Official admits welfare privatization lacks personal touch

Indiana’s human services chief is acknowledging one of the biggest criticisms of the state’s privatized welfare
system, telling lawmakers it does not provide enough face-to-face interaction between caseworkers and welfare recipients.

Testifying at length before the State Budget Committee in West Lafayette on Friday, Family and Social Services Administration
Secretary Anne Murphy said a team from IBM Corp. has made improvements to its system by improving its technology and adding
staff. But she said the timeliness of processing applications for food stamps, Medicaid and other benefits has not improved,
a problem she attributed to too little in-person contact.

"There has been a loss of the face-to-face interaction,"
Murphy said. "We think a lot of the errors that we’re seeing are the result of not having sufficient face-to-face interaction
with the client."

Armonk, N.Y.-based IBM, Dallas-based Affiliated Computer Services Inc. and their partners are
running the state’s welfare system under a 10-year, $1.34 billion contract — one of the most lucrative in state history.
Critics have complained about lost documents, lengthy approvals for benefits and other problems with the new system, and
Murphy has given the contractors until the end of this month to fix a host of problems.

Among them, a complaint from
both advocates for welfare recipients and lawmakers about a lack of face-to-face contact that largely began when Indiana
moved about 1,500 state caseworkers to the IBM team in March 2007.

Murphy said the state does not want to return to
the old system, in which every welfare recipient had a single caseworker. She said her department wants to find a balance
between the old system and the new technology-driven system, which uses call centers and document imaging and gives both
state caseworkers and their private partners access to the files of every welfare recipient.

Murphy said IBM has already
been sanctioned about $260,000 for poor performance under the contract. She also said the overall value of the contract
hasn’t changed, even though the new system has only been rolled out to counties covering a little more than a third of the
state’s caseload.

Also testifying Friday was Kim Dodson, associate executive director of the Arc of Indiana, who told
the committee the contract has hurt local service providers because they must spend more time working with clients as they
apply for benefits, rather than providing supplementary services.

"It seems that we are paying a lot of Hoosiers’
tax money on a contract for services that are not being provided," Dodson said.

Paul Chase, associate state director
of AARP, criticized Gov. Mitch Daniels for comments he made last week, in which he said if upcoming changes to the privatized
system don’t fix all of the problems, the state will go back and make further adjustments.

"We cannot continue
to experiment when people’s lives are at stake," Chase said. "A systemwide fix is needed and is needed now."

Sen. Luke Kenley, R-Noblesville, was among the lawmakers who questioned whether the state is getting its money’s worth
from IBM and its partners. Kenley said the budget committee will continue examining the contract through much of the fall.

"This is only the beginning of this discussion," Kenley said.