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The Struggle to Streamline

Texas' first foray into a high-profile streamlining of social and health services delivery paid off impressively: In 1993, the Lone Star state won an Innovations in...

Texas' first foray into a high-profile streamlining of social and health services delivery paid off impressively: In 1993, the Lone Star state won an Innovations in American Government award for its landmark effort to knit more than a dozen separate child care programs together through a "unitary" application. Even more revolutionary, parents and guardians no longer had to travel to a state welfare office to apply for the programs in person; they could do that by phone or mail.

Fast-forward to the spring of 2007, when Texas was back in the social and health services spotlight. This time, however, instead of emerging as a model of success, the state became Exhibit A in how to engineer a multimillion-dollar meltdown. Between January 2006 and March 2007, state officials and human services advocates watched with a combination of growing embarrassment, alarm and anger as the wheels came off an ambitious effort to privatize intake and screening for key public assistance programs, including TANF, Medicaid, food stamps and the state's insurance coverage plan for children.

What was envisioned as a system that would allow applicants to quickly and easily access services through four regional call centers, instead turned into a dark comedy of bungled work: unanswered and dropped calls; applications lost, ignored and misdirected; misdated renewal notification letters littering the two pilot counties.

The most serious and visible consequence of the mess were the thousands of kids who were dropped from the state health insurance coverage because of rule changes and administrative mistakes, including Devante Johnson, who would become the poster child for the ill-fated reform. The Houston 14-year-old died of kidney cancer in the months after his insurance was dropped by the state, in spite of his mother's repeated attempts to regain legitimate coverage.

So it wasn't much of a surprise when on March 13, 2007, the state's Health and Human Services Commission decided to terminate its five-year contract with the global consulting firm Accenture, which had been leading a consortium of contractors known as the Texas Access Alliance in the streamlining effort. Meanwhile, the state scrambled to pick up the pieces and develop a plan for moving forward.

The reasons offered for the meltdown are manifold; the finger-pointing in the wake of the disaster has been dizzying. But everyone involved seems to own a piece of the problem. Contractors over-promised on performance. HHSC rushed to meet deadlines before people and systems were in place and ready to work. Hundreds of state workers experienced in the complex application and eligibility process were either terminated or left state service knowing that privatization was coming. Old and new computer systems didn't mesh, requiring vast amounts of information to be re-entered manually.

Another major contributor, though, was the Texas legislature, which so far seems to have effectively ducked any direct blame for the fiasco. In 2003, lawmakers required HHSC to prepare a business case that looked at keeping call centers in-house versus contracting out, while at the same time slashing the commission's budget in the face of a huge, looming statewide revenue shortfall. If that wasn't strain enough, lawmakers that same session engineered a wholesale reorganization of the entire state human services system, collapsing 12 health and human services agencies into five. "I think it was just too much to deal with all at once," says Jim Hine, a former health commissioner who now works as a consultant.

While Texas has made a name for itself as a ringing example of how NOT to go about the job of streamlining access to social and health services, the state is hardly alone in its attempts to make progress toward that goal. In fact, during the past few years, dozens of states have been working on a variety of ways to do social and health services intake and screening more efficiently -- and, it should be said, more humanely.


The grim picture of small, dingy waiting rooms filled with women and children, being shuffled from one office to another depending on the program, filling out form after form all asking for the same information, and then waiting -- and waiting some more -- has for years dominated how government delivers assistance programs.

But that is changing -- and rapidly. According to a report released earlier this year by the Government Accountability Office, 26 states either have implemented or are developing systems to allow online applications for at least some benefits (the report looks primarily at food stamps). Almost half of all states are either using or developing call centers, which allow people to inquire about and apply for benefits by phone, as well as follow up. Multiple states, according to the report, have launched efforts to encourage participation in the alternative application process by doing mass mailings, holding community meetings and disseminating information via community partners.

While most of these efforts haven't made news, several have made significant inroads. Among the front runners: Florida, Pennsylvania, Utah and Wisconsin, all of which are in the midst of exploring alternatives to the old style sit-and-wait school of applying for benefits.

In fact, Florida is an Innovations in American Government award finalist this year for what it calls "ACCESS Florida." The extension of a fairly long-running regional pilot program, ACCESS Florida allows residents to apply for social and health services benefits online from anywhere in the state, 24 hours a day, seven days a week.

The system has dramatically reduced the labor-intensive nature of applying for benefits, as well as wait times for those who are approved electronically. The program also has a well-developed document scanning component so that any paperwork involved can quickly be digitized, and the records created can then be easily and efficiently shared among state offices.

To encourage and accommodate applicants in going the Web route, the state took hundreds of its own about-to-be-retired computers, refurbished them and gave them to local nonprofit service providers and community centers -- so that applicants might have broad access to both the technology and the help many would initially need to use it.

According to Daniella Levine, executive director of a coalition of human services providers and advocacy groups in Miami-Dade County, her members like the emphasis on the state partnership with community providers. They also like the more streamlined approach to applications and screening, as well as the "no-wrong-door" approach to accessing assistance and users' ability to track the status of their applications using the Web.

But while the state crows over the fact that more than 90 percent of applications are now coming in electronically, advocates such as Levine are not so sure that number necessarily represents across-the-board progress. First, she says, the state seems to be coercing applicants into going the Web route by aggressively limiting the opportunity for direct interaction with state eligibility workers. "The flaw is assuming that all of these community sites with computers are a substitute for the active participation of paid [state] staff," says Levine. The lack of opportunity for face-to-face meetings, she argues, means that those without the capacity to negotiate the new electronic world of social and health services applications may be getting left way behind, particularly the elderly and severely disabled.

Meanwhile, to the extent that community partner staff are stepping up and helping applicants negotiate the new system, Levine describes that as "free privatization," because scores of nonprofit employees are now doing what amounts to pro bono intake work, which the state used to pay its own staff to do. Indeed, one of the results of ACCESS Florida that the state seems proudest of is that it has enabled each state eligibility worker to review nearly 700 cases per year versus 150 under the old system. That, in turn, has allowed the Department of Children and Family Services to reduce state eligibility staff by more than 40 percent for an annual savings of around $80 million.


Like Florida, Utah started its push toward a more uniform and easy-to-navigate system years ago. In fact, following federal welfare reform in 1996, Utah set up a statewide system of "storefront" workforce development centers where anyone looking for unemployment benefits and job-search help could come for one-stop service.

Since then, the state has expanded the one-stop concept to all other public assistance programs. The next step, according to Curt Stewart, spokesman for the Utah Department of Workforce Services, is to roll out a Web-based application system called eREP or Electronic Resource and Eligibility Product. Online access is especially important in a rural state like Utah, says Stewart, where "someone might have to get in their car and drive 100 miles to a storefront center, get there at 3 p.m., run out of time and have to come back the next day."

An interesting twist on the state's online effort is that not only will it allow Utah residents to apply for specific benefits and services but it will alert them to any other programs for which they may be eligible.

Wisconsin, too, has an online application system widely regarded as a model. Residents fill out a basic form covering their personal, family and financial status, and the Web-based program will list what services and benefits they might be eligible for, and then allow them to apply for all of them online. To make the whole process even simpler, Wisconsin has eliminated the assets test -- where things like the value of cars are figured into the benefits-eligibility equation.

Wisconsin's system also is noteworthy because it fulfills one other one-stop need. As is the case in about a dozen other states, social and health services in Wisconsin are administered by counties, with state oversight. So the system there has done more than just pull all state and federal assistance programs together; it has opened up a single entry point into 72 separate county social service agencies, as well.

The other state cited as having advanced considerably on the electronic-applications front is Pennsylvania, which has developed both Web-based screening and call centers. Once the decision was made to go with call centers, the state had seven of them up and running in less than a year using state employees and some help from the phone company to design, build and staff the system. The cost for all seven centers was substantially less than the nearly $100 million Texas spent on its four privately constructed call centers.

The other state that's being watched closely at the moment is Indiana. There, state officials are aggressively pushing the call-center concept and have charted a course somewhere between those of Pennsylvania and Texas. Indiana is privatizing intake and screening, but it has required the contractor, IBM, to first offer call-center jobs to state eligibility employees and, for at least two years, to also offer them the same pay and benefits packages they were receiving from the state.

The Indiana experiment is being piloted now and is due to roll out completely next year. The state expects to save in the neighborhood of $500 million over the life of the 10-year contract. But an interesting milestone will come much sooner, when the IBM commitment to state-based pay and benefits runs out, notes Celia Hagert, senior policy analyst with the Center for Public Policy Priorities in Austin, who was invited to Indianapolis to debrief state officials on the Texas mess. If IBM cuts pay and benefits after two years, seasoned staff may decide to quit and go elsewhere.


It is in that climate of multiple, creative experiments in streamlining around the country that Texas now finds itself as it tries to rebuild its own system. While other states undoubtedly learned some lessons from Texas' problems, the question now is what lessons Texas might learn from them.

Those who've been following the streamlining phenomenon say that what Florida and its ilk can teach Texas is pretty clear. First, eligibility screening is no job for amateurs. It takes years of experience to become solidly versed in the rules and regulations that underpin all the state and federal social and health service programs -- and the rules are constantly changing. So successful streamlining efforts place a premium on hanging on to seasoned staff. While Florida, Wisconsin and Pennsylvania used contractors to help with the technology side of their initiatives, none turned over the actual job of eligibility determination to contract employees.

When asked about the arrangement in Wisconsin, Health and Human Services Department spokesman Jim Jones says that Deloitte is handling the computer side of the system and doing a fine job of it. Asked if the state has ever considered using private-sector consultants to make eligibility determinations, Jones communicates in no uncertain terms the state's conviction that making eligibility determinations is a government responsibility.

Even Florida -- which as ACCESS Florida was being developed was being led by Jeb Bush, the most aggressive privatizer in any statehouse -- decided to keep the effort in-house. To the extent that private contractors were used, state officials say, it was in a very limited way to solve specific technical problems.

The second, and perhaps less obvious, lesson that other states could teach Texas is that setting fiscal goals as part of streamlining is a mistake. Pushed by state legislators to achieve specific savings through privatization, HHSC director Albert Hawkins seemed happy to accommodate them, trumpeting the $600 million-plus that the call centers would save the state over the life of the five-year contract, and boxing Texas into an unrealistically ambitious schedule based on cutting costs rather than building competencies. Reformers in other states say the overriding goal should be to make the system more efficient. If savings follow, fine.

Has Texas learned these lessons? According to Anne Heiligenstein, deputy executive commissioner for social services with the HHSC, it has. This time around, she insists, the state is going to carefully consider "where it draws the line" as far as what state employees do versus contractors. Earlier this year, the legislature restored funding for hundreds of new state eligibility workers. Heiligenstein adds that the HHSC is beefing up oversight of call center contract staff by state employees, as well.

But even as the state contends that it's pulling power back from contractors, there is a still a very clear privatization bias in Texas. While the HHSC scrambled to rehire state employees to help clean up the call-center mess, it was contracting out again -- to Maximus -- to handle the overall operations of the four newly built centers.

The privatization push became even more obvious during a July presentation by top HHSC staff to the advocacy community summarizing action in the wake of the 80th legislature. When it was Heiligenstein's turn to cover the HHSC's plans for recovery, she laid out a scenario for next steps in Texas that revolves substantially around outsourcing.

Rather than step back and reevaluate completely the prudence of privatization, the HHSC has laid out an ambitious schedule of "requests for information" from vendors, "requests for proposals" and even dates by when the contracts for technical and administrative services will be awarded.

None of that surprises privatization's toughest legislative critic in Texas, Garnet Coleman, a Houston-area Democrat who has made something of a career battling efforts to outsource state work, including then-Governor George W. Bush's unsuccessful effort to turn eligibility and screening over to Lockheed Martin back in the mid-1990s.

"The policy objective here is privatization," says Coleman, "not to deliver better services to more people." For example, he offers "third-party verification" (whereby the information supplied by applicants will either be confirmed or debunked by cross checking it with other databases) as an area that HHSC plans to outsource anew. This approach, Coleman contends, may discourage people from seeking services while also "pioneering new lines of business for the private sector."

Coleman's assessment of what drives social and health services Lone Star-style may or may not be overly harsh. But one thing is certain: In taking in the broad sweep of experiments in social-services streamlining going on nationwide right now, and in considering which states really might represent models worth emulating, it's a very good bet that more officials will be beating paths to places such as Tallahassee, Salt Lake City, Madison and Harrisburg. It's an equally sure bet that few, if any, will be making the trek to Austin.

A Senior Editor of Governing, Jonathan has been covering state and local public policy and administration for more than 30 years.
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