1. August 15 & 16, 2012 FFY2013 EAP Annual Training FFY2013 EAP Annual Training Part 1: Overview; FFY12 Outcomes; FFY13; The Story of the Finding; FFY13 Outlook;

2. August 15 & 16, 2012 FFY2013 EAP Annual Training 2  Amanuel Asghedom  Ken Benson  Jynell Boulka  Doug Burns  Kathy Hochreiter  Mark Kaszynski Staff  Sue Lenarz  Jeff Mitchell  Michael Schmitz  Sandra Seemann  Tracy Smetana

3. August 15 & 16, 2012 FFY2013 EAP Annual Training 3  Ben Hill  Sukumar Puligilla  Sheldon Klugman  Eric Boyd  Marilou Cheple  Bill Grant, Deputy Commissioner Staff Others  Andy Hawkins  Brian Swanson  Karen Moe  Mike McGlone

4. August 15 & 16, 2012 FFY2013 EAP Annual Training 4 Intentions  Program and policy changes  Areas of concern  Not EAP 101  Documentation  Improved controls at many levels  Train-the-trainer Overview of Training

5. August 15 & 16, 2012 FFY2013 EAP Annual Training 5 FFY12 Outcomes

6. August 15 & 16, 2012 FFY2013 EAP Annual Training 6 FFY12 Approach  EAP intends to maximize program availability and expenditure  Balancing number of households served with average benefits per household and available funding  Make benefits available through the heating season  Highest benefits to households with the lowest incomes and highest fuel costs  Assure changes are sustainable  Continue to address crisis and delivered fuels challenges  Improve program effectiveness by participating in national Program Measurement initiative  Explore serving targets not first-come-first-serve ( Not feasible 10/21/11)  Consider reductions to Crisis (Eliminate EBA and cut EB max and events to one) (JH 9/9/11)  Increase program integrity by  Crisis program control improvements  Vendor management, controls, monitoring and training improvements  Improve services to households by exploring improvements to household payment programs (Cold Weather Rule, Gas Affordability Program, etc.)  Ensure EAP maintains cutting edge technology and tools for service delivery by upgrading eHEAT FFY12 Outcomes

7. August 15 & 16, 2012 FFY2013 EAP Annual Training 7 Weekly App Report FFY12 Outcomes Report Consists of Data from 2012-07-16 StatusCount As Of: 2012-07-16Count As Of: 2011-07-16Count As Of: 2010-07-16 Approved163,368172,149164,771 Complete41159254 SUB TOTAL163,409172,308165,025 Incomplete27155136 Logged51822 Denied17,61717,78119,467 Closed688728899 SUB TOTAL17,69517,94419,625 Pre-Logged35,61331,70129,221 Void653828600 TOTAL (of SUB TOTALS) 181,104190,252184,650

8. August 15 & 16, 2012 FFY2013 EAP Annual Training 8 FFY12 Outcomes Source: eHEAT

9. August 15 & 16, 2012 FFY2013 EAP Annual Training 9 FFY12 Outcomes Source: eHEAT

10. August 15 & 16, 2012 FFY2013 EAP Annual Training 10 FFY12 Outcomes Source: eHEAT

11. August 15 & 16, 2012 FFY2013 EAP Annual Training 11 FFY12 Outcomes Source: eHEAT

12. August 15 & 16, 2012 FFY2013 EAP Annual Training 12 FFY12 Outcomes Source: 2006-10 American Community Survey Public Use Microdata Sample & eHEAT

13. August 15 & 16, 2012 FFY2013 EAP Annual Training 13 FFY12 Outcomes Source: 2006-10 American Community Survey Public Use Microdata Sample & eHEAT

14. August 15 & 16, 2012 FFY2013 EAP Annual Training 14  Thank you  Challenging year  Mid-season changes  Weird winter Thank You!

15. August 15 & 16, 2012 FFY2013 EAP Annual Training 15 FFY13

16. August 15 & 16, 2012 FFY2013 EAP Annual Training 16 EAP is at great risk EAP is at great risk on different levels  National  State  Local FFY13

17. August 15 & 16, 2012 FFY2013 EAP Annual Training 17 Nationally  Pennsylvania issue FFY13

18. August 15 & 16, 2012 FFY2013 EAP Annual Training 18 Nationally  Critical Government Accountability Office (GAO) report  HHS is the reigning level of scrutiny  Developing new requirements  National Program Integrity Working Group  Advancing compliance reviews FFY13

19. August 15 & 16, 2012 FFY2013 EAP Annual Training 19 Program Integrity Working Group Program Integrity Working Group was tasked to  Identify issues of waste, fraud & abuse affecting LIHEAP  Identify program integrity issues  Identify program integrity systems currently used by LIHEAP grantees  Identify needs and strategies for various types of state LIHEAP programs and local service providers The Working Group is issuing a report outlining national LIHEAP program integrity improvements. These internal controls will be used by USHHS as a national model for program integrity. FFY13

20. August 15 & 16, 2012 FFY2013 EAP Annual Training 20 State  Office of Legislative Auditor (OLA) finding  DOC Internal Control Assessment FFY13

21. August 15 & 16, 2012 FFY2013 EAP Annual Training 21 The Story of the Finding

22. August 15 & 16, 2012 FFY2013 EAP Annual Training 22 Finding In October 2011, an energy vendor alerted the Department of Commerce about concerns with crisis emergency benefits paid to one household from the Low-Income Home Energy Assistance Program. Upon review, the department found that one local service provider 4 inappropriately provided $1.35 million of crisis emergency benefits 5 to several thousand households that were either ineligible to receive crisis funds or received more crisis funding than they were eligible for. The service provider also did not sufficiently document eligibility for the crisis benefits paid, and the department’s monitoring review of the service provider activities failed to detect these problems… The Story of the Finding

23. August 15 & 16, 2012 FFY2013 EAP Annual Training 23 The Story of the Finding For federal fiscal year 2011, the service provider awarded crisis emergency benefits totaling $5.7 million to approximately 11,000 households. The department required the service provider to submit a written action plan to strengthen their policies and procedures before they were awarded any crisis emergency funding for federal fiscal year 2012. In response to the concerns, the department developed plans to improve its monitoring of all service providers to ensure all future crisis emergency benefit payments comply with applicable program requirements.

24. August 15 & 16, 2012 FFY2013 EAP Annual Training 24 OLA Recommendations  The Department of Commerce should recover the ineligible crisis emergency benefits made by the service provider, as required by the federal Department of Health and Human Services  The department should improve its monitoring procedures to address risks with crisis emergency benefits and ensure compliance with program policies and procedures The Story of the Finding

25. August 15 & 16, 2012 FFY2013 EAP Annual Training 25  Over the past few years we have been stressing the importance of internal controls  Overall the internal controls of the program and system has matured  Key point--internal control maturity must never stop The Story of the Finding

26. August 15 & 16, 2012 FFY2013 EAP Annual Training 26 Program Integrity  Accountability  Accurate benefits  Culture  Documentation All protect the program The Story of the Finding

27. August 15 & 16, 2012 FFY2013 EAP Annual Training 27  Even though our controls appear to be strong, we had in incident in FFY11 which put the program at great risk (still not complete)  Incident led to an investigation which led to substantial changes (some of which have been obvious and others not so much) The Story of the Finding

28. August 15 & 16, 2012 FFY2013 EAP Annual Training 28 Incident  An energy vendor questioned a large refund at the end of FFY11  The DOC looked into the refund  We questioned it too  Incident expanded into an investigation The Story of the Finding

29. August 15 & 16, 2012 FFY2013 EAP Annual Training 29 Incident  First determined the scope  Limited to one household?  Limited to one local Service Provider?  Checked for patterns  Secured energy vendor data The Story of the Finding

30. August 15 & 16, 2012 FFY2013 EAP Annual Training 30 Investigation  Reviewed energy vendor account data for “trigger” household  Payment and bill history revealed household was ineligible for Crisis and EBA received  SP lacked documentation Conclusion: Household received inaccurate benefits The Story of the Finding

31. August 15 & 16, 2012 FFY2013 EAP Annual Training 31 Investigation  Sampled SP Crisis files and cross-referenced with energy vendor data  Sample revealed two patterns:  Provided higher Crisis benefits than HHs were eligible to receive  Provided Crisis benefits to HHs who weren’t Crisis eligible  Onsite data investigation showed inconsistent and lack of documentation of Crisis events  Additional samples were conducted with same outcome Conclusion: Affected more than one household The Story of the Finding

32. August 15 & 16, 2012 FFY2013 EAP Annual Training 32 The Story of the Finding

33. August 15 & 16, 2012 FFY2013 EAP Annual Training 33 Investigation  Sampled three other SPs’ Crisis files and cross referenced with energy vendor data  Sample revealed accurate benefits and did not produce the same patterns Conclusion: Non-systemic and isolated to one SP The Story of the Finding

34. August 15 & 16, 2012 FFY2013 EAP Annual Training 34 Investigation  Conducted comprehensive data analysis to determine size and scope  Coordinated with energy vendors to obtain comprehensive data of all the SP’s FFY11 Crisis events  Required detailed methodology for the analysis Conclusion: Over $1.3 million of inaccurate benefits The Story of the Finding

35. August 15 & 16, 2012 FFY2013 EAP Annual Training 35 Effects  This happened to occur during EAP’s annual audit with the OLA  EAP reported it to the OLA as required by law  EAP reported it to the U.S. Department of Health and Human Services The Story of the Finding

36. August 15 & 16, 2012 FFY2013 EAP Annual Training 36 Effects  DOC and OLA required steps to address this  Deputy Commissioner Grant letter last fall  Pattern analysis was introduced for monitoring  Other major improvements in monitoring  Program Audit Report improvements  OLA Finding The Story of the Finding

37. August 15 & 16, 2012 FFY2013 EAP Annual Training 37 Results  Difficult for the adversely affected households  Difficult for the local Service Provider  Difficult for the state staff  Created doubt in the program  Created scrutiny of the program  Independent consultant reviewing our internal controls The Story of the Finding

38. August 15 & 16, 2012 FFY2013 EAP Annual Training 38 Results  It put the program at risk  It puts organizations (yours and ours) at risk The Story of the Finding

39. August 15 & 16, 2012 FFY2013 EAP Annual Training 39 Now what?  Debrief--the internal controls section is too long  In hindsight it was too short  Internal controls is an on-going practice and a living practice  There will be further changes as the result of this incident and the state and national reports that are forthcoming  These changes may/ will occur during the program year The Story of the Finding

40. August 15 & 16, 2012 FFY2013 EAP Annual Training 40 Now what?  Some program changes for FFY13 are a direct result of this incident  More auditing  More documentation  If it isn’t documented it is as though it didn’t happen and your agency may be liable for re-paying funds The Story of the Finding

41. August 15 & 16, 2012 FFY2013 EAP Annual Training 41 Now what? FFY13 Improvements  More internal controls  More monitoring/auditing  Additional PAR improvements  Further quality control efforts  More documentation The Story of the Finding

42. August 15 & 16, 2012 FFY2013 EAP Annual Training 42 FFY 13 Outlook  Can’t predict the funding, timing of the funding, the weather, the economy, demand or fuel prices  What we can predict  Election will happen  Fight over funding  $110 billion in cuts due Jan 2013 unless something happens  50% defense  50% domestic FFY13 Funding & Approach

43. August 15 & 16, 2012 FFY2013 EAP Annual Training 43 FFY 13 Outlook Best guess  We will not get as much as FFY12  Somewhere between $78 million and $113 million  Starts and stops  We will not have the same warm winter as last year FFY13 Funding & Approach

44. August 15 & 16, 2012 FFY2013 EAP Annual Training 44 FFY 13 Outlook  Limited options are available to address less money  Serve less people  Serve people less  Combination of both  Less funding increases the pressure to ensure accurate benefits are going to eligible households FFY13 Funding & Approach

45. August 15 & 16, 2012 FFY2013 EAP Annual Training 45 Q & A