INSIDE OKDHS COMMISSION REPORT – OCTOBER 2011

Director Hendrick: We'll run through some site visits, share some of the good news that's happening in theagency, give you an update on where we are with the SNAP program, give you an update on the 2012 budget, review the capital bond refinancing proposal, share some other information and just talk about some of the major issues that are in front of us. 

It's been busy and fast month. Had a really nice, successful Volunteerism Conference. Karen Jacobs and her group really do a great job and this year they coordinated this conference, with not just our volunteers, but with a lot of other volunteer organizations to train volunteers and also recognize them for their work. 

We're making a lot of progress with the continued deployment of the OKDHS Live initiative. We'll talk a little bit more about that as we go along. But, to refresh your memory, this is really where we're pushing a lot of the work for eligibility online so we can basically stay up with the demand that we have. We've also had a really nice presentation last week in Tulsa from the folks from the Chadwick Center in San Diego who are helping us, as one of three sites in the nation, to really deploy trauma informed care throughout our child welfare system. 

Many of our staff, together with staff from the Department of Education, the Department of Health and the Smart Start Oklahoma participated in the development of the grant that was filed last week, I guess it was, with the Federal Government to be one of the lead states for the Early Learning Challenge grant. So a lot of work has gone into that. It is a very long and extensive grant application process...  and the rest of the world is blank. 

I think I've got a paper copy here somewhere and can talk, at least, while they're getting that fixed. Another event that we've had this last month is the third annual Completing the Circle event. This is an event that we sponsor with many of the tribes across the state for foster kids, Native American foster kids. They come in and spend a day. They get oriented with a lot of crafts, a lot of music, a lot of reconnection with their culture and many of the tribes help participate with keeping, particularly Native American children connected to their culture and orientation that way. That's pretty good, let's go on with that. 

I don't... I'm hoping we can get some better picture out here. Okay, is Paula Hearn here? Where's Paula at? Stand up Paula. Come up here. Paula's going to bail me out here. Paula's always bailing me out. 

Paula Hearn: He's killing time. 

Director Hendrick: Actually I have a slide here all about you, but... this is Paula's last Commission meeting. She is retiring at the end of this... I guess the middle of November, first of November, and she has been our Chief Administrative Officer. She has a great record of public service. She served not only as the City Manager of Oklahoma City, but also served in the cabinet of several governors, at least a couple of governors. 

Paula Hearn: One governor. 

Director Hendrick: One governor. 

(Laughter) 

Director Hendrick (continues): I can't keep track of them all. Director of the Department of Central Services for a while and then she's been our... she ran our Office of Support Services for a while and then she's been our Chief Administrative Officer. So, say some good words here Paula about... would you? 

Paula Hearn: Sure. 

Director Hendrick: Go over there and share whatever you'd like to share because we're really are going to miss Paula's leadership here.

Paula Hearn: You know, I can't claim 40 years here like Raymond but I've worked in every level of government and the private sector, I've even worked for the Catholic Church so, I don't know, I've been everywhere.  This agency has captured my heart. I just want to thank a couple people. I appreciate the Commission but particularly Chairman DeVaughn, Commissioner Peck and Commissioner Wilkinson.  They have been with us and the work we've done every step of the way. 

The communications projects, the property projects - they've been right there asking the tough questions. I appreciate that. Working for the Director has been an honor. He is the best boss, no doubt, I've ever worked for. He's just a fine, fine human being. Then, finally, you know the executive team has been amazing to work with and I appreciate all of you here. 

But the seven women of Administrative Services, would you just stand up? The people who directly for me. That's who makes it happen. (applause) That's really it.  Thank you for allowing me this opportunity to work for such a great agency and I hope to stay in touch.

(Applause) 

Director Hendrick: Thanks Paula.  I really appreciate Paula for lots of reasons, two in particular: one is she completes my thoughts, I'm going to really miss that because I can get going into things and she can come along and kind of help me finish up a decision I need to make. And she also helps me, I think in writing sometimes, I want to write a memorandum to our staff or encourage our, somebody, I'll put together a rough draft and she's very good at being a good polishing writer for me. 

We're going to miss you very, very much and we wish you the best as you travel the world. Because that's what she's going to go do, which is great.  And she didn't even mention a lot of the initiatives that she's been involved with. One of the big initiatives that she didn't talk about is 508 compliance. 

Hardly anybody talks about 508 compliance. But we're one of the, really, very best agencies, probably in the... around the country in 508 compliance which is required under the Federal Law for purposes of getting all your electronic information available for persons with disabilities. So, it's slowed us down on a lot of projects over the years but I think we've done it right, so that over and over... there's no assurance that you're going to ever be perfect in that kind of work but I think it's been very difficult to get all of the different people to come together on that kind of issue.

She did a really great job of getting everybody to come together on those issues. Her replacement will be Sandra Harrison. Most of you know Sandra. She's served as our Legislative Relations, she's going to continue some of those responsibilities and then assume the other responsibilities. 

She's going to delegate some of the responsibilities she has right now, so she comes with a lot of experience and with a lot of talent. We're really looking forward to Sandra leading this effort. I already introduced Marietta and Kyle. 

I want to recognize our Data Services Division, our Project Management Office and James Randell who's our leader there. In the last month or so they've been recognized in a new book that's being published, released on October 1st, called, "An Inside Look at High Performing Project Management Offices." What most people may not realize is that we've actually committed a lot of our internal resources to training our... to developing our project managers. 

A lot of folks go outside to contract for Project Managers. We invested in our staff and trained our Project Managers. We have certified Project Managers in our Project Management Office. Those people really help us manage all the IT projects, manage a lot of other projects we do across the agency. Many of them are trained in Six Sigma, other kinds of initiatives. They do a terrific job and James has been the leader of that office and he's our Interim Division Director for our Data Services Management Group. So, I just want to recognize James and his team for their great leadership. 

September was another record month for food stamps. An all-time high, again. 625,000 people in September on Food Stamps. Again, the highest number ever in State History, you can see. The good news about 625,000 people, if there is any, is there was another about 250,000 people who were not on food stamps in September who had been on food stamps for at least one month in the previous 12 months. 

So, that tells you how much work our staff is having to do every month of people coming in when they lose their job, they have to be determined to be eligible. When they get a job, they fall back off of eligibility. So I think what these numbers say to us is this economy is still very hard and even though it may look as if Oklahoma is doing a little better than other folks, when you look at the quantity of working poor people, a lot of the people who are working poor are really not coming out, yet at least, of where we need to be for economic well-being for particularly low-income families. 

30% of all the children in the state were on food stamps last month. 40% of all the kids in the state were on food stamps for at least one month in the last 12 months. Average benefits, $4.23 per person per day. Not a lot of people are getting rich on food stamps but it's feeding a lot of people that need to be fed during a time in which the great recession still is not showing signs that we're fully recovered. 

There are some signs that we are recovering but not signs that we are fully recovered. This is the dilemma we're facing with. One of the things that we're going to talk about, which you'll have to consider in your meeting today, is what to do about an amendment to the 2012 budget. I want to run through the proposed solution to that budget but also I want to caution you about the consequences of those recommendations so that you have a full appreciation of what's involved in this decision. 

It's not an easy recommendation to make because of a lot of things that go into this decision. One of the things that has happened is, as we continue to improve in all of our divisions, our Finance Division really has done a good job of continuing to find ways to improve their process. As a result of that, they are able to now identify, earlier in the year, funds that would otherwise be unencumbered later in the year. 

And so that's one of the reasons why when you look at our financial position for the current month, we improved from our prior year's cash position from about $7 million to about $17 million. Well that $10 million we would have found eventually, maybe in January, February, March or the Spring, but because of the improved process in Finance they've been able to identify this and recognize this earlier. Well this creates an opportunity for us solve some of the other concerns we've had about how we're going to finance services. 

I want to talk a little bit about the pros and cons of the recommendation and what we are recommending and you'll get to decide what you want to do with this. But this is the recommendation that's coming from the staff and you can determine whether or not you agree or disagree or want to do something different with it. In preparing the 2012 budget, we cut a little more than $39 million out of our budget to make the budget work in 2012. 

Now to be fair with everybody so you can appreciate what all that means if you're a Legislator you think, "well, we only cut them 1%." But what's not counted in that 1% is the differences in cost that are associated with the delivery of services in 2012 compared to 2011. Specifically, substantial increases in F-MAP rates, the Federal Medicaid matching rates. 

Those increased rates mean that we can't buy as much services in 2012 as we bought for the same dollars in 2011. So all those things together, by not getting enough funding to cover all those costs we really had to cut $39 million out of our budget for 2012. What this $10 million will do is restore some of those cuts. 

So what's recommended is to avoid the co-pay reduction $6.8 million, we would just restore those. Now, we can come back and look at those if we want to, we had $595,000 in cuts proposed in the Family Support payments to families with children with Developmental Disabilities. We had $2 million that we're recommending that we restore to Field Operations. We already have cut about $2.2 million out of Field Operations. 

And as a precaution we're recommending that we put back another $1 million for legal fees for the Children's Rights litigation. Here's some of the reasons for the recommendations: One, it reduces the consequences of the continuing challenge we face between high demand for help and limited funding. 

Now I want to really talk about this for a minute because I think people need to appreciate the dilemma that we have been in, we are in, and are likely to be in for quite a while. I'm very concerned about this point. Because, at some point, we're going to have to face the reality that either the borrowings at the Federal Government level are not going to be sustainable or the quantity of services we are delivering is going to have to be changed or some other  priorities are going to have to be made for the delivery of these services. 

But I'll show you some more graphically in just a moment. This is a very real challenge about the continuing challenge we face between high demand for help and limited funding. This will defer the effects of the cuts that we already had planned to put in place for 2012 in hopes that revenues will recover enough to avoid these permanent reductions in 2013. 

The legal fees are estimated based on a current trial date of February. These fees might be less if trial was unnecessary or delayed. We still will avoid dipping below the $12.5 million TANF reserve amount set by the Commission and we will have about the same cash position we projected when the budget was put into place. Those are all good reasons to go forward with these recommendations and that's why the staff is recommending them to you. Okay? 

But I want to be fair about the recommendation. So I want you to be fully appreciative of the consequences of the recommendation. Here are some concerns with the recommendation. Although the 2012 budget will be about $30 million less than it was in 2011 it would be $39 million less. 

We already cut $39 million, we're only saying, "let's reduce the cuts to about $30 million 
instead of $39 million." That's why we're restoring... $9 million of the $10 million are restoration of cuts that we've already planned to have for the current year. These are all one-time funds used to pay recurring costs, which will have to be revisited when we put together the State Fiscal Year 2013 budget. 

We've been doing that for quite a while. Okay? That's not new for us but it does make it difficult. This will add about $10 million to the already $35 million in the State Budget Work Program of recurring costs funded with one-time funds and about $10 million of TANF expenditures funded with one-time TANF reserves. 

A lot of one-time funds already in our 2012 budget paying for recurring costs. So, this is a hard question when you look at that much one-time money paying for recurring costs. And that's probably the biggest (inaudible) about the recommendation. What are some alternatives to the recommendation? Okay, I don't want you to think that you don't have any choices.

One of the alternatives is just the amount of the recurring funds with one-time costs. If the one-time funds are spent as we recommend them, they will not be available to help balance 2013's budget. But, again, this is really right in the crosshairs of the dilemma; if you don't adopt the recommendation you're going to push people, right now, into service reduction. 

You're going to really face what we already planned to do anyway. But, we have the money right now where we can avoid that if we want to. But it's going to make 2013 very difficult, that's what I'm saying to you. If one-time funds are spent as recommended they will not be available for 2013. We can proceed with the cuts recommended now and use the one-time funds to minimize the cuts that might be required in 2013. 

So for child care co-pays that would mean that we would proceed under the emergency rule-making rules and involve compliance with the Administrative Procedures Act. We may not get all the cuts planned but some of the funds would be saved to address the needs in 2013. Our cuts to Field Operations would proceed but the quality of service concerns could exist. I mean, when you look at the number of people we're serving in Field Operations right now, that's the reason why we're saying we ought to at least try to restore those $2 million to minimize some of those cuts to Field Operations. 

This is the Productivity Challenge I want to make very clear to you about what we're dealing with and how I think this is likely to be a continuing problem. You can see in 2002 we had 8,000 employees. Last year we had 7,397 employees. This year 7,257 employees. We're collecting more child support.What I don't have on this chart is the number of children for whom we're collecting child support. In 2002, Gary can help me out with this but in round numbers, my guess it's around 150,000 kids and today it's about 215,000 kids.

Gary Dart: 221, I think. 

Director Hendrick: 221,000 children for whom we're collecting child support and in 2002 we were collecting for about 150,000 children. So we have less employees, we're collecting for about 60,000 more children and we are collecting 122% more child support than we did eight years ago with less people. What's not told about that is with the 221,000 kids that we're collecting child support for we have over, maybe, a $1.8 billion in uncollected child support. And this is true across the country. 

There's enormous levels of uncollected child support that we would like to collect but you have to have the resources to actually collect it. Adoption Subsidies - you can see that in 2002, we were funding a little less than 6,000 children in the Adoption Subsidy. In 2011, June 30th of this year we were supporting 12,384 children in adoptions. So let's talk about what that means. 

That means that June 30, 2011 there were 4,000 more children who had already been removed from their parents, alleged to be victims of child abuse and neglect, confirmed by the courts to be victims of child abuse and neglect. Attempts were made to reunify them with their parents and it did not work, they were then connected to an adoptive family which adopted them and had the parental rights terminated through a jury trial, one of only seven states that has a jury trial. 

Had a jury trial, terminated the parental rights, they got a home study and they were adopted. 4,000 more kids in that condition than were in foster care on the same day. So, one of the reasons why child abuse and neglect overall is continuing to drop some in Oklahoma, although it didn't drop in 2010-11. In 2010, if you go back to 2002 all the way through 2010, you can see the prevalence of child abuse and neglect per 1,000 children has dropped little by little by little each year until we are now actually have a lower prevalence rate than the national average for overall victims of child abuse and neglect. 

Part of the reason for that is because we've got a lot of kids out of harm's way. They got adopted, they're out of harm's way. You can see we have 400,000 more people, 400,000 more people served in 2011 than in 2010 for food, just to eat. 7,000 more children had their paternity established in 2011 than had their paternity established in 2002. 7,000 more senior citizens were staying at home instead of going to nursing homes by getting waivered services than we had in 2002. 

About 700 more folks on DDSD it doesn't count all the Family Support payments, one of our budget restoration recommendations. And then about 1,000 more persons were getting DDSD waivered services in the community than were getting those services in 2002. 

Commissioner: What is DDSD? 

Director Hendrick: Developmental Disability Services Division. So, these are services that let people avoid institutional placements. They can stay at home, stay with their family members, living in group homes and as a result of that they can live in the community. The bad news about that is that the number of persons who need that service has grown to more than 6,000 people on a waiting list that we need to work through. 

So, one of the other dilemmas that's really in this equation about how to spend this money is, well, do you want to spend some of this money on meeting some of the needs of persons with developmental disabilities? No matter what you want to take on, there's never going to be enough money until we find some way to fund the recurring costs. 

Commissioner: Let me clarify one point.  Let me ask you about the DDSD. That 5,00 ADvantage Waiver DDSD but there's 6,000 on the <<<waiting list, a total of 11,000.

Director Hendrick: Let's clarify. ADvantage Waiver is not DDSD. ADvantage Waiver is for persons as an alternative to nursing homes. The DDSD Waiver is a separate waiver and you're right, there are 6,000 people who need to be assessed, not all those people will qualify for the service, and many of those people are getting other services like the folks who are getting DDSD family support services. 

But the point is we haven't recovered from our economic situation. We have this one-time funds that will help us through this process. It's a dilemma. I just want you to appreciate the work that's been done to take dollars as far as they can go. It' not an easy process. People have stretched a long ways. There are limits though to how much you can really expect people to stretch. 

These are people who haven't had pay increases in four years. These DDSD providers and ADvantage Waiver providers haven't had rate increases in five or six years. So, this is a very difficult situation but I think we're doing the right thing in the recommendation. It's not a perfect recommendation - it's going to make 2013 hard. But I think it's the right thing to do to try to at least to push on through some of the softening of the effects of some of the cuts we're having to make. Now, we may have to come back and make them next year anyway. 

Commissioner: The reason why you're saying it's going to be hard is because it was going to happen in 2012 but you found this money, this pot of money, and now we can postpone but it's still going to be bad whenever the shoe drops.

Director Hendrick: That's right. Yeah. Okay, so that gives you a little bit of a picture of how stressed the safety net really is. I think you need to appreciate 400,000 more Oklahomans on food stamps for at least one month in State Fiscal year 2011 than in 2002. So, okay one of the other proposals you'll have to look at here is the Capital Bond Refinancing opportunity. 

There's a lot more detail in your packet but I just want to give you the highlights so that you can appreciate what we're trying to get done here. The proposal would refinance some existing bonds that lower interest rates. There is no increase in our budgeted monthly cash outlay for the bonds. The new bonds will be financed over 13 years rather than the usual 15 years. Financing will still require the approval of Development Finance Authority and the Council on Bond Oversight. 

The bonds will pay off some existing debt and provide $10 million for capital needs mostly involved in three projects: completing the renovation of the Tulsa Skyline Building, constructing alternative space in Osage County, and remodeling and expansion of space in Pawnee County. So these are our biggest property needs right now. We can do it without having to incur any more ongoing operating costs. 

So that's the reason for that recommendation. And we can get lower interest rates. IT consolidation - we continue to have conversations with the CIO for more and more clarification. I've got another meeting set with him this week. We've given them lots of information. We have hot site solutions done that we were concerned about at the beginning of this year. We still have these concerns about loss of Federal funds in this consolidation that's why... I think, to his credit, he's' been willing to slow down and be sure that we're assessing everything well before anything happens so we can avoid the loss of Federal funds and also the risk of loss of service quality. 

This is something that, I think you have to appreciate that maybe isn't readily apparent but there's no way we could do this without all of our IT infrastructure. It just couldn't happen. There's no way we can do all this extra work with less people without our IT infrastructure. If we hadn't invested in our own Project Management Office, if we didn't have our own Certified Project Managers doing all this IT updates, we would be in deep trouble in terms of our ability to do all that we are doing. 

I appreciate, actually, the CIO's recognition of the fact that we're in a little different situation. No decision has been made on how this is all going to work out. But I just want you to be aware that this thing is still very fluid and I think people are talking which is good. As long as people are talking and trying to work things out, good things can happen. 

That's what we're trying to do and hopefully it will be a constructive process. 

Commissioner: Howard, when you said “he,” you were referring to Mr. Patter?

Director Hendrick: Yes. Yeah. We do have a number of IT initiatives that are moving along, some slowly, some quickly. We have a big requirement on November 1st to do a bunch of fingerprinting. We're working with the Department of Education to actually expand some more remote access for fingerprinting for reunification in foster care. 

We already do fingerprinting, of course, for all the adoptive homes and all the foster parents. But this new requirement is that we have to do fingerprinting before we can reunify children with their parents. Child Care Monitoring Information Systems - we're making some progress there. 

Completing OKDHS Live, we talked about...  we have a lot of pending issues there. Our OKDHS Live is coming along pretty well. We think we will be pretty much through with all of the state over the next three months in terms of the renewal process. That's really good news because this is kind of like remodeling your kitchen while you're living in it. You've got to keep delivering record numbers of people, every month for service and at the same time your changing the process of how people get their services renewed. 

Commissioner: Are we talking about food stamps?

Director Hendrick: Food stamps and we'll do Medicaid and also, some of the Medicaid that comes through us and some child care also. There are different phases. The main thing we're trying to get done first though, is all the renewal process. We have 27,000 households every month who are renewed for their benefits. So we have to send that notice out, we want to try to push as much of that renewal work as we can to the web. It takes a lot of work to get there. 

For example, all of the Federal auditing that comes through to make all that work... we get audited by the Federal Government. And by the way, I didn't mention this earlier, but our error rate right now on food stamps is the lowest we've ever had. Which is remarkable with the volume we've got. I think a lot of it is this improved automation. 

We have auditors and the Feds come audit our auditors and so failing to get all that stuff done right, that means you get written up in those audits. So that's one of the most impressive things about this process, we are continuing to make all this change happen while we're continuing to deliver this service and doing it as accurately as it's happening. 

We hope that by the end of January we'll have everybody, in terms of renewal processes, out online that wants to go online. You can still call us, there'll be a number you can call. You can still come see us. We're not closing any of the existing gateways, we're just saying that for those people that want to you can go online and get your services renewed. 

We could not have done that, though, without also making our infrastructure paperless. That sounds kind of simple, but that's been about 18 months to get here and we probably have about two or three more months to finish up the paperless environment for all the eligibility process. So some offices you can go to today, we had file cabinets before, we won't have any files there. All the records for those cases are digitized and all the documentation to support people's eligibility has been scanned into a paperless environment. 

That paperless environment means that we can do more things online now, which we could not do when we were still stuck in a paper-filled environment. So a lot of work to get us through that.

Commissioner: Just a question.  You said for those that want to use the OKDHS Live, are we doing anything on the front lines of the communities to place user-friendly kiosks, or something that can be built for our constituents? Libraries?  Or County Offices?

Director Hendrick: We have the same vision that you've articulated; we have two or three challenges. First of all, we have to deal with all the IT processes that have now been put into statute that require the CIO to approve all these different things. So, I mean, right now the process is very, very, very slow because they're not sure if they want to approve this or that. 

So we have a lot of things that we get stuck up in that process. Mostly, you could do it over any computer. So, we'll see, once we get fully deployed here and we'll go to a lot of non-profits and a lot of other community partners and make sure they know they can enroll people that way as well. 

So we won't, by the end of January we won't have the application process done. But we will have all the renewal process done. Okay? That's really a big deal because, as I mentioned earlier, we have 880,000 different Oklahomans on food stamps for at least one month in the last twelve months. 

So most of the people who are going to apply are probably people who lost their job or are coming back in, you know, are in the cycle, are the working poor and need help. They got help temporarily, they've lost their job or something happened, so most of the people will have no problem coming through this process. 

It will be the people we've never seen before that will still need to come see us because... and for good reason. We want to make sure this person is someone we know as opposed to somebody in Afghanistan or somewhere. You know, we really want to know we're certifying the right people. 

Major issues ahead - rollout of OKDHS Live, we're still working with the CIO, next month we hope to present, Mr. Dawes, you asked, some presentation on the SORC and NORCE proposal. We hope to have that ready for you then.