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Executive Summary




1. Executive Summary

The Texas Electronic Services Delivery (TESD) Project was undertaken on behalf of the Interagency Task Force on Electronic Benefits Transfer (EBT) by the Comptroller of Public Accounts at the request of Senator Bill Ratliff, Chair of the Texas Senate Committee on Finance, and Representative Robert Junell, Chair of the Texas House Committee on Appropriations. The purpose of this project was to explore strategies and develop a road map for expanding the state's current electronic benefit transfer (EBT) system into an electronic services delivery (ESD) system that would allow Texas to retain and strengthen its position as a leader in technology. The state leadership is well aware that Texas state government has been a leader among states in the use of electronic technologies to facilitate delivery of government services, and they had the foresight and interest to move forward to continue this trend.

From early efforts to develop one of the nation's first EBT systems for the Food Stamp and Temporary Assistance for Needy Families (TANF) Programs, to the provision of internet-based access to information, Texas has attempted to make the delivery of services more efficient and to make those services more accessible to the public that depends on them. The EBT system is moving smoothly to a second generation of technology, and it is now time to identify and plan for the next steps.

The charge for the TESD project was to create a 10-year strategic plan for enhancing the use of ESD in Texas. In particular, legislators were interested in exploring ways in which the use of the existing Lone Star EBT card for food stamps and TANF could be expanded. They were also specifically interested in ways to streamline verification of Medicaid eligibility for clients and health care providers. The objective of the plan is to create a guide for the state to follow, so that expansion of ESD can be orderly and efficient. The strategic plan is intended to insure that, to the extent practical, common technology standards are used statewide, and the electronic delivery of services is coordinated between agencies and the public that is served.

Because ESD is an emerging concept with many different definitions, and none of them are universally accepted, the TESD project team first created a working definition of electronic services delivery for this project. For purposes of this project, it is viewed primarily as encompassing the use of electronic transaction technology, and it is a means of providing access, typically through the use of card technology, to services and benefits that government agencies provide to residents, employees, and those entities with which government business is conducted. The largest current application of ESD is the Lone Star Card used to deliver food stamps and TANF benefits. However, an important point established by this project is that the concept of ESD is not limited to delivery of financial benefits. Improved access to information can be an equally important outcome of adopting an ESD approach.

The ESD definition can encompass a wide range of technological approaches and services to multiple populations, including both individuals and institutions. Because of this, it was necessary to establish certain boundaries on the scope of this project. There are existing initiatives, such as the Department of Information Resources Web portal project and the General Services Commission e-commerce project, with which this project does not interfere. Those initiatives focus primarily on the state's business relationships. The TESD project focuses primarily on the delivery of services to individuals.

1.1. Project background

The project team began by reviewing existing reports and documentation of state activities related to EBT and ESD. Two major source documents used were the Interagency Task Force on EBT's State of EBT and Direct Deposit in Texas and the Texas Department of Human Services' Texas EBT Alternatives Analysis. Interviews were conducted with staff from state agencies that administer programs that were viable candidates for inclusion in the plan. Reports of those interviews are found in Appendix A.

Research was also conducted to identify similar initiatives in other states, at the federal government level, and internationally. Many examples were found, including delivery of health and human services, transportation, education, and workforce management. The ESD technologies used in government parallel similar technologies in commercial sector applications, so some exploration of emerging e-commerce initiatives was included.

Finally, available technologies were researched to identify options and trends. Project staff researched various card technologies, and uses of these technologies in both online and off-line applications were considered. A variety of biometric measures, such as digital finger imaging, were also examined as means to improve the level of security and integrity in systems. Forms of ESD that are not dependent on the use of cards-such as direct deposit and Intranet usage-were also explored.

Three important points were identified as a result of studying the technology choices. First, each of the technologies examined has benefits and weaknesses. Second, because of this, it is necessary to match the appropriate technology with each application. Third, the use of a technology must be prescribed in a manner that is socially acceptable to the population being served. This required consideration of issues such as privacy, confidentiality, and ownership of data.

It is not possible to identify a single technology that can be prescribed for all types of applications. For example, magnetic stripe cards-a well-seasoned technology-are highly successful in delivering cash and other financial benefits in an online environment, or where information changes rapidly and must be readily available to different users. Integrated circuit cards (also known as smart cards or chip cards), while not as well known in this country, are very useful for applications that require storage of large amounts of data on a card, or where telecommunications with central host systems are problematic. In addition, storage of information on a smart card rather than in a centralized database can enhance an individual's control over the stored information and can increase public acceptance of the process for some applications. This card technology provides a level of confidentiality and a method for ensuring privacy that is not so easily attained using an online system.

The options and combinations of technology are numerous, and no one solution fits. The key is matching technology to the need being addressed and making informed decisions.

1.2. Summary of the Strategic Plan and Recommendations

The plan has two distinct stages with specific recommendations, plans, and timelines for each. These stages are called Lone Star Generation 1 (LSG1) and Lone Star Generation 2 (LSG2). LSG1 builds on the existing investment and infrastructure of the existing EBT2 Lone Star Card, maintaining the current technological platform. Additions with the most obvious financial benefits are recommended, including the use of the LSG1 card to create an electronic medical identification (Med ID) system, in exchange for the current paper card that is expensive to produce and distribute monthly. Another savings of substantial production and mailing costs would be to eliminate the use of paper warrants for child support payments. This is possible through the combination of direct deposit and use of the LSG1 card for recipients who do not have bank accounts or do not choose to use direct deposit. The total cost savings of implementing LSG1 is expected to be about $11 million in general revenue and $8 million in federal funds over five years.

A development project is underway for Texas' Supplemental Nutrition Program for Women, Infant, and Children (WIC). That project will be exploring electronic technology for the WIC program, possibly with a hybrid card using microprocessor chip technology. If the WIC pilot project is successful, using any of the likely card technology options, it should be incorporated into the LSG1 system.

In some areas, project timeframe and scope did not allow for conclusive research. Recommendations are made, in some instances, for further research, or for action once the cost of the technology has decreased to a level to make a change economical.

The administrative structure for LSG1 should remain with the current EBT2 group at the Texas Department of Human Services (TDHS). Some of the recommendations involve other agencies, and TDHS would be responsible for coordinating with those agencies and with the Interagency Task Force on EBT during this period. Modifications to the EBT2 contracts would be required by certain recommendations. TDHS would be responsible for managing those contracts and for negotiating any necessary changes.

LSG2 is intended to set a new direction for ESD in Texas. For LSG2, the state should migrate from the magnetic stripe card and develop a multi-technology card, with a magnetic stripe, an integrated circuit chip, a bar code, a finger image, and a picture identification-all on a single card. This approach enhances the functionality of a single card, provides the maximum flexibility and convenience for the populations using the cards, and will enable the state to take greater advantages of the possibilities for ESD.

The second stage of the strategic plan, the LSG2 card, would use a single platform (the same technology), but two cards are recommended-to focus on two different population and application groups. The State Employee Card would be issued to all state employees and would have two primary and immediate functions: employee identification and as a vehicle to carry selected personal health-related information. It would incorporate the current ERS FLEXcard, and could also be used to deliver state payroll in lieu of the instances where paper warrants are currently used. It could replace and enhance the current credit card usage for employee travel and be used as a link to e-commerce for state agency purchases. A number of other functions are explored for the card, including building access and systems security applications. A pilot project of the security function should be initiated at the Comptroller of Public Accounts. Except for the employee payroll function, all other applications recommended for the State Employee Card are of the information exchange type.

The second card, the Benefits Transfer Card, would access applications that are related to health and human service functions or that affect cash transfers. This card would incorporate all applications originally contained on the Lone Star Card or the LSG1 card, including food stamps, TANF, Medicaid ID, child support payments, and WIC. The same type personal health information would be incorporated on the Benefits Transfer Card as described for the State Employee Card. A number of other applications that would employ the chip card technology are recommended for exploration, such as service participation and payment tracking and payment of subsidized school meals programs.

An ambitious undertaking such as LSG2 will require adequate administration and oversight. The state should designate an administrative agency, such as the Department of Information Resources (DIR), to be the decision-making authority. Management and administrative functions for LSG1 should be merged with LSG2 in DIR, and DIR would be responsible for setting standards and technical specifications, assuring statewide procurement opportunities, approving new application plans, coordinating multi-agency applications, and responding to stakeholder interests. DIR would be advised by an ESD Task Force, with representation from all stakeholders.

Implementation of these recommendations would require legislative approval, which should be sought during the 2001 session. The planning for LSG1 would begin in 2001, immediately following the legislative session. LSG2 would begin to build an administrative structure in fiscal 2001, and standards and technical architecture are scheduled to be developed in fiscal 2003. By September 1, 2005, the administrative and operating structure for EBT2 and WIC would transition to the recommended statewide administrative agency, DIR. The LSG2 system would be developed, tested, and piloted in fiscal 2004 and 2005 and achieve statewide implementation in fiscal 2006.

1.3. The Future

The administrative agency should establish a research function to continuously search for opportunities presented by these changes and, to the degree possible, develop systems that incorporate a more expansive list of benefits and services for LSG2 and beyond.

By fiscal 2006, rapid changes are anticipated-in the available technology and in decreased costs of such technological applications, as well as in the general public's acceptance and usage of those applications. At that point, Texas should have an infrastructure in place that could accommodate a wide variety of state applications. Initiation of new usage of the technology would be made significantly easier by the presence of that infrastructure. The state could develop a menu of services that would include not only those recommended in this report, but also those that offer possibilities for state tax functions, state purchasing activities, e-voting, low-income utility subsidies, documentation of professional licensure, and other activities not yet imagined in 2000. State employees, recipients of state benefits, and members of the general public who interact with the state for a multitude of purposes could choose to carry an electronic card, or use cardless electronic technology as a vehicle for those services and functions that serve their individual needs.

In 2006, the ESD Task Force and administrative agency should assess the longer-range plan for ESD to propose new initiatives to the Legislature in 2007. It is the belief of the TESD project staff that this report successfully accomplishes the intention of providing the roadmap to guide the way for electronic services delivery and can position the state to take full advantage of technological advances as they become available.