FFY2013 EAP Annual Training Part 2: DOC Internal Controls Director; Crisis

1. FFY2013 EAP Annual Training Part 2: DOC Internal Controls Director; Crisis

2. 2012 EAP Annual TrainingInternal Controls Presentation Of 15 Sheldon Klugman Internal Controls Director Minnesota Department of Commerce August 15, 2012

3. Who are you? • New hire to the Department of Commerce in April 2011 • Report to Deputy Commissioner Steve Carlson • Prior State experience – Department of Administration Management Analysis Unit • Prior private sector experience – Compliance Director Ameriprise Financial (IDS)

4. Who are you? • New hire to the Department of Commerce in April 2011 • Report to Deputy Commissioner Steve Carlson • Prior State experience – Department of Administration Management Analysis Unit • Prior private sector experience – Compliance Director Ameriprise Financial (IDS)

5. What Do You Do? • Work with Commerce leaders on designing strategies for integrating internal controls into business functions • Work with staff members on implementing tactics for detecting and preventing control gaps • Develop corrective action plans when controls gaps are identified • Represent Commerce in state-wide control activities such as: MMB’s Internal Auditors Roundtable, MN.IT’s Disaster Recovery, and the OLA’s audit process

6. Why Do You Do It? • Commissioner Rothman’s commitment to highest standards of controls and integrity • Prevent fraud, waste and abuse of State financial resources • Safeguard and prevent misuse of sensitive State information • Protect physical assets • Comply with laws, regulations and state-wide policies • Receive favorable feedback from OLA • Maintain a positive reputation for the Department

7. How Do You Do It? • Risk Assessments (MMB Controls Assessment) • Technical consulting • Training (Information Security Awareness) • Documentation (policies and procedures) • Testing (emergency contacts, remote access) • Process improvement (e.g., penalty collection)

8. Contact Information Sheldon Klugman Internal Controls Director Minnesota Department of Commerce Phone: 651.297.7685 Sheldon.Klugman@state.mn.us

9. Q & A

10. FY13 Crisis Program Intentions Implement FFY13 Crisis policies and procedures By (Agenda) Spiraling from overview to details • Explaining why & how the change occurred • Reviewing key concepts needed to understand details • Explaining details of new chapter and eHEAT

11. Why FFY13 Crisis Program Impetus for changes • FFY12 there were considerable changes to Crisis • Driven by funding reduction issues • Focus became keeping heat on - households have heat during the winter to the extent possible with limited funding • Enough changed last year – EACA and DOC requested JAD to detail and refine Crisis program • SMEs agreed FFY13 funding likely low again • OLA, findings, GAO improve program integrity also a driver

12. How FFY13 Crisis Program Process for development • October 2011 engaged SME in JAD to adjust FFY12 Crisis program due to lower funding(SME = subject matter expert, JAD = joint approach to development) • March 2012 EACA recommended Crisis JAD • May 2012 had 4 days of JADs with 11 SME to explore, assess and determine candidate specifications. • During & after JAD, grappled with & iterated concepts • DOC took SME input and designed Crisis policies - the devil was in the details (as always) • June & July continued to iterate with SMEs and state staff

13. How FFY13 Crisis Program JAD Subject Matter Experts (SME) • Stacy Draper • Catherine Fair • Richard Fuchs • Mary Heilman • Marla Lodermeier • Joan Markon • Tammy Stauffer • Judy Steinke • Pam Wild • Phil Wold • Scott Zemke

14. How FY13 Crisis Program How the conversation went • Not everyone agrees on everything ever • Agreed important to reserve Crisis funds • Guessing game to plan for resource allocation (SMEs estimated FY13 apps ranged from 173,500 to 127,900) • When JADing new ideas emerged • Detailed ways to improve verification and documentation, particularly use of new eHEAT screens • More details to verify and record – DOC & SME see it as necessary for program integrity • Attempt was to design effectivepolicies & technical solutions

15. Policy & eHEAT Overview High level list of policy changes • Fundamental change: PH first to address emergencies • Allow Crisis for non-heat electric • Coping with over 20% Crisis delivery mistakes • 24/7 phone coverage • Avoid self-supplied biofuel direct payments • Verification and documentation requirements

16. Policy & eHEAT Overview “Crisis Reasons” Changed How and Why: SME explored reasons during JAD. This expertise helped refine reasons: • Some were combined • Others renamed for clarity, but are not new reasons • Now serve non-heat electric Crisis households • Eviction-related not needed b/c of non-heat electric • Less variation in SP use of reasons - more consistent

17. Policy & eHEAT Overview Balancing policy and implementation • Improving controls & implementing efficient procedures is a challenging balancing act • For example, improved verification and documentation is required, but improved eHEAT functionality makes this less cumbersome • An improvement: the Crisis worksheet has been eliminated – all information will be entered directly into eHEAT

18. Primary Heat First Concept Intention • Illustrate key concepts needed to understand policy details by • Explaining “Primary Heat first” concept • Explaining key ideas • Illustrating with pictures

19. Primary Heat First Concept “Primary Heat first” Understanding • PH to address emergencies is key FFY13 change • There are several ways it could be applied • Options have been debated extensively • Believe the selected policy best meets EAP intentions and is the most effective and efficient • Essential to understand “Primary Heat first” to learn policies and procedures

20. Primary Heat First Concept Values • Keep heat on • Reserve Crisis funds • Reduce likelihood of credits • Treat households fairly • Consistent procedures • Efficiency • Prudence in handling household’s individual situation

21. Primary Heat First Concept Key Ideas “Primary Heat first” • One Crisis event to one vendor • Maximum of four Crisis events • Terminology change • “Emergency” is defined as any EAP Crisis reason – new language throughout Crisis chapter • “Crisis” means the benefit (no longer EB)

22. Primary Heat First Concept “Primary Heat first” Steps • Process PH as application designates • PH benefit split to heat & electric non-heat (i.e. 30%) • Improper manipulation of designations can result in a finding • Then process the emergency - PH payments are applied based on how they were designated by the HH • Each event is for a single vendor • When determining benefit, available ‘Payable’ PH for the vendor • If PH not enough, Crisis benefit is calculated to address the remainder

23. Policy & eHEAT Overview eHEAT Functionality Sneak Peak A quick look (not detailed) at 3 new eHEAT functions: • New Crisis screens appear when a Crisis reason is selected, with details specific to the reason • New ‘Determine Benefit’ button uses details to calculate Crisis benefit amount • Can disallow payment scheduling

24. Primary Heat First Concept FPO New Crisis Screen by Reason & Determines Benefit

25. Disallow Scheduled Payments

26. Primary Heat First Concept Illustration of “Primary Heat first” concept Key Codes • V1 – The vendor with whom the HH has the emergency • V2 – Other vendor with a PH benefit distribution as designated by the application process

27. Primary Heat first concept A.Emergency is more than PH Emergency V1 Vendor Emergency: $552 PH: $400 Crisis: ? Emergency: $552 $152 Crisis $152 • Specifics • PH payments must be “Payable” (if ‘Certifiable’ this is an error) • Enter emergency info on Crisis Event screen • eHEAT calculates using info and available Payable PH • Notify HH as needed PH: $400

28. Primary Heat first concept B. Emergency more than V1 PH & max Crisis V1 Emergency Other V2 Vendor Vendor Emergency: $916 $66 Emergency: $916 Emergency Vendor (V1) PH: $350 Other Vendor (V2) PH: $150 Crisis: ? $500 Crisis $500 • Specifics • Keep designation as app processed • eHEAT calculates • Work with HH on available payment moves (document) • Notify as needed • Rescheduling remaining V2 payments is optional (use prudence) PH: $350 (V1) PH: $150 (V2)

29. Primary Heat first concept C. Emergency vendor has no PH designated or available V1 Emergency Other V2 Vendor Vendor $500 Emergency: $655 Emergency Vendor (V1) : $0 Emergency Vendor (V2): $300 Crisis: ? Emergency: $655 $500 Crisis $155 • Specifics • V1 PH gone or no 30% designated • Work with HH on moves • eHEAT calculates • Notify as needed • Reschedule remaining V2 payments is optional (use prudence) PH: $300 (V2) PH: $0(V1)

30. Primary Heat first concept D. Emergency vendor has enough PH V1 Emergency Vendor Emergency: $332 PH: $400 Crisis: ? $0 PH: $400 Emergency: $332 • Specifics • Enter Crisis event • $0 event does not count as 1 of 4 events • Collapse payments to make $332 payment • Measures how many emergencies addressed by EAP funds

31. Primary Heat first concept Primary Heat First Q&A

32. Crisis Chapter Overview New Crisis Chapter • All new and improved • Policies reflect decisions Chapter Contents • Crisis Intentions • Crisis Eligibility Requirements • Crisis Benefit Determination and Distribution • Crisis Implementation • Processing Events by Crisis Reason

33. Crisis Chapter Overview Crisis Eligibility Requirements (pg 2) Requirements for household to receive Crisis benefit: • Household requested assistance by submitting a bill/disconnect notice/disconnection document or by notifying SP of energy emergency • EAP eligible • Received a PH benefit that did not resolve the emergency

34. Crisis Chapter Overview Crisis Eligibility Requirements (pg 2) Requirements to receive Crisis benefit (continued): • Have emergency situation verified & documented by SP with energy vendor at time Crisis benefit is determined • Be currently living in the dwelling at the time Crisis is requested and the benefit is determined • No redundant heating system with fuel

35. Crisis Chapter Overview Crisis Eligibility Requirements (pg 2) Requirements to receive Crisis benefit (continued): • Have one of the seven Crisis reasons • Heat Related Shut Off • Heat Related Disconnection Notice • Less than 20% in Fuel Tank and Refusal to Deliver (RTD) • Less than One Week Biofuel • Non-Heat Electric Shut Off • Non-Heat Electric Disconnection Notice • Senior Past Due or Current Energy Bill

36. Crisis Chapter Overview Assurance 16 and Crisis (pg 3) • A16 integral part of delivering Crisis • Determining best course to address emergencies - essential to work with households on their particular needs and preferences • SP applies program rules based on particular situation • Crisis often requires referral to other resources and advocacy • A16 is used to get CWR protection • A16 is used to promote household payment responsibility • EAP employs a Coordinated Responsibility Model - HHs, vendors, and EAP all have role in assuring heat for low-income households during the winter

37. Crisis Chapter Overview Crisis Benefit Determination & Distribution (pg 4) Allowable Crisis expenditures • Arrearage and current bill • Delivered fuels or emergency fuel • Energy-related fees such as pressure tests, leak seek, line bleeding, tank setting, tank rental, membership, after hours delivery costs, reconnection and service deposits • Removal of load limiters

38. Crisis Chapter Overview Crisis Benefit Determination & Distribution (pg 4) Amount of Crisis Benefit • Crisis benefit is amount needed to resolve the emergency and the current amount due - up to $500 • Available PH funds are applied first before calculating Crisis benefit amount • If the emergency is not resolved after the available PH benefit is applied, the HH is eligible for a Crisis benefit • No credit can be generated by a Crisis payment

39. Crisis Chapter Overview Crisis Benefit Determination & Distribution (pg 4) Amount of Crisis Benefit (cont.) • For delivered fuels, the Crisis benefit amount is the amount needed for a minimum delivery plus any current balance • The self-supplied biofuel direct payment amount is $250

40. Crisis Chapter Overview Crisis Benefit Determination & Distribution (pg 4) Distribution Requirements for Crisis Benefit: • Prior to approving Crisis, must verify and document • Available PH payment must be in ‘Payable’ status to be used in the calculation of Crisis (make ‘Certifiable’ payments ‘Payable’) • One Crisis event to one vendor • Maximum four Crisis events • When determining Crisis benefit, entered account balance must not be older than 7 days • No direct payments for self-supplied biofuel, unless no biofuel vendor available

41. Crisis Chapter Overview Crisis Benefit Determination & Distribution (pg 4) Distribution Requirements for Crisis Benefit (cont): • Crisis funds can be used to reduce HH balance even if payment does not resolve the emergency • If HH has both heat and non-heat vendor emergencies, priority is to maintain or restore heat • Follow Crisis timelines even when PH addresses the emergency • After using pending PH payments to address emergency, can reschedule remaining PH if it is substantial

42. Crisis Chapter Overview Crisis Implementation (pg 6) Response timelines • Life-threatening situation: • HH has no heat or no heat distribution • Must receive the highest service level – within 18 hours after request • Not immediately life threatening: • Examples: HH is scheduled for a shut-off or has less than 20% of the tank fuel capacity remaining. • Must provide assistance within 48 hours after request • Vendor can do crisis fill during regular route if HH has enough fuel remaining • HH member age 60 or older and not shut off or in danger of being shut off: • HH unable to pay past due and/or current energy bill • Not subject to 18/48 timeline – can be served in normal priority/delivery order Increasing national focus on states meeting response times. As required by federal law and the EAP contract.

43. Crisis Chapter Overview Crisis Implementation (pg 6) 24/7 accessibility – Oct 1 to Apr 15 • HHs must be able to access Crisis assistance 24 hours a day, seven days a week from October 1 through April 15 • SPs must have a 24-hour emergency number • SP staff must be available to address a life-threatening situation within 18 hours • Corresponds with health & safety heating season timeline

44. Crisis Chapter Overview Crisis Implementation (pg 6) Process to reduce ineligible Crisis deliveries • SPs had issues with tanks being over 20% • Process intended to reduce the delivery of fuel when HH reporting energy emergency mistakenly has more than 20% fuel in tank • There is leeway for fuel delivery if delivery truck goes out and HH tank is between 20% and 30% full

45. Crisis Chapter Overview Crisis Implementation (pg 6-7) Process to reduce ineligible Crisis deliveries (cont.) • When SP gets call from HH reporting less than 20% fuel, SP must: • Tell HH to make every effort to get an accurate tank reading. Suggest friend or neighbor read gauge if HH is unable to do so themselves. • Confirm with energy vendor the HH tank size, date & amount of HH’s last fuel delivery – to assess reasonableness of delivery need • Notify both HH & energy vendor that if fuel truck goes out & tank is over 30%: • No fuel will be put into the tank • Trip charge will be put on HH account • SP will use HH Crisis funds to pay vendor trip charge • If delivery to HH with tank over 30%, funds recovery process occurs

46. Crisis Chapter Overview Crisis Implementation (pg 7) Verification and Documentation • HH Crisis event must be entered into eHEAT • Each Crisis event makes a payment to one vendor • HH needing Crisis assistance with two energy vendors requires two Crisis events • HH allowed four Crisis events per program year

47. Crisis Chapter Overview Crisis Implementation (pg 7) Verification and Documentation (continued) • SP must document energy vendor verification of Crisis. Following must be entered in eHEAT for each Crisis event: • Crisis reason • Current balance owed • Date of verification with energy vendor • How verified with energy vendor (phone, fax, etc) • Name of verifying energy vendor employee (if applicable)

48. Crisis Chapter Overview Crisis Implementation (pg 7) Verification and Documentation (cont.) • Also, Crisis-related documentation should be saved in HH file (if not saved in eHEAT) including: • Copy of bill, disconnect notice or disconnection document • Reasonable Payment Worksheet (for seniors only) • Energy vendor Crisis verification documents, such as: • Copy of email • Printout from portal • Copy of fax • Delivery ticket

49. Crisis Policy & eHEAT by Reason Processing Events by Crisis Reason (pg 7-10) • eHEAT screens by Crisis reason • Specific fields for each reason

50. Crisis Policy & eHEAT by Reason Heat Related Shut Off (pg 8) • This is a life-threatening no-heat situation and the threat to life must be removed within 18 hours of HH request (when funds are available) Verification Requirements. The following information must be verified with the energy vendor and entered into eHEAT: • Energy account balance • Fees not included in energy account balance, if any • Date shut off