2004 INNOVATIONS AWARDS PROGRAMAPPLICATION FORM

ID #: 04-W-29MTCategory: Health and Human ServicesState: Montana

SubmittedApril 20, 2004

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

APRIL 20, 2004 2

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

2004 INNOVATIONS AWARDS PROGRAMApplication Form

(INSTRUCTIONS: Please complete and submit this document electronically if possible, e.g. a Word document. The application form is available online at our web site, www.csg.org, in the Programs section. Please determine the

appropriate Program Category from the enclosed Program Categories sheet,and list the category under the Category section below on the right.)

ID #: 04-W-29MTCategory: Health and Human ServicesState: Montana

1. Program NameMONTANA ACCESS

2. Administering AgencyMontana Department of Public Health and Human Services

3. Contact Person (Name and Title)Cynthia Whitbeck, MONTANA ACCESS Project DirectorAlt: Kellee English, MONTANA ACCESS System Specialist

4. Address2401 Colonial Drive, Helena MT 59604

5. Telephone Number(406) 444-0433Alt: (406) 444-5667

6. FAX Number(406) 444-3980

7. E-mail Addresscwhitbeck@state.mt.uskenglish@state.mt.us

8. Web site AddressUnder construction

9. Please provide a two-sentence description of the program.The MONTANA ACCESS program is an electronic benefits transfer (EBT) program, based on debit card technology that manages the distribution of Food Stamp Benefits and cash for the Temporary Assistance for Needy Families (TANF) program and Child Support payments.

APRIL 20, 2004 1

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

MONTANA ACCESS interfaces with the commercial banking industry to provide electronic payments to retailers for goods and food purchases and to financial institutions with automated teller machines (ATM) for cardholder cash withdrawal transactions.

10. How long has this program been operational (month and year)? Note: the program must be between 9 months and 5 years old on May 1, 2004 to be considered.The MONTANA ACCESS program has been operational since April 2002 when the Food Stamp Program was implemented. The ability to manage cash programs was made operational in October 2002. At that time the TANF cash program was implemented. MONTANA ACCESS was further expanded in March 2003 with the addition of Child Support payments.

11. Why was the program created? (What problem[s] or issue[s] was it designed to address?)The MONTANA ACCESS program was initially created to provide an electronic means for Food Stamp clients to receive benefits and utilize those benefits with dignity. The Department of Agriculture – Food and Nutrition Services (FNS) mandated that all states implement a statewide EBT program as of October 2002. The MONTANA ACCESS program was subsequently expanded to deliver TANF cash entitlements and Child Support payments through debit card technology.

Prior to EBT, Food Stamp benefits were delivered via paper coupons. EBT was implemented to address problems with paper coupons. One of the main issues the MONTANA ACCESS program focused on was the stigma of using the Food Stamp coupons. State employees can recount many stories of how program participants, particularly the elderly, have refused to apply for and use Food Stamps simply because they were embarrassed about the social stigma that, was associated with standing in a grocery check out line and attempting to pay for groceries with Food Stamp coupons in full view of an often times critical or disapproving public. Other issues the program was designed to address were:

Lack of benefit security, i.e., food stamp coupons were subject to loss, theft, and sale.

Problems with benefits not being received in a timely fashion, largely due to mailing delays in our rural environments.

The inability for the State to track Food Stamp usage. Problems for retailers not always receiving timely redemption. Time spent by retailers and financial institutions handling, sorting and accounting

for the Food Stamp coupons.

By further expanding the MONTANA ACCESS program to include TANF cash benefits and Child Support payments, the program sought to address issues related to the issuance of paper warrants.

APRIL 20, 2004 2

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

12. Describe the specific activities and operations of the program in chronological order.The State of Montana requested Northrop Grumman to research and prepare a white paper on the EBT options available to the State. In December 1999 a white paper was delivered to the State. Its recommendation was to conduct a study to determine if it was feasible for Montana to provide its own EBT services as opposed to contracting with a vendor for turnkey EBT services. The Feasibility Study, conducted by Northrop Grumman and Phoenix Maximus, began in March 2000 and was completed in June 2000. The goals of the feasibility study were to:

Research developing contracts with vendors for specific EBT services. Document at a high level general requirements. Document at a high level a proposed EBT Authorization Platform. Estimate the costs and time frame for developing the EBT program. Estimate the implementation costs of an EBT program. Estimate the ongoing operation and support costs for the EBT program.

The study concluded that it was indeed feasible for Montana to build and operate its own EBT program.

In July 2000 DPHHS contracted with Northrop Grumman to design, develop and implement the first, and only, state built EBT authorization program in the United States. Design and development of the program occurred from September 2000 through December 2001.

In January 2002, Food and Nutrition Services, with the quality assurance subcontractor Booz-Allen Hamilton, conducted a certification test of the newly developed program. The program passed the test with only 29 trouble tickets – a remarkably low number for such a complex program. Prior to proceeding to pilot implementation, two live demonstrations were conducted on the program. Volunteer Food Stamp and TANF participants were issued cards and benefits and allowed to make purchases at participating retailers. Again success was achieved and MONTANA ACCESS was ready for its pilot implementation.

Pilot implementation was conducted in two counties beginning in February 2002 and ending March 2002. All Food Stamp participants in Silver Bow and Hill counties were issued MONTANA ACCESS cards and they received their Food Stamp benefits electronically rather than in paper form. The pilot implementation was a success and the project readied itself for statewide rollout.

Statewide rollout was accomplished in three phases during the months of April, May and June 2002. On June 1, 2002 MONTANA ACCESS was fully implemented in the State of Montana for Food Stamp benefits. Statewide rollout occurred as planned and was hugely successful.

APRIL 20, 2004 3

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

Immediately after full implementation, the team began work on adding the capability to access cash benefits with the MONTANA ACCESS card. This culminated in October 2002 with MONTANA ACCESS having the ability to process TANF cash benefits. Following on the successful implementation of the TANF cash benefits, the project turned its sights on handling Child Support payments to custodial parents. In May 2003 this capability was implemented statewide.

13. Why is the program a new and creative approach or method?With the exception of one other state, the model for processing EBT services was for a state to contract with a vendor who offered a turnkey program. More often than not these programs were rigid and not responsive to the needs of the states.

The approach Montana chose was to work directly with the vendors, eFunds, VeriFone and Oberthur in the design, development, implementation and operation of their EBT program. Montana, in partnership with Northrop Grumman, designed, developed and implemented the MONTANA ACCESS program. Also in partnership with Northrop Grumman, Montana operates MONTANA ACCESS. The State of Montana is the only state to own and operate its own EBT program.

The operational model of MONTANA ACCESS is a true public-private enterprise. The State of Montana provides:

The necessary hardware for the software to operate. The interactive voice response unit. Telecommunication lines and equipment. Payment to retailers drawn from the State bank account. Draw downs from Federal accounts and money transfers. Administrative functions. Retailer and ATM contracts.

In another partnership with the United States Department of Agriculture (USDA) Food and Nutrition Services (FNS), the state shares retailer management responsibilities. This innovative approach involves the Federal and State governments working together to achieve a successful goal and program. The State received a $200,000 grant from FNS to support this effort.

Northrop Grumman and its subcontractors provide:

Transaction routing. Point of Sale devices. Customers and Retailer support 24 hours per day – 365 days per year. Software enhancement and maintenance. MONTANA ACCESS debit cards. Voucher processing.

APRIL 20, 2004 4

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

System support management. Disaster recovery capabilities.

The State of Montana and Northrop Grumman share responsibility for the authorization program, database and external interfaces. This close cooperation between public and private entities has been one of the keys to the success of the MONTANA ACCESS program as illustrated in question 23.

14. What were the program’s start-up costs? (Provide details about specific purchases for this program, staffing needs and other financial expenditures, as well as existing materials, technology and staff already in place.)The total development cost for the MONTANA ACCESS program was $2.1 million. Some of the purchases encompassed in this cost include:

System Design System Development Hardware

Three RS/6000 servers Three Interactive Voice Response (IVR) Units Routers Telecommunication Lines

Software Oracle 8i Database Oracle Designer 6i Oracle Reports Builder 6i IBM C Oracle 8i PL/SQL

POS Devices Omni 3200SE Pin Pad 1000SE

Debit Card Stock Brochures Food Stamp Offline Vouchers Training Materials

Videos State personnel training material Participant training materials Merchant POS installation instructions and use

15. What are the program’s annual operational costs?Annual operational costs for the MONTANA ACCESS program are approximately $1.5 million for all three programs, Food Stamps, TANF, and Child Support.

APRIL 20, 2004 5

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

16. How is the program funded?The three programs currently on the platform fund the MONTANA ACCESS program. In Montana, approximately 32,000 households receive about $6.6 million in Food Stamp benefits every month. The Food Stamp program carries the majority of the funding at 85% while Child Support Enforcement bears 12%, and TANF approximately 3%. Federal funds comprise 55% of the total funding and the remaining 45% are state funds.

17. Did this program require the passage of legislation, executive order or regulations? If YES, please indicate the citation number.The MONTANA ACCESS program did not require the passage of legislation, executive order or regulations. However, because of the project’s success, the State is considering submitting legislation that would further expand electronic funds transactions for other state agencies payment activities. For example, consideration is being given to use of the MONTANA ACCESS program platform to pay certain Medicaid providers, group home providers and to offer an alternative payment methodology for State Payroll.

18. What equipment, technology and software are used to operate and administer this program?The MONTANA ACCESS program was built for 7x24x365 operations and maximum availability. Attachment A depicts the high level architecture of MONTANA ACCESS. The design incorporates redundant equipment and communications links to ensure that the system is “always up”. The system has a number of automatic monitoring processes in place to detect problems (often before they impact the system) and notify on-call staff. If a system component fails, a redundancy is switched into place either automatically or within a few minutes.

The MONTANA ACCESS program utilizes three database servers that automatically update each other as transactions are posted. In a matter of minutes, the system can be switched to use any of the three databases as the primary. Two database servers are located in Helena and the third is at the MONTANA ACCESS Disaster Recovery site in another state. The software was developed using the Oracle 8i database, Oracle Designer 6i for Forms, Oracle Reports Builder 6i, IBM C and Oracle 8i PL/SQL.

In a similar way, the Interactive Voice Response (IVR) unit has three servers (again two in Helena and one in the Montana Access Disaster Recovery site). As with the database, phone calls can quickly and easily be directed to any of the IVRs.

Card transactions can occur through cardholder interaction with a Point of Sale (POS) device or an Automatic Teller Machine (ATM). These types of transactions are routed through eFunds to the Montana Access System. To ensure constant communications are in place between eFunds and Montana Access, there are several levels of redundant, alternate routes through T1 lines and dial-up ISDN connections.

APRIL 20, 2004 6

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

The State of Montana as required by USDA has implemented point of sale devices in qualified retailer establishments. The Verifone Omni 3200SE and PinPad 1000SE were chosen to be deployed. The State of Montana also uses a DataCard 295 machine to emboss and encode its own debit cards. By creating its own debit cards, the State of Montana has significantly decreased the amount of time needed to place a new MONTANA ACCESS card in the hands of the participant.

19. To the best of your knowledge, did this program originate in your state? If YES, please indicate the innovator’s name, present address, telephone number and e-mail address.Our variation of the MONTANA ACCESS platform definitely did originate in the State of Montana. The innovator was Mike Billings, MONTANA ACCESS Project Executive, 111 Sanders, Helena, MT 59604.

20. Are you aware of similar programs in other states? If YES, which ones and how does this program differ?Each state was required by Federal Law to have implemented by October 2002 an EBT program.

With the exception of one other state, Texas, the model for processing EBT services was for a state to contract with a vendor who offered a turnkey program. More often than not these programs were rigid and not responsive to the needs of the states.

The approach Montana chose was to work directly with the vendors in the design, development, implementation and operation of their EBT program. Montana, in partnership with Northrop Grumman, designed, developed and implemented MONTANA ACCESS. Also in partnership with Northrop Grumman, Montana operates MONTANA ACCESS. The state of Montana is the only state to own and operate its own EBT program.

21. Has the program been fully implemented? If NO, what actions remain to be taken?The MONTANA ACCESS program is fully implemented. On June 1, 2002, all Food Stamp benefits in Montana were issued using MONTANA ACCESS. This continues to be the case today. TANF cash benefits or child support payments are available statewide when the participant or recipient chooses to participate in the program.

The MONTANA ACCESS program was designed and built to be flexible and responsive to the needs of Montana. Montana continually reviews existing state programs where paper warrants are used to see if MONTANA ACCESS could issue those monies.

22. Briefly evaluate (pro and con) the program’s effectiveness in addressing the defined problem[s] or issue[s]. Provide tangible examples.The MONTANA ACCESS program has been effective in reducing program stigma and producing a safer and more efficient distribution method of and recipient access to benefits/payments. Also, it offers convenience to the economically disadvantaged citizens of

APRIL 20, 2004 7

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

our state and introduces these citizens into the mainstream of society. The convenience comes not only in reduced stigma for those who rely on public assistance programs, but in addition, the MONTANA ACCESS program relieves retailers and banking institutions from having to handle, sort, bundle, mail and account for the food stamp coupons. The MONTANA ACCESS program delivers program funds and benefits efficiently, accurately, and expeditiously. There is increased benefit security through the program and, with the elimination of paper coupons and warrants, there is no worry about benefits or funds arriving late or being lost or stolen. Montana benefits through the program by being better able to track food stamp usage, not having to distribute the food stamp coupons or create and mail costly benefit and payment warrants.

23. How has the program grown and/or changed since its inception?Currently, after less than two years in implementation, the number of Food Stamp participants averages 35,000 per month, compared to an average of 26,600 for the year preceding implementation of the MONTANA ACCESS Program (a 27.8% increase); also Food Stamp payments are averaging nearly $6,600,000 per month, compared to $4,600,000 for the months preceding implementation (a 43.5% increase). The graphs in Attachment B provide further detail.

The State continues to explore other programs, their payments and their suitability for the MONTANA ACCESS program.

24. What limitations or obstacles might other states expect to encounter if they attempt to adopt this program?MONTANA ACCESS architecture was designed for small to medium sized states. It is a straightforward and cost effective program and model. MONTANA ACCESS is built upon technologies and concepts existing in the EBT market. It also fits into the commercial market place and its standards. Most importantly, the MONTANA ACCESS program provides an alternative means of benefit and payment distribution and access.

Aside from the hardware, system software and telecommunication needs, states need to ensure they have sufficient staff to perform the administrative and financial management functions of the program. The state must also have the ability to interact with the commercial banking environment for money transfers and movement. Also states must ensure they have the legal ability to enter into contracts with retailers to provide point of sale devices and to participate in the program.

ApplicationForm04.doc

APRIL 20, 2004 8

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

APRIL 20, 2004 9

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

Attachment B

Food Stamp Program Payments

Child Support Program Payments

TANF Program Payments

APRIL 20, 2004 10

2004 INNOVATIONS AWARDS PROGRAM

APPLICATION FORM

Attachment B - continued

Food Stamp Program Usage: Number of Participants

Child Support Program Usage: Number of Payments

TANF Program Usage: Number of Participants

APRIL 20, 2004 11