Indiana Gov. Mitch Daniels issued this statement Wednesday about a Marion County judge’s ruling in the state’s lawsuit against IBM:
“Here’s what matters: Indiana, which eight years ago had the nation’s worst welfare system, now has its most timely, most accurate, most cost effective and fraud free system ever. That was always the goal, and changing vendors was essential to achieving it. We’ll seek and expect a reversal, and either way, it’s all been well worth it to solve the problem we set out to fix.”
The U.S. Department of Agriculture (USDA) recently recognized Indiana’s Family and Social Services Administration (FSSA) for its second straight year of achieving payment accuracy and negative error rates that are better than the national average in both categories. A year ago, Indiana was the second most improved state for payment accuracy and earned a $1.6 million bonus.
Among other improvements since the state terminated its contract with IBM in 2009 and turned to other private vendors to modernize the delivery of welfare services throughout the state:
Timeliness to process applications within required standards for all programs is now 93 percent compared to 65.6 percent in 2009 under IBM, and 74 percent in 2005. This includes applications for Medicaid, the food stamp program known as Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance to Needy Families (TANF).
The error rate for individuals incorrectly denied SNAP benefits is well below the national average and has plummeted since the IBM contract was terminated. The error rate was 5.64 percent for federal FY 2011 but was 13.69 percent in 2009 with IBM and 6.58 percent in 2005.
The SNAP error rate for payment accuracy has been reduced by nearly half from the IBM contract period to federal Fiscal Year 2011 (7.13 percent to 3.29 percent). The error rate was 6.58 percent in 2005.
Timeliness for eligible recipients to receive benefits more quickly and accurately has improved despite a nearly 90 percent increase in application volume since 2005. The state processed about 696,000 welfare applications in 2005 and is expected to process more than 1.3 million applications this year.
The state’s case backlog has dropped 81 percent since the IBM contract was terminated.
Adam Horst, the director of the Office of Management and Budget, said “Even if this ruling stands, it will have zero impact on the state surplus. The state sets aside funds for exactly this type of lawsuit contingency. Taxpayers are way ahead because of the decision to modernize our eligibility system.”
If the state had taken no action to change its welfare system, the cost to operate the old system just this year would have been $61 million more than the system now in place. Since the state began using different private vendors in early 2010, savings versus the old welfare delivery system have been $129 million, according FSSA Secretary Michael Gargano.