Employer Misclassification Predictive Analytics Sue Anne Athens, CIO March 2017

Agenda Project Purpose Objectives PCC Certification History Budget Schedule and Current Status Preliminary Results Transition to Operations Lessons Learned IV&V Questions

Project Purpose Presently, New Mexico has approximately 45,000 active registered employers and is required to meet a one percent penetration rate. Of these, 450 required audits, NMDWS is required to detect 450 misclassified workers. Approximately 50% of these audits are “clean audits,” meaning there were no wage discrepancies detected 225 of the 450 annual audits. The purpose of this project is to improve the overall efficiency of NMDWS by prioritizing field audit work, reduce the number of employers misclassifying wages and providing mechanisms for better managing performance standards required by the US DOL.

Objectives All Business Objectives were Successfully Achieved To be an integral part of all economic development and education initiatives and to be efficient and responsive to the diverse needs of New Mexico’s employers and workforce. Deliver targeted messaging to employers in an effort to realize significant reductions in the need for targeted audits, saving staff time, and enhancing collections to the UI Trust Fund. Prioritize employer outreach and audit activities to better identify at-risk employers, further reducing the incidence of misclassification. Improve the overall efficiency of NMDWS to reduce the number of employers misclassifying wages by 50%. All Technical Objectives were Successfully Achieved Ensure reuse of existing architecture, specifically the IPPI engine with integration into the UIA Secure additional data sources that can be securely stored and reused for a range of purposes

PCC Certification History Project Phase Amount Date Initiation $250,000 February 2016 Planning $150,000 August 2016 Implementation $99,970 Closeout n/a March 2017 Amount Previously Certified $499,970 Remaining Amount Not Certified Total Appropriated Amount

Project Budget Performance Completed Project On Budget Actual Professional Services $499,970 Planned Professional Services $499,970 Difference $0 Actual Software Cost $0 Planned Software Cost $0

Project Current Status Completed Project On Time Initiation – 3/22/2016 Engine Requirements and Design – 8/15/2016 Treatment Stream Design – 10/15/2016 Engine Implementation – 10/9/2016 Treatment Stream Implementation – 12/14/2016 Close – 3/29/2017

Increased engagement on worker classification Preliminary Results Increased engagement on worker classification 47% of emails sent were opened Nearly 50% of those opened clicked on a link to additional information

Transition to Operations EMPA Transition and Sustainment Plan EMPA was built on DWS’ existing Improper Payment Prevention Initiative (IPPI ) technology, leveraging the same software components and delivery mechanism. Both IPPI and EMPA are integrated with DWS’ existing Unemployment Insurance Application (UIA). Agency business areas updated Standard Operating Procedures (SOPs) and training materials to support the roll-out of EMPA. Production monitoring and issue resolution documentation are provided with the solution.

Lessons Learned

IV&V Project Accomplishments: The EMPA project team achieved a number accomplishments over the course of the project. Most significantly, the primary components of EMPA – the analytics engine, the treatment streams, and reporting – were implemented with minimal technical problems and disruption to DWS operations. The few technical problems that emerged were quickly identified and addressed by Deloitte and DWS staff. Technical testing for both the engine and the treatment streams was effective and greatly aided the individual deployments. The development team was able to accelerate the deployment of the treatment streams as part of an effort to balance the amount of change being introduced to the DWS environment. This effort added a smaller third phase to the project that was implemented in mid-December. Training and internal communications was performed as planned, specifically for the Tax and Tax Audit teams. Additionally, the project team received good support from both the Tax teams and the Economic Research and Analysis (ER&A) organizations. NOTE: See Final Report submitted by Cognosante for more details.

Questions Requesting Closeout Certification for NMDWS EMPA Project