BEACHES The State of Alaskas Electronic Payment Solution

1
BEACHESThe State of Alaskas Electronic
Payment Solution
Michelle Prebula, CPA, CTP, AAPCash Manager,
State of Alaska
2
Outline

• Goals of electronic payment systems
• History of electronic payments in Alaska
• BEACHES development and structure
• Pricing
• Future development

3
Goals

• Decrease costs
• Increase efficiency
• Provide alternative methods of payment to and
  from individuals and organizations

4
Objectives

• Standardize payment and collection processes
• Eliminate duplication using centralization
• Decrease use of costly paper processes
• Use the Internet as a service delivery and data
  collection tool to decrease manual processing
• Aid in implementation of HB 494

5
HB 494
Sec. 37.25.050. Methods of disbursement. (a)
Except as provided in (b) this section, unless
federal law requires otherwise, a state agency
may not disburse money unless the disbursement is
made (1) by an electronic funds transfer to
an account in a financial institution or (2)
from an account established by the state agency
by contract with a financial institution under
which a person uses an electronic payment card
issued by the financial institution to access the
money.
6
Warrant Conversion Savings

• Up to .31 per transaction converted
• The state issues over 2 million warrant
  transactions each year
• Potential savings of 620,000 for converting
  warrants to ACH transactions even before the
  streamlining of internal processing costs is
  considered

7
History of Electronic Payments in Alaska
Independent Bank Connections
Pilot 1
Pilot 2

• Admin Payroll
• RB Payroll
• Admin Vendor Payments
• Unemployment Benefit Payments
• Student Loan Revenue
• Student Loan Disbursements

• DMV Business Partner Payments
• Revenue Tax Payments

Commerce Insurance Tax Payments
Costs Minimal, transaction only Technology
Phone Additional Implementation Process is too
manual to be supported within Treasury
Costs 96,000 annually transactional
costs Technology Phone Additional
Implementation 13,000 per application. Internet
not supported.
Costs Development and transactional
only Technology Various Additional
Implementation 300 PC hardware, and front end
application development Feasible only for large
volume applications, front end application
development has been prohibitive for smaller
agency applications.
8
Consolidation Savings

• Alaska is generating about one million ACH
  transactions each year using multiple independent
  systems
• These systems do not leverage economies of scale
• Alaska needs a single point of contact with the
  ODFI, decreasing equipment and software costs and
  third-party fees

9
BEACHES Development

• Recognized the need for a comprehensive payment
  solution
• Cooperative effort between 3 State departments
• Revenue, Treasury
• Administration, Enterprise Technology Services
• Labor and Workforce Development

10
BEACHES
All Agency Applications
ACH Bank
BEACHES
BEACHES is designed to replace all of the current
ACH methods listed above. Costs 80,000 -- one
time cost for development, 40,000 plus
transactional costs annually Technology
Primarily Internet, but can take data generated
by mainframe or PC applications. No additional
hardware or software is required by each
department for bank communication. Minimal
transition fees. Additional Implementation
Feasible for both large and small volume
applications. No implementation fees.
11
BEACHES Services

• Translates agency transactions into compliant ACH
  format
• Transmits ACH file to the States bank
• Provides access to and validates routing numbers
  against the latest version of the Thomson
  Table, through WEB Service methods
• Allows agencies to view processed, returned and
  notification of change ACH transactions
• Allows agencies to enter or delete warehoused
  transactions
• Allows agencies to store multiple bank routing
  and account information for each customer

12
Architecture

• BEACHES is comprised of three components
• Web Service Accepts and retrieves payment data
• 2. Batch Creates and transmits ACH files to
  and from the ODFI
• 3. Administrative Web Application Provides
  operational control and reporting

13
Web Service

• A Web Service is a web application that exposes a
  programmatic interface using standard protocols
  that can be accessed across the Internet. It is
  meant to be consumed by other applications, not
  by humans.
• Web Services are an innovative and cost effective
  means to deploy services at an enterprise level.
• The Web Service utilizes industry best practices,
  and follows the State of Alaska Technology
  standards.

14
BEACHES Security

• Agency Access Authentication requires myAlaska
  Application ID, password, and a BEACHES agency ID
  for every call to an EFT Web Service method
• Storage Bank routing numbers, account numbers
  and passwords are stored using an industry
  standard encryption algorithm
• Web Service and ODFI transmission uses Secure
  Socket Layers which ensures privacy of data
  transfers
• Transmission between BEACHES and the ODFI travels
  over a private dedicated communication line

15
Network Diagram
16
Adapting Applications to Use BEACHES

• Adapt agency application or web interface to
  collect transaction data and send to BEACHES
• Request Enterprise Technology Services (ETS) to
  set up a myAlaska application ID
• Request Treasury to set up division and
  subaccount number(s)
• Request Treasury to set up maximum and daily
  transaction total limits
• Provide data to BEACHES using its Web Service
  methods

17
Three ways to use BEACHES

• Feed data directly from subsidiary system
• Web interface using myAlaska
• Web interface not using myAlaska

18
myAlaska Interface
19
Employment Security
20
Employer Selection
21
Contribution Filing
22
ePayment
23
Payment Confirmation
24
DMV
25
ePayment
26
DMV Payment Confirmation
27
Administrative Web Application
28
How to Subscribe to BEACHES Reporting

• Obtain a valid State of Alaska employee e-mail
  account
• Subscribe to BEACHES administrative application
• Notify Treasury to activate reporting capability

29
User Roles

30
Reporting
31
Annual Costs
32
BEACHES ETS Rate Base Projections
33
How Will the State Pay for ACH Programs?

• Offset program costs with efficiencies gained
• Retained fee language in the front of the
  operating budget
• Fees vs Balances HB 494 the State may
  compensate the banks for handling state
  disbursements
• Working toward a separate appropriation for
  BEACHES

34
Retained Fees

• Chapter 133, SLA 2000, Section 31 is a standard
  section for what is referred to as Retained Fees.
  It reads
• Sec. 31. RETAINED FEES. The amount retained
  to compensate the collector or trustee of fees,
  licenses, taxes, or other money belonging to the
  state during the fiscal year ending June 30,
  2001, is appropriated for that purpose to the
  agency authorized by law to generate the revenue.

35
Application Users

• Current Users
• Corporate and Business Taxes
• Division of Motor Vehicles, Business Partners
• Planned Implementations
• Unemployment Insurance Tax (1/1/05)
• Insurance Tax (1/1/05)
• Environmental Conservation User Fees (1/1/05)
• Alaska Knowledge Base (2/28/05)
• Unemployment Insurance Benefits (6/1/05)

36
Questions?

• Michelle Prebula, CPA, CTP, AAP
• [phone]
• michelle_prebula_at_revenue.state.ak.us