Human Services Integration: Results of a GAO Cosponsored Conference on Modernizing Information Systems
Released: 2002-01-31T00:00:00

Letter

Background

The conference, whose theme was “Realizing the Promise of Technology: Modernizing Information Systems for Human Services,” was co-sponsored by GAO, the Rockefeller Institute, the National Health Policy Forum, and The Finance Project (Welfare Information Network). To promote an informed dialogue at the conference, invitations were sent to selected individuals from four key sectors involved in developing information systems for human services—the Congress, federal agencies, state and local governments, and information technology contractors—along with research organizations and foundations. Appendix II lists the names and affiliations of conference participants. State representatives included those with responsibility for program management as well as those with expertise in information technology. Participants from 14 organizations were asked to prepare papers for presentation at one of three panels—The Need for Systems Modernization, Possible Approaches for the Future, and State and Local Experiences. Appendix I contains the conference objectives, agenda, and Web addresses for each of the papers and briefing charts presented at the conference. Following the panel presentations, participants were separated into small groups on the first day to discuss the history, roles, and challenges of various sectors in systems modernization, and on the second day to propose actions that would best facilitate systems modernization. Assignments to each discussion group were made to achieve a mix of participants from diverse backgrounds.

Systems Modernization Needed To Better Meet Information Needs For Human Services

Presenters at the conference maintained that state information systems need to be modernized to better meet new information needs that have arisen from shifts in the objectives and operations of states’ welfare programs. Research on states’ systems has identified major gaps in their capabilities to support the implementation and oversight of welfare reform. In addition, many states are using large, mainframe systems that are old, which compounds the difficulty of meeting new information needs because these systems are limited in their ability to take advantages of recent innovations in technology. Innovations, such as Internet technology, offer significant opportunities for improving the delivery of human services.

Shifts in Welfare Program Objectives and Operations Place New Demands on Information Systems

With the advent of welfare reform, states’ programs for needy families with children have experienced dramatic shifts in their objectives and operations, which have created new demands on information systems, according to GAO assistant director Andrew Sherrill and Rockefeller Institute director Richard Nathan and senior fellow Mark Ragan.PRWORA placed a greater emphasis on the importance of work and established various signals to reinforce this emphasis, such as stronger work requirements and a 5-year time limit on federal TANF assistance to families. The shift from an income maintenance focus under the prior AFDC program to a service-oriented, self-sufficiency focus under TANF has significant implications for information systems. The technology challenge of welfare reform is to provide the information needed to integrate services to clients and track their progress towards self- sufficiency. To help needy families prepare for and obtain work, case managers need detailed information about factors such as family circumstances, job openings, and support services, which is very different from the information needed to issue timely and accurate cash assistance payments.

In many cases, states and localities have enhanced their efforts to partner with other organizations to serve needy families, which creates demands for sharing data across organizations. As welfare agencies focus on moving needy families toward self-sufficiency, workers are drawing on other federal and state programs, often administered by separate agencies, to provide a wide array of services. While local welfare agencies typically determine eligibility for TANF, food stamps, and Medicaid, other programs that provide key services to TANF clients may be administered by separate entities, such as housing authorities or education agencies. Most notably, because TANF has focused welfare agencies on employment, a focus that has long been the province of state and local workforce development systems, welfare agencies need to work more closely than before with workforce development systems. Finally, in many cases state and local welfare reforms involve a greater effort to partner with community organizations, including faith-based organizations, to meet the needs of low-income families.

Devolution is another factor that has contributed to the expansion of information needs for human services. Under PRWORA, states have greater flexibility in designing and operating their TANF programs and some states in turn have devolved substantial authority to localities for their TANF programs. As a result, state information systems will be called upon to support a potentially more diverse range of local program goals and operations. Moreover, providing automated support for localities is typically an evolving process, since local information needs can change as caseload composition changes, service strategies evolve, or new policy issues emerge.

Current Information Systems Do Not Fully Support Information Needs for Welfare Reform

Andrew Sherrill provided an overview of the research done by GAO, in collaboration with the Rockefeller Institute, on the capabilities of states’ information systems. This research, he said, highlights the need for systems modernization. In 1999, GAO surveyed state and local program administrators in 15 states on the overall extent to which their current information systems met different types of information needs for administering and overseeing welfare reform. GAO focused on three broad types of information needs: those for case management, service planning, and program oversight. Agency workers need information for case management to perform the full range of tasks involved in coordinating the various services provided to an individual client, such as making referrals to training and monitoring a client’s progress towards employment. Service planning, which is performed by local and state program administrators, requires aggregate information on the characteristics and service needs of the caseload to determine the appropriate services that should be made available for the caseload. Program oversight, which is performed by program administrators and oversight officials, requires aggregate information on relevant measures of program performance, such as job entries and job retention. The majority of the local officials that GAO surveyed reported that their current systems provided half or less of the information needed for each of the three types of information needs. Overall, state officials provided a somewhat higher assessment of system capabilities but still acknowledged major gaps in some cases.

Andrew Sherrill explained that GAO’s in-depth fieldwork at the state and local level in six states provided more detail about information system shortcomings. A major shortcoming, cited to varying degrees by officials in these states, is that some of the systems used by the agencies providing services to TANF recipients do not share data on these recipients, thus hampering a case manager’s ability to arrange and monitor the delivery of services in a timely manner. For example, local officials in New Jersey told GAO that data are not transferred electronically between the labor department, which tracks attendance of TANF recipients at work activities, and the welfare department, which imposes sanctions on TANF recipients who fail to meet work requirements. Consequently, in some cases, TANF recipients have received sanctions in error because the welfare department’s system could not obtain the needed data in a timely manner from the labor department’s system to verify a recipient’s participation in work activities. Another consequence of the lack of data sharing in the states GAO studied is that agency workers have had to input data for some items more than once because the data were not automatically transferred and updated from one system to another. Multiple entries of the same data not only reduces the time available for work directly with clients but also increases the risk of introducing errors into the data contained in information systems.

The extent to which states have established links among information systems for human services varies substantially. In the 15 states that GAO surveyed, the systems that support TANF eligibility determination are, in almost all cases, linked with the information systems for food stamps, child support enforcement, TANF work activities, Medicaid eligibility determination, and transportation subsidies. These links reflect federal mandates and enhanced federal funding for systems in these programs. In contrast, GAO found that information systems for other services that TANF recipients may need to facilitate their movement toward employment, such as job training, welfare-to-work grant services, vocational rehabilitation, job listings, and subsidized housing were generally not linked to systems for determining TANF eligibility. Some state officials and others attending the conference commented that changed rules governing interactions between welfare and Medicaid have also presented new demands for the modification of information systems. Under these rules, TANF recipients, unlike AFDC recipients, are not automatically eligible for Medicaid. Not only has more work been required to demonstrate the eligibility of TANF families for these programs, but more work has also been required to modify systems so that closures of TANF cases do not generate automatic closures of Medicaid cases, as has happened in some situations.

A second shortcoming of some information systems, which was voiced especially at the local level, was the limited ability to obtain data needed by program managers to meet their particular management challenges. For example, local officials at one site told GAO that data on the characteristics of TANF recipients in the state’s information system are often not available in a format that can be easily manipulated, so obtaining data depends on the technical expertise of the user. Overall, local officials cited a need for user friendly tools that provide the capability to generate a locally designed management report. In his comments on the presentation by Andrew Sherrill, Thomas Gais, director of the federalism research group at the Rockefeller Institute, said that the gaps in systems capabilities identified by GAO represent persistent problems that were also identified in earlier fieldwork by Rockefeller Institute researchers and in their follow-up fieldwork in 2000.

Age of Many States’ Systems Compounds Difficulty of Meeting New Information Demands

The results of a survey by the U.S. Department of Health and Human Services (HHS) cited in GAO’s presentation indicate that many states have been using old information systems. Of the states responding, 26 percent said that the systems they were using when TANF was enacted in 1996 had first become operational in the 1970s and 40 percent said that their systems had become operational in the 1980s. Many of these older systems are housed in large mainframe computers. The HHS report goes on to point out that generally accepted information technology standards assume that the average useful life of a large-scale computer system ranges from 5 to 7 years. Moreover, the report maintains that the age of states’ systems has limited their ability to take advantage of technological improvements because the underlying equipment and software platforms of these systems do not lend themselves easily, if at all, to technological advances because of basic incompatibilities. A conference participant commented that New York’s large mainframe system has not been modernized because it would be costly and time-consuming. Instead, the state operates a dual system, relying primarily on its mainframe, but with a separate system developed to meet new data reporting requirements. Conference presenters from New Jersey, North Carolina, Oregon, Utah, and Wisconsin noted that their states continue to use older mainframe systems to varying degrees, using upgrades and interfaces where possible, although they are developing new systems to enhance their capabilities.

The continued presence of these older mainframe computers reflects the historical role of the federal government in funding the development of such systems in the 1970s and 1980s, according to some conference participants. The major objectives of these systems were to increase the accuracy of eligibility determinations and cash payments, reduce error rates, and detect and deter fraud and abuse in major entitlement programs. While costs for systems development and operation were shared by the federal government and states, the federal government provided enhanced funding (i.e., more than 50 percent) in many cases. For example, states could receive federal matching funds for 90 percent of their development costs for approved welfare, Medicaid, child support, and certain child care systems. States could also receive federal matching funds of 75 percent for developing statewide food stamps systems, and in the early 1990s, for developing child welfare systems. In the mid-1990s, the federal government eliminated enhanced federal matching payments for all systems except child support and Medicaid management information systems for claims processing.

Information system contractors from the Human Services Information Technology Advisory Group (HSITAG) described various innovations in technology that they said offer significant opportunities for improving the delivery of human services. Today’s personal computers can process more data at lower costs, making it possible to automate even small service providers in the local community. Systems can be secured from outsiders using firewall technologies, and confidential information that is transferred among agencies can be encrypted, further increasing security. Telecommunications networks are more widely available, providing greater opportunities for data sharing among different programs that serve the same populations. The Internet and World Wide Web provide opportunities to link program applicants, recipients, case managers, and administrators to each other and to a wealth of information needed to achieve various objectives. Graphical user interfaces allow icons or pictures to be used as well as words, so it is easier to access and navigate systems from the computer screen, and the data accessible can be expanded to include photographs, sound clips, and movies that can facilitate program orientation, assessment, and training. Coding by location and mapping represent new capabilities available to program planners to target services to families and neighborhoods. Other technological advances make it possible to store and retrieve large volumes of data with greater efficiency at less cost than was possible a decade or more earlier to facilitate meeting reporting requirements and providing information for program oversight.

Systems Modernization Efforts Are Underway in Several States

Presenters from North Carolina, Oregon, New Jersey, Utah, and Wisconsin described initiatives that their states had undertaken to modernize information systems for human services. The initiatives—designed to meet the unique needs of each state—are in varying stages of implementation and generally share some common goals, such as enhancing service integration. The states faced a broad range of issues in developing and implementing their initiatives, which reflect the complexity and scale of information systems projects.

States’ Initiatives Seek to Enhance Service Integration and Program Management Through Expanded Data Sharing

While the states’ initiatives have a multitude of stated objectives, their central goals generally include providing enhanced automated support for service integration and program management. Gary Weeks, director of human services reform at the Annie E. Casey Foundation, discussed his experiences in promoting service integration as the former director of the Oregon Department of Human Resources. He said that many program recipients fail because they are among the least prepared to deal with the maze of human services bureaucracy and case management plans—in some cases multiple plans for a single recipient. His strategy in Oregon was to create a system in which each recipient had a single case management plan, based on an initial, comprehensive assessment and coordinated by a lead case manager who was supported by information systems that were linked. Creating such a system, he added, did not require cutting edge technology but rather getting agreement from all the right people on the recipient data that was most important, securing access to critical databases, and authorizing case managers to work with individualized recipient data. Richard Nathan and Mark Ragan of the Rockefeller Institute echoed this point in their presentation, arguing that service integration has been a longstanding aim of program officials, but that the real politics of human services—characterized by bureaucracies with their own cultures and politics—have made this difficult. They went on to say that information technology can allow human service providers to overcome the politics of program proliferation not necessarily through “one-stops”—co-locating staff from different programs at one-stop centers—but through “one-screen,” that is, making data from different programs available to a caseworker on a single computer screen.

With respect to the objective of improving automated support for program management, three of the states have developed or plan to develop large data warehouses or smaller data marts, that is, specialized databases that store information from multiple sources in a consistent format, usually for a specific subject area, and are separate from the databases used for daily business operations. Using data warehouses or marts, program administrators can generate customized management reports on request without slowing routine business transactions, including reports that track recipients’ use of government services over time and respond to varied requests for information from state legislatures, federal agencies, and research organizations.

While the information systems initiatives of the five states share similar broad goals, they vary in terms of stages of development, with North Carolina in the planning phase, Oregon in the pilot phase, and New Jersey, Utah, and Wisconsin fully operational. What follows is an overview of some of the distinctive aspects of each state’s initiative.

Bill Cox, director of information resource management at the state’s Department of Health and Human Services, described North Carolina’s comprehensive planning effort, the Business Process Re-Engineering Project.Recognizing that its current mainframe information systems are at the end of their life cycle, the state developed a model of a reengineered business process for human services to prepare for the development of a single, comprehensive statewide information system. This system would support a wide array of programs, including TANF, Medicaid, children’s health insurance program, food stamps, child care, child support, child welfare services, and adult services for families. The reengineered business process is intended to resolve a host of deficiencies with the current process, such as excessive paper-based processes, little access to “real-time” data, and minimal communications among agencies and partners. As part of the reengineering initiative, a contractor working with a team of state and county officials for 3 months examined current business processes and concluded that a minimal amount of time is actually spent assisting applicants and recipients while the majority of time is spent on administrative tasks. On the basis of the team’s recommendations, the state began implementing its initiative in June 2001, including the development of a data warehouse.

Gary Weeks of the Anne E. Casey Foundation outlined Oregon’s pilot initiative that uses information technology to support integrated service provision at Family Resource Centers in 4 of the state’s 36 counties. Workers from various agencies have been co-located at these centers, where families and individuals receive an initial comprehensive needs assessment, a single case management plan is developed with a lead case manager, and data on the family are available to agencies located at the center. To provide this shared data, the centers use a software tool called MetaFrame, which provides access on a caseworker’s computer screen to the separate databases for TANF, child welfare, and mental health and substance abuse systems. Caseworkers can obtain information from these databases on eligibility, services received, and case narrative notes in some cases, and thereby build their own comprehensive file on a client. Gary Weeks noted that the software tool’s capabilities are fairly rudimentary because they do not provide a single integrated database, but the tool provides caseworkers access to information in a fairly low-tech and relatively inexpensive manner. To overcome data confidentiality issues, applicants are asked to sign a release form at the time of their assessment that authorizes the sharing of their case file data for program purposes, and about 96 percent of applicants sign this form.

William Kowalski, director of the One Ease-E Link project at the New Jersey Department of Human Services, explained that a key aim of the initiative was to employ information technology to support the building of new cooperative relationships among the diverse providers of human services in New Jersey and thereby enhance service integration. The initiative seeks to accomplish this by providing hardware and software to counties so they can create county-level networks comprised of a multitude of public and private organizations, including nonprofits such as United Way organizations. Each county network is part of the larger One Ease-E Link network that includes a website with an eligibility screening tool, case management software, secure e-mail, discussion forums, document libraries, and resource directories. This network is also linked to a single database shared with three state agencies: the Departments of Human Services, Labor, and Health and Senior Services. The sharing of information is secured behind a firewall and protected by Public Key Infrastructure (PKI) technology that uses digital signatures and encrypts data. Counties that join One-Ease-E Link maintain their networks through fees they collect from member service providers. One Ease-E Link has been implemented by 17 of New Jersey’s 21 counties and more than 900 local service providers have become part of the network.

Russell Smith, deputy director of information technology at the Utah Department of Workforce Services, described Utah’s development of the UWORKS One-Stop Operating System. In 1996, the state created the Department of Workforce Services, which combined 25 programs from 5 different departments with the goal of merging job training, job development, and welfare-related services such as TANF, food stamps, and child care into a single efficient system. The new department inherited various computer systems that had supported each of the programs and recognized that it needed an integrated case management system that supported all of its programs. The One-Stop Operating System was developed to fill this need at nearly 50 one-stop employment centers throughout the state. The system uses Internet technology and has linkages with databases for program eligibility, job listings, job training, labor market information, and unemployment insurance. Job seekers can access services on their own by using a web browser or obtain help from state staff at the one-stop centers that offer multiple services under a single roof. To expand information for program management, the state has developed a data warehouse that can generate reports in response to on- line queries.

Paul Saeman, acting director of the workforce information bureau in Wisconsin’s Department of Workforce Development, explained how his state’s extensive information system has evolved in response to changes in program objectives and organization. The system serves two state departments that have split responsibility for human services programs.

His department is consolidating TANF and child care with other employment programs, while the Department of Health and Family Services is expanding benefit entitlement programs like Medicaid and food stamps. To support integrated case management and eligibility determination across these departments and programs, the state has built 22 subsystems that comprise the Client Assistance for Re-employment and Economic Support System (CARES). Teams of workers at one-stop job centers use the Case Manager’s Desktop Reference system to access CARES data and monitor participant eligibility and services received in 6 or more programs. A plan for sharing the CARES system and developing it in the future was established by the two departments after many months of negotiation. While CARES supports day to day program operations, it also feeds information into a series of small data marts and a larger data warehouse, called the Wisconsin Data for Operational Management (WISDOM), that are used for planning and reporting purposes. With the help of WISDOM, knowledgeable state and local users expect to be able to create hundreds of different reports in almost endless combinations for programs such as TANF, child care, and food stamps. In addition, CARES data compiled over time on families served by TANF and other programs is being inventoried, documented, and stored as part of the Wisconsin Program and Administrative Data and used for research and evaluation by state staff and the Institute for Research on Poverty at the University of Wisconsin.

States Confronted a Broad Range of Issues in Developing and Implementing Their Initiatives

The information systems initiatives of these states are complex and large- scale undertakings, and states faced a broad range of issues in developing and implementing their initiatives. Table 1 summarizes some of the issues most commonly reported by the state presenters and provides examples of responses taken to these issues. For example, these issues include obtaining support for the initiative, training system users, maximizing the useful life of the system, and managing the project effectively. These issues are not unique to the human services but are the general types of issues that arise in large-scale information systems projects.

Challenges for Systems Modernization Pertain to Intergovernmental Collaboration, Federal Funding Processes, and Project Management

Conference participants identified and discussed at length three key challenges for systems modernization: enhancing strategic collaboration among different levels of government, simplifying the cumbersome approval process for obtaining federal funding for information systems, and obtaining staff expertise in project management and information technology. These challenges were identified in the small group sessions and elaborated in greater depth in several of the conference papers.

Enhancing Strategic Collaboration Among Federal, State, and Local Governments

A key challenge to modernization and integration identified by conference participants is that of achieving greater strategic collaboration across programs and agencies and among levels of government. This challenge was articulated in the presentation by Sandra Vargas, Administrator of Hennepin County, Minnesota, and Costis Toregas, president of Public Technology Incorporated, who provided a local perspective on information technology issues. Vargas and Toregas reminded other participants of the importance of including localities when states and federal agencies develop plans for human service programs and information systems. In their view, the guiding vision in this area should be that of “local, state, and federal governments investing and executing together around a citizen-oriented service delivery model that produces measurable results” and they see technology as the tool to execute the vision. However, they maintained that what is still missing is a framework for achieving this vision that is truly collaborative. They added that greater collaboration could promote such outcomes as information technology investments that build on one another and work being performed by the level of government best able to accomplish the task.

Richard Nathan and Mark Ragan of the Rockefeller Institute echoed the need for more intergovernmental collaboration in their presentation. They maintained that many of the recommendations that have been made in the last decade to facilitate systems improvements have expressed a common theme—that federal agencies should improve and integrate their policies and procedures. However, in their view, it is not reasonable to expect all solutions to come from the federal government or that federal changes will necessarily and quickly result in better state and local information systems. They maintained that federal, state, and local governments, as well as technology contractors, all have a role to play in systems modernization for human services and that improvements are needed in the interactions of these partners. Nathan and Ragan proposed that an institute for the management of human services information systems be created that would, among other objectives, convene federal, state, and local officials across program areas to discuss ways to remove barriers to system development.

Some conference participants commented that the federal government could play a greater collaborative role in facilitating systems modernization. They explained that in the 1970s and 1980s, the Congress and federal agencies had taken the lead in encouraging states to invest in technology to improve services to needy families. But, they added that they currently see little coordinated federal effort to help states and localities invest wisely in technology, learn from the best practices as well as the mistakes of others, and tailor information systems to meet local needs. Instead, they are left with the impression that federal agencies primarily regulate rather than facilitate systems development for human services, and do so in a narrow context, prescribing details rather than providing broader strategic guidance.

Another area cited in which the federal government could play an improved collaborative role pertains to the enactment of legislation that has implications for state systems. Some conference participants commented that in certain instances, federal legislation is enacted that does not anticipate adequately the time and cost required to develop or modify state information systems. For example, several conference participants noted that legislative deadlines for systems implementation often follow a “one size fits all” approach that places all states in competition for a limited number of private contractors and fails to accommodate differences in state capabilities. Another participant said that states do not receive sufficient federal funding for the costs of providing benefits to needy families through electronic benefit transfers. Several participants also cited the extensive efforts required of diverse state agencies to re-examine the privacy and security of their automated data as a result of the passage of the Health Insurance Portability and Accountability Act of 1996 (P.L. 104-191).

Simplifying Cumbersome Approval Process for Obtaining Federal Funding

Obtaining approval for federal funding of state information systems development and operations can be a slow and burdensome process that delays project implementation, according to various participants at the conference. Participants cited problems with both the overall approval process for obtaining funding—the advanced planning document (APD) process—and the cost allocation component of this process. As shown in table 2, states must submit required documents under the APD process and receive federal approval from the relevant federal agency to obtain federal funding for systems development for Medicaid, food stamps, child welfare and child support enforcement. An APD is not required if TANF funds only are used for a project, because TANF is a block grant. As part of the APD process, states submit specific documents, including planning, contracting, and purchasing documents, which cover needs, objectives, requirements analysis, alternatives analysis, project management plan, cost benefit analysis, proposed budget, and any proposed cost allocation. If federal agencies do not respond within 60 days, approval is automatic. If federal agencies request further state documentation or clarification, the 60-day clock starts over when the state’s additional documentation is received, so the actual approval process may take longer. An updated APD is required annually or more frequently if significant changes are involved.

The current APD process fails to address the fundamental shift that has occurred in information systems practices over the past 20 years, according to Jerry Friedman, former executive deputy commissioner at the Texas Department of Human Services, and John Cuddy, chief information officer at Oregon’s Department of Human Resources. In their view, the APD process, designed to mitigate financial risks and avoid incompatibilities among systems, was appropriate when states typically worked for 3 to 5 years to develop mainframe systems that were implemented with a “big bang.” Since then, states have generally shifted from investments in mainframes to smaller systems that are developed and implemented incrementally through a series of small, quick projects. Friedman and Cuddy explained that in the time it takes to obtain federal funding approval under the APD, states’ plans may be obsolete, given the current fast pace of technological advances. They also noted that the APD process was intended for systems in which the design and development stage was distinct from the implementation and operations stage. They maintained that these distinctions no longer fit state practices, which are iterative, with one stage overlapping or running concurrently with another and lessons learned from one project’s implementation altering the planning of another. Friedman and Cuddy concluded that the APD process is not working to the satisfaction of anyone and that it is time to reengineer the process. William Kowalski echoed their views, commenting that New Jersey experienced lengthy delays and altered its plans for the development of a data warehouse because of difficulties obtaining approval for federal funding under the APD process.

Rick Friedman of the Centers for Medicare and Medicaid (CMS, formerly the Health Care Financing Administration) agreed that the APD documentation appears daunting, but noted that similar documentation is often required for approval within states. To the extent that the federal requirements are already addressed in the states’ own internal approval processes, Rick Friedman said that the federal agencies would be willing to review the documentation previously developed to satisfy the state procurement offices. If there are additional federal requirements, however, these would still have to be addressed. In an effort to expedite the APD approval process, his agency developed a streamlined APD format for use by states interested in receiving federal financial support for Medicaid- related activities under the Health Insurance Portability and Accountability Act. The new format re-packaged existing requirements in a way that simplified the entire process. He added that North Carolina used this format in making its request and found it to be considerably easier and more efficient.

Within the APD process, conference participants identified cost allocation as a component that may delay federal funding approval and impede service integration. State information systems that support more than one federal program must have a cost allocation plan approved by the federal agencies that provide funding. To receive federal approval, the cost allocation plan must be complete and provide sufficient detail to demonstrate that the costs are allowable and fairly allocated among the various federal and state programs that benefit from the project, including TANF (if applicable). Within the plan, different methodologies are used to justify the costs for specific objectives, such as eligibility determination. The allocation of costs that must accompany the APD for systems development is usually based on different methodologies than the allocation of costs for systems operations. Federal agencies have not issued guidance on specific methodologies. The cost allocation plans for systems development must be approved by each federal agency expected to provide funding, while the plans for systems operations must be approved by HHS, the lead federal agency.

Cost allocation has received more attention from state human services officials under welfare reform because TANF is now subject to rules governing cost allocation that did not apply to AFDC. AFDC was exempted from Office of Management and Budget cost allocation rules based on HHS’ interpretation of the legislative history. Under the exemption, AFDC could be considered the primary program for common costs, such as entering data on applicants’ income and assets, and could cover costs that otherwise would have been allocated to various programs like Medicaid or food stamps. The same is not true under TANF. TANF funds may be used to pay for shared systems only to the extent that the TANF program benefits from the systems, so they cannot cover common costs, but only a proportion of these costs in shared systems. As part of the transition from AFDC to TANF, HHS requested that states submit new public assistance cost allocation plans that would take effect July 1999 for most states.

Some conference participants cited a need for more guidance or flexibility on acceptable cost allocation methodologies. In his presentation on the development of Utah’s UWORKS project, Russell Smith said that obtaining approval for the cost allocation plan took considerably more time and effort than originally estimated. Utah State officials spent 6 months negotiating an acceptable cost allocation plan with federal officials for the project, which used funds from Labor’s One Stop grants, TANF funds, and food stamp employment and training funds. Bill Cox identified inflexible cost allocation methodologies as a problem in his presentation on North Carolina’s Business Process Reengineering Project. He said that while project costs are commonly allocated based on the size of program caseloads, the state did not think it was appropriate to use this basis for its reengineering project. He explained that while the state’s TANF caseload has decreased in recent years, the size of the caseload does not accurately represent the amount of time that caseworkers actually spend on TANF cases. The state proposed using a cost allocation methodology based on the amount of time caseworkers spent on different programs and projects. However, while the CMS and the Food and Nutrition Service had no comments on this change in methods, the Administration for Children and Families did have reservations and indicated that the preferred method is caseloads, according to Cox. Cox also maintained that more guidance is needed with respect to appropriate cost allocation methodologies in complex projects with multiple phases.

Obtaining Staff Expertise in Project Management and Information Technology

In their presentation, Software Productivity Consortium president Werner Schaer and State Information Technology Consortium president Bob Glasser highlighted project management as a key challenge for systems modernization. They explained that in their extensive consulting work on a wide range of state information systems projects, the major problems they observed have involved issues other than technology. The primary causes of these problems are a lack of wide-ranging management experience with information technology, a lack of management experience with large and complex systems, and insufficient user participation in project processes. They added that most firms that are dependent on software development for their core business have learned significant lessons about how to manage the development and deployment of large, complex software systems. Yet in their view, the states, as a general rule, are very early on this learning curve and could benefit from the lessons that the industry has learned. Information technology contractor representatives from HSITAG echoed these themes in their presentation. For example, they explained that HSITAG members have encountered situations in which states have chosen proven program managers but failed to provide training to help them become successful managers of information technology projects. HSITAG presenters emphasized that as systems projects grow to span multiple programs and increase in complexity, it is important to use proven methods for promoting regular communication among project stakeholders, predicting system impacts, and defining and achieving results. Georgia chief information officer Larry Singer commented that the project management challenges faced by states are similar to those described in GAO testimony on the information system challenges facing the federal government.

Some states have found it difficult to attract and retain staff with the necessary expertise in information technology because these specialists command high salaries and technology is changing so rapidly. For example, due to government salary limits, it is hard to compete for database analysts who can earn $150 to $200 an hour in the private sector, according to Russell Smith. Private contractors also may face staffing problems, lacking the expertise required for specific work they have agreed to undertake or reassigning experienced staff to other work before projects are completed.

Participants Proposed Various Actions To Facilitate Systems Modernization

Conference participants identified numerous strategies to improve state information systems and facilitate service integration. By identifying broad roles that each of the following sectors could play—the Congress, federal agencies, states and localities, and information technology contractors— they affirmed that diverse groups can contribute to making progress in this area. In addition, participants developed more detailed proposals of actions that could be taken to address challenges for systems modernization and facilitate service integration. The majority of these proposals pertain to the challenges of enhancing collaboration among different levels of government and simplifying approval processes for obtaining federal funding.

Different Sectors Can Play Roles in Systems Modernization

Table 3 summarizes conference participants’ suggestions about the roles that different sectors could play in facilitating systems modernization and some of the challenges associated with fulfilling these roles. For example, in addition to authorizing funding for systems demonstration projects, the Congress could play a broad supportive role in helping remove barriers and promoting systems modernization as it obtains additional knowledge of information systems trends and needs. A key challenge in fulfilling these roles is how organizations should target their efforts to better inform the Congress of needs and trends in this area. Beyond their roles as regulators, federal agencies could help states work together to develop information systems and share their models with other states. State and local governments, which are on the front lines of system design and operation, could facilitate progress by developing model information systems and testing innovative system linkages. Information technology contractors could use their unique perspectives and expertise to play a range of educational roles, such as helping states and localities improve their management of information systems projects.

Conference Participants Offered Varied Proposals

Conference participants, working in small discussion groups, proposed numerous actions to address systems modernization and facilitate improvements in state information systems for human services. These proposals are summarized in table 4. The proposals vary in their scope and specificity, and also whether or not they would require legislative or regulatory changes to be implemented. Some of the proposals are described more fully in papers presented at the conference. However, the list of proposals does not represent a consensus of participants. Participants brought diverse perspectives to the issues examined at the conference and did not have time to discuss each proposal in detail or systematically assess the merits or relative priorities of the various proposals. Nonetheless, this list of proposals represents a rich source of potentially useful ideas for improving the development of information systems for human services and thus merits further analysis and discussion.

Many of the proposals pertain to enhancing strategic collaboration among different levels of government and these proposals present various approaches to this objective. For example, several proposals focus on informing federal or state political leaders about, and involving them in, issues related to systems modernization, such as by holding a congressional hearing on integrated information technology for human services. Other proposals would create a forum for intergovernmental collaboration by creating an institute for the management of human services information systems or establishing federally funded systems demonstration projects to integrate state and local services. Other proposals are intended to minimize the occurrence of perceived adverse effects on state information systems resulting from federal legislation.

The proposals related to improving the federal funding process also encompass a wide range of approaches, ranging from making incremental changes to the APD process to creating a federal block grant for human service information systems. Several proposals call for replacing the APD process—in one case with a process in which states’ information systems plans would be reviewed as a component of their overall program plans and in another with a process based on states’ certified capacity to manage information systems. Another proposal suggests a negotiating procedure that could be used to develop an acceptable replacement for the APD process.

There is an effort underway to implement changes to address one of the broad challenges identified by conference participants: simplifying the approval process for obtaining federal funding. Partly in response to a recommendation in GAO’s April 2000 report on information systems, a federal interagency group has been established and is focusing its attention on the APD process. Rick Friedman of the CMS, who chairs the group, gave conference participants a status report on the work of the group. He said that the interagency group includes representatives from five HHS offices and the U.S. Department of Agriculture’s’ Food and Nutrition Service. The group has met several times to examine the APD process, has consulted with state officials, and has formulated some recommended changes, but the proposed changes have not been approved by the respective federal agencies.

We are sending copies of this report to appropriate congressional committees; the Secretary of Health and Human Services; the Secretary of Agriculture; the Secretary of Labor; and other interested parties. We will also make copies available to others on request. If you or your staff have any questions concerning this report, please call me at (202) 512- 7215. Other GAO contacts and staff acknowledgments for this report are listed in appendix III.

Appendix I: Conference Agenda

Realizing The Promise Of Technology: A Conference On Modernizing Information Systems For Human Services Sponsored by: U.S. General Accounting Office The Nelson A. Rockefeller Institute of Government Welfare Information Network (The Finance Project)

June 28 and 29, 2001 in Reston, Virginia With its heightened emphasis on employment and time-limited assistance, welfare reform significantly expanded the information needed to support activities ranging from integrated service delivery by front-line caseworkers to program performance monitoring by administrators and oversight agencies. To meet such needs, automated systems must be able to share data across the numerous programs that serve low-income families, such as Temporary Assistance for Needy Families, Medicaid, child care, job training, vocational rehabilitation, and child welfare. For three years, members of the GAO / Rockefeller Institute Working Seminar on Social Program Information Systems have met regularly to study system capabilities, obstacles to modernization, and strategies to facilitate progress. In April 2000, GAO issued a report that identified major gaps in the capabilities of state automated systems to meet information needs for welfare reform.

This conference will build on prior work by providing diverse perspectives on key issues and options. To help develop a literature in this area, the presenters at this conference will write papers that we plan to publish, along with an overview of conference proceedings. Attendance will be by invitation only, and conference participants will include congressional staff, federal and state program and information technology managers, welfare researchers, information technology vendors, and others. A key objective will be to tap this collective expertise by having participants take part in breakout sessions each day. Participants will consider proposals for actions that could be taken in four key sectors to facilitate systems modernization: the Congress, federal agencies, states and localities, and information technology vendors. We will then determine the level of consensus for these proposals. By documenting current knowledge and highlighting collaboratively developed proposals—an action agenda—the report issued from this conference should provide the Congress, Administration, and states and localities with timely suggestions pertinent to the reauthorization of welfare.

WELCOME AND CONFERENCE OVERVIEW Cynthia Fagnoni, General Accounting Office (GAO), and Richard Nathan, Rockefeller Institute of Government THE NEED FOR SYSTEMS MODERNIZATION Chair: Barbara Blum, Research Forum on Children, Families, and the New Federalism The Capabilities of State Automated Systems to Meet Information Needs in the Changing Landscape of Human Services Andrew Sherrill, GAO http://www.gao.gov/special.pubs/GAO-02-121/ap1.pdf Briefing charts: http://www.gao.gov/special.pubs/GAO-02­ 121/ap2.pdf The Need to Align Federal, State, and Local Technology Investments: A Local Perspective Sandra Vargas, County Administrator, Hennepin County, Minnesota, and Cost is Toregas, Public Technology Incorporated http://www.gao.gov/special.pubs/GAO-02-121/ap3.pdf Reactor: Thomas Gais, Rockefeller Institute of Government POSSIBLE APPROACHES FOR THE FUTURE Chair: Judith Moore, National Health Policy Forum Re-engineering the Approach by Which the Federal Government Approves and Monitors the Creation of State Human Services Information Systems Jerry Friedman, Texas Department of Human Services, and John Cuddy, Oregon Department of Human Resources http://www.gao.gov/special.pubs/GAO-02-121/ap4.pdf Briefing charts: http://www.gao.gov/special.pubs/GAO-02­ 121/ap5.pdf Federalism and the Challenges of Improving Information Systems For Human Services Richard Nathan and Mark Ragan, Rockefeller Institute of Government http://www.gao.gov/special.pubs/GAO-02-121/ap6.pdf Briefing charts: http://www.gao.gov/special.pubs/GAO-02­ 121/ap7.pdf Innovations in Technology and Project Management Practices That Can Improve Human Services Representatives from the Human Services Information Technology Advisory Group http://www.gao.gov/special.pubs/GAO-02-121/ap8.pdf Briefing charts: http://www.gao.gov/special.pubs/GAO-02­ 121/ap9.pdf Lessons Learned Helping Organizations Make Smart Information Technology Decisions Werner Schaer, Software Productivity Consortium, and Robert Glasser, State Information Technology Consortium http://www.gao.gov/special.pubs/GAO-02-121/ap10.pdf Briefing charts: http://www.gao.gov/special.pubs/GAO-02­ 121/ap11.pdf Reactors: Joseph Leo, Science Applications International Corporation, and Bruce Eanet, Employment and Training Administration, U.S. Department of Labor The Oregon Experience and Looking to the Future Gary Weeks, Director of Human Services Reform, Annie E. Casey Foundation (former director of the Oregon Department of Human Resources) http://www.rockinst.org/publications/pubs_and_reports.ht ml BREAKOUT SESSIONS Participants are divided into the following groups to discuss the historical involvement, role, and special challenges of that sector in facilitating systems modernization.

Group 1: The Congress Moderator/Reporter: Elaine Ryan, American Public Human Services Association, and Gregory Benson, Rockefeller Institute of Government Group 2: Federal Agencies Moderator/Reporter: Rick Friedman, Centers for Medicare and Medicaid Services, and Richard Roper, The Roper Group, New Jersey Group 3: States and Localities Moderator/Reporter: Lorrie Tritch, Iowa Department of Human Services, and Michael Rich, Emory University Group 4: Information Technology Vendors Moderator/Reporter: Vicki Grant, Supporting Families After Welfare, and Robert Stauffer, Deloitte & Touche Consulting Group PLENARY SESSION: REPORTS FROM BREAKOUT GROUPS AND DISCUSSION OF THEIR IDEAS Discussion Leader: Barry Van Lare, Welfare Information Network DINNER STATE AND LOCAL EXPERIENCES Chair: Sigurd Nilsen, GAO Wisconsin’s System Initiatives for Eligibility and Work- Based Programs Paul Saeman, Wisconsin Department of Workforce Development http://www.gao.gov/special.pubs/GAO-02­ 121/ap12.pdf Briefing charts: http://www.gao.gov/special.pubs/GAO-02­ 121/ap13.pdf http://www.gao.gov/special.pubs/GAO-02-121/ap14.pdf http://www.gao.gov/special.pubs/GAO-02-121/ap15.pdf One Ease E-Link: New Jersey’s Pursuit to Establish an Electronic, Multi-Tooled Network for the Delivery of Coordinated Social, Health And Employment Services William Kowalski, New Jersey Department of Human Services http://www.gao.gov/special.pubs/GAO-02-121/ap16.pdf Briefing charts: http://www.gao.gov/special.pubs/GAO-02­ 121/ap17.pdf Utah’s Development of a One-Stop Operating System Russell Smith, Utah Department of Workforce Services http://www.gao.gov/special.pubs/GAO-02-121/ap18.pdf Briefing charts: http://www.gao.gov/special.pubs/GAO-02­ 121/ap19.pdf Reengineering Business Processes to Integrate the Delivery of Human Services in North Carolina Bill Cox, North Carolina Department of Health and Human Services http://www.gao.gov/special.pubs/GAO-02-121/ap20.pdf Briefing charts: http://www.gao.gov/special.pubs/GAO-02­ 121/ap21.pdf Reactor: Rachel Block, Centers for Medicare and Medicaid Services Participants are divided into the same four groups in which they participated the previous day. Building on their previous discussions, they develop proposals for actions that could be taken to facilitate systems modernization. However, participants are not limited to any particular sector (e.g., federal agencies) in developing their proposals.

Appendix II: Conference Participants

Staff Acknowledgments

Elizabeth Caplick also helped arrange the conference that resulted in this report.