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.