Year 2000 Computing Challenge: Readiness of Key State-Administered Federal Programs

Published by the Government Accountability Office on 1999-10-06.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Government Management,
                          Information and Technology, Committee on Government
                          Reform, and the Subcommittee on Technology, Committee
                          on Science, House of Representatives

For Release on Delivery
Expected at
10 a.m.
                          YEAR 2000 COMPUTING
October 6, 1999           CHALLENGE

                          Readiness of Key
                          State-Administered Federal
                          Statement of Joel C. Willemssen
                          Director, Civil Agencies Information Systems
                          Accounting and Information Management Division

             Mr. Chairman, Ms. Chairwoman, and Members of the Subcommittees:

             Thank you for inviting us to participate in today’s hearing on the Year 2000
             readiness of state-administered federal programs. These programs include
             critical federal human services functions such as Food Stamps and
             Medicaid. As we reported in November 1998, many systems that support
             state-administered federal human services programs were at risk from the
             Year 2000 challenge and much work remained to ensure that services
             would continue.1 In February of this year, we testified that while some
             progress had been achieved, many states’ systems were not scheduled to
             become Year 2000 compliant until the last half of 1999.2 This past summer,
             we testified that although federal agencies were working with their state
             partners to obtain readiness information and provide assistance, much
             work remained at the state level to ensure that major services were not

             As requested, after a brief background discussion, today I will (1) highlight
             the reported Year 2000 readiness of 10 key state-administered federal
             human services programs and (2) discuss federal activities to assess states’
             readiness for these 10 programs.

Background   In March 1999, the Office of Management and Budget (OMB) designated
             42 programs as high impact (later adding a 43rd) and designated lead
             agencies for each. OMB reported that it designated those programs that, if
             disrupted, could have a direct effect on the public’s health and safety or the
             well-being of individuals.

             Almost one quarter of the programs on OMB’s high-impact list are
             administered by the states. These programs provide essential benefits, such
             as food stamps and unemployment benefits, to millions of people.

             Year 2000 Computing Crisis: Readiness of State Automated Systems to Support Federal
             Welfare Programs (GAO/AIMD-99-28, November 6, 1998).
             Year 2000 Computing Crisis: Readiness of State Automated Systems That Support Federal
             Human Services Programs (GAO/T-AIMD-99-91, February 24, 1999).
             Year 2000 Computing Challenge: Federal Efforts to Ensure Continued Delivery of Key State-
             Administered Benefits (GAO/T-AIMD-99-241, July 15, 1999).

             Page 1                                                                 GAO/T-AIMD-00-9
                                         Table 1 lists these 10 high-impact state-administered federal human
                                         services programs and the lead federal agency responsible for each.4

Table 1: State-Administered Federal Human Services Programs
Lead federal agency                               Program
Department of Agriculture                         Child Nutrition programs
                                                  Food Stamps
                                                  Special Supplemental Nutrition Program for Women, Infants, and Children
Department of Health and Human Services (HHS)     Child Care
                                                  Child Support Enforcement
                                                  Child Welfare
                                                  Low Income Home Energy Assistance Program
                                                  Temporary Assistance for Needy Families
Department of Labor                               Unemployment Insurance

                                         Source: OMB.

                                         For each high-impact program, the lead federal agency was charged with
                                         identifying to OMB the partners integral to program delivery; taking a
                                         leadership role in convening those partners; assuring that each partner had
                                         an adequate Year 2000 plan and, if not, helping each partner without one;
                                         and developing a plan to ensure that the program would operate effectively.
                                         According to OMB, such a plan might include testing data exchanges
                                         across partners, developing complementary business continuity and
                                         contingency plans, sharing key information on readiness with other
                                         partners and the public, and taking other steps necessary to ensure that the
                                         program would work. OMB directed the lead agencies to provide a
                                         schedule and milestones of key activities in the plan by April 15, 1999; it
                                         also asked agencies to provide monthly progress reports.

                                         OMB also directed federal oversight agencies to include the status of
                                         selected state human services systems in their quarterly Year 2000 progress
                                         reports. Specifically, OMB asked that agencies report the date when each
                                         state’s systems would be Year 2000 compliant. Further, it requested that

                                          Appendix I contains a description of each program.

                                         Page 2                                                                 GAO/T-AIMD-00-9
                         federal agencies describe their planned actions to help ensure that these
                         programs would be able to provide services and benefits.

Some State Programs      Table 2 summarizes the latest information on state-administered federal
                         human services programs reported by OMB on September 13, 1999.5 The
Reported as Already      table indicates that while many states6 reported their programs to be
Compliant; Others May    compliant, a number did not plan to complete Year 2000 efforts until the
                         last quarter of 1999. For example, nine states did not expect to be
Not Be Until Late 1999   compliant until the last quarter of 1999 for Child Support Enforcement,
                         seven states for Food Stamps, and four states for Unemployment
                         Insurance. Moreover, Year 2000 readiness information was unknown in
                         many cases. For example, according to OMB, the status of 16 states’ Low
                         Income Home Energy Assistance programs was unknown because
                         applicable readiness information was not available.

                          For Medicaid, OMB reports on the two primary systems that states use to administer the
                         program: (1) the Integrated Eligibility System, used to determine whether an individual
                         applying for Medicaid meets the eligibility criteria for participation, and (2) the Medicaid
                         management information system, used to process claims and deliver payments for services
                         rendered. Integrated eligibility systems are also often used to determine eligibility for other
                         public assistance programs, such as Food Stamps.
                         In the context of this testimony, the term states can include the District of Columbia and
                         U.S. territories, such as Puerto Rico.

                         Page 3                                                                       GAO/T-AIMD-00-9
Table 2: Reported State-level Readiness for Federally Supported Programs

                                                                             Expected date of 1999 compliance
                                                Est. compliance date
Program                       Complianta           before Aug. 1999b         Aug.      Sept.       Oct.       Nov.      Dec.        Unk.c       N/Ad
Child Nutrition                       41                              1          4          4          2          0          2           0          0
Food Stamps                            39                             0          3          5          3          4          0           0          0
Women, Infants, and
Children                              45                              0          0          2          3          3          1           0          0
Child Care                            25                             12          0          2          2          3          0           6          4
Child Support
Enforcement                           23                              9          2          7          4          3          2           4          0
Child Welfare                         23                             14          1          3          5          3          0           5          0
Low Income Home
Energy Assistance
Program                               25                              2          3          3          2          0          0         16           3
Medicaid − Integrated
Eligibility System                    25                             18          0          5          4          0          0           2          0
Medicaid −
Information System                    22                             16          5          4          4          1          0           2          0
Temporary Assistance
for Needy Families                    27                             15          2          4          2          1          0           3          0
Insurance                             39                              0          0         10          3          0          1           0          1

                                            Note: This chart contains readiness information from the 50 states, the District of Columbia, Guam,
                                            Puerto Rico, and the Virgin Islands.
                                             OMB defined compliant as when the state or territory had determined that its systems were able to
                                            provide services, whether directly or indirectly, to beneficiaries.
                                             In many cases, the report indicated a date instead of whether the state was compliant. According to
                                            OMB, in some cases, while the estimated dates had passed, confirmation of completion had not been
                                            received from the federal agencies.
                                             Unk. indicates that, according to OMB, no information was reported by the agency.
                                             N/A indicates that the states or territories reported that the data requested were not applicable to
                                            Source: Progress on Year 2000 Conversion: 10th Quarterly Report (OMB, data received August 13,
                                            1999; report issued September 13, 1999).

                                            The information in the OMB report was gathered, but not verified, by the
                                            Departments of Agriculture, HHS, and Labor based on submissions by the
                                            states and territories. As a result, some of the state information reported by
                                            OMB may not be accurate or up-to-date. For example, in five cases, state

                                            Page 4                                                                               GAO/T-AIMD-00-9
                            programs cited as compliant by OMB in its June quarterly report had
                            estimated compliance dates of October 1999 or later in its September
                            quarterly report.

                            Further, the late reported compliance dates of some states are problematic
                            since schedule delays or unexpected problems could well arise. Indeed,
                            reported schedule delays have now occurred in 8 of the 10 state-
                            administered programs since OMB’s June 1999 report.7 For example, OMB’s
                            June report showed that three states had estimated compliance dates in the
                            last quarter of 1999 for Food Stamps, while the most recent OMB report
                            indicates that seven states now have estimated fourth quarter compliance
                            dates. To illustrate, the June OMB report indicated that a state and a
                            territory were due to be compliant in June for Food Stamps but the
                            September OMB report indicated that the date for these entities had moved
                            to November 1999.

Assessments of State-       In addition to obtaining state-reported readiness status information, the
                            three federal departments are taking other actions to assess the ability of
Administered Human          state-administered programs to continue operating successfully into the
Services Programs Are       next century. However, the approaches of the three departments in
                            assessing the readiness of state-administered federal human services
Ongoing                     programs vary significantly. For example, HHS’ Health Care Financing
                            Administration (HCFA) obtained a contractor to perform comprehensive
                            on-site reviews in all states, using a standard methodology. Agriculture’s
                            Food and Nutrition Service’s (FNS) approach includes actions such as
                            having regional offices monitor state Year 2000 efforts and obtaining state
                            certifications of compliance. The Department of Labor is relying on its
                            regional offices to monitor state Year 2000 activities as well as requiring
                            states to obtain and submit independent verification and validation reports
                            after declaring their systems compliant. I will now briefly describe some of
                            the specific actions that the Departments of Agriculture, HHS, and Labor
                            have taken and/or plan to take.

Department of Agriculture   Agriculture’s FNS is responsible for three state-administered federal human
                            services programs−Child Nutrition; Food Stamps; and Women, Infants, and

                            There was no change in one state-administered federal program and the number of states
                            with estimated compliance dates in the last quarter declined by one for a second program.

                            Page 5                                                                   GAO/T-AIMD-00-9
Children. This past week we reported that FNS has taken action and made
progress in ensuring Year 2000 readiness of these programs.8 However, FNS
had a long way to go with the limited time remaining to fully meet its high-
impact program responsibilities. We continue to perform work in this area
for the House Committee on Agriculture, Subcommittee on Department
Operations, Oversight, Nutrition, and Forestry.

To obtain assurance that state systems are compliant, FNS’ regional offices
are collecting readiness status information from states as part of their
monitoring. Moreover, in June 1999, FNS required its regions to provide, for
each program, a copy of either a state letter certifying that it was Year 2000
compliant or a business continuity and contingency plan. As of August 25,
1999, FNS had received

• 15 certifications and 6 business continuity and contingency plans for
  Child Nutrition;
• 22 certifications and 16 business continuity and contingency plans for
  Food Stamps; and
• 25 certifications and 21 business continuity and contingency plans for
  Women, Infants, and Children.

The number of certifications provided to FNS9 is significantly lower than
the number of compliant state-level programs indicated in OMB’s latest
quarterly report (see table 2)−41 states for Child Nutrition; 39 for Food
Stamps; and 45 for Women, Infants, and Children.

Business continuity and contingency plans are essential to respond to two
types of failures: those that can be predicted (e.g., systems renovations that
are behind schedule) and those that are unforeseen (e.g., systems that fails
despite having been certified as Year 2000 compliant). Therefore, it is
important for organizations to have such plans, regardless of the readiness
status of their systems.

Although agency officials instructed FNS regional offices to require state
agencies for all three programs to prepare business continuity and
contingency plans, it remains unclear whether all states have adequate

Year 2000 Computing Challenge: Readiness of USDA High-Impact Programs Improving, But
More Action Is Needed (GAO/AIMD-99-284, September 30, 1999).
 FNS officials told us that some states are reluctant to provide certification statements
because of potential litigation concerns.

Page 6                                                                      GAO/T-AIMD-00-9
                           plans to ensure the continuity of these programs. For example, a
                           June 18 FNS document summarizing the agency’s review of contingency
                           plans received to date noted that “all need work.” It appears that little
                           progress has been made since then because, as of September 15, FNS
                           officials told us that only two states had submitted suitable contingency
                           plans. In addition, FNS has not established milestones for when states
                           should complete business continuity and contingency plans. Our
                           September report10 recommended that such milestones be established.
                           USDA and FNS agreed with this recommendation and said they planned to
                           take steps to implement it.

                           To help states with their Year 2000 efforts, FNS obtained a contractor to
                           conduct on-site visits to certain states and territories. Between May 1999
                           and September 1999, this contractor visited 21 states and territories−for
                           one or more state-administered programs−in which (1) the state had
                           estimated it would not be compliant until the last quarter of the year,
                           (2) the state had reported little or no progress to date, and/or (3) an FNS
                           regional office requested that the state be visited. These visits were
                           principally intended to provide technical assistance to the states in areas
                           such as Year 2000 project management, hardware and software testing, and
                           contingency planning. FNS headquarter officials told us that while they
                           have not required their regional offices to follow up with states in those
                           cases in which the contractor had recommendations for improvement, the
                           regional offices were doing so in some cases. As a next step, FNS plans to
                           have its contractor review contingency plans at those states that reported
                           that they expect to be compliant after September 30, 1999.

Department of Health and   Six of the 10 state-administered federal human services programs are
Human Services             overseen by either one of two HHS component entities, HCFA or the
                           Administration for Children and Families (ACF). HCFA has adopted an
                           approach that includes three rounds of on-site contractor reviews of states
                           (performed in conjunction with HCFA regional and headquarters offices)
                           using a standard methodology. Yesterday, we issued correspondence to the
                           Senate Committee on Finance on the results of our Medicaid work, as
                           summarized below.11

                                GAO/AIMD-99-284, September 30, 1999.
                                Reported Medicaid Year 2000 Readiness (GAO/AIMD-00-22R, October 5, 1999).

                           Page 7                                                                  GAO/T-AIMD-00-9
Between November 1998 and April 1999, the HCFA contractor completed
the initial round of on-site reviews in all 50 states and the District of
Columbia. These reviews included assessments of states’ integrated
eligibility systems and Medicaid management information systems (MMIS)
in areas such as project management and planning, remediation progress,
testing, and contingency planning. After completing the on-site review, the
contractor (1) identified barriers to successful remediation, (2) made
recommendations to address specific areas of concern, and (3) placed
Medicaid integrated eligibility and management information systems into
low, medium, or high risk categories based on the quality and completeness
of project management/planning, progress in remediation, quality
management, testing, and contingency planning.

Since May 1999, HCFA’s contractor has (again, along with officials from
HCFA regional and headquarters offices) conducted a second round of on-
site reviews in 40 states−primarily those in which at least one system was
categorized as a high or medium risk during the initial visit. As in the first
round, the state systems were placed in low, medium, or high risk
categories. A system’s risk level was determined based on the resolution of
critical issues previously identified, progress in remediation, testing, and
senior management support. During this round, HCFA’s contractor also
conducted follow-up telephone calls to four states not visited.

With respect to the risk levels assigned to the states, as of October 4, 1999,

• 4 eligibility systems and 5 MMISs were assessed at high risk,
• 13 eligibility systems and 8 MMISs were assessed at medium risk, and
• 36 eligibility systems and 40 MMISs were assessed at low risk.12

These risk ratings indicate that information in the latest OMB quarterly
report may have overstated the compliance status of some states. For
example, a program cited as compliant in two states (see table 2) was
considered to be at high risk by HCFA.

HCFA’s current state risk ratings represent an overall improvement from
those assigned after the first round of reviews. Nevertheless, many issues
continue to be unresolved at the states. For example, based on final and
draft reports for the eligibility systems and MMISs for 37 states, the District

 Thirteen state risk ratings in the low category are based on the results of first-round visits
because the states were not visited in the second round.

Page 8                                                                       GAO/T-AIMD-00-9
of Columbia, and two territories and completed follow-up telephone calls
to 3 states, (1) 43 testing issues were open, (2) 37 project management or
planning issues were open, and (3) 24 contingency planning issues were

HCFA’s third and final round of contractor visits began during the last week
of September. While HCFA had not finalized its list of states to visit as of
September 28, 1999, HCFA officials told us that all states will either be
visited or undergo follow-up telephone calls.

To complement its system reviews, HCFA obtained another contractor to
review state business continuity and contingency plans. In June 1999,
HCFA’s business continuity and contingency plan contractor began
reviewing the quality of state plans through either a desk audit alone or
both a desk audit and an on-site visit. After the contractor’s review, each
state’s plan was placed into a high, medium, or low risk category based on
the contractor’s evaluation of the state’s development process and the
quality and completeness of its plan. Of the 33 states and two territories
that have been reviewed by the business continuity and contingency plan
contractor as of October 1, 1999,14 11 were high risk, 11 were medium risk,
and 13 were low risk. In addition, many states were reported to have open
issues in essential areas. For example, 9 states had insufficient detail in
their plans, 7 states lacked management oversight, and 4 states did not
intend to test their plans.15

Regarding the other five HHS state-administered federal programs, ACF
modeled its state assessment program after that of HCFA. However,
because ACF began its Year 2000 review of state programs several months
later than HCFA, it is not as far along in its assessment of each state’s
ability to continue the operation of these programs into the next century.
As of September 27, 1999, an ACF contractor had conducted on-site
reviews of 50 states, three territories, and the District of Columbia. These
reviews, performed with the participation of ACF regional offices,
encompassed areas such as project management, business risk assessment,

     A state can have more than one issue in each area.
 As of October 1, 1999, 16 state business continuity and contingency plans had not been
reviewed, and 2 states had not provided their plans to HCFA.
     A state may have more than one issue.

Page 9                                                                   GAO/T-AIMD-00-9
                                           interfaces, testing, and the business continuity and contingency planning

                                           While ACF and its contractor have completed an initial round of site visits,
                                           the agency has only issued one final report and has provided draft reports
                                           to another 18 states even though some states were visited many weeks ago.
                                           For example, as of September 27, 1999, ACF had not provided draft reports
                                           to five states in which the visits had been completed in June.

                                           The delays in issuing reports restrict the value of the contractor’s state
                                           visits. For example, because draft reports may not be sent to states for
                                           months after on-site visits, the information in the reports may no longer be
                                           current. Further, the recommendations in the reports to improve the states’
                                           Year 2000 program may no longer be useful, applicable, or feasible.

                                           With respect to the 19 reports that have been provided to the states as of
                                           September 27, 1999, table 3 breaks out the number of states placed in each
                                           risk assessment level.

Table 3: Summary of Risk Levels as of September 27, 1999
                                                                                                                     Risk levels
                                                                                       Number of
Program                                                                              state reports            High         Medium       Low
ACF - Child Care                                                                                  19            1                  9      9
ACF - Child Support Enforcement                                                                   19            3                  6     10
ACF - Child Welfarea                                                                              18            0                  8     10
ACF - Low Income Home Energy Assistance Program                                                   19            0                  7     12
ACF - Temporary Assistance for Needy Families                                                     19            2                  7     10

                                            This program was not evaluated for one of the U.S. territories.

                                           Given the results of the contractor’s review, the state readiness information
                                           in the latest OMB quarterly report (see table 2) may have overstated the
                                           status of one state system. One state assessed as at high risk for the Child
                                           Care program was cited as compliant in the OMB report.

                                           The 19 reports also raised a number of concerns. The most common areas
                                           of concern were business continuity and contingency planning and testing.

                                           Page 10                                                                           GAO/T-AIMD-00-9
                      ACF plans to continue working with the states after the initial on-site
                      reviews are completed, and a second round of reviews is expected for at
                      least 10 states. According to an ACF official, this second round of reviews
                      will include a reassessment of the concerns raised in the first round as well
                      as technical assistance for business continuity and contingency planning.

Department of Labor   With respect to Unemployment Insurance, State Employment Security
                      Agencies (SESA) use automated systems to pay unemployment
                      compensation benefits to eligible workers and collect state unemployment
                      taxes from employers. We have ongoing work reviewing this program for
                      the House Committee on Education and the Workforce.

                      Labor’s regional offices are responsible for monitoring the SESAs’ Year
                      2000 activities to better ensure the reliability of state-reported readiness
                      status information provided quarterly to Labor. In September 1998, Labor
                      established a valuable tool in gauging the readiness status of state
                      Unemployment Insurance programs by requiring that all SESAs conduct
                      independent verification and validation reviews of their Unemployment
                      Insurance programs. The department set a target date of July 1, 1999, for
                      states to submit independent verification and validation reports of their
                      Unemployment Insurance systems to Labor. Labor obtained a contractor to
                      review these reports and rate them from low to high probability of Year
                      2000 compliance.

                      According to the Labor contractor’s review of states’ independent
                      verification and validation reports for their benefits and tax systems,

                      • 20 benefits and 19 tax systems had a low probability of compliance,
                      • 10 benefits and 9 tax systems had a medium probability of compliance,
                      • 7 benefits and 6 tax systems had a high probability of compliance.

                      In addition, 11 and 12 states, respectively, had not submitted independent
                      verification and validation reports for their benefits and tax systems.16

                      Given the results of the contractor’s review, the information provided in the
                      latest OMB quarterly report (see table 2) appears to overstate the readiness

                       Five benefits and seven tax systems independent verification and validation reports had
                      not yet been rated.

                      Page 11                                                                  GAO/T-AIMD-00-9
status of state systems. Of the 39 state Unemployment Insurance programs
cited in the report as compliant, Labor’s contractor rated 15 states as
having low probability for Year 2000 compliance for their benefits and/or
tax systems.

Labor’s contractor also reviewed states’ business continuity and
contingency plans. The states’ plans were rated from low to high in terms
of their compliance with Labor’s requirements for coverage of core
business functions of benefits and tax systems. Based on the contractor’s
completed reviews,17 the quality of state business continuity and
contingency plans varied widely. For example, according to Labor’s
contractor (1) 23 benefits and 14 tax plans had a low/very low degree of
compliance with Labor’s requirements and (2) 9 benefits and 5 tax plans
had a high degree of compliance with Labor’s requirements. In addition,
one and five states, respectively, did not submit business continuity and
contingency plans for their benefits and tax functions.

In summary, much work remains at the state level to ensure that major
services are not disrupted. At particular risk are several states with systems
that are not yet Year 2000 compliant. In addition, federal agency reviews of
business continuity and contingency plans for state-administered federal
programs indicate that many are inadequate. Federal agencies are working
with their state partners to obtain readiness information and evaluate and
provide assistance in key activities such as business continuity and
contingency planning. Nevertheless, some state completion dates are so
close to the turn of the century that the risk of disruption to their programs
is substantially increased, especially if schedule delays or unexpected
problems arise. This is especially troublesome considering the amount of
work remaining in developing effective business continuity and
contingency plans.

Mr. Chairman, Ms. Chairwoman, this concludes my statement. I would be
pleased to respond to any questions that you or other members of the
Subcommittees may have at this time.

     Eleven state tax business continuity and contingency plans were not yet rated.

Page 12                                                                      GAO/T-AIMD-00-9
Contact and       For information about this testimony, please contact Joel Willemssen at
                  (202) 512-6253 or by e-mail at willemssenj.aimd@gao.gov . Individuals
Acknowledgments   making key contributions to this testimony included David Alston,
                  Pamlutricia Bens, Margaret Davis, Norman Heyl, Troy Hottovy, Linda
                  Lambert, Glenn Nichols, Steve Schwartz, Cynthia Scott, and Mark Shaw.

                  Page 13                                                    GAO/T-AIMD-00-9
Appendix I

Descriptions of Ten State-Administered
Federal Human Services Programs                                                                            Appendx


Child Nutrition Programs   These provide healthful, nutritional meals to children in public and
                           nonprofit private schools, child care institutions, adult day care centers,
                           and summer recreational programs through the National School Lunch
                           Program, School Breakfast Program, Special Milk Program, Child and
                           Adult Care Food Program, Summer Food Service Program, and Nutrition
                           Education and Training Program. Agriculture funds these programs, while
                           state and local governments administer them. In fiscal year 1998, about
                           $8.7 billion was obligated for these programs.

Food Stamps                This program provides low-income households with paper coupons or
                           electronic benefits transfer cards that can be redeemed for food in about
                           200,000 authorized stores across the nation. Agriculture administers the
                           program in cooperation with state agencies. The federal government pays
                           the full cost of benefits and shares administrative costs with the states. In
                           an average month in 1998, 19.8 million people, or 8.2 million households,
                           received benefits.

Special Supplemental       This program is designed to improve the health of lower-income pregnant,
Nutrition Program for      breast-feeding and postpartum women; infants; and children up to age 5,
                           who are at nutritional risk. The program provides participants with
Women, Infants, and
                           nutritious supplemental foods, nutrition, education, and referrals to health
Children                   care services. Agriculture provides grants to states that, in turn, provide
                           program benefits to participants through local agencies. In 1998, the
                           program reached an average of 7.4 million people each month.


Child Care                 This is a block grant program that provides low-income families with
                           financial assistance for child care. It also funds activities to improve the
                           quality and availability of child care, and to establish, expand, or conduct
                           early childhood development programs and before- and after-school
                           programs. Grants are made to the states and Indian tribes to administer

                           Page 14                                                        GAO/T-AIMD-00-9
                            Appendix I
                            Descriptions of Ten State-Administered
                            Federal Human Services Programs

                            such programs. In fiscal year 1998, about $1 billion in grants was made to
                            provide child care services for about 1.25 million children.

Child Support Enforcement   This program provides four major services−locating noncustodial parents,
                            establishing paternity, establishing child support obligations, and enforcing
                            child support orders−to ensure that children are financially supported by
                            both parents. The federal government provides funding to the states and
                            local governments to run this program. In fiscal year 1998, the federal
                            government provided about $2.6 billion to states and local governments.

Child Welfare               Federal grants provide for programs delivering foster care, adoption
                            assistance, independent living for older foster children, family preservation
                            and support services, child welfare services, prevention of neglect/disabled
                            infants, and programs designed to improve the investigation and
                            prosecution of child abuse and neglect cases. Grants are provided to states
                            and local agencies to develop and administer such programs. In fiscal year
                            1998, about $4.3 billion was obligated to the states in grants for child
                            welfare programs.

Low Income Home Energy      This is a federal block grant program that assists eligible low-income
Assistance                  households in meeting their home energy needs. Grants are made to states,
                            the District of Columbia, Indian tribes and tribal organizations, and insular
                            areas. They can be used for energy assistance in heating, cooling, energy
                            crisis intervention, and low-cost residential weatherization and other
                            energy-related home repairs. In fiscal year 1998, about $1.2 billion was
                            obligated for this program.

Medicaid                    This is a federal/state-funded health care program furnishing medical
                            assistance to eligible needy persons. In fiscal year 1998, Medicaid paid
                            about $169 billion for medical services to millions of recipients. Medicaid
                            provides health coverage for about 33 million low-income people, which
                            include children, the elderly, the blind, and disabled individuals. Within
                            broad federal guidelines, each state establishes its own eligibility
                            standards; determines the type, amount, duration, and scope of services;
                            sets the rate of payment for services; and administers its own program.

                            Page 15                                                       GAO/T-AIMD-00-9
                           Appendix I
                           Descriptions of Ten State-Administered
                           Federal Human Services Programs

Temporary Assistance for   This program provides time-limited assistance to low-income families. HHS
Needy Families             provides block grants to the states to operate the program. The states are
                           given broad flexibility to set eligibility criteria and determine the types of
                           assistance they provide. In fiscal year 1998, the federal government
                           provided $16.5 billion in grants to the states.


Unemployment Insurance     The Unemployment Insurance program is a federal-state partnership that
                           covers 97 percent of all wage earners. Under this program, Labor is
                           responsible for establishing broad guidelines, general oversight, and
                           administrative funding, while SESAs pay unemployment compensation
                           benefits to eligible workers and collect state unemployment taxes from
                           employers. In fiscal year 1998, these state agencies collected $22 billion in
                           state unemployment insurance taxes.

(511800)       Leter       Page 16                                                        GAO/T-AIMD-00-9
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