NYS Unemployment Insurance UI Direct Payment Debit Card Program

1. 1 NYS Unemployment Insurance (UI) Direct Payment (Debit) Card Program Plans/Lessons Learned 12/5/06 National Association of State Treasurers

2. 2 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).

3. 3 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.

4. 4 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.

5. 5 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.

6. 6 Knew that critical to providing electronic benefit services to our customers would be:1) Bank customer service-oriented Call Center;2) Bank Interactive Voice Response (IVR) system;3) Bank website; ..for up-to-date debit card-related information to customers (current balances, weekly replenishments and other card related information).

7. 7 Visa/ MasterCard logo=wide acceptance. RFP�s 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.

8. 8 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.

9. 9 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.

10. 10 Method for transferring customer calls under State�s jurisdiction from bank�s 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;

11. 11 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.

12. 12 Lessons Learned: *** Don�t underestimate State IT systems requirements!_- Thorough understanding of agency programming resources, systems changes needed, and what you�ll 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). 

13. 13 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.

14. 14 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 USDOL�s handling of postage and mailing costs--accelerated state efforts are likely.

15. 15 - 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.

16. 16 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.

17. 17 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 Comptroller�s Office- Audits of payments.  

18. 18 --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 Governor�s Office, outreach to legislature, advocacy groups, unions;- What want bank to provide in terms of marketing & training material.

19. 19 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).

20. 20 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 Have�s�--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.

21. 21 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.

22. 22 - 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.

23. 23 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.

24. 24 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.

25. 25 Positives: 1) Better Management of State Funds/ �Just-In-Time� Funding of Accounts: Funding transfers/electronic disbursement:

26. 26 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.

27. 27 Results of Efforts: We�ve 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. We�re jointly better meeting customers� rising expectations, and have improved our services, efficiencies and processes as well.