Year 2000 Computing Crisis:

Readiness of State Automated Systems to Support Federal Welfare Programs

AIMD-99-28: Published: Nov 6, 1998. Publicly Released: Nov 6, 1998.

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Pursuant to a congressional request, GAO reviewed the year 2000 status of the state and local automated systems used in federal welfare programs, focusing on: (1) the reported status of systems used in Medicaid, Temporary Assistance for Needy Families, Special Supplemental Food Program for Women, Infants, and Children, food stamps, child support enforcement, child care, and child welfare programs, and the potential consequences of not modifying these systems in time for the year 2000 change; (2) year 2000 guidance provided by federal agencies to the states; and (3) any year 2000 oversight and monitoring activities that the federal agencies have performed.

GAO noted that: (1) the states reported that they were using 421 automated systems to manage the seven federal welfare programs in GAO's survey; (2) several states reported that they use more than one system to support a program; (3) while many states do not require year 2000 costs to be accounted for separately, states provided estimates totalling about $545 million during fiscal years (FY) 1997 through 2001 for completing year 2000 conversion of their welfare information systems; (4) failure to complete year 2000 conversion could result in billions of dollars in benefits payments not being delivered; (5) potential problems states cited were that: (a) new recipients could not be added to the recipient file; (b) eligibility for new applicants could not be determined; (c) recipients could be denied benefits; (d) payments could be underpaid or overpaid; and (e) payments could be delayed; (6) about one-third of the state welfare systems are reported to be compliant; (7) the compliance rate ranged from only 16 percent of the Medicaid systems to about half of the child care and child welfare systems; (8) states reported that they had completed the assessment phase for about 80 percent of the welfare systems supporting the seven programs; (9) according to the Office of Management and Budget guidelines, systems renovation work should have been completed by September 1998, however, as of the July/August 1998 response dates, states reported having completed renovation on only about one-third of the systems; (10) of those states that had not completed this phase, many systems were no more than one quarter complete; (11) 18 states reported that they had completed renovating one quarter or fewer of their Medicaid claims processing systems; (12) these 18 states had Medicaid expenditures of about $40 billion, one quarter of total Medicaid expenditures, for about 9.5 million recipients in FY 1997; (13) about one quarter of the systems were reported as having completed the validation and implementation phases; (14) states said that they had not developed test plans for about 27 percent of the systems; (15) 80 percent of states noted that routine systems development and maintenance activities and other changes have been delayed because of the year 2000 compliance efforts; (16) states cited the Department of Agriculture and the Health Care Financing Administration as providing the most guidance and oversight; and (17) the top category of desired additional support mentioned by the states was funding.

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