Tennessee's Unemployment Insurance Program

2013-2014

Joint Fiscal Review Committee June 10, 2014

Chair – Senator Bill Ketron

Vice Chair – Representative Mark White

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Single Audit In Perspective

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Perspective

Most Recent Audit Period July 2012 – June 2013

Prior Audit Period July 2011 – June 2012

Current Department Administration April 2013 - Present

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Headlines Jobless Benefits Paid To:

84 Felons Behind Bars (.0002% of 390,000 claims)

16 (19) State Workers (.00004% of 390,000 claims)

3 Dead People (.000007% of 390,000 claims)

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Overpayments FY 07-08 thru FY 12-13

$81,500,000 in overpayments (based on USDOL definition of overpayment)

Or

$181,000,000 in overpayments (includes $94.5 million COT estimated potential )

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Antiquated System

43 Years Old Mainframe System COBOL

(Common Business Oriented Language) 120 Programs

(Leaky Dam) Multiple Undocumented Additions and

Work Arounds 6

Leaky Dam

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Fraud Prevention

SAS (Fraud Detection Software)

Weekly Cross Matching

(Individuals Incarcerated)

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Citizens Properly Served

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Currently Approximately 29,500 Drawing TN Unemployment

72.3% of the Approved Claims are Paid within

Federal Guideline of 21 Days or Less (2013 average)

21 Days or Less - May 2014 65%, June 2014 68.6%

Overriding Priorities

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Customer Service Experience

Effective/Efficient Program Delivery

Acquire/Implement New Modern System

SCUBI

After Extensive Due Diligence Tennessee Removed Itself From the

SCUBI Consortium July 29, 2013

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Going It Alone Sought “off-the-shelf” Solution

(no “from scratch” creation)

Competitive Bid - RFP Contract Awarded Contract Signed

18-24 Months Implementation $38 Million Cost Avoidance

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IT Failures 2013-14 • Nevada – four years planning - $38 million • Pennsylvania - $107 + $60 million overruns

– 42 months past due • Florida - $63 million + $6 million overrun –

10 months overdue • California - $188 million • Massachusetts - $46 million + $6 million

overruns, 2 year overdue 13

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So Where is Tennessee? Incremental Improvements to Old

System

-While-

Implementing New Modern System

What You Hear From Constituents

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“The message said to call but I can’t get anyone on the phone!”

“I was approved but was locked out when I tried to

certify!”

“Why is it taking so long to get my decision (payments)?”

Call Reduction

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January 2014 – 803,786 (5 to 1 original callers)

February 2014 – 402,184 March 2014 – 299,948 April 2014 – 298,955 May 2014 – 249,829

(2 to 1 Original Callers)

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0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Jan Feb Mar Apr May Jun Jul

Call Attempts to Claim Center

21 Day Adjudication

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Converted Paper and Manual Centric Process to Digital Process

Effect on Backlog To Date;

Approximately 45% decline since January 2014

Certification – PIN Resets

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80% of Issues Revolve Around These

Very Recent Modifications Realizing Immediate Positive Results

New Customer Service System

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Interactive

30 Day Trial Through March 2014

Fully Implemented April 2014

Contract Signed for Modernization

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Contract signed May 1, 2014 for a New UI system to Replace the Mainframe System

Full Implementation Within 18-24 Months

$38 Million Cost Avoidance

Implementation Task Force

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UI/Employment Security Workforce Development

IT Fiscal Services

Automated Employer Tax Payment

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Automated system for employers to pay quarterly taxes

Since July 17th, 2013 implementation:

44,705 payments totaling $48,821,845.33

Trust Fund Health

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Tennessee in Top Eleven States with Trust Fund Balances in Excess of $700,000,000 as of March 2014

May 2014 Balance

$874,542,999

Solvency of States UI Funds

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U.S. Department of Labor – Trust Fund Solvency Report - May 2014

Questions

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