HHS Ability To Effectively Implement Incentive Funding for State Information Systems in the Aid to Families With Dependent Children Program

New legislation authorized the Federal Government to begin paying 90 percent of the costs incurred by States for the planning, design, development, or installation of Statewide mechanized claims processing and information retrieval systems for administering the Aid to Families with Dependent Children (AFDC) program. Currently, the Federal Government pays 50 percent of both development and operating costs related to these systems. The legislation contains several specific conditions for obtaining increased Federal funds. To meet these requirements, the Department of Health and Human Services (HHS) has developed a general systems design, the Family Assistance Management Information System (FAMIS), which provides a standard approach for State AFDC systems development activities. FAMIS is to serve as a system standard that States must meet to be eligible for the increased Federal matching funds. Because FAMIS has not been pilot tested to demonstrate its feasibility, GAO has expressed concern that the FAMIS requirements: (1) have not been shown to be cost beneficial for all State systems, (2) do not contain sufficiently specific performance standards for evaluating the quality of State developed systems, (3) do not adequately address the internal controls needed to ensure that State systems function as mandated by legislation, and (4) do not facilitate compatibility of State AFDC systems with systems used to administer other welfare programs. Therefore, GAO reviewed HHS policies and procedures for approving the administration of Federal incentive funding of State AFDC systems and discussed their implementation with HHS officials.

The cost benefit analysis conducted to demonstrate that savings would result from implementation of FAMIS on a state-by-state basis was based on unsupported assumptions and very general data which do not consider the diversity among states in quality of program administration, size, and complexity. GAO does not believe that there is adequate cost-benefit analysis justification for FAMIS. The performance standards currently included in the FAMIS general systems design are inadequate for assisting the states in meeting the basic requirements of the law to design efficient and effective systems to administer the AFDC program. In addition, the performance standards are inadequate for evaluating whether state systems are performing efficiently and effectively. The general systems design fails to address or inadequately addresses the internal controls that states should design into their systems in order to produce timely and reliable information. Although the legislation also requires that state AFDC systems must be compatible with systems used to administer social service programs and Medicaid, GAO believes that FAMIS does not facilitate the development of integrated systems and thus, does not provide guidance to states on how FAMIS can be incorporated into integrated systems in existence or under development.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Joseph F. Delfico Team: General Accounting Office: Human Resources Division Phone: (202) 512-7215