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Contra
TO: BOARD OF SUPERVISORS
IONS COMMITTEE,FROM: INTERNAL OP'ERAT o: _ Costa;
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DATE: DECEMBER 6, 2004 �'osr.._ _ County
SUBJECT: EMPLOYMENT AND HUMAN SERVICES DEPARTMENT
INTERNAL SECURITY PLAN AND FOOD STAMP ERROR RATE UPDATE
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
1. ACCEPT reports from the Employment and Human Services Director on the status of the
Department's Internal Security Plan to prevent welfare fraud and continuing success in
significantly reducing the County's food stamp error rate.
2. COMMEND the Department on the development and implementation of multiple strategies
to lower the County's risk and exposure to internal fraud, and on achieving an 87%
reduction in the food stamp error rate since federal fiscal year ending 2001.
3. RECOGNIZE that the now fully staffed Program Integrity Unit is having the most significant
impact on the food stamp error rate and that the County should continue to place a high
priority on maintaining the Unit.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR COMME ATI N OF BOARD COMMITTEE
�PPROVE OTHER
SIGNATURE(S)-
GAYLE IL EMA, CHAIR MARK DeSAULNIER
ACTION OF BOARD O APPROVE AS RECOMMENDED O ER
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
UNANIMOUS(ABSENT ) AND ENTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON THE DATE
AYES: NOES: SHOWN.
ABSENT: ABSTAIN:
ATTESTED: JANUARY 18,2005
CONTACT: JULIE ENEA(925)335-1077
JOHN SWEETEN,CLERK OF THE BOARD OF SUPERVISORS
AND COUNTY ADMINISTRATOR
CC: INTERNAL OPERATIONS COMMITTEE STAFF
EMPLOYMENT AND HUMAN SERVICES _ a
COUNTY ADMINISTRATOR
BY ,DEPUTY
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EHSD Internal Security Plan and Food Stamp Error Rate Update December 6, 2004
Internal Operations Committee Page 2
4. RECOGNIZE that the statewide implementation of the CaIWIN system will have massive
impacts on internal procedures and service delivery.
5. DIRECT the Employment and Human Services Director to report back to the Internal
Operations Committee in November 2005 on the status of the CaIWIN system and to
schedule with the Committee a demonstration of the system.
. BACKGROUND
On April 6, 1999, the Board of Supervisors referred to the 2000 Internal Operations Committee
the monitoring of actions taken by the EHSD following the filing of fraud charges against two
County employees, and on County check issuance procedures and administration of petty
cash funds, particularly the Immediate Need Imprest Fund.
The 1999 Committee received and reviewed reports dated September 27, 1999 and October
11, 1999 from staff. Based on its discussions, the Committee reported back to the Board on
County check issuance procedures and administration of petty cash funds and had these
items removed as referrals.
On July 18, 2000, the Internal Operations Committee made a status report to the Board and
recommended that EHSD staff, in addition to establishing a Fraud Hotline, return to then 10
Committee on November 13, 2000 with a follow-up report that addresses:
a. Identification of the individual who monitors system security access in the EHS, and
the process and criteria used to determine security access levels.
b. Review and verification of appropriate system security access for existing staff, in
addition to new staff.
c. Clarification of the levels of managers who will review program compliance and
security reports for the 2"d Party Review Process, and how accountability will be
established.
d. Progress on the implementation of the Comprehensive 2"d Party Review Process for
welfare cases and transactions.
e. Use of random sampling of benefit issuances to enhance fraud detection efforts.
f. Clarification of the mandated Electronic Benefit Transfer (EBT) Process for food
stamp issuances, and an evaluation of the option for using EBT for cash issuances
and related effects on security.
f. Verification that new check stock is being used for Imprest Fund disbursements.
On November 13, 2000, the Committee received a status report from the Employment and
Human Services Department addressing the above questions/concerns. The loc
subsequently recommended to the Board that the EHSD provide an annual status report to the
loc.
In September 2001 and 2002, and October 2003, the loc met with EHSD and reported out to
the Board of Supervisors on the progress of the internal security plan. In 2003, the loc and
Employment & Human Services Department Contra Costa +bounty
Date: November 22, 2004
MEMO TO: Supervisor Mark DeSaulnier C: Julie Enea
Supervisor Gayle B. Uilkema
Internal Operations Committee
FROM: John B. Cullen,Director,
SUBJECT: 2004 Internal Operations Conu-nittee—
EHSD's Status Report on Internal Security Plan
Enclosed is our annual status report on the implementation of EHSD's Internal Security
Plan.
We ask that the Internal Operations Committee accept the attached report, as a follow-up
to our previous October 2003 committee report.
We also ask that the Committee schedule an annual update, in 2005, on the Plan's status.
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Internal Operations Committee
Status of Internal Security Plan
November 2004
EHSD Status Report - Internal Security Plan Implementation
Background
In 1998, EHSD established an Internal Security function and action plan outlining several
goals, strategies and steps to improve controls over welfare benefit disbursements. Since
then, we have successfully implemented many enhancements to our control environment
and have remained committed to further lowering risk and exposure to internal fraud.
Our approach employs prevention and detection tools that are cost effective and also
enable us to meet legislative mandates. In the past year, we have particularly emphasized
the issue of employee accountability throughout the Department. We have focused on
these strategies:
• CaIWIN implementation planning that addresses new security enhancing
features
• Increasing the volume and type of Second Party Reviews of welfare cases
• Increasing staff training on program compliance and fraud issues
• Maintaining security controls over staff's computer access, and utilizing audit
trail fraud alerts
Actions and Strategies Taken that Improve Our Security Environment
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faIWIN Imulementation Planning
We are currently preparing for significant changes to EHSD's operations, in
order to fully implement the Ca1WIN (CalWORKS Information Network)
system by August 2005. Ca1WIN is the new automated public assistance
eligibility system replacing CDS/GIS. Contra Costa County is one of eighteen
California counties that are jointly developing and implementing Ca1WIlN.
We expect that the new system will positively affect the maintenance and
service delivery of our major programs, including Ca1WORKS, Food Stamps,
Medi-Cal, General Assistance, and Foster Care. A significant redesign of
business processes has been underway the past year, with EHSD work groups
and managers now engaged in detailed planning.
The development of a new set of operational policies and procedures will be
necessary to support the redesigned processes. As a consequence, with
security also in mind,we are assessing how Ca1WIN's automated features will
best enhance our supervisory review processes, strengthen internal controls,
provide a detailed audit trail, and augment our monitoring tools. From both a
security and compliance view, one of the main benefits of the new system is
the capability for "transaction sampling" (or random computer selection) of
case actions for second party pre-approval or post-review, as further described
below.
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Internal Operations Committee
Status of Internal Security Plan
November 2004
CalWIN has three primary "authorization" processes for welfare benefit
issuance: 1) Worker Authorization, 2) Supervisory Authorization, and 3)
Supervisory Review. The "Worker Authorization" process allows the
caseworker to authorize eligibility results, disposition and benefit levels for
each assistance unit/individual, but there is now the capability to send the
pending action to either "Supervisory Authorization" or "Supervisory
Review", according to the user's security profile. The "Supervisory
Authorization" feature enables a supervisor to review the worker's case
actions and either approve or decline (on-line) before benefits are issued. The
"Supervisory Review" feature provides the supervisor or higher management
the ability to review, in accordance with County policy, actions that have been
previously authorized by the worker and/or supervisor. The technology will
allow us to program Ca1WIN to randomly select a percentage of transactions,
by category, for either"Supervisory Authorization"or"Supervisory Review".
Transactions selected for review, for instance, could include: emergency
benefits, supplements, diversion payments, payments over a certain dollar
limit, supportive service payments, retroactive issuances, and annual
reinvestigations. Since the volume of payment-related transactions totals over
30,,000 each month, involving approximately 13,000 active CalWORKS, Food
Stamp, General Assistance, Foster Care/Child Welfare Service cases, this
random sampling feature presents us with a cost effective means to test the
validity of transactions.
We are also making plans to reorganize staff responsibilities and establish a
centralized unit that verifies and enters new payment providers (third party
payees and vendors) into the CalWIN system. We expect that this validation
process will improve segregation controls over the monthly issuance of
approximately 8,500 payments to third party payees.
• Increased the Volume and Type of Case Reviews by Second Parties
In the past six months, we have increased our level of scrutiny over workers'
case actions, by increasing the type and number of formal case reviews.
These reviews are essential to full program compliance, but they also
significantly support our security goals by providing a deterrent to internal
fraud and a detection tool that complements our separate security monitoring.
While our long-term goal is to expand these methods (supervisory and
program integrity reviews) to encompass all welfare programs, we have
accomplished the following with regard to food stamp cases.
Program Integrity Unit
In May 2004, we fully staffed this centralized review function.
The unit's five employees now routinely conduct monthly
compliance reviews of a significant number of welfare cases.
Since May, the Unit has steadily increased the volume of reviews,
just recently completing a documentation review of approximately
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Internal Operations Committee
• Status of Internal Security Plan
November 2004
2,400 food stamp cases. We estimate that the unit will complete an
additional 750 case reviews in November and December of this
year. We have a management reporting process that helps us fully
analyze the results and initiate corrective actions.
Reviews by Unit Supervisors — Each Food Stamp supervisor is
held accountable for conducting three full case reviews,per worker
assigned, per month. Cases are randomly selected so that
potentially any case is subject to unannounced review. A
management reporting process conveys the results and prompts
corrective actions. As a result, from January to September 2004, a
total of 3,510 supervisory case reviews were completed (an
average of 390 each month). Additionally, 11 percent (or 400) of
these cases were subsequently selected for re-review by second
parties to ensure that the original supervisory reviews were correct.
Unit supervisors also continue to perform targeted reviews of cases
prior to their transfer to other units.
• Increased Training on Program Compliance and Fraud Issues
In the past year, our Staff Development Division has increased the number of
staff trained and the number of completed hours of training. This effort has
covered supervisory, systems, and administrative topics as well as
eligibility, employment service, and child welfare program areas. Also,
during this period, our Fiscal Compliance Unit provided fraud prevention
training to two new incoming classes of eligibility worker trainees. Topics
covered included security standards for computer system and password usage,
and the proper reporting of security breaches. In general, for all topics
presented at Staff Development, since January 2004 we computed a total of
approximately 100,000 hours of classroom time (based on the number of
hours spent in each class multiplied by the number of participants).
• Maintained Controls Over Staff's Computer Access / Utilized
Fraud Alerts
The core features of our security program have continued to be in effect. We
preserve several audit trail reports and use a variety of software database
querying techniques to produce alerts detailing staff's use of the automated
systems. This is to detect potential discrepancies, omissions, security
breaches and other policy exceptions. All users of our automated systems
remain on notice that all transactions are subject to monitoring and
independent review. Employees' access to all sensitive computer systems
continues to be closely monitored and levels are only assigned based on job
function.
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Internal Operations Committee
Status of Internal Security Plan
November 2004
Summary
We have continued to promote employee accountability, not only as part of our security
program, but also as a broad strategy to accomplish our overall mission of service
delivery. In particular, we have strengthened our supervisory"checks and balances", and
implemented successful case review processes.
Throughout 2005, we will be heavily involved in pre- and post-CalWIN implementation
activities. Our Program, Fiscal, Security, and Information Technology staff will be
working to put the new system's technological efficiencies, security edits and controls in
operation. Additionally, we will be redesigning and adapting our fraud detection tools as
this new case data system is implemented.
We remain dedicated to continuing improvements involving second party reviews,
maintaining a secure control environment, and fostering program integrity and
compliance. In the coming year, as we face challenges associated with implementing
CaIWIN, as well as other program and policy changes, these issues will remain recurring
themes for us, and key components to our success in providing quality service to the
public.
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EMPLOYMENT AND HUMAN SERVICES
CONTRA COSTA COUNTY
DATE December 30, 2004
TO Supervisor Mark DeSaulnier
Supervisor Gayle B. Uilkema
INTERNAL OPERATIONS COMMITTEE
FROM John B. Cullen, Director
SUBJECT Food Stamp Error Rate—FFY 2000 to present
The Employment and Human Services Department (EHSD) has maintained a Food Stamp
error rate below the Federal tolerance level for the past two consecutive Federal Fiscal
Years (FFYs), and has shown ongoing and continuous improvement in payment accuracy.
This report provides a summary of the Food Stamp error trends over the past five years
and the corrective action activities associated with our successful error rate reduction.
The United States Department of Agriculture (USDA), Food and Nutrition Services
(FNS) require states maintain a Food Stamp error rate below 105% of the federal
tolerance level. The Federal Tolerance Level is an average of all the states' error rates.
California counties administer the Food Stamp Program and are, therefore, held liable for
performance. The consequence of not meeting this standard is that fiscal sanctions are
applied to the State and County. In recent past years, California has not operated within
the Federal tolerance and has faced sanctions in excess of $150 million. Following
negotiations between Federal and State governments, we have been allowed to `reinvest'
into lowering our past error rates versus paying the sanctions. It continues to be
imperative that California and our counties continue to lower error rates in order to avoid
payment of sanctions in the future.
The error rate results for the FFY 2004 reporting period will not be finalized until January
2005, as there is one month remaining in the review period; however, the preliminary
results loop positive. Our cumulative Food Stamp error rate through August 30, 2004 is
1.83%. This is an 87% reduction from our highest error rate of 13.99% in FFY 2001.
The reduced error rate trend began with FFY 2002 when the error rate was 10.56% and
the rate has moved steadily downward since that time.
Several of the corrective action activities were initiated during FFY 2002 under the
impending threat of a fiscal sanction. Many of these practices have been institutionalized
and have directly contributed to the lowering of our error rate. These include:
• Food Stamp Oversight Committee, chaired by EHSD Director
• Quality Control Error Citation Workgroup
• Supervisory case reviews
• Secondary supervisory case reviews
• Improved Food Stamp Handbook and ongoing updates
• Training
• Hot tips
• Monthly bulletin
The major factor in lowering and sustaining an error rate below the Federal tolerance
level has been placement under the Food Stamp Policy Manager of FS Policy, Quality
Control and Program Integrity. This has greatly improved interdepartmental
communication and cooperation as demonstrated by a more cohesive and collaborative
approach to Food Stamp corrective action than previously existed.
The most common errors in each of the past four years have been in the area of earned
income. This is followed by shelter deduction, citizenship, household composition and
unearned income. Training in the area of treatment of income has been ongoing during
the past two years, especially since the implementation of Quarterly Reporting /
Prospective Budgeting (QRPB) in June 2004. Citizenship errors have significantly
declined with the issuance of monthly ad hoc reports in tandem with regulation changes.
Caseload management training is currently being offered and attendance is mandatory for
eligibility workers because many errors are associated with the worker failing to take
appropriate action.
Successful strategies used to reduce the error rate have included:
• Contract with the Rushmore Group to assist in the reduction of Quality Control
(QC) errors and improvement of QC practices including the strengthening of our
rebuttal knowledge.
• The creation of a new electronic Food Stamp handbook. This has assisted staff as
its format is now user friendly and updates are issued continuously. The creation
of hyperlinks to other areas of the handbook as well as State and Federal
regulations provide staff with the means to locate information immediately. This
increases their ability to make an accurate eligibility determination.
• During the "Clean Sweep Project" from February 2002 through June 2002 all
8,200 Food Stamp cases were reviewed. This review was ashort-term effort
designed to have an immediate positive impact on the Food Stamp error rate and it
achieved the following results:
■ Lowered the risk of a FS sanction for FFY 20029
■ Assisted line workers with identification of Food stamp payment errors,
■ Established a baseline accuracy rate to use for future measurements.
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• Successful Implementation of Quarterly Reporting / Prospective Budgeting
(QR/PB)
■ Mandatory QR/PB program training for all staff prior to implementation.
■ Changes to the treatment of income concepts along with relevant procedures
training completed one month into QR/PB implementation.
■ Program Integrity Coordinator (PIC), Program Integrity Assistants (PTAs), and
the Food Stamp Trainer made themselves available in the district offices to
answer questions and help staff process new quarterly reporting forms.
■ Food Stamp and Ca1WORKs Program Analysts along with the QC supervisor
provided a Question and Answer session in each district office that gave staff
the opportunity to ask questions in an effort to clarify QR/PB concepts.
■ PIAs focused reviews on QR/PB documentation
In addition to the institionalized practices mentioned above, ongoing payment accuracy
strategies include:
• Creation of the Program Integrity Unit (PIU). This unit is responsible for
developing, implementing and monitoring all department corrective action
activities. The primary function of the PIU is to complete targeted reviews of case
accuracy, as well as complete secondary reviews of supervisory case reviews.
• Ongoing ad hoc reports
• Comprehensive Corrective Action Plan provides an annual blueprint for error
reduction strategies and builds upon efforts identified in the prior year.
• Ongoing training that addresses not only program policies but systemic issues such
as caseload management.
Food Stamp Error Rates, Trends and Corrective Action Activities
Over the last four years
FFY 2000
Contra Costa County error rate 12.90%, State 13.99% and Federal 8.91%.
Error Trends:
Earned Income
Shelter deduction
Household Composition
Unearned Income
Citizenship
Corrective action activities:
• Targeted reviews of the Monthly Income Report(CW7)
• Monthly Bulletin
• Monthly FS /Corrective Action Meetings
• FS Handbook update
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• Mandatory CFAP and Shelter training
FFY 2001
The error rate in Contra Costa County reached its highest level at 13.99%. The State
error rate was at 17.03% and the Federal tolerance level was 8.66%
Error trends:
Earned Income
Shelter deduction
Unearned Income
Citizenship
Corrective action activities:
9 Targeted reviews of the Monthly Income Report(CW7)
9 Focused Case reviews
• FS Quality Improvement team: Monthly Corrective Action Meeting
• Developed Hot Topic bulletins
• Technical Assistance Training for CFAP and Shelter
• Established"Hot Tips"
• Food Stamp trainer hired September 2001
Quality Assistance unit - 2 supervisors and 7 workers reviewing public assistance
FS cases beginning 11-01
• Established quality control error citation workgroup.
FFY 2002
The Contra Costa County error rate was 10.56%. The State error rate was 14.39% and the
Federal tolerance level was 8.26%.
Error Trends:
Earned Income
Shelter Deduction
Citizenship
Household Composition
Corrective action activities:
e Clean Sweep Project reviewed all 8,200 FS cases.
o Food Stamp trainer identified and conducted several training modules February
2002 through August 2002.
* Established Supervisory case reviews June 2002
* Established Secondary Supervisory reviews July 2002
9 Food Stamp Handbook project began. First section issued May 2002.
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• Established monthly FS Oversight Meetings
FFY 2003
Our error rate in Contra Costa County for the FFY was 4.62%. The State error rate was
6.48% and the Federal tolerance level was 6.29%.
Error trends:
Earned Income
Shelter deduction
Household Composition
Standard Utility Deduction
Corrective action activities:
• Food Stamp Handbook project completed March 2003.
• Contract with the Rushmore Group to assist in the reduction of QC errors and im-
provement of QC practices including the strengthening of our rebuttal knowledge.
• Program Integrity Coordinator hired November 2003 to develop, implement and
monitor corrective action activities.
• Established Food Stamp quiz for eligibility workers March 2003 to assess program
knowledge.
FFY 2004
The error rate in Contra Costa County through 8-04 is 1.83%. The preliminary figure for
the State through July 2004 is 6.01% and the Federal tolerance Level is 5.50%
Error Trends identified through 8-04:
Earned Income
Standard Utility Deduction
Unearned Income
Citizenship
Corrective action activities:
• Contract with the Rushmore Group to assist in the reduction of QC errors and im-
provement of QC practices including the strengthening of our rebuttal knowledge.
• Monthly CFAP ad hoc reports
• Hired 4 Program Integrity Assistants (PIAs) to perform technical assistance and
quality assurance activities to sustain current low error rate.
• 6-04 QR/PB Implementation.
o Mandatory QR/PB program training for all staff prior to implementation,
o Changes to .the treatment of income concepts along with relevant proce-
dures training completed one month into QR/PB implementation.
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o PIC, PIA's and the Food Stamp Trainer were available in the district offices
to answer questions, and help staff process QR7's.
o Food Stamp and Ca1WORKs Program Analysts along with the QC supervi-
sor provided a Question and Answer session in each district office that af-
forded staff the opportunity to ask questions in an effort to clarify QR/PB
concepts.
o PIA focused reviews completed on QR/PB documentation.
Future Challenges.
The department has been able to effectively reduce and maintain an error rate below the
Federal Tolerance level through the active and informed commitment of top level
management, the successful implementation of many corrective action activities, and the
concerted effort of staff. As we prepare to change from the Case Data System (CDS) to
the new welfare payment and tracking system, Ca1WIN, we are working closely with the
California Department of Social Services (CDSS) and the Food and Nutrition Services
(FNS)to identify and address error prone new systems procedures ahead of time. It is our
goal to put appropriate solutions in place to minimize any increases in the Food Stamp
error rate during this conversion process.
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