California CSDA Annual Training Conference October 23rd, 2008 California State Disbursement Unit

2 What We Do – Collections Processing Process each payment the same business day as received –Date of receipt = date of collection Process correct payment amount Identify payment source Capture required additional data elements –If remitted with payment, based on payment source Capture remitter contact information

3 What We Do – Collections Processing Identify (derive) the NCP statewide Participant ID –Using a minimum of two data elements Pass all collections to the Child Support Enforcement (CSE) system –Daily, by means of an outbound file Deposit payments into State of CA bank account(s) –Checks –Money orders –Cashiers checks –Electronic payments

4 What We Do – Disbursement Processing Process disbursement instructions as received from LCSAs and DCSS Issue disbursements on the same business day received –To the payee as instructed –By the method instructed (check, direct deposit, or electronic payment card) Process disbursement status changes –Stop, void, delete payments Void disbursements returned to the SDU as undeliverable by the USPS –The returned disbursement void process includes participant (CP) address update in the CSE system if provided by the USPS

5 Annual Volumes – Oct ‘07 - Sep ‘08 Collections –13,757,110 transactions –$2,665,225,398 Disbursements –11,983,106 transactions –$2,157,052,417

6 Non-SDU Functions The SDU does not perform: –Payment allocation –Payment adjustment –Payment refund without LCSA or DCSS instruction (using the disbursement process) –Disbursement issuance without LCSA or DCSS instruction –Re-issuance of stopped or voided disbursements without LCSA or DCSS instruction –Case or financial management

Collections Payment received, let’s roll!

8 Payments Received – Rev up the SDU Collections Engine Physical Payment received at USPS PO Box West Sacramento, CA Payment delivered to the SDU by bonded courier Payment immediately moved into SDU Operations payment processing stream

9 Mail Receipt – Loading Dock and Staging Area Receive payments and prep items for downstream processing Remove misdirected mail from the process stream Move payments to the mail opening and scanning department

10 Mail Opening and Scanning Mail Room Operators use OPEX machines for one-stop automated mail opening and scanning –Open envelopes –Scan checks, back up documentation, and envelopes, creating images of all payment items –Print audit trail on back of each item –Sort documents by type

11 Data Entry – OCR Optical Character Recognition (OCR) technology System automatically converts physical data into electronic data Template definition—templates created by operators –Based on where data elements are located on remittance –Used for remitters with multiple payments per item –Once setup remitter’s payments automatically go through OCR Reduces manual data entry

12 Data Entry – Remittance and Lockbox (R&L) Data Entry Operators: –Use payment images to enter check amount –Perform re-key function if system cannot read payment amount –Perform balancing

13 Data Entry – Key From Image (KFI) Data Entry Operators: –Use payment images to derive statewide Participant IDs for NCPs by: Utilizing data elements from documents provided by remitter Utilizing the Participant Match File (PMF) received weekly from the CSE system

14 Data Entry Screen Shot

15 Intra-Day Exceptions – Putting the Puzzle Pieces Together Exceptions Research Associates: –Work in payment queues specific intra-day SDU collections processing functions, such as: Remitter Profile (RP) Update - Queue 1 Insufficient Payment Data - Queue 4 Other Intra-day Processing Queues

16 Intra-Day Exceptions – Putting the Puzzle Pieces Together Remitter Profile - Queue 1 –Identify correct payment source –Capture remitter contact information –Once a payment has been initially processed in the RP Queue, any additional payments from the same bank routing and account number will have payment source and remitter contact information automatically applied to it –Certain types of remitters have all payments processed in this queue with no automatic, system application of payment source or remitter contact information Payroll Providers Bill Pay Services Payments from States and Federal Government

17 Intra-Day Exceptions – Putting the Puzzle Pieces Together Insufficient Payment Data - Queue 4 –Identify NCPs by deriving statewide participant IDs if not completed during upstream data entry processing by: Working off payment images for NCP data elements Perform research using CSE, ARS and CASES systems and SDU transaction warehouse Reviewing previous collections system (CE) payment history Utilizing the Participant Match File received weekly from the CSE system

18 Intra-Day Exceptions – Putting the Puzzle Pieces Together Insufficient Payment Data - Queue 4 (continued) –Validate Payment Source –Capture Additional Data Element(s) as required based on Payment Source Captured by SDU if provided with remittance and is identifiable

19 Intra-Day Exceptions – Putting the Puzzle Pieces Together Other Intra-day Exception Queues –Check Verification Queue 2- Review high-dollar payments and match refused payments (CSE system Refuse Check Indicator in place) –Unbalanced Transaction Queue 3- Review and balance payments where physical and logical amounts do not match due to upstream keying error –Returned Payments Queue 5- Process returned (unfunded, NSF items) payments. Provided to the SDU for imaging and matching to the original collection by the DCSS NSF Team when their processing is completed –Misdirected Payments Queue 8- Return misdirected (not intended as child support) payments to their remitter –Returned Disbursements Queue 9- Process disbursements returned to the SDU by the USPS as undeliverable

20 Reconciliation – Checks… and Balances! NDP machines: –Encode checks –Sort checks by state depository bank and misc. sort bank Reconciliation team: –Prepares cash letters to accompany the daily deposit –Generates and reviews daily collections reports, balancing data (items) processed to dollars

21 Aged Exceptions – Payment Detectives Aged Exceptions – Queue 10 –Items not resolved in Data Entry or Intra-day Exceptions are returned to SDU from the CSE system in a Suspense Notification file –Associates perform extensive research utilizing: CSE/CASES/ARS system Transaction Warehouse Collections Web Archive Contact Remitter Internet Search –If still not resolved, items are passed to DCSS for resolution

22 Aged Exceptions (Suspense) Performance

23 Misidentified Payments How they happen –Human error –Data Elements on remittance incorrectly result in a match with a record in the PMF How this is being remedied –SDU requests that each county report errors through the Payment Validation Process –Performance feedback to SDU supervisors and employees –Outreach to employers –Improvements to PMF

Collections Electronic is where it’s at! Employers and NCPs

25 Electronic Collections No data entry Required data elements validated prior to processing Very few items move to exceptions queues Employer options –Automated Clearinghouse (ACH) network –Web/IVR Direct withdrawal (individual or bulk upload) Credit card NCP options (Web or IVR – one time or recurring) –Direct withdrawal –Credit card

26 Conversion to Electronic Collections

Disbursements Electronic is where it’s at! Direct Deposit or Electronic Pay Card (EPC)

28 Direct Deposit or EPC Benefits of Direct Deposit and EPC –Faster access to funds –No check cashing fees –Reduces fraud –Minimal returns (over 200,000 checks returned/year) Additional benefits of EPC –Minimal Enrollment Requirements Name, DOB, SSN or Alien ID, and physical US address –Disaster preparedness –Internet purchases –Hotel/car reservations

29 Electronic Disbursements

30 Electronic Disbursement Initiative Pilot being planned for early 2009 Participants notified via check insert Recipients that do not enroll in direct deposit (or opt out) will be sent an EPC Statewide rollout after pilot results reported

Electronic Help Desk and Outreach

32 Electronic Help Desk – Talk to Us! EHD Representatives: –Support and troubleshoot electronic payment issues Customer access: –IVR –Web services

33 Outreach – Information is Power Outreach team members are dedicated to informing child support stakeholders on key payment initiatives, such as: –Converting paper collections to electronic –Transitioning Non IV-D payments to the SDU –Converting paper disbursements to electronic

34 In Closing The SDU Service Provider thanks the LCSAs for their dedication and support of California’s families. Child support payment processing could not occur without your efforts. Questions