States Enjoy New Authority, Revenue Boost

States Enjoy New Authority, Revenue Boost

By Neil Munro
Staff Writer

The federal regulatory strings that have tangled many state-level projects are being severed by the 1996 welfare reform law, allowing improved program management by state officials, say industry and government officials.

"The biggest problem was that we were focused on federal requirements, not the [state] customers," because the federal agencies provided up to 90 percent of each project's funding, said Larry Singer, president of Public Interest Breakthroughs Inc. The end result was that most projects were completed but were promptly rejected by state agencies whose needs were ignored by the developers, said Singer, whose Vienna, Va.-based nonprofit group advises states on information technology issues.

For example, federal agencies directed that child-support payments be made every 30 days, while many state agencies actually had to track payments that local judges directed should be paid every eight, 10 or 14 days, Singer said.

However, the 1996 welfare reform law has freed the states to experiment and to consolidate control over their sprawling information technology systems in the offices of state chief information officers, said Thomas Davies, a vice president at Federal Sources Inc., a market analysis firm based in McLean, Va. This new focus on management will help states better manage the projects, especially because they are funded by state money, he said.

The trend toward increased state control over information technology programs is greatly aided by an unexpected revenue windfall in the states, he said. The extra funds include taxes generated by the growing economy and by the transfer of much welfare-related funding from federal agencies to state governments, he said.

With the extra authority and money, state officials are moving ahead with a variety of innovative experiments, Davies said. For example, officials in Texas are going forward with plans to reorganize its welfare and support programs, partly via outsourcing of some tasks, despite a decision by the White House to bar the outsourcing of a critical task - the determination of eligibility for state aid, said Davies.

But, according to one industry official, the federal government can do much the states are unable to accomplish: share lessons learned from failures and successes, highlight differences in prices charged to the states by nationwide vendors, and also establish technical and policy standards.

State officials and industry observers say too-tight oversight by the federal government helped cause the failure of numerous state child-support projects begun in the early 1990s with federal funds. For example, the federal government has given $2 billion since 1987 to the states for the development of upgraded systems intended to improve the collection and distribution of child-support payments, as required by the 1988 Family Support Act. But only one state completed its project by the original deadline of Oct. 1, 1995, and only 17 states had completed their projects by Oct. 1, 1997.

These 17 states are Montana, Delaware, Georgia, Virginia, Washington, West Virginia, Arizona, Utah, Connecticut, Wyoming, Mississippi, Louisiana, New Hampshire, Idaho, Colorado, Oklahoma and Wisconsin.

By comparison, the federal government has successfully developed a child-support system that is now linked to 47 states. The $6.9 million program was awarded in January 1997 to SRA International Inc., a systems integrator based in Arlington, Va. The system is intended to track the hiring of parents to check whether they owe child-support payments in other states, said David Siegel, a Washington-based spokesman for the child support unit of the U.S. Department of Health and Human Services. Roughly 30 percent of the nation's 20 million child-support cases - involving roughly $12 billion per year - involve parents and children living in different states, he said.

As more states complete their child-support programs and link them with the federal system, governments should be able to deliver an extra $6.4 billion in child support payments over the next decade, Siegel predicted. Tougher laws, better identification of a newborn's father and improved coordination of states' tracking systems will generate another $18 billion in child support payments over the next decade, he predicted.