Narrative: a. 3.

STATE PLAN ALTERNATE YEAR NARRATIVE ARKANSAS - FY 2017

During FY 2017, the Arkansas Department of Workforce Services (ADWS) will continue to pursue a strategic direction designed to take ADWS from a mainframe legacy environment to a new web-based environment using server technology and focusing on customer self-service. The intent of this new environment is to better leverage staff due to decreases in federal program and administrative funding. ADWS continually develops new technology in implementing this strategy.

ADWS launched its Automated Adjudication System (AAS) in July 2005. Like the UI State Information Data Exchange (SIDES), ADWS’ AAS system is a web-based system designed to streamline and increase the efficiency of the nonmonetary determination process. Since AAS was implemented in Arkansas, ADWS has continued to enhance the system to further streamline the adjudication process. In March 2012, ADWS deployed its electronic response system for employers to the World Wide Web. Through the electronic response system employers receive and respond to Notices to Last Employers, Notices to Base Period Employers, and questionnaires regarding nonmonetary issues via the Internet. ADWS is aware that SBR funding opportunities are available to states that agree to fully implement SIDES; however ADWS’ Automated Adjudication System and electronic response system for employers, which is based upon our own server technology and state UI law, enables Arkansas to maintain the same functionality as SIDES along with ability to tailor questionnaires designed to elicit more information from employers with no additional subscription costs to the agency.

In March 2015, ADWS deployed its “Claims Processing Hotline” to selected Workforce Centers as a method of leveraging staff resources by shifting one local office’s claimstaking workload to another local office experiencing a lower claimstaking volume. The deployment of the Claims Processing Hotline did not alter existing claimstaking procedures, the only difference being that a claimant may be served at a local office via telephone rather than in-person. Due to the success of the Claims Processing Hotline pilot, during FY 2016 ADWS deployed the Claims Processing Hotline to all remaining Workforce Centers. ADWS will continue to expand the Claims Processing Hotline during FY 2017. During the first quarter of 2016, ADWS deployed its claimant identification scanning and repository system in an effort to curtail and address possible identity theft issues.

ADWS has one UIRS Grant project (SBR) underway at this time. The Reemployment Services and Eligibility Assessment (RESEA) Grant authorized the development of a weekly profiling model to identify unemployment insurance claimants who are most likely to exhaust their claims as well as transitioning veterans receiving Unemployment Compensation for Ex-Servicemembers (UCX) and develop individualized reemployment plans designed to enable them to quickly and effectively reenter the workforce.

Current Financial Considerations Impacting Performance

Staffing, funding limitations and requirements to operate and maintain current systems continue to impact the Department’s ability to implement the move from a legacy mainframe environment to an Internet and server based environment. ADWS’ current project plan estimates that the move will be completed by December 31, 2017. ADWS continues to examine ways to efficiently and cost effectively automate and reduce staff.

Training and retention continues to be major points of emphasis for DWS in order to cultivate and maintain a well-trained and experienced staff. ADWS remains committed to providing quality service along with a commitment to reduce and eliminate improper payments; training emphasis will continue to focus on promoting a thorough understanding and working knowledge of the unemployment insurance program.

Assessment of Program Performance in Prior Years

For SY 2015, ADWS’ performance below the Core Measures resulted in Corrective Action Plans for Effective Audit Measure; Data Validation - Benefits Population 4; Data Validation - Tax Population 3; and Improper Recording of Issue Detection Date. During SY 2016, ADWS completed the Corrective Action Plan for Data Validation - Tax by passing all three components +/- 2% in Population 3. For SY 2016, ADWS’ performance below the Core Measure includes the remaining issues from SY 2015 and the areas listed below. Corrective Action Plans for these items are submitted in accordance with the Core Measure criteria for the FY 2017 SQSP in accordance with the Additional Planning Guidance for Fiscal Year (FY) 2017 Unemployment Insurance (UI) State Quality Service Plan (SQSP) as per UIPL 18-16 dated August 1, 2016.

Improper Payment Measure - CAP Included: Over the past three years the BAM Operational Rate fluctuated from ranging from 9.63% to 11.62%. The top three root causes identified by ADWS’ Benefit Accuracy Measurement (BAM) Unit are: Benefit Year Earnings, Separation Issues and Other Issues. ADWS has taken aggressive steps during CY 2015 and 2016 to increase the overpayment detection rate and reduce the operational overpayment rate. These efforts have aided ADWS in reducing the Operational Rate from 11.62% to 10.09% as of March 31, 2016. ADWS anticipates that these efforts could result in ADWS achieving an Operational Rate of less than 10% for the period ending June 30, 2016.

Detection of Overpayments - 3 Year Measure - CAP Included: The GPRA goal for FY 2017 is to establish at least 61.4% of the estimated detectable recoverable overpayments. ADWS’ performance for FY 2016 was at 38.88% under the FY 2016 goal of 67.9%. However, ADWS will continue efforts to meet the Core Measure of 50% to 95% for the detection of overpayments as it did during the fourth quarter of 2013, all of calendar year 2014 and the first quarter of 2015. In line with the national trend, the majority of Arkansas’ overpayments are the result of Benefit Year Earnings issues. ADWS continues in its efforts to educate employers and claimants on the importance of timely and accurately reporting earnings. For FY 2016 ADWS detected 53.0% of Benefit Year Earnings issues. In December 2015 ADWS added over 400 employees back into the quarterly crossmatches. The addition of those employers proved to be effective, producing an increase of 20% in investigations. In January 2016 ADWS initiated the Quarterly Crossmatch Review Project to conduct follow ups on employers with 30 or more outstanding wage audit notices. Upon completion of the project 1,924 of the outstanding wage audit notices had been returned and processed. ADWS is in the process of working with Equifax/The Work Number to explore methods of enhancing their wage audit submissions to be in compliance with UI requirements. ADWS will work regularly with other state agencies to identify, discuss and pursue best practices used to meet and maintain USDOL detection rate. ADWS will continue to work to promptly resolve all earnings issues.

Incorrect recording of the Issue Detection Date - Narrative

ADWS recognizes a need to improve the recording of the issue detection date and has continued in its improvement since 2013. In SY 2013 ADWS’ total performance was 90.25%, in SY 2014 total performance increased to 91.18%, during SY 2015, ADWS further increased its performance to 93.33%. In SY 2016, ADWS continued in its trend to improve the recording of the issue detection date by increasing to 93.75%. ADWS acknowledges that it did not meet the desired level of achievement of 95% for issue detection dates during SY 2016. This non-achievement stems from continued staffing shortages resulting from the retirement of more experienced and supervisory staff resulting in the hiring of staff with little or no prior experience in unemployment insurance and/or adjudication processes and practices.

ADWS will strive to improve the issue detection date measure by continuing to provide in-depth and ongoing refresher Benefits, Timeliness and Quality (BTQ) training with regard to issue detection dates to all adjudication staff. As issue detection date errors remain part of the Adjudicators’ and Adjudication Supervisors’ performance appraisals, this internal performance standard should continue to help increase the accuracy of issue detection date errors closer to the desired level of achievement of 95%.

Workforce Innovation and Opportunity Act (WIOA)

WIOA, which went into effect on July 1, 2015, is designed to provide job seekers with increased access to employment, education, training and other support services to succeed in the labor market, match employers with the skilled workers they need to compete, improve the coordination of employment and training services and resources, and strengthen collaboration with state and local partners. The State of Arkansas has elected to coordinate and integrate as many workforce development programs as possible, and therefore, elected to submit a combined state plan designed to streamline investment in workforce development. The combined plan integrates and streamlines the services provided by program partners: ADWS, the Arkansas Department of Career Education and the Arkansas Department of Human Services. ADWS hosted training strategy sessions in July and September 2015 which included workforce development partners and stakeholders, including employers, economic developers, Workforce Development Board Members and community college representatives with the goal of developing broader and deeper partnerships, integration of programs and services within their regional area to help prepare Arkansas’ workforce to meet the needs of current and potential employers.

ADWS has long benefited from the integration of its workforce partner programs, including UI, within its 30 local offices. The longstanding practice of having the UI program integrated into 30 local offices throughout the state has enabled the UI program to ensure that income support is available to eligible individuals who are simultaneously utilizing the onsite services proved by partner programs. Specific enhancements made by UI include the notification to claimants with inactive Arkansas Job Link (AJL) accounts of the necessity of ensuring their accounts were activated and current, including a resume. An up-to-date AJL account ensures that claimants have maintained their work registrations and are able to assess services offered through the Workforce Network of Arkansas. These notifications were sent to claimants who had active UI claims but inactive AJL accounts. Beginning in July 2016, ADWS began notifying claimants at the time of a UI claim is filed that the individual must upload a resume to their individual AJL account. Resumes uploaded to an individual AJL account are then searchable by employers.

Maintaining Solvency of the State’s Trust Fund

As of July 31, 2016, the seasonally adjusted TUR rate for Arkansas was 3.8%. Through the week ending July 16, 2016, Initial Claims totaled 73,600 and Continued Claims totaled 555,940. During the comparable period of 2015, Initial Claims totaled 87,818 and Continued Claims totaled 672,681. This represents a 16.19% decrease in Initial Claims and a 17.35% decrease in Continued Claims activity in CY 2016.

Arkansas’ Unemployment Insurance program served as an important safety net for thousands of Arkansas families during the Recession. Unfortunately, the increase in demand for unemployment claims quickly exhausted the program’s trust fund. Arkansas was one of 35 states that had to take advances from the federal government in order to meet the funding needs resulting from additional UI claims. The ADWS UI Trust Fund received $360 million in Title XII Advances in order to pay UI Benefits. On October 1, 2014, ADWS made the made the final, voluntary payment on these advances. ADWS projects a trust fund balance of $492,700,000 at the end of CY 2016.

While the UI Trust Fund has not reached the recommended average high cost multiple of 1, bills passed during the 2015 Legislative Session should increase trust fund solvency. Act 412 amended ADWS’ Unemployment Insurance law by reducing the total number of full weeks of UI benefits from 25 to 20 and changes the weekly benefit amount calculation from using the high quarter to using an average of all four quarters in the base period. Act 412 had the desired affect by reducing disbursements from a projected $233,900,000 to $195,000,000 in the quarters immediately following implementation. As of the end of CY 2015, the UI Trust Fund had an average high cost multiple of .7 and is projected to reach .9 by the end of CY 2016.

Act 690 amended ADWS’ Unemployment Insurance law by allowing ADWS to offset the federal tax returns of employers who are delinquent in the payment of their unemployment insurance taxes. ADWS implemented the Treasury Offset Program concerning delinquent employers in October 2015. Since the implementation of the Treasury Offset Program, ADWS received $409,652.07 in response to notices sent to delinquent employers who received notices that their debts were submitted for collection through the Internal Revenue Service. For the period of January 1, 2016 through August 4, 2016, ADWS received $51,376.56 through offsets of delinquent employers’ tax returns.

In addition to the current legislatively authorized activity, ADWS previously implemented some varied strategies to protect or replenish the trust fund. ADWS began participating in the Treasury Offset Program in SY 2013. Since that time, ADWS has intercepted a net $43,137,623.62 through August 3, 2016 ADWS intercepted a net of $1,494,189.86.

In March 2012, ADWS began matching claims with the state payroll system, AASIS, in order to detect improper payments to state employees as quickly as possible. The cross-match returns weekly earnings for the match weeks, eliminating the need to send wage audit requests to individual agencies. In the most recent FY, ADWS deployed its front-end identity verification to reduce the risk of fraudulent unemployment insurance claims. In order to make initial claim eligibility determinations faster and more accurate, ADWS will continue to seek to increase employer utilization of the response systems for employers to respond to notices to last employer, notices to base period employers, the adjudication questionnaires, and wage audit notice requests. ADWS continues to experience positive results with the online, general fraud reporting system available to the general public on the ADWS home page.

Assurances

Per UIPL 18-16, by signing the SQSP Signature Page, ADWS certifies that it will comply with the assurances listed in Handbook 336, 18^th Edition. ADWS will institute any plans or measures necessary to comply with the requirements.

Additionally, UIPL 18-16 requires information for Assurance “H”, “Assurance of Contingency Planning”; and Assurance “J”, “Assurance of Automated Information Systems Security.

H. Assurance of Contingency Planning:

• Date IT Contingency Plan Implemented: 2004
• IT Contingency Plan Reviewed/Updated: Monthly
• IT Contingency Plan Tested: November 2015

J. Assurance of Automated System Security

• Date Risk Assessment Conducted: January 2014
• System Security Plan Reviewed/Updated: January 2016
• System Security Plan implemented: 2004