FORT WAYNE – The governor called for a “midcourse correction” at the state’s public-assistance agency more than two years ago, an about-face after months of criticism over Indiana’s outsourcing of services to a private contractor.

Today, the state’s welfare agency has improved its speed and accuracy enough that it’s ready to bring online the last and largest county in the state – Marion County.

Getting there has not been easy or inexpensive, but Indiana was awarded last year for most-improved payment accuracy by its federal partner in the food-stamp program, the U.S. Department of Agriculture’s Food and Nutrition Service.

In Allen County, which began the new program about a year ago, performance measures are the highest in years. Statewide, the agency has seen more Hoosiers take advantage of more convenient online application options. And the improved performance is coming at a time when more residents than ever are seeking aid, said Adrienne Shields, director of the Indiana Family and Social Services Administration’s Division of Family Resources.

“This has been a very long, tedious and difficult process,” Shields said.

Paying off

In 2006, Gov. Mitch Daniels’ administration inked a $1.3 billion welfare deal with IBM Corp., which was to lead a coalition of private vendors meant to modernize and streamline the state’s antiquated system of approving food stamp, Medicaid and other public assistance applications.

By the time the system had been implemented to large parts of the state, clients were complaining of lost documents and improper terminations of benefits. Public-records requests by The Journal Gazette in 2009 showed massive delays and error rates deemed unacceptable by federal authorities, and by October 2009, the administration canned the deal.

The costly fallout from that decision continues to build, as the state and IBM duke it out in lawsuits and argue whether Daniels should give depositions, as IBM’s attorneys want.

In early 2010, the Indiana Family and Social Services Administration announced an overhaul to the overhaul – what it has commonly called its “hybrid” system, taking the best elements of the IBM coalition and combining them with aspects critics said were lacking, namely face-to-face contact between clients and caseworkers.

The new system is not without its detractors, relying as it does on the largest and most controversial subcontractor in the IBM-led coalition, Texas-based Affiliated Computer Services.

The company was a former employer of Mitch Roob, the then-FSSA chief who oversaw the privatization effort.

As of early 2010, Affiliated Computer Services had a seven-year deal for more than $638 million as “prime contractor,” according to public documents.

But today, FSSA leaders say the changes are paying off for the state’s vulnerable clients. The administration’s Shields said the improvements have come about at a time when the number of residents depending on benefits has continued to grow.

At the end of last year, 907,423 Hoosiers were enrolled in the SNAP program – commonly referred to as food stamps. That’s about 14 percent of the state population, FSSA said.

Allen County’s rate is slightly higher at about 15.25 percent, slightly more than 54,000 residents, according to FSSA.

The approach was cautious, at least on paper. There was no announced timeline, and regions of the state were brought on board only when authorities deemed them ready.

Behind the scenes, though, there was overhaul. Staffs were rotated in and out of offices as all received new training, Shields said.

“That’s been kind of difficult, but we’ve been able to manage,” Shields said.

The Allen County region adopted the hybrid program about a year ago and has shown steady improvement nearly since the IBM contract was canceled.

At the start of 2010, barely half of Allen County residents’ applications for assistance programs were processed on time.

By July of last year, more than 77 percent were on time, and by December, the rate had risen to more than 91 percent, FSSA said.

Local offices are staffed by a mix of public workers, currently 53 percent, and private workers. Depending on geography, those employees have at various times over the past two years worked under three different systems: the pre-IBM way, the IBM-led way, and the hybrid way.

Shields said that’s part of the reason for retraining all employees. FSSA wanted to make sure all were on the same page for the hybrid system, which uses a group-management style to track cases.

Monthly conference calls with hospitals, senior agencies and other advocates have helped ensure FSSA is hearing constructive criticism, Shields said. Complaints through the state’s website, legislators and the governor’s office also are logged, and FSSA said those complaints have decreased 40 percent since 2009.

Offices have been upgraded with self-help kiosks for clients to check the status of their benefits, and clerks stationed at the front of the office can help those uncomfortable with technology.

Shields said team-style case management has been one of the best changes. Instead of one employee being responsible for a client’s single paper file, all files are digitized. Authorized employees can pull up the file anytime, meaning less pressure on employees, who could feel as if they were letting their clients down if they called in sick or took vacation.

“Staff are very excited, and they’re ready for a change,” she said. “They’re ready for new technology.”

Its own region

Marion County never adopted the IBM-style system, and it has remained a sort of time capsule, stuck in the pre-IBM way of doing business while FSSA worked out kinks.

To ensure success when the largest county is brought online Feb. 20, FSSA broke it out of a larger region, making the county its own region, and opened three new offices there.

FSSA’s improvements are welcome to observers who have watched other states try unsuccessfully to recover from failed privatization attempts.

Federal officials have said Texas’ failed privatization with a company called Accenture – which was being held up as a cautionary tale when Indiana charged ahead with its own plan – caused a five-year slide. In Texas, about 4 million people rely on food stamps, according to the USDA.

Organizations that help guide public policy for low-income communities have long been preoccupied with the use of private companies to administer public benefits.

John Bouman, president of the Sargent Shriver National Center on Poverty Law in Chicago, said much depends on the way a contract is structured.

IBM has noted in lawsuits related to the failed deal that it was trying to implement the new system during a massive influx of applications caused by the economic downturn and widespread flooding.

Bouman, speaking generally, said private contractors sometimes make the mistake of thinking a streamlined system is as simple as doing business in the private sector. Public assistance is the opposite of most business – the demand goes up as the economy worsens, Bouman said.

“You have to be prepared for that,” he said.

The problems with IBM in Indiana drew bipartisan criticism, but in the wake of the plan’s cancellation, Democrats were most vocal in calling for changes in accountability and transparency at the state’s largest agency.

Indiana Senate Minority Leader Vi Simpson, D-Bloomington, called the response from constituents to the changes at FSSA in 2008 and 2009 the most negative she’s seen in her 20-plus years as a lawmaker.

“They went too far,” she said. “They went too fast, and you just can’t experiment with people’s lives.”

Efforts by lawmakers calling for closer examinations of private contracts fell flat, and Simpson and others still aren’t satisfied with closed-door decisions by FSSA to cut some reimbursements and services.

When it comes to the improvements in food stamp and welfare applications, though, Simpson said she is happy to see them because there’s been too much at stake not to give it a full effort.

“Is it perfect? No. Are there still mistakes? Yes,” she said. “But it is 100 times better than the original privatizing experience.”

aturner@jg.net