Personal Privacy in an Information Society. Principal Findings and Conclusions

07/12/1997

The basic philosophy of any system of government is reflected in its welfare system and in the way policy regarding the welfare system evolves. In a federal system, responsibilities for governing are divided between national and state governments. The welfare system of the United States is a product of our federal system of government, and methods of determining welfare policy and the policy itself must reflect this reality.

Historically, "poor relief" was a local responsibility. During the Great Depression of the 1930's, the tidal wave of unemployed quickly over-whelmed community resources, throwing the burden of supporting them on the States. When the States, in turn, found themselves helpless against the floodtide, the Federal government stepped in. Since the 1930's, the funding of welfare has been a shared responsibility of Federal, State, and in some cases local, governments; administrative responsibility for alleviating the plight of the needy, however, has remained with the States, even though the Federal government has assumed an ever larger share of responsibility for financing the benefits and the cost of administering them.

The States are not, however, free to administer welfare programs as they see fit. Acceptance of Federal funds carries with it the obligation to adhere to Federal standards and requirements. The extent of Federal constraint on the States has fluctuated over the years and varies from program to program, in record keeping as in other aspects of administration. When Federal law is silent on a record-keeping activity, States retain the discretion to establish their own policies and practices within the limits established by the Constitution. To the extent that the Federal government has chosen to regulate the record keeping of agencies administering federally assisted programs, the minimum requirements for acceptable practices are set forth in Federal statute and regulation. These, or more stringent, requirements must be included in State statutes, regulations, or plans. The result is that welfare record keeping reflects a medley of practices prescribed by Federal statutes and regulations in some areas, by State laws in others, by a combination of the two, or, in some cases, by no formal policy at all.

A comprehensive policy to guide all the record-keeping activities of welfare agencies has never been formulated by the Federal government. A few States have recently enacted laws that deal comprehensively with fair information practice, but the laws are general in scope, applicable to all State records. Some federally assisted programs must conform to Federal requirements, such as those regarding client access to records, contents of a case file, and permissible disclosures of records, while others-either through oversight or deliberate omission- need not. For the great bulk of federally assisted programs, Federal law has not yet prescribed fair practice regarding such factors as the accuracy, timeliness, completeness, and relevance of information used, and the ability of a client to contest erroneous information. In the case of programs funded solely by State or local governments, the administrators, however attentive they may be to professional ethics, often receive little direction from State legislatures in setting record-keeping policy.

It is against this background that the Commission's general findings must be understood. The Commission has evaluated the extent to which existing law on record keeping is faithful to the principles of fair information practice described earlier in this report. Specific recommendations (see below) focus on the deficiencies of existing policy; the following general findings help put them into perspective.

First, the Commission could find no general, overall policy on public assistance and social services record keeping. In the few programs that address and attempt to control practices from which unfairness to clients can flow, attention has concentrated on some controls-most notably constraints on disclosures of records-while other sources of unfairness have been largely ignored. Failure to define general policy leaves the way open for unfair record-keeping practices.

Second, the Commision finds that the lack of a general policy creates problems within an agency. Even where law has been developed to regulate the record-keeping practices of the federally assisted programs, the resolutions arrived at are not necessarily consistent from one program to another. For example, the AFDC, Medicaid, Social Services, and Food Stamp programs are each subject to somewhat different restrictions on disclosure of client records to third parties. Nor are the rules regarding client access to a case file the same in the Food Stamp program as in the AFDC program. Such policy inconsistencies often confuse those administering a program, as well as the program's clients, and may create unnecessary administrative costs. The confusion is compounded when a private services agency receives funds under several federally assisted programs. Such a private agency may find it all but impossible to keep its records so that they meet the requirements of the different funding sources.

Third, the Commission finds that lack of a general policy creates great problems in the exchange of information among and within agencies. Federal record-keeping policy fails to take full account of the interrelation ship in administration of all of the federally assisted programs. Again, this problem is especially acute in the area of policy that defines and limits the range of permissible disclosures of a program's records. Information about Medicaid and Food Stamp clients, for instance, may not be disclosed for purposes other than the administration of the program for which it was collected. Yet one worker in a State or local welfare agency may have responsibilities for administering not only these two programs, but others, such as AFDC and Social Services, as well. It may be impractical for the agency to segregate records about the client as a Medicaid or Food Stamp recipient from those about the same client as an AFDC or Social Services client.

Fourth, the Commission finds uncertainty about the extent to which the Federal government should dictate the record-keeping practices of State and local welfare agencies. Federal law in some areas clearly directs the practices to be followed, while in other equally crucial areas, Federal law is silent, leaving the States with wide discretion in formulating their own policies. Disclosure policy, for example, is clearly specified in Federal law, whereas the States are left to decide what practices are permissible in verifying information.

Fifth, the Commission finds weak oversight of record-keeping practic-es, even where requirements are quite clear. Federal agencies like the Departments of Agriculture and Health, Education, and Welfare apparently lack the resources to monitor State practices adequately, so that a State which ignores or circumvents their regulations can probably do so with impunity. For example, despite a clear DHEW regulation permitting an AFDC client access to his case file prior to a hearing, the Commission found substantial evidence that some States deny this right.

Sixth, the Commission finds that even when State policy incorporates Federal requirements, the workers at the State and local level sometimes fail to translate policy into practice. Factors which contribute to these failures include the complexity of the laws and frequent changes in requirements, which increase the work load to no purpose and make it difficult for workers to know what is required of them. Complexity and frequent change in requirements are not the exclusive prerogative of Federal legislators; State legislators also contribute.

Finally, the manner in which Federal spending power has been exercised and the inaction of the States have meant that cash assistance and social services programs funded by State and local governments may be subject to record-keeping requirements that are different from those applicable to federally assisted programs or, in some cases, to no require-ments at all. This is true even when such programs are administered by the same State agency responsible for administering federally assisted programs. This means that the privacy interests of clients of these programs may be wholly unprotected and that flows of information between federally assisted programs and those financed through other means are subject to no coherent policy.