11

NYS Unemployment NYS Unemployment Insurance (UI) Direct Insurance (UI) Direct

Payment (Debit) Payment (Debit) Card ProgramCard Program

Plans/Lessons LearnedPlans/Lessons Learned12/5/0612/5/06

National Association of National Association of State TreasurersState Treasurers

22

RFP/Initial Plans:RFP/Initial Plans:

After 2 year effort, first ever RFP for NYS UI After 2 year effort, first ever RFP for NYS UI Benefit Banking services (traditional Benefit Banking services (traditional checking and electronic benefits) was checking and electronic benefits) was issued July 05;issued July 05;

RFP contained plan for initially changing RFP contained plan for initially changing over to new bank for checks, working with over to new bank for checks, working with the State to implement debit cards and the State to implement debit cards and direct deposits as State was ready (Plan: direct deposits as State was ready (Plan: multi-year, phased changeover to EBT).multi-year, phased changeover to EBT).

33

Major service improvements that Department Major service improvements that Department of Labor and our Partners envisioned of Labor and our Partners envisioned

receiving with RFP:receiving with RFP:

Electronic BankingElectronic Banking (Direct (Direct Deposit/Debit Cards) for weekly benefit Deposit/Debit Cards) for weekly benefit distribution.distribution.

Lockbox (or alternative) serviceLockbox (or alternative) service for for receipt of claimant reimbursements to receipt of claimant reimbursements to State for overpayment of benefits.State for overpayment of benefits.

44

Need For Electronic BankingNeed For Electronic Banking:: Problems associated with printing and Problems associated with printing and issuance issuance

of 10M to 14M weekly paper of 10M to 14M weekly paper benefit benefit checks/year.checks/year.

Cost savings: Cost savings:

- - Staff timeStaff time associated with lost and associated with lost and replacement checks, taking replacement checks, taking

forgery-related calls & affidavits;forgery-related calls & affidavits;- - Bank feesBank fees for check stock and check for check stock and check processing;processing;- Internal - Internal printing and mailingprinting and mailing costs; costs;- Need to - Need to safeguard check stocksafeguard check stock; ; - - Printing equipment failuresPrinting equipment failures and delays. and delays.

55

The Key: A system less dependent on, and The Key: A system less dependent on, and substantially free of, paper checks as soon as substantially free of, paper checks as soon as feasible. feasible.

Two mechanisms Per RFP:Two mechanisms Per RFP:

– 1) Initial distribution of, and 1) Initial distribution of, and subsequent weekly replenishments subsequent weekly replenishments

to, to, ‘virtual bank accounts’ for those ‘virtual bank accounts’ for those customers customers optingopting to utilize to utilize

debit cardsdebit cards instead of direct deposit.instead of direct deposit.

- 2) Claimant customers’ personal checking - 2) Claimant customers’ personal checking accounts viaaccounts via direct deposit.direct deposit.

66

Knew that critical to providing Knew that critical to providing electronic benefit services to our electronic benefit services to our customers would be:customers would be:

1) 1) Bank customer service-oriented Bank customer service-oriented Call Call Center;Center;

2) Bank 2) Bank Interactive Voice Response Interactive Voice Response (IVR) system;(IVR) system;

3) 3) Bank website;Bank website;

..for up-to-date debit card-..for up-to-date debit card-related information to customers related information to customers (current balances, weekly (current balances, weekly replenishments and other card related replenishments and other card related information).information).

77

Visa/ MasterCard logo=wide Visa/ MasterCard logo=wide acceptance.acceptance.

RFP’s Plan: provide secure access to RFP’s Plan: provide secure access to benefits through benefits through optionaloptional weekly weekly electronic ‘replenishments’ of electronic ‘replenishments’ of

individual claimant benefit individual claimant benefit payments.payments.

With this RFP: NYSDOL was at the With this RFP: NYSDOL was at the forefront of NYS state agencies + forefront of NYS state agencies + most state level Departments of most state level Departments of Labor across the country.Labor across the country.

88

Among RFP Requirements:Among RFP Requirements: Bank must deal directly with claimants regarding:Bank must deal directly with claimants regarding:

1) Issuance of cards and replacement 1) Issuance of cards and replacement cards,cards,2) PIN changes, withdrawals, account 2) PIN changes, withdrawals, account balances,balances,3) Fraudulent use of cards, account 3) Fraudulent use of cards, account overdrafts, etc.overdrafts, etc.

Minimum: (1) Surcharge-free Minimum: (1) Surcharge-free Automated Teller Automated Teller Machine Machine (ATM) withdrawal of cash per (ATM) withdrawal of cash per weekly weekly replenishmentreplenishment. .

99

Desirable: Up to 3 ATM withdrawals/ Desirable: Up to 3 ATM withdrawals/ week + balance inquiries at ATMs week + balance inquiries at ATMs at no cost, on a 24 hour/7 day a at no cost, on a 24 hour/7 day a week accessibility basis.week accessibility basis.

Wide network of ATM/ POS accessWide network of ATM/ POS access..

Claimants not overdraw their debit Claimants not overdraw their debit card accounts (while not an card accounts (while not an overpayment on our books – still overpayment on our books – still not not encouraged).encouraged).

Assist State: Informational and Assist State: Informational and marketing materials for customers, marketing materials for customers, and in training of State staff.and in training of State staff.

1010

Method for transferring customer calls Method for transferring customer calls under State’s jurisdiction from under State’s jurisdiction from bank’s Customer Call Center to bank’s Customer Call Center to DOL Call Centers (or alternate DOL Call Centers (or alternate

State offices designated)--seamless State offices designated)--seamless andand customer service oriented customer service oriented fashionfashion. .

------------------------------------------ Received Received 4 bank proposals--4 bank proposals--

award made 12/05award made 12/05 after after lengthy multi-agency proposal lengthy multi-agency proposal review and scoring process;review and scoring process;

1111

We received better than we imagined – We received better than we imagined –

JPMC: Outstanding in its proposal --and JPMC: Outstanding in its proposal --and continues to be extremely responsive to continues to be extremely responsive to us and our customers. Finalized us and our customers. Finalized

contract contract with JPMC in Summer of 2006;with JPMC in Summer of 2006;

Decision to eliminate checks altogether-- Decision to eliminate checks altogether-- NYSDOL NYSDOL mandatedmandated direct payment cards direct payment cards for for all claimants as of 9/10/06; required all claimants as of 9/10/06; required mass mass conversion of conversion of ~ 160,000 claimants ~ 160,000 claimants that that had been receiving checks, and large had been receiving checks, and large mailing of cards on part of bank and its mailing of cards on part of bank and its subcontractor card vendor;subcontractor card vendor;

Currently looking to implement direct deposit Currently looking to implement direct deposit as an option (via web enrollment) early as an option (via web enrollment) early

in in 2007 for new claims and weekly 2007 for new claims and weekly certification payments.certification payments.

1212

Lessons Learned:Lessons Learned:

*** *** Don’t underestimate State IT systems Don’t underestimate State IT systems requirements!_requirements!_

- Thorough - Thorough understanding of agency understanding of agency programming programming resourcesresources, systems , systems changes needed, and what you’ll need changes needed, and what you’ll need

the bank to assist with--the bank to assist with--before you before you finalize the RFPfinalize the RFP..

- Plan around IT resources-vs. catching-up.- Plan around IT resources-vs. catching-up.

- Know other touch points in mainframe/ - Know other touch points in mainframe/ legacy systems legacy systems affected by this change affected by this change (such as child support payments, (such as child support payments, charge charge back of benefits to employers, codings).back of benefits to employers, codings).

1313

TEST – TEST – TEST BEFOREHAND!TEST – TEST – TEST BEFOREHAND!

Know other resource limitations.Know other resource limitations. This This includes all relevant staffing (not only includes all relevant staffing (not only quantity of staff but quality of quantity of staff but quality of knowledge) in all affected areas and knowledge) in all affected areas and offices as well as equipment, offices as well as equipment, software, software, etc.etc.

Utilize Formal Project Management Utilize Formal Project Management Experience:Experience:

--Maintain open communication --Maintain open communication between all parties between all parties

involved. Make involved. Make potential problems potential problems known to all.known to all.

1414

Establish Establish contacts with States already contacts with States already doing electronicdoing electronic payments--cards and DD payments--cards and DD as much as you can.as much as you can.

- Proved invaluable as we reached out to - Proved invaluable as we reached out to Utah and Oregon as the first 2 states Utah and Oregon as the first 2 states doing cards. doing cards.

- Other states’ RFPs/contacts may be- Other states’ RFPs/contacts may be helpful; helpful;

- With changes in USDOL’s handling of- With changes in USDOL’s handling of postage and mailing costs--accelerated postage and mailing costs--accelerated state efforts are likely. state efforts are likely.

1515

- - Assess your own needed levelsAssess your own needed levels of of service to agency and customers (free service to agency and customers (free ATM withdrawals, over the counter ATM withdrawals, over the counter withdrawals ?,…)withdrawals ?,…)

(Per (Per Interstate Technology Service Center Interstate Technology Service Center (ITSC) website:)(ITSC) website:)

- 11 states now doing debit cards or- 11 states now doing debit cards or testing/piloting (another 32 testing/piloting (another 32

planning).planning).

- 23 states doing DD, another 16- 23 states doing DD, another 16 planning/developing.planning/developing.

1616

Ensure Outreach to All Needed:Ensure Outreach to All Needed:

1) 1) All relevant Departments/ DivisionsAll relevant Departments/ Divisions are part of are part of developing RFP, & in developing RFP, & in reviews of RFP responses reviews of RFP responses and and planning discussions-not just planning discussions-not just ‘Program ‘Program area’.area’.

Other offices within just NYSDOL:Other offices within just NYSDOL: - Planning Office- Planning Office - Technology Office - Technology Office - Finance Office - Finance Office - Research and Statistics - Research and Statistics - Communications - Communications - Legal – Counsels Office - Legal – Counsels Office

Staff of these offices needed to be Staff of these offices needed to be familiar with familiar with RFP provisions & bank RFP provisions & bank proposals-proposals- knowledge not knowledge not centeredcentered with selected staff.with selected staff.

1717

2) 2) All All Partner AgenciesPartner Agencies are involved to are involved to maximum amount needed (partners maximum amount needed (partners with with responsibilities for deposits, responsibilities for deposits, reconciliations, disbursements, auditing reconciliations, disbursements, auditing all all payments):payments):

NYS: Joint Custodians Of UI Accounts:NYS: Joint Custodians Of UI Accounts:

o o Treasury- Major partnerTreasury- Major partner in daily in daily UI benefit payment operations— UI benefit payment operations—

responsible for deposits, responsible for deposits, disbursements and disbursements and

reconciliationsreconciliations..

o o State Comptroller’s Office-State Comptroller’s Office- Audits of Audits of payments. payments.

1818

--How will this affect processes?--How will this affect processes? --Provide input and buy-in early.--Provide input and buy-in early.

3) Plan 3) Plan Marketing and other outreach early:Marketing and other outreach early:

-- What should the State do – website -- What should the State do – website alerts, check stub announcements, alerts, check stub announcements, separate separate mailings, press releases;mailings, press releases;

- Remember the politics--initial discussions - Remember the politics--initial discussions with Governor’s Office, outreach towith Governor’s Office, outreach to legislature, advocacy groups, unions;legislature, advocacy groups, unions;

- What want - What want bank to providebank to provide in terms of in terms of marketing & training material.marketing & training material.

1919

Consider a Customer Interest Consider a Customer Interest Survey-Survey-

o NYS surveyed 5,000 claimants:o NYS surveyed 5,000 claimants:

-- Huge interest in EBT;-- Huge interest in EBT;-- Some unfamiliarity with cards -- Some unfamiliarity with cards

for government programs.for government programs.

o Provided valuable feedback o Provided valuable feedback early on (check stubs, early on (check stubs, other concerns). other concerns).

o Customer service is taken into o Customer service is taken into

account (advocacy groups, account (advocacy groups, unions, media)unions, media)..

2020

Procurement Pitfalls:Procurement Pitfalls:

- Research on banking industry: balance - Research on banking industry: balance finding out about standards in the finding out about standards in the industry industry vs. making outreach to banks vs. making outreach to banks that may that may be bidders;be bidders;

- RFP Requirements vs. ‘Nice to Have’s’--can - RFP Requirements vs. ‘Nice to Have’s’--can make or break proposals;make or break proposals;

- Allowable flexibility in scoring, - Allowable flexibility in scoring, asking asking follow up questions of entities follow up questions of entities

responding to RFP, fine-tuning plans after responding to RFP, fine-tuning plans after award is made, etc.award is made, etc.

- Some states more restrictive than others-- Some states more restrictive than others-NYS has lobbying laws, procurement NYS has lobbying laws, procurement laws.laws.

2121

Ensure Understanding of Electronic Banking Ensure Understanding of Electronic Banking World:World:

- - Culture changeCulture change for staff and for staff and customers (may be more of an issuecustomers (may be more of an issue for staff than customers!)for staff than customers!)

- - RFP terminology must be precise:RFP terminology must be precise: for example, ‘surcharges’ vs.for example, ‘surcharges’ vs. ‘transaction fees’, EReg, NACHA ‘transaction fees’, EReg, NACHA standards,standards,

- What are - What are standards in the industrystandards in the industry in in terms of bank holds on accounts,terms of bank holds on accounts, minimum/ maximum withdrawals, etc.minimum/ maximum withdrawals, etc.

2222

- - ACH transmittals:ACH transmittals: -- Formatting of ACH payments;-- Formatting of ACH payments; -- Storage of account information -- Storage of account information

(direct deposit)-(direct deposit)- -- No longer have paid files returned -- No longer have paid files returned

to agency.to agency.

- - Investigations & Fraud issues:Investigations & Fraud issues: o No more endorsed checks;o No more endorsed checks; o Patriot Act/Know your Customer IDo Patriot Act/Know your Customer ID issuesissues o Discuss what information should be o Discuss what information should be

forthcoming from bank forthcoming from bank without without subpoenas.subpoenas. o Claimant swipes issues o Claimant swipes issues confidentialconfidential..

2323

Steer clear of dealing with claimants regarding:Steer clear of dealing with claimants regarding:

- Individual card balances,- Individual card balances,- Individual swipe questions,- Individual swipe questions,- PINs, lost card—- PINs, lost card— let bank do these – let bank do these – customer-focused bank critical.customer-focused bank critical.

- Fraudulent use of cards is primarily bank - Fraudulent use of cards is primarily bank issue--but be advised for possible UI issue--but be advised for possible UI

fraud investigations.fraud investigations.

Nuances of Your Specific Contract:Nuances of Your Specific Contract:

- May contain relatively new service from - May contain relatively new service from viewpoint of bank (and viewpoint of bank (and

other other banks) staff;banks) staff;

- Card Customer Call Center staff may not - Card Customer Call Center staff may not always be special dedicated always be special dedicated

staff.staff.

2424

How has EBT Changed our Cash How has EBT Changed our Cash Management and Other Activities?Management and Other Activities?

((Negatives):Negatives):

a) a) Loss of Float:Loss of Float:

- Interest on balance before checks - Interest on balance before checks cleared. cleared.

b) b) Loss of Escheatment:Loss of Escheatment:-- Written off Written off after 74 days & returned to UI after 74 days & returned to UI

Trust Trust Fund.Fund.

- Return of unused funds not possible in EBT - Return of unused funds not possible in EBT environment. environment.

2525

Positives: Positives: 1)1) Better Management of State Funds/ Better Management of State Funds/ ‘Just-In-Time’ Funding of Accounts:‘Just-In-Time’ Funding of Accounts: Funding transfers/electronic disbursement:Funding transfers/electronic disbursement:

SundaySunday Monday Monday

a.m.a.m.MondayMondayBusiness Business

DayDay

MondayMonday

Evening to Evening to BankBank

TuesdayTuesday Wed Wed a.m.a.m.

Claimant Claimant certifiescertifies

(Weekly cert-(Weekly cert-not Orig. claim)not Orig. claim)

PaymenPayment t

initiateinitiatedd

Review by Review by OSC/OSC/

TreasuryTreasury

Initiate Initiate payment payment of ACH of ACH

NetworkNetwork

Claimant Claimant receives receives funds by funds by 6:00 a.m.6:00 a.m.

Direct Direct Deposit Deposit funds funds

available available to to

claimantclaimant

JPMC JPMC sends tran sends tran pay file to pay file to NYSDOL NYSDOL detailing detailing payments payments initiated initiated to ACH to ACH

networknetwork

DOL funds DOL funds total of total of

disbursemdisbursementent

2626

2) 2) Reduced State administrative CostsReduced State administrative Costs..3) 3) Faster access to $$ for claimants:Faster access to $$ for claimants:

NYSDOL claimants can, NYSDOL claimants can, depending depending on their geographic on their geographic location in location in NYS, have access to NYS, have access to their funds their funds sooner. Checks were sooner. Checks were mailed mailed Monday Monday afternoon from Albany – afternoon from Albany – could take 2-3 days to be received could take 2-3 days to be received

in outlying parts of state such as in outlying parts of state such as Buffalo. Now all claimants should Buffalo. Now all claimants should

have access on Tuesday.have access on Tuesday.

44)) More flexible access to benefits for More flexible access to benefits for customerscustomers..

2727

Results of Efforts:Results of Efforts:We’ve entered the electronic age with We’ve entered the electronic age with

outstanding partnersoutstanding partners (JPMC + State (JPMC + State Treasurer and her staff).—Treasurer and her staff).—

Both provided advice, outstanding services and Both provided advice, outstanding services and assistance to assistance to NYSDOL in countless ways. NYSDOL in countless ways.

Both were patient with us, too, as we learned (and Both were patient with us, too, as we learned (and continue tocontinue to learn) in the process.learn) in the process.

We’re jointly better meeting customers’ rising We’re jointly better meeting customers’ rising expectations, and have improved our expectations, and have improved our

services, efficiencies and processes as well.services, efficiencies and processes as well.