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Mike Ruffin, County Manager Page -2- In November 19Bi, plaintiffs filed a Motion for Further Relief alleging, among other things, the continued -failure of the county departments to process AFDC and Medicaid applications in a timely manner; failure of the State to take meaningful corrective measures against counties that consistently fail to process applications expeditiously; discouragement of prospec~iva applicants from filing applications; and inflexible and excessive verification requirements in violation of the due process clause of the Fourteenth Amendment and of federal regulations. The State filed an answer~ denying most of the allegations. Legal Services filed sufficient evidence with the Court to lead the gtate~s legal counsel (the Attorney General) to believe that the Court would find a favorable ruling for the plaintiffs if the case were taken to trial. Therefore, the decision was ~ada to negotiate a settlement. Legal Services also indicated their preference to negotiate a settlement rather than go to trial. Current Order and its Problems In December, 1989, the North Carolina Department of Human Resources entered into a consent order and settlement agreement between the state agency and Legal Services of ~orth Carolina in relation to the 1988 Motion for Further Relief, Under the terms of the settlement agreement~ a monitoring instrument was developed which was used last year to test each county's compliance with various program requirements. Counties were classified into three categories, depending on the score achieved on the monitoring instrument: Category I ~ 455 - 500 points Category ~l ~ 355 - ~5~ points Category III - 0 - 355 points Under this plan~ after the initial year of "hold harmless" monitoring, in the following year of monitoring, Category III counties were to be required to take cerractivs action and pay a sanction equal to 7.51 of their combined tFDC and Medicaid non-federal costs of administration. Category II counties were to take corrective action and improve their scores by IOZ in the next monitoring in order to prevent paying a sanction equal to 3.75I of the non-federal costa of administration for AFDC and Hedicaid. Category I counties had to take corrective action as appropriate~ but were assessed no sanctions. In the initial year of monitoring, 88 county departments scored in Category III, or Category I~ ~lth only 12 county departments scoring in Category I. Tbs vast ma~ori~y of larger counties scored in Category Ill, Cabarrus County scored in Category III. It became apparent in this monitoring process that the paperwork requirements which have proliferated ~rith each subsequent order in Alexander v. Flaherty are having a seriously detrimental effect. Basically, the mere papet~ork which has to be completed, the longer it takes to complete applications. In. a very real sense, the medicine has become worse than the disease. It is also obvious that the monitoring