulent, 

agencies can optimize investigators’ time and increase the funds collected. These are 

just a few objectives of an anti-fraud strategy. 

‘‘Building an Anti-fraud Strategy’’ (this topic will be covered in a later section) discusses these tactics and other strategies for creating a comprehensive, continuous 

process to curtail fraud, waste, abuse and improper payments. 

Improper payments 

The Government Accountability Office estimates that $38 billion was lost to improper payments in 2005 alone. Eliminating improper paymentsis a key component 

of the President’s Management Agenda. In fact, FY 2004 was the first full year of 

the Improper Payments Information Act (IPIA) implementation. The IPIA and the 

Program Assessment Rating Tool (PART) require agencies to identify and resolve 

improper payment and resource productivity issues or run the risk of budget cuts. 

Agencies are feeling the pressure of increased accountability for the misappropriation of funds. 

After all, this misuse depletes money from services and programs for citizens who 

rely on the government for help. With rising costs for programs and services such 

as healthcare and an aging baby boomer population, agencies are increasing spending and, thus, increasing their vulnerability to improper payments. In fact, for programs with estimated improper payments exceeding $10 million, agencies are required to report certain information to Congress including the causes of the improper payments, actions taken to correct those causes and the results of those actions. 

Many public and private entities in the states are responsible for administering 

federal programs that report on improper payments, including support for millions 

of low-income families, people on disability, those out of work and children who need 

medical care. Programs such as the Temporary Assistance for Needy Families 

(TANF) and the Child Care and Development Fund (CCDF) are administered by 

state agencies; these programs expend about $34 billion in state and federal funds 

annually. The GAO recently reported on the importance of minimizing improper 

payments in this area, but stated that the U.S. Department of Health and Human 

Services (HHS), which oversees these two programs, is hampered by a lack of adeVerDate Aug 31 2005 00:35 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00069 Fmt 6633 Sfmt 6621 E:\HR\OC\30442.XXX 30442
66 

quate information on the internal controls in place within each state to identify and 

prevent improper payments. 

HHS programs are not the only areas where states determine eligibility and disburse funds, however. Another sizeable area for improper payments is unemployment insurance. The U.S. Department of Labor randomly reviews state unemployment insurance claims and estimates that 

2.5 percent of benefit overpayments in 2004 were fraud-related. On average, this is nearly a $5 million problem in each state. 

Purchase card fraud 

In 2001, the GAO testified and reported that significant weaknesses in internal 

controls made agencies vulnerable to fraud, waste and abuse due to inefficient purchasing actions. Since then, numerous GAO reports have cited agencies for inadequate control resulting in fraud, waste and abuse. The government is held liable 

for the value of each purchase card transaction. In addition, there has been steady 

growth in the amount charged to government purchase cards, from $1 billion in FY 

1994 to $16.4 billion in FY 2003, a 1,540 percent increase in just eight years. 

Although it is difficult to track compliance, agencies face the risk of a GAO audit 

and testimony of the audit’s findings before House or Senate subcommittees. Thus, 

government agencies need increased oversight of purchase card management and 

the ability to quickly identify purchase patterns that indicate misuse, whether intentional or unintentional. Improved management tools, along with an overall program of polices, procedures, disciplinary actions and accountability, can lead to 

fraud deterrence and help to achieve a culture of compliance. 

Medicare and Medicaid fraud 

The GAO estimates that of the $1.7 trillion Americans spend on healthcare each 

year, between 3 and 10 percent is fraud-related. The National Health Care AntiFraud Association offers a similar estimate of between 5 and 10 percent. That 

amounts to a $51 billion to $170 billion problem nationwide. At the same time, demand for Medicare and Medicaid services will only grow substantially with the 

aging baby boomer population. In addition, Medicare accounts for nearly half of the 

improper payments reported in FY 2004. 

Fraud, waste, abuse, and improper payments have plagued the U.S. healthcare 

system since its inception. These issues have caused substantial financial losses to 

states and the federal government. The result is that budget resources are diverted 

from citizens who rely on and expect healthcare and services. Meanwhile, ’’bad actors’’ are becoming more sophisticated and savvy with their techniques. More advanced fraud controls, better tools, and enhanced technology are needed to 

proactively and continuously uncover and deter these practices, prosecute offenders, 

recoup misdirected funds, with the ultimate goal of providing more and better services to eligible recipients. 

Each step in the complicated healthcare billing process is vulnerable to fraud, 

waste, abuse, and improper payments. Healthcare providers themselves have taken 

advantage of the system for illegal or unethical financial gain. For example, many 

cases have been found of overbilling, double-billing, or upcoding in order to bilk the 

system. Analytics can help government agencies detect and deter such behaviors by 

uncovering patterns of suspicious activities and predicting or forecasting future patterns and behaviors. It thus can provide agencies with a powerful tool to prevent 

improper spending before it occurs. 

What’s Working 

Government agencies and commercial organizations around the world are working 

to detect and prevent fraud, improper payments, waste, and abuse. Below are two 

stories that describe a few of the challenges that real government and private industry organizations face and the best practices they apply to overcome a variety of obstacles. 

Case study: U.S. Offic eof Personnel Management 

One example of success in the federal government involves the U.S. Office of Personnel Management (OPM). The OPM Office of the Inspector General is responsible 

for conducting a nationwide program of audits on the more than 400 health insurance companies participating in the Federal Employees Health Benefits Program 

(FEHBP). The program serves more than 9 million federal employees and their families. The Office of the Inspector General’s challenge is to determine which claims 

represent instances of fraud, waste or abuse. Using SAS, OPM identifies bogus 

claims or administrative problems in healthcare claims that result from illegal activities. As a result, OPM officials estimate a 50 percent time savings; this in turn 

frees the auditors’ time to perform other analyses. 

67 

While this example describes how a government agency uses targeted technology 

solutions to successfully meet specific challenges, models of excellence in the fight 

against improper payments do not exist solely in the public sector, nor must they 

be confined to such targeted approaches. Both government and commercial organizations are applying complete solution packages that address the challenge of improper payments enterprise-wide. 

Case study: HSBC Holdings plc 

HSBC Holdings plc is one of the largest banking and financial services organizations in the world. 

With a credit and debit card portfolio of more than 100 million cards, HSBC is 

also one of the world’s largest plastic card issuers. Each year, banks and financial 

organizations across the globe lose more than $2 billion to payment card fraud. The 

challenge for HSBC was to detect and deter rapidly evolving types of payment card 

fraud. In July 2005, SAS and HSBC announced a long term partnership to transform the payment card fraud-detection market. 

HSBC will be rolling out the enterprise-wide fraud solution in all of its key markets, and it will become its key defense in the fight against credit card and debit 

card fraud. The major benefit for HSBC will be the significant reduction in fraudrelated losses, while also lowering the overall cost of fighting fraud by having a common platform operating in all of its markets. By handling fraud in a faster, cleaner 

and more effective way, HSBC will be able to provide even better service to its customers because this approach is inherently customer-centric. Customers shouldn’t 

have to experience any interruption of legitimate transactions; they will only realize 

the benefits of preventing those activities which are fraudulent. In addition to 

happier customers and earning the reputation of providing the most secure card in 

the world, HSBC’s shareholders are likely to find the measurable results to be very 

pleasing indeed! For more information, read ‘‘Fraud Detection: In real Time. Right 

Now’’. 

This example describes how a commercial organization uses targeted technology 

solutions to successfully fight payment card fraud. The same technology solutions 

would be applicable within government agencies to detect and deter purchase card 

or travel card fraud and improper payments. 

Building an anti-fraud strategy 

The diversity of challenges and solutions represented in the examples of OPM and 

HSBC illustrates the fact that—when it comes to combating fraud, waste, and 

abuse—the anti-fraud strategy and technology framework that is applied must be 

flexible enough to address the unique objectives and business processes of each 

agency as well as the increasingly devious and evolving mechanisms that fraudsters 

employ. As fraud schemes constantly change, fraud detection requires continuous 

vigilance. The process and strategy for fraud detection need consistent monitoring 

and refinement. A wide range of approaches to combat fraud are needed—ranging 

from a variety of individual solutions that organizations can implement in an 

iterative manner for meeting targeted objectives to an enterprise-wide solution, such 

as the approach employed by HSBC, in which a customer receives a complete solution package. 

Regardless of the specific approach, it is imperative that agencies establish an analytical and business intelligence framework for fraud detection—an enterprise intelligence platform. The enterprise intelligence platform is the foundation upon 

which organizations can implement other strategies and solutions. Once this platform is established, agencies can take the next step: extending specific fraud detection efforts to enhance operations across the enterprise through financial management and performance management solutions. By supplementing the enterprise intelligence platform with financial intelligence and performance management, agencies can tie together all the essential areas of fraud management and organizational 

management into a cohesive strategy for control, discovery, investigation 

prioritization and deterrence. 

The enterprise intelligence platform 

An enterprise intelligence platform includes several components, or steps, that 

serve as a proven framework to assist government agencies as they institute business strategies and technology solutions to eliminate improper payments, fraud, 

waste and abuse. The following steps in the framework are always evolving. For example, if the data analysis process discovers a new fraud pattern, new information 

about the pattern needs to be captured in the data for further use in analysis. However, by considering each component of the framework in terms of the individual 

capability it provides as well as how each component fits into a larger solution plan, 

government leaders can construct a comprehensive strategy. 

68 

Improve data effectiveness 

Improving data effectiveness means giving government organizations a consistent 

version of the truth. This enables critical decisions to be made on accurate, concise, 

trustworthy information more efficiently and with less risk. Often, the most immediate challenge that agencies face is that data systems containing information relevant to fraud, waste, and abuse cannot share information with one another. This 

often results in an incomplete, inaccurate view of data that allows errors or fraudulent actions to ‘‘slip through the cracks.’’ By using data integration solutions along 

with sophisticated data matching and standardization routines that reach across 

multiple platforms and formats, agencies can create a single version of the truth so 

that the information upon which analyses and decisions are made is accurate and 

complete. 

Another essential step in reducing error and fraud is to verify the identity, eligibility, and authentication of payees. This ensures that the right people are receiving 

the right services. Using data quality solutions, organizations can standardize and 

augment data while identifying duplicate names, addresses and other identifying information, thereby validating key citizen information. 

This process of authenticating the citizen also reduces overpayments, underpayments, and duplicate billings. 

For example, North Carolina Department of the State Treasurer is using data 

quality to support the NCCash program, which was implemented to meet mandates 

for delivering unclaimed property dollars to often unsuspecting owners. This program requires accurate information to ensure funds are properly paid to citizens. 

Using intelligence solutions, the Department quickly matches names and addresses 

from different data sources and on different platforms for accurate identification and 

location of owners. For more information, read ‘‘Forgotten, but not gone: N.C. state 

treasurer returns unclaimed cash using SAS  Data Quality’’. 

Visualize data and analyze outliers 

Using various visualization and analysis techniques, agencies can determine visual patterns and aberrations. Outlier analysis is often used to determine the ‘‘lowhanging fruit.’’ These are the obvious activities—such as billing for more than 24 

hours in a day—that need immediate perusal. 

Next, it is important for agencies to monitor information to identify fraudulent activity. Once fraudulent activity is identified, agencies can institute business rules 

to prevent the fraud from recurring. Many agencies have business rules associated 

with documented fraud schemes. As part of the anti-fraud strategy, these rules can 

be automated and scheduled to run. They will flag cases that need investigative follow-up. In addition, agencies can analyze data across peer groups to determine abnormalities. For instance, physician-billing practices can be compared to physicians 

in the same field for the same diagnostic codes to determine unusual practices. 

Other techniques can add value in determining unusual patterns or practices. Sequence analysis and association analysis uncover events that tend to occur together or in sequence. Link analysis can identify relationships among citizens, organizations and services, thereby uncovering interactions that might need closer inspection. For example, link analysis can uncover personal injury attorneys who repeatedly send clients to the same clinics or doctors for diagnosis. 

All of these techniques mentioned above are integral parts of an ongoing, continuously improving monitoring process. 

Enhance audit and investigation effectiveness 

With analytical intelligence, fraud detection is taken one step further to improve 

audit and investigation effectiveness. A variety of advanced analytical techniques 

can be utilized depending on the agency’s data. If the agency has not captured data 

surrounding known fraud schemes, then cluster analysis can used. This analysis 

determines unusual aberrations within the data. Once these patterns are uncovered, 

they need further scrutiny to deem them fraudulent or not. 

However, if an agency has documentation of known fraud patterns, then predictive analytics can be used to identify and predict future fraud risks. Agencies 

can ease the burden of validating false positives, maximizing recovery and prosecution while reducing processing time and recovery costs. 

Analyzing both structured and unstructured data with data mining and text mining respectively helps agencies to use both their quantitative and qualitative data 

to better identify fraudulent claims. By doing so, they are able to stop fraudulent 

payments before they are paid. Additionally, they can prioritize cases that appear 

to be improper for further investigation. Thus, agencies can rapidly detect new fraud 

schemes and patterns before they cause major problems. 

69 

Once analysis has determined a likely fraud scheme, the next steps are audit and 

investigation. 

After fraudulence is determined, these new fraud schemes can then be incorporated into the known fraud business rules, as discussed previously. Then, the 

process begins again. Fraud detection is an ongoing, cyclical process of analysis and 

refinement. 

Spark insight with business intelligence 

A vital piece of developing an overall strategy to eliminate fraud, waste, and 

abuse is applying business intelligence (BI). BI empowers organizations to deliver 

insight to the right people, at the right time and in the appropriate form to help 

its people make effective decisions with greater confidence. This is instrumental 

when it comes to fraud detection, since inaccurate information or delays can leave 

agencies at risk. BI capabilities provide a flexible and extensible set of business 

interfaces to its information and supporting services, turning the information that 

has been collected and enriched into intelligence that it can quickly utilize. Whether 

an agency requires electronic distribution of reports, interactive query environments, content delivery via a Web-based portal, or publish-and-subscribe channel 

distribution, BI provides seamless access to reports and analysis, saving time and 

driving results for the agency. 

Financial management and performance management 

Agencies are not only concerned with detecting and deterring fraud. They also 

want to ensure that their processes are effective. In addition, monitoring expenditures allows for tightened internal controls on costs. Going beyond data analysis and 

analytics enables agencies to scrutinize financials and processes across the enterprise. Vigilance across multiple organizational functions and throughout the agency 

creates a culture of accountability, compliance, and deterrence. 

Optimize financial management 

The American public wants wasteful spending stopped. There is public outcry at 

reports of expenditures of tax money on frivolous items or preventable losses. 

With financial management, agencies develop a consistent approach to the spectrum of financial reporting requirements. This ultimately enables greater accountability and transparency and reduces public scrutiny. 

Financial management enhances the reporting and control environment with financial statements that enable agencies to receive a clean audit. By proactively 

managing risk, agencies can examine risk before complications arise. Early intervention in the cycle reduces the risk that funds will be misappropriated. Applying 

a financial intelligence strategy, the U.S. Department of the Treasury received its 

first unqualified or ‘‘clean’’ auditor’s opinion on its department-wide financial statements in 2001. Since then, the agency has continually received clean audit opinions. 

Tightening internal controls is another way to reduce fraud—so much so that 

OMB has revised its Circular A–123 to include additional internal control measures 

for the federal government. OMB decided that some of the existing controls were 

weak. Furthermore, the influence of Sarbanes Oxley in the commercial sector 

prompted the agency to make significant changes to the circular. 

Therefore, it is highly likely that the Government Auditing Standards (the Yellow 

Book) for 2003 will be revised accordingly to incorporate requirements set forth in 

the revised Circular A–123. 

Once adopted, these new rules will greatly influence how government organizations manage and document internal controls. This renewed focus on an internal 

control framework is intended to ensure that control risk is mitigated, thereby reducing opportunities for fraud to go undetected. 

Agencies will have a clearer picture of how effectively funds flow throughout their 

organizations, where possible weakness or process gaps exist and who might be affected. 

Measure program performance and monitor fraudulent activity 

Incorporating a performance management strategy helps agencies monitor key 

performance metrics to determine program effectiveness and efficiency. This allows 

the agencies to define metrics in a dashboard environment and to monitor activities 

and threats proactively in order to curtail fraud. As a result, government leaders 

can identify sources of organizational failure and can isolate best practices that lead 

to success. A performance management solution provides a strategic heads-up that 

keeps organizations on course and stops fraudulent activity before it occurs. 

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Fraud detection: An iterative process 

The management and control of improper payments and fraud requires an 

iterative process of constant, consistent monitoring. Each agency’s unique culture 

and business processes require the implementation of an anti-fraud strategy that is 

flexible to meet both the variety of internal business processes and the ever-changing ways that fraudsters try to exploit those processes. 

In fact, there are various approaches to counteract fraud, waste, abuse, and improper payments, ranging from solutions for which agencies implement individual 

strategies in a step-by-step manner to address targeted challenges to an enterprisewide approach in which agencies receive a complete solution package for solving a 

variety fraud challenges across the organization. 

No matter where the agency is in developing an anti-fraud strategy, leaders can 

identify and implement key technology components and solutions that allow them 

to use and augment current infrastructure resources and refine and monitor existing organizational processes to stop fraud, waste and abuse ‘‘before’’ money is lost. 

Summary and conclusion 

SAS is committed to working with government to ensure that hardworking taxpayers receive the benefits and services they deserve, when they need them. The 

SAS anti-fraud strategy curtails fraud, waste, abuse, and improper payments so 

agencies have the resources to fund programs, provide services to citizens, and ultimately judge whether these programs and initiatives are meeting their goals and 

are being administered effectively. 

SAS commends the subcommittee for the attention it has brought to the use of 

technology in enhancing service delivery. As a recommendation, SAS submits these 

written comments to stimulate further dialogue and consideration as to other benefits that technology can bring to bear—notably in ensuring that taxpayer dollars are 

indeed being spent wisely. SAS has a wealth of history and a record of accomplishment in using technology—notably enterprise-wide technology—to help reduce instances of improper payments by using data to predict, prevent, and deter unacceptable or ineligible behaviors and patterns. We would welcome the opportunity to provide more insight to the subcommittee as to our experiences, and commend to the 

subcommittee’s attention a number of our white papers, including ‘‘Combating Improper Payments, Fraud, Waste and Abuse: A Best Practices Approach for Government’’. 

f 

Statement of Visa Inc. 

Visa appreciates the opportunity to submit this written testimony to address the 

important issues raised by today’s hearing on the use of technology to improve public benefit programs. 

The Visa Payment System, of which Visa U.S.A. is a part, is a leading consumer 

payment system, and plays a pivotal role in advancing new payment products and 

technologies, including the growing category of prepaid cards. Visa U.S.A. is an association of 14,000 U.S. financial institutions who issue credit, debit and prepaid 

cards and who work with merchants to ensure the acceptance of these cards for 

transactions. Visa itself does not have relationships with cardholders or merchants. 

This is important for understanding the use of prepaid cards for government benefit programs. While Visa establishes the technical platform for the use of prepaid 

cards and the standards that enable the cards to be used at merchant locations and 

ATM machines, it is the financial institutions who work directly with state, local 

and federal agencies to issue cards to government beneficiaries. The terms and conditions of the issuance of the cards, including terms and conditions to the cardholders, are set by contracts between these financial institutions and their government agency customers. There are a variety of possible contractual relationships 

and a large degree of competition among financial institutions interested in serving 

this growing market. 

The prepaid Card Market 

The growth of prepaid cards is one element in the electronicifcation of payments. 

In December 2004, the Federal Reserve System announced that electronic transactions had surpassed checks as the consumer’s preferred noncash method of payment. Fifty-five percent of these noncash transactions were completed using a debit 

or credit card, through an automated clearing house (ACH) transaction, or an elecVerDate Aug 31 2005 00:35 Dec 12, 2006 Jkt 030442 PO 00000 Frm 00074 Fmt 6633 Sfmt 6621 E:\HR\OC\30442.XXX 30442
71 

tronic benefit transfer (EBT). The remaining forty-five percent of these transactions 

were made by check. The trend toward electronic payments is well underway. 

Prepaid cards can bring the benefits of electronic transactions to consumers who 

are unserved or underserved by financial institutions, that is, to those without a 

credit card or a checking or a savings account that can be accessed through a debit 

card or the ACH. Prepaid cards that access the same electronic payment networks 

as credit and debit cards can be used to meet the financial transactions needs of 

the unbanked in a highly efficient fashion. These prefunded financial services products are used to withdraw monies through ATMs, make point-of-sale debit transactions, pay bills, and transmit funds through account-to-account electronic transfers. 

Prepaid payment cards are a broad series of products which represent the expansion of choice and convenience in how consumers, businesses and the public sector 

make and receive payments. While the category started with consumer-to-consumer 

gift cards, it has expanded to include: 

• A payroll card, direct deposit alternative to both employers and employees 

• Disbursement of government benefits programs like child support, unemployment benefits and other social services 

• Consumer management of benefits funds including flexible spending accounts 

(FSA) and healthcare reimbursement accounts (HRA) 

• Corporate rewards, rebate, incentive or bonus programs 

Prepaid cards are different from both credit cards and debit cards. Credit cards 

offer consumers the ability to draw on a line of credit and pay their bills later— 

at the end of the month or over time. Debit cards provide customers with convenient 

access to their depository account to pay for purchases or to obtain cash at ATM 

machines. Prepaid cards provide customers with access to a pre-defined amount of 

money without drawing on a traditional banking account. 

The funds associated with a prepaid card are stored in a central location by the 

financial institution that issues the card. There is no value on the card itself. The 

card functions as an access device to the funds. 

In a face-to-face point of sale transaction, the card is swiped at a regular point 

of sale terminal. The merchant does not need to install special point of sale equipment, and no PIN number is entered. The transaction is routed over the Visa network, and is approved if the cardholder has sufficient funds to cover the purchase. 

ATM access is accomplished through the use of the card in conjunction with a PIN 

number. Visa prepaid cards are accepted wherever Visa debit cards are accepted— 

worldwide, online or offline. 

Some prepaid cards like gift cards are not reloadable. They are designed to be 

used until their value is exhausted. Other cards such as payroll cards or government benefit cards are designed to be reloaded on a regular basis. 

Visa estimates that the current market for all bank-issue prepaid cards (Visa, 

MasterCard and American Express) is less than $25 billion. The bulk of that is government benefit cards. The market is in its infancy now, but the potential growth 

over the next several years is likely to be substantial. 

Government Prepaid Card Programs 

Visa estimates that there are approximately 80 million underserved customers 

who receive about $1 trillion in wages and government benefits in the form of 

checks. This delivery method imposes unnecessary costs on the recipients and it is 

costly and inefficient for the entity disbursing the funds. The prepaid card is a way 

to improve the efficiency of this market. 

The first government prepaid card program was implemented in 2002. The program used a reloadable prepaid Visa card to disburse Child Support payments. The 

program was with the state of Colorado and the issuer was U.S. Bank. There are 

now 27 states that are using or are in the process of using a reloadable prepaid Visa 

card to disburse payments such as Child Support, Unemployment Insurance, Temporary Assistance to Needy Families and Payroll. See the attached chart for a current list of programs. 

States are quickly adopting this method of disbursing payments to underserved 

recipients because of the significant cost savings and increased processing efficiencies compared to checks (cost savings from postage, check handling, processing 

lost/stolen checks and paying caseworkers to track down recipients). Recipients also 

like the benefits of receiving payments via direct deposit to a prepaid Visa card compared to receiving their benefit in the form of a check. They receive faster access 

to their funds and do not have to worry about paying check cashing fees. Additionally, unlike cash, if the card is lost or stolen, cardholders receive a replacement card 

72 

and are protected from unauthorized transactions with Visa’s Zero Liability program. 

Visa estimates that there are about 2 million prepaid Visa cards in use by underserved customers through payroll cards, government benefit cards and general purpose prepaid cards. Visa issuing banks have issued about 1 million of these prepaid 

as part of government benefit programs, and about 600,000 of them are currently 

in active use by program beneficiaries. 

Overall a prepaid card program saves money for the state agencies. There are, 

of course, expenses associated with a prepaid card program. For instance, there are 

costs, which vary by program, for producing and mailing prepaid cards and educating beneficiaries on their use. The allocation of these costs is subject to the contractual agreement between the state agencies and the financial institutions issuing 

the cards. In some cases, the state agency does not have a direct payment for these 

production and distribution costs. The results from the existing prepaid programs 

show cost savings for the state agencies from the switch away from paper check delivery of benefits, even taking into account these and other costs of administering 

the program. 

Consumer protections can also be an expense of administering the program. The 

cards are protected by zero liability, and are subject to replacement if lost of stolen. 

But these costs are minimal. Fraud losses from government prepaid Visa cards are 

low and stable, averaging less than $.03 cents for every $100 of transactions. In 

Visa’s experience beneficiaries are protective of their card; they like the benefits and 

convenience of receiving payment through this method. Visa has not seen a lot of 

instances of lost or stolen cards in these government prepaid programs. 

Benefits to Program Recipients 

• Visa prepaid cards are accepted at merchant locations and ATM machines 

worldwide. 

• Visa prepaid cards are Visa cards, and are subject to Visa operating rules and 

regulations, including all the Visa Consumer Protections. 

• Zero liability applies. If a Visa prepaid card is used fraudulently, without the 

cardholder’s authorization, the cardholder is not liable for the fraudulent transactions. 

• Visa prepaid cards can be replaced if lost or stolen. The cardholder simply follows the normal procedure for notifying the issuing financial institution, and 

the old card will be canceled and a new one issued. 

• Funds are available immediately after the card is loaded. There is no waiting 

period as there often is with check disbursements. 

• Cardholder has the convenience, prestige and versatility of a Visa card. This is 

especially important to those who do not have a relationship with a financial 

institution. 

• Cardholders have safer, less expensive access to their money. Those without a 

bank account do not need to go to risky, costly check cashing locations to cash 

their payroll or government benefit checks. 

Check-cashing costs are especially troublesome for the unbanked and one of the 

major advantages of prepaid government benefit programs is to enable unbanked 

beneficiaries to avoid these fees. They can be relatively inexpensive in some states 

such as New York State, where fees are capped at 1.5 percent of the value of the 

check. In some states, however, fee limits are much higher and in eighteen states 

no fee limits are imposed. In addition to check-cashing fees, unbanked customers 

will pay fees for bill payment services, money orders, and money transfer services. 

Benefits to Government 

• Prepaid cards reduce costs. There are no paper checks to issue, or re-issue if 

they are lost or stolen. 

• Funds disbursement is superior to paper check. The funds reach employees or 

beneficiaries in a faster, safer and more secure electronic fashion. 

• Prepaid cards enhance risk management. Fraudulent use can be detected much 

earlier by sophisticated Visa fraud detection systems and those operated by the 

issuing financial institution. 

• Prepaid cards provide better tracking and reporting of card use. This enables 

cardholders and government to understand the pattern of spending with the 

cards, thereby improving budgeting and other expenditure control systems. 

73 

State Prepaid Programs (as of 3/7/06) 

State Use Program Status Issuer 

Alabama Child Support In rollout Amsouth 

Alaska Child Support Implemented JPMC 

Arizona Child Support Implemented JPMC 

California Child Support In implementation BofA 

Colorado Child Support Implemented USB 

Iowa Child Support Implemented USB 

Kentucky Child Support In implementation USB 

Louisiana Child Support In rollout JPMC 

Louisiana Unemployment Implemented JPMC 

Maryland Child Support Implemented BofA 

Massachusetts Child Support Implemented JPMC 

Michigan Child Support In rollout USB 

Minnesota Child Support Implemented USB 

Nebraska Child Support Implemented USB 

Nebraska Child Care Credits Launch pending USB 

Nebraska State Employee Payroll In rollout USB 

Nevada Child Support Implemented JPMC 

North Dakota Child Support Implemented USB 

North Dakota TANF Implemented USB 

Ohio Unemployment In implementation USB 

Oregon Child Support In rollout USB 

Oregon Unemployment Implemented USB 

South Dakota Child Support Implemented USB 

Tennessee Child Support Implemented JPMC 

Texas Child Support In implementation WFB 

Washington Child Support Implemented USB 

West Virginia Child Support Implemented BB&T 

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