SDU Oversight Changed As A Result Of Bank One Audit

SPRINGFIELD - Governor George H. Ryan announced today that the private management firm of Deloitte and Touche temporarily will assume oversight of the troubled State Disbursement Unit, a move designed to help reverse several problems found at the SDU by an audit ordered by the governor.

In releasing the final audit report of the SDU, conducted by Bank One, Ryan noted that significant problems hampered all aspects of the SDU's operation in the DuPage County Circuit Court Clerk's office. The problems include insufficient planning, inadequate management, poor system design, and a general lack of customer service and employee training.

"The federal government forced us to transfer the disbursement of child support checks from 102 counties to a single unit, and from the beginning this transfer has been plagued by numerous mistakes, miscalculations and false assumptions," Ryan said. "The Bank One audit that I requested provides us with a good blueprint for correcting those mistakes and getting this system on track for good.

"Our top priority remains getting child support checks to the parents and children who are entitled to them. The SDU is now sending out 98 percent of the checks, compared to 80 percent last October," the governor added.

"That's no excuse to the families who had their checks held up and we're continuing to make every effort to keep the system running smoothly," Ryan said.

The governor added that the Bank One audit, in conjunction with another study completed recently by state Auditor General William Holland, raises serious questions about the system, which was created through a no-bid contract with no performance incentives or penalties for non-compliance.

The governor said all parties who played a role in the transition to the SDU share blame. DuPage officials overestimated the system's capabilities and underestimated the scope of the project. The Illinois Department of Public Aid failed in 1998 to negotiate a contract with teeth that held the SDU to performance goals and did not adequately monitor last year's transition to the SDU.

In addition, the Bank One audit said "bad data" flowing to the SDU exacerbated the situation and was a "significant root cause" of failures with the system.

"Our audit is not intended to affix blame, but rather to find out what went wrong and why and what we need to do to fix the problems," the governor said.

Already in progress are recommendations from the Bank One audit that the SDU's flawed data base be cleaned up and corrected and that financial and operating controls be implemented in order to reduce the system's exposure to fraud.

In the spring of 1998, the state's 102 circuit clerks unanimously endorsed the selection of the DuPage County Circuit Clerk's office to house the SDU. In September of 1998, Public Aid and the DuPage circuit clerk's office formally agreed to begin system development and to negotiate a management contract for the SDU.

Although the contract with DuPage was signed in February of 1999, the agreement was retroactive to October of 1998. DuPage officials have announced that the county will voluntarily drop the SDU contract at the end of June.

The Department of Public Aid will accept proposals for the transfer and operation of the SDU this summer, evaluate all proposals received and award a new contract to operate the SDU later this year. The entire competitive bid process should take approximately six to eight months to complete.

Deloitte and Touche will continue to operate the SDU until a new operator is selected and will help with transition. Ryan added that the state's circuit clerks, a group of employers and child support advocates will guide the transition.

Ryan noted that along with new site management at the SDU, the Department of Public Aid initiated several emergency steps to keep the SDU from failing:

• Created an emergency payments system to help get payments quickly into the hands of custodial parents whose child support money was temporarily stuck in the system.

• Assigned more than 100 state employees to supplement the SDU workforce to ensure quick turnaround of payments and to handle customer service questions. The audit noted that the SDU did not hire enough employees for the workload.

• Established regional problem resolution centers throughout the state to help parents, employers and county officials straighten out mistakes.

• Implemented House Bill 2773, a new law that better clarifies procedures in the child support disbursement system and requires new actions to better synchronize operations between parents, employers, circuit clerks and the SDU.

• Hired Bank One and the accounting firm Arthur Anderson to conduct an operating audit of the SDU. Bank One has experience in child support disbursement.

• Will seek a $12 million supplemental appropriation in the Fiscal Year 2000 state budget to offset the emergency payments made to custodial parents and to clean up the data.

• Will continue to seek better enforcement of child support orders to ensure more successful collections for families.

"Mistakes were made that shouldn't have been made," Ryan said. "The contract was poorly negotiated and by the time we inherited it in early 1999, all sides in this mess had very little time to implement a reliable system. Public Aid did an inadequate job of supervising the transition to the SDU and the SDU could not cope with the incomplete or wrong information supplied by employers and circuit clerks," Ryan said.

"With these audits as guides, it's time to put the past behind us and focus on the parents and children who count on us to get them child support checks," he added.