Delivery of Emergency Benefits Lessons from Katrina

Delivery of Emergency Benefits – Lessons from Katrina FEMA 10 th Annual Emergency Management Higher Education Conference Thomas H. Stanton June 7, 2007 Washington, DC Copyright 2007 by Thomas H. Stanton

Delivery of Emergency Benefits – Lessons from Katrina Focus: Delivery of Emergency Financial Benefits • Existing benefits: Food Stamps, TANF, Social Security, unemployment insurance, government retirement, etc. • Emergency benefits: emergency Food Stamps, unemployment insurance, emergency cash aid, etc. n Emergency benefits can be delivered • At the disaster site, once power and telecommunications are restored • At evacuation sites immediately Copyright 2007 by Thomas H. Stanton

Delivery of Emergency Benefits – Lessons from Katrina 1. 2. 3. 4. 5. 6. 7. Megadisasters do happen Plastic is better than paper Ad hoc solutions work, but networks are more effective Organizational issues are critical Sort out legal issues in advance Payment integrity involves tradeoffs The building blocks are in place; leadership is needed Copyright 2007 by Thomas H. Stanton

Megadisasters do happen n Katrina/Rita/Wilma: an improbable high-impact occurrence • Over 1, 500 deaths • $ 88 billion in damage across 90, 000 square miles in five states • 600, 000 families displaced n How to pay for such events • Benefit delivery networks can serve both routine and emergency purposes • Federal government should backstop the states (economies of scale) • Recognize: preparation does cost resources • Recognize: with homeland security threats, preparation will pay Copyright 2007 by Thomas H. Stanton

Plastic is better than paper n Paper checks are costly and ineffective • • n Paper costs more than plastic When your home is underwater, where is the check? Checks are insecure No control over use of funds Plastic cards have advantages • • • Easy to issue, reload, and terminate Easy to use at multiple locations; good for the unbanked Better security Better fraud control Use of funds can be limited Agency gains important information Copyright 2007 by Thomas H. Stanton

Plastic is better than paper n Types of Benefit Card: • Direct deposit (EFT): excellent except for the unbanked • Branded debit card: Useful for the unbanked; reloadable; more costly than EBT n SEIU model shows benefits for the unbanked • Electronic Benefits Transfer (EBT) card: efficient and convenient; lacks consumer protections of a branded card • Branded stored value card: one-time, nonreloadable card Copyright 2007 by Thomas H. Stanton

Ad hoc solutions work; networks are more effective n Impressive Examples • Food Stamps – n n n Delivered $ 907 million in emergency Food Stamp benefits to 2. 3 million households EBT Network: USDA (FNS), state governments, private contractors, nonprofits Portable; accessible across the country • Texas Workforce Commission (TWC) – n 2. 6 million calls to special TWC hotline • Half serviced outside of Texas n n n Helped Louisiana develop Internet assistance applications Accepted applications, transmitted to LA Labor Department contractor, which issued LA unemployment debit cards Processed 68, 000 unemployment claims for Louisiana evacuees Copyright 2007 by Thomas H. Stanton

Ad hoc solutions work; networks are more effective n American Public Human Services Association (APHSA) • Composed of chief human services officials of each state • Contacted chief human services officials of affected states – assessment • Called for support to APHSA members • Discovered EMAC (Emergency Management Assistance Compact) n n Mutual aid agreement among states To provide National Guard, law enforcement, medical team, search and rescue and other personnel; commodities such as ice and water • Made EMAC work • 10 states sent intake workers to Louisiana and Alabama Copyright 2007 by Thomas H. Stanton

Organizational issues are critical n n Government must work across organizational boundaries For a megadisaster, and for effective program service, interoperability is essential • Benefit recipients must have access to benefits across state lines • In a disaster, evacuees must have access to benefits in all states n Interoperability requires common payment system rules Copyright 2007 by Thomas H. Stanton

Organizational issues are critical n The outstanding model: Electronic Benefits Transfer (EBT) • The network: federal officials (OMB, FMS, USDA), state officials (finance and human services departments), nonprofits (NACHA), for-profits (retailers, card system vendors, banks, processors) • The mechanism: EBT card, technical standards, operating rules, legal rules, contractor requirements (contractual incentives, sanctions, etc) • All states and DC offer EBT for food stamps • Many states add other benefits -- e. g. , TANF, Medicaid, child care Copyright 2007 by Thomas H. Stanton

Organizational issues are critical n Setting up the EBT Council (1995): • • • n Modeled on industry standards groups; consensus decisions Council respects power and authority of each participant OMB played a leadership role Goal of interoperability benefited all stakeholders Some disputes, e. g. , who could be an EBT provider EBT developments • 2000 law: Food Stamp EBT must be interoperable across the country • 2004: USDA says “Food Stamps” is a misnomer • States continue to add other benefits; these are not fully interoperable • Council maintains and updates EBT rules; governed by a balanced stakeholder board Copyright 2007 by Thomas H. Stanton

Sort out legal issues in advance n Statutory waiver authority is essential • Again USDA/Food Stamps are the outstanding example n n n Hot food purchase; compensation for lost food More liberal access to benefits (e. g. , no need for user to have the card) Advancing date for program benefits Adjust issuance methods and reporting requirements Needed for many other programs • Should authorize emergency benefit payments under expedited methods • Other changes, e. g. , turn WIC into food stamps? n Other legal issues must be sorted out • E. g. , authority to respond to apparent misuse • E. g. , privacy issues and information sharing with other programs and agencies Copyright 2007 by Thomas H. Stanton

Payment integrity involves tradeoffs n The major tradeoff: processing time • In a megadisaster, intake is overwhelmed n Treasury sponsored debit cards: 1. 4 million in Katrina vs. less than 100, 000 in 2004 and 1992 hurricanes • E. g. , FEMA turned off automated edits of applications n The tradeoff when deciding who should issue benefits (e. g. , SBA disaster loans) n Optimizing tradeoffs • • n Conduct risk assessments beforehand Have policies and procedures in place Use automated systems when possible Branded cards and EBT cards can limit use of benefits The problem of headline risk vs. program risk Copyright 2007 by Thomas H. Stanton

The building blocks are in place; leadership is needed n Intake • ACCESS FLORIDA – Internet-based application system (Food Stamps, TANF, Medicaid) • Coordinated Assistance Network (CAN) – integrated intake portal for nonprofits • Benefits. Check. Up (Nat’l Council on Aging) – Internet-based analysis of benefits based on eligibility • SBA GO Loan Program – using local banks to process disaster loan applications n Restoring service infrastructure • Bank of America – Emergency mobile banking services (check-cashing, ATMs, open new checking accounts to access EFT benefits, provide information to Treasury) n Enhanced interstate cooperation • APHSA – Networking to make EMAC rapidly available Copyright 2007 by Thomas H. Stanton

The building blocks are in place; leadership is needed Improving program integrity – Lessons from the Red Cross • Improve systems to authenticate identity of applicants, especially at call centers • Train intake workers; provide computerized scripts • Create sense of payment integrity among intake workers • Conduct volunteer background checks • Control passwords and user IDs n Other improvements • • • n Monitor to prevent duplicate applications, etc. Mine data to detect fraud and abuse early Lower initial benefits on cash cards; reload benefits later after more thorough screening In a megadisaster, some fraud will not go away • Both program fraud and fraud on people Copyright 2007 by Thomas H. Stanton

The building blocks are in place; leadership is needed n • Leadership is urgently needed Federal agency leadership n n n • OMB leadership n n n • Other major programs (e. g. , TANF, unemployment benefits) must become electronic and interoperable across state lines Regulations must provide guidance and flexibility for a megadisaster Risk assessments must guide program rules for a megadisaster Encourage statutory emergency waivers clarify legal rules for a megadisaster encourage agencies to adopt the EBT Council model for key programs ensure that the unbanked are not left out Assure allocation of adequate resources to advance preparation State leadership n n States urged federal support for the EBT Council; should urge adding other programs States should ensure EMAC officials know their human services counterparts Copyright 2007 by Thomas H. Stanton