NYS Unemployment Insurance UI Direct Payment Debit Card Program

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NYS Unemployment Insurance (UI) Direct Payment
(Debit) Card Program

• Plans/Lessons Learned
• 12/5/06
• National Association of State Treasurers

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RFP/Initial Plans

• After 2 year effort, first ever RFP for NYS UI
  Benefit Banking services (traditional checking
  and electronic benefits) was issued July 05
• RFP contained plan for initially changing over to
  new bank for checks, working with the State to
  implement debit cards and direct deposits as
  State was ready (Plan multi-year, phased
  changeover to EBT).

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Major service improvements that Department of
Labor and our Partners envisioned receiving with
RFP

• Electronic Banking (Direct Deposit/Debit Cards)
  for weekly benefit distribution.
• Lockbox (or alternative) service for receipt of
  claimant reimbursements to State for overpayment
  of benefits.

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Need For Electronic Banking

• Problems associated with printing and issuance
  of 10M to 14M weekly paper benefit checks/year.
• Cost savings
• - Staff time associated with lost and
  replacement checks, taking forgery-related
  calls affidavits- Bank fees for check stock
  and check processing
• - Internal printing and mailing costs
• - Need to safeguard check stock
• - Printing equipment failures and delays.

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• The Key A system less dependent on, and
  substantially free of, paper checks as soon as
  feasible.
• Two mechanisms Per RFP
• 1) Initial distribution of, and subsequent
  weekly replenishments to, virtual bank
  accounts for those customers opting to
  utilize debit cards instead of direct
  deposit.
• - 2) Claimant customers personal checking
  accounts via direct deposit.

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• Knew that critical to providing electronic
  benefit services to our customers would be1)
  Bank customer service-oriented Call Center2)
  Bank Interactive Voice Response (IVR)
  system3) Bank website
• ..for up-to-date debit card-related information
  to customers (current balances, weekly
  replenishments and other card related
  information).

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• Visa/ MasterCard logowide acceptance.
• RFPs Plan provide secure access to benefits
  through optional weekly electronic
  replenishments of individual claimant benefit
  payments.
• With this RFP NYSDOL was at the forefront of
  NYS state agencies most state level
  Departments of Labor across the country.

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Among RFP Requirements

• Bank must deal directly with claimants
  regarding
• 1) Issuance of cards and replacement
  cards,2) PIN changes, withdrawals, account
  balances,3) Fraudulent use of cards, account
  overdrafts, etc.
• Minimum (1) Surcharge-free Automated Teller
  Machine (ATM) withdrawal of cash per weekly
  replenishment.

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• Desirable Up to 3 ATM withdrawals/ week
  balance inquiries at ATMs at no cost, on a 24
  hour/7 day a week accessibility basis.
• Wide network of ATM/ POS access.
• Claimants not overdraw their debit card accounts
  (while not an overpayment on our books still
  not encouraged).
• Assist State Informational and marketing
  materials for customers, and in training of
  State staff.

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• Method for transferring customer calls under
  States jurisdiction from banks Customer Call
  Center to DOL Call Centers (or alternate State
  offices designated)--seamless and customer
  service oriented fashion.
• ---------------------
• Received 4 bank proposals-- award made 12/05
  after lengthy multi-agency proposal review and
  scoring process

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• We received better than we imagined
• JPMC Outstanding in its proposal --and
  continues to be extremely responsive to us and
  our customers. Finalized contract with JPMC in
  Summer of 2006
• Decision to eliminate checks altogether-- NYSDOL
  mandated direct payment cards for all claimants
  as of 9/10/06 required mass conversion of
  160,000 claimants that had been receiving
  checks, and large mailing of cards on part of
  bank and its subcontractor card vendor
• Currently looking to implement direct deposit as
  an option (via web enrollment) early in 2007 for
  new claims and weekly certification payments.

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• Lessons Learned
• Dont underestimate State IT systems
  requirements!_- Thorough understanding of
  agency programming resources, systems changes
  needed, and what youll need the bank to assist
  with--before you finalize the RFP.- Plan
  around IT resources-vs. catching-up.
• - Know other touch points in mainframe/ legacy
  systems affected by this change (such as child
  support payments, charge back of benefits to
  employers, codings).

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• TEST TEST TEST BEFOREHAND!
• Know other resource limitations. This includes
  all relevant staffing (not only quantity of
  staff but quality of knowledge) in all affected
  areas and offices as well as equipment,
  software, etc.
• Utilize Formal Project Management Experience
  
• --Maintain open communication between all
  parties involved. Make potential problems
  known to all.

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• Establish contacts with States already doing
  electronic payments--cards and DD as much as you
  can.- Proved invaluable as we reached out to
  Utah and Oregon as the first 2 states doing
  cards.- Other states RFPs/contacts may be
  helpful- With changes in USDOLs handling of
  postage and mailing costs--accelerated state
  efforts are likely.

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• - Assess your own needed levels of service to
  agency and customers (free ATM withdrawals, over
  the counter withdrawals ?,)(Per Interstate
  Technology Service Center (ITSC) website) -
  11 states now doing debit cards or
  testing/piloting (another 32 planning). -
  23 states doing DD, another 16
  planning/developing.

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• Ensure Outreach to All Needed
• 1) All relevant Departments/ Divisions are
  part of developing RFP, in reviews of RFP
  responses and planning discussions-not just
  Program area.
• Other offices within just NYSDOL -
  Planning Office - Technology Office -
  Finance Office - Research and Statistics
  - Communications - Legal Counsels
  Office Staff of these offices needed to be
  familiar with RFP provisions bank
  proposals- knowledge not centered with
  selected staff.

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• 2) All Partner Agencies are involved to
  maximum amount needed (partners with
  responsibilities for deposits, reconciliations,
  disbursements, auditing all payments)
• NYS Joint Custodians Of UI Accounts
• o Treasury- Major partner in daily
  UI benefit payment operations responsible
  for deposits, disbursements and
  reconciliations.
• o State Comptrollers Office- Audits of
  payments.

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• --How will this affect processes?
• --Provide input and buy-in early.
• 3) Plan Marketing and other outreach early
• -- What should the State do website alerts,
  check stub announcements, separate mailings,
  press releases- Remember the
  politics--initial discussions with
  Governors Office, outreach to legislature,
  advocacy groups, unions- What want bank to
  provide in terms of marketing training
  material.

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• Consider a Customer Interest Survey-
• o NYS surveyed 5,000 claimants
• -- Huge interest in EBT
• -- Some unfamiliarity with cards for
  government programs.
• o Provided valuable feedback early on (check
  stubs, other concerns).
• o Customer service is taken into account
  (advocacy groups, unions, media).

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• Procurement Pitfalls
• - Research on banking industry balance
  finding out about standards in the industry vs.
  making outreach to banks that may be bidders-
  RFP Requirements vs. Nice to Haves--can make
  or break proposals- Allowable flexibility in
  scoring, asking follow up questions of entities
  responding to RFP, fine-tuning plans after
  award is made, etc.- Some states more
  restrictive than others- NYS has lobbying laws,
  procurement laws.

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• Ensure Understanding of Electronic Banking
  World- Culture change for staff and
  customers (may be more of an issue for staff
  than customers!)- RFP terminology must be
  precise for example, surcharges vs.
  transaction fees, EReg, NACHA standards,-
  What are standards in the industry in terms
  of bank holds on accounts, minimum/ maximum
  withdrawals, etc.

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• - ACH transmittals
• -- Formatting of ACH payments
• -- Storage of account information (direct
  deposit)- -- No longer have paid files
  returned to agency.- Investigations
  Fraud issues
• o No more endorsed checks o Patriot
  Act/Know your Customer ID issues o
  Discuss what information should be forthcoming
  from bank without subpoenas. o Claimant
  swipes issues confidential.

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• Steer clear of dealing with claimants regarding
  - Individual card balances,- Individual
  swipe questions,- PINs, lost card let bank do
  these customer-focused bank critical.
• - Fraudulent use of cards is primarily bank
  issue--but be advised for possible UI fraud
  investigations.
• Nuances of Your Specific Contract- May
  contain relatively new service from viewpoint
  of bank (and other banks) staff- Card
  Customer Call Center staff may not always be
  special dedicated staff.

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• How has EBT Changed our Cash Management and Other
  Activities?
• (Negatives)
• a) Loss of Float
• - Interest on balance before checks
  cleared.
• b) Loss of Escheatment- Written off after
  74 days returned to UI Trust
  Fund. - Return of unused funds not
  possible in EBT environment.

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

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• 2) Reduced State administrative Costs.
• 3) Faster access to for claimants NYSDOL
  claimants can, depending on their geographic
  location in NYS, have access to their funds
  sooner. Checks were mailed Monday
  afternoon from Albany could take 2-3 days to
  be received in outlying parts of state such as
  Buffalo. Now all claimants should have
  access on Tuesday.4) More flexible access to
  benefits for customers.

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Results of Efforts

• Weve entered the electronic age with outstanding
  partners (JPMC State Treasurer and her
  staff).
• Both provided advice, outstanding services and
  assistance to NYSDOL in countless ways.
• Both were patient with us, too, as we learned
  (and continue to learn) in the process.
• Were jointly better meeting customers rising
  expectations, and have improved our services,
  efficiencies and processes as well.