Arizona Works Pilot Program - Special Audit

The Arizona Works pilot program was created to determine the feasibility of privatizing public assistance administration in the State of Arizona. The first phase of the pilot program began on April 1, 1999, and will continue through December 31, 2002. The pilot program is required by statute to save a minimum of 10 percent in administrative expenses when compared to the Department of Economic Security’s (DES) estimated costs. However, the pilot program’s costs have been from 6 percent up to 37 percent higher each year than the estimated cost for DES to perform the same functions. Costs have been higher because the pilot program’s contract payment formulas were not adjusted for two decisions by the federal government that significantly limited the program’s original intended scope of work, and the manner in which costs could be charged it.