BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 537 (Arambula) Hearing Date: 08/02/2010 Amended: 06/30/2010 Consultant: Jacqueline Wong-HernandezPolicy Vote: Human Services 4-1 _________________________________________________________________ ____ BILL SUMMARY: AB 537 would require, with exceptions, a flea market, farmers' market, or certified farmers' market that does not have an electronic benefit transfer (EBT) system in place by January 1, 2012, to designate or assign an interested Food and Nutrition Service (FNS)-authorized organization to operate an EBT acceptance system in the market, as specified. This bill would require the Department of Social Services (DSS) to consider and solicit input from the market prior to making a designation or assignment authorized under the bill, as specified. This bill makes codified legislative findings and declarations. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund DSS designation/oversight $41 $163 $163 General* $41 $163 $163 Federal* EBT devices up to $330 General* up to $576 Federal* Local assistance Potentially substantial one-time costs General* Federal* *If federal approval is granted, to allow FNS-authorized organizations that do not own the market to operate EBT on behalf of the market. _________________________________________________________________ ____ STAFF COMMENTS: This bill meets the criteria for referral to the Suspense File. Under federal law, food stamp benefits must be issued through the EBT system, and retailers must apply and become authorized by the federal FNS to accept EBT transactions. California has a statewide EBT Farmers Market Program through which approximately 70 farmers markets (out of more than 800 in currently operation statewide) have opted to participate, and are authorized by FNS to accept food stamps. Most EBT farmers markets use scrip (a type of currency). From a central location at the farmers market, EBT cardholders can use their EBT cards to purchase scrip. They use this scrip to purchase food stamp eligible items from farmers at the market, and farmers are later reimbursed by the market for the amount of scrip they have received. This bill would require all markets (that do not currently participate in EBT transactions) to either have an EBT system in place by January 1, 2012 or allow an outside FNS-authorized organization to operate an EBT system on behalf of the market, if allowed by Page 2 AB 537 (Arambula) federal law. DSS would be responsible for designating an interested organization (for each market), to the extent there are interested FNS-authorized organizations. This bill would incur one-time costs to DSS to purchase additional EBT devices, to establish new procedures, and to provide initial local assistance. EBT devices cost approximately $1,200 each, and new devices could be needed for many of the additional 750 (or more) farmers markets that would be required to participate. Some FNS-authorized organizations can likely use existing wireless point-of-sale devices they already have. DSS would also incur ongoing staffing costs to monitor the program, recruit and coordinate organizations, and work with markets to implement the provisions of this bill. The duties are extensive, and will likely require two PYs, for state support. Some amount of local assistance will be ongoing, and will likely change depending on the level of actual participation by the outside organizations.