Establish a Single Identification Number For Entities Doing Business with the State

The state should move toward the use of the Comptroller s core 11-digit taxpayer number as a universal identification number for state transactions since it is a widely used number among taxpayers and is based on common federal identifiers.


Background
There are more than 200 state agencies providing services to the citizens, businesses and other organizations in Texas. In addition, there are large numbers of vendors, contractors and service providers doing business with state government. State agencies that interact directly with the public have developed a variety of methods to identify individuals, businesses and other types of organizations.

The Comptroller of Public Accounts, which collects state taxes and pays the state s bills, has the largest database of varied entities and vendors in the state. The Comptroller uses a 14-digit number: a core 11-digit taxpayer number for identification, plus 3 digits as vendor address codes. The core 11-digit number can be used by all agencies as a universal identification number. This core number is broken down into three parts. The first digit is either 1, 2, or 3, defining the type of taxpayer. The next 9 digits are either the federal employer identification (FEI), the social security number (SS) or temporary numbers of the taxpayer. The last digit is assigned by the computer using a mathematical algorithm to help detect data entry errors.

Agencies that are paying entities according to contracts, fees, claims and payrolls must interact with the Comptroller to generate payment warrants or checks. The paying agency must provide the Comptroller s Claims division with an FEI, SS or temporary number that has been assigned to the entity they are paying.

The Comptroller uses the Tex as Payee Information System (TPIS) to assure that the correct entity is being paid. This system has the following information: payee numbers (taxpayer number) associated with a particular name, names and addresses for a specific payee; a transaction histor y for a specific payee; a voucher history for a specific payee; payment hold information showing whether the entity owes money to the state and to which agency an amount is owed and payment information. Eighty-seven state agencies have chosen to use and ac cess the TPIS.

A comparative review of other state agencies showed that while many agencies do have the capability of identifying entities by FEI or SS numbers, and in some instances even by the Comptroller s taxpayer s 11-digit number, they still use their own unique method of primary identification.

For example, the Texas Workers Compensation Commission (TWCC) primarily interacts with claimants for Workers Compensation who are identified by an 8-digit claim number. TWCC also interacts with health care providers, identified by a provider number issued by the Texas Medical Board; employers, identified by their FEI number; and insurance carriers, identified by a certificate number. Essentially TWCC uses four different identification keys.

There are similar situations in other agencies. The Department of Agriculture regulates nine different programs with identification key-coding varying from program to program. One program regulating applicators of pesticides uses a certificate number; anot her program regulating buyers of produce for resale uses a license number.

The sharing of data among state agencies has been described as extremely difficult because of the lack of a common identification key. For example, the Texas Department of Insurance (TDI) and TWCC formed a data-sharing arrangement during the month of September 1991, when the task of collecting and entering information pertaining to employers and insurance carriers was moved from TWCC to TDI. At the time, both agencies needed to share information i n their respective databases but neither had a common identification key. They mutually agreed to use the employer s FEI number as that key.

Another example of the need for a common identification number entails the Department of Human Services and the Texas Department of Health, who jointly interact with the same private health care providers. Both agencies are often required to share informat ion on these providers; however, the agencies have no common key-coding system. The Department of Human Services u ses a contract number for identifying a provider. If the provider has several outlets, then each outlet is given its own separate contract number. The Department of Health, on the other hand, uses a vendor number.

For record-keeping purposes, it is important for some agencies to assign operator, provider, carrier, claimant numbers and so on. However the necessity of using these as a primary identifying number is unclear.

One thing that is true of all entities that interact with state agencies is that the y either have an FEI or SS number. Three of the state agencies reviewed, the Attorney General, the General Land Office, and the Texas Department of Agriculture, are already using or are preparing to use a common entity identification numbering system simil ar to the taxpayer identification number (TIN) used by the Comptroller s office.


Recommendation
State law should require all state agencies to identify individuals, businesses and organizations by a single entity number. The Comptroller s taxpayer s iden tification number should be the basis of this numbering system.

To avoid immediate system conversion cost for those agencies currently using a different identification approach, and because of record-keeping and operational necessities, agencies should be allowed a five-year period to complete the conversion to this en tity TIN. The phase-in period, by law, should be completed on or before September 1, 1998.


Implications
In the long run, the use of a common TIN would serve to minimize costs in the area of inter- and intra-agency sharing of databases. An integrated system would improve the delivery of services and minimize the unnecessary duplication of databases, efforts and costs. Common TIN identifiers would greatly assist legislative and agency research ers in ways such as performing data analysis for special studies, program analysis and auditing and fraud detection.

This is primarily a good business practice recommendation that, once put into place, will benefit state agencies, vendors and clients of state services. It will ensure at least a certain degree of comparability and accessibility of databases throughout Texas state government. As the state tries to migrate towards performance-based management and budgeting, it is essential to be able to acc ess, manipulate and compare data among state agencies.


Fiscal Impact
The intent of the recommendation is to allow a sufficient phase-in period so that costs, which cannot be estimated at this time given the number of agencies and automated client data sy stems, would be minimized. There would be many positive fiscal benefits from the recommendation, such as minimizing duplicate identification systems, expediting requests for information and better management decisions through better data.