BILL ANALYSIS Ó
AB 493
Page 1
Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Jim Beall Jr., Chair
AB 493 (Perea) - As Amended: March 21, 2011
AS PROPOSED TO BE AMENDED
SUBJECT : CalWORKs: Electronic Benefit Transfer card
SUMMARY : Places restrictions on the types of transactions that
California Work Opportunity and Responsibility to Kids
(CalWORKs) recipients can make with their cash assistance
grants.
Specifically, as proposed to be amended, this bill: Requires
the Electronic Benefit Transfer (EBT) system to prevent CalWORKs
recipients from using their EBT card to:
1)Access automated teller machines (ATMs) located in gambling
and adult entertainment establishments; or
2)Purchase alcohol or tobacco products.
EXISTING LAW :
1)Under federal law:
a) Establishes the Supplemental Nutrition Assistance
Program (SNAP) to provide food assistance that eligible
persons can access via their state-issued EBT card; but,
prohibits retailers from accepting SNAP benefits via a
state-issued EBT card to pay for non-food items such as
tobacco and alcohol products and establishes penalties for
retailers that are found to be accepting SNAP benefits for
these items.
b) Establishes the Temporary Assistance for Needy Families
(TANF) program to provide cash grants to eligible persons
as part of a welfare-to-work program but places no
restrictions on the types of purchases or locations where
cash is withdrawn.
2)Under state law:
a) Establishes the CalFresh program to provide food
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assistance to eligible persons via an EBT card that is used
to purchase food at participating stores and markets.
b) Establishes the CalWORKs program (the state name for
TANF) to provide eligible persons cash assistance via an
EBT card that can be used to make purchases at
participating stores or access cash at participating banks.
c) Prohibits, through an executive order, ATM machine and
point of sale devices at gambling and adult entertainment
establishments from accepting a California-issued CalWORKs
EBT card for any purchase or for accessing cash.
FISCAL EFFECT : Unknown
COMMENTS : The author points to a Los Angeles Times article last
year as the impetus for this bill. The article implied that
out-of-state purchases and cash withdrawals by CalWORKs
recipients were a misuse of public funds. Because cash
assistance is intended to pay for basic needs, the discovery
that some recipients had withdrawn cash at casinos in Las Vegas
or made purchases in shops and restaurants in Hawaii suggested
to the author that preventive measures were necessary to ensure
program integrity. Indeed, the author states that:
Given the current climate of the state's economy and
the limited resources available to all of California's
programs, it is more important than ever to ensure
that state aid is to provide basic necessities for
California's under-resourced families.
While the article largely focused on where the funds were spent
and what for, it also highlighted that the expenditures amounted
to less than 1% of the $10.8 billion spent during the
approximate three-year period in question. As well, it was
mentioned that the expenditures may not be inappropriate as many
recipients need to travel to other states for emergencies such
as a death in the family.
The author proposes to prevent all CalWORKs recipients from
accessing cash at ATMs located in gambling and adult
entertainment establishments and from purchasing alcohol and
tobacco. This bill directs the state-contracted EBT processor
to block these transactions.
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Executive Order blocks EBT access
In response to the articles like the one discussed above,
Executive Order S-09-10 (executive order) under the
Schwarzenegger Administration mandated that CalWORKs recipients
can no longer withdraw cash benefits at gambling establishments.
Additionally, the former governor directed the Department of
Social Services (DSS) to propose other methods to reduce waste,
fraud, and abuse in the disbursement of CalWORKs benefits. Soon
after that directive, DSS and the Office of Systems Integration
blocked EBT access at ATMs and POS devices located in:
adult entertainment establishments;
certain liquor stores;
bail bonds businesses;
bingo halls;
cannabis shops;
cruise ships;
gun/ammunition stores;
night clubs/saloons/taverns;
psychic readers;
race tracks;
smoking shops;
spa/massage salons; and
tattoo/piercing shops.
While much of what this bill seeks to accomplish has already
been done through the executive order, the author seeks to
codify its provisions, thereby making it more difficult to
overturn.
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Language clarification
As mentioned above, EBT access has been significantly restricted
at many establishments per the executive order. It is the
Committee's understanding that the intent of the author is to
codify the executive order, but the bill does not cite the
executive order. Rather, it only specifies gambling and adult
entertainment establishments. If this bill passes out of this
committee, the author may consider clarifying that provision.
Current law on alcohol and tobacco purchases
SNAP is the federal name for the program formerly known as Food
Stamps and in California is now known as CalFresh. Unlike
CalWORKs rules, SNAP law prohibits the purchase of alcohol and
tobacco, among other non-food items, with a participant's
CalFresh benefits.
The enforcement of the SNAP law is done through different means.
Generally, large grocery store chains program their computer
systems to block alcohol and tobacco transactions while smaller
chains rely on EBT card users to pay separately for these items
at the request of the clerk. Enforcement is also done through
federal inspections. The SNAP and CalWORKs program policies on
alcohol and tobacco purchases were determined at different times
which results in the inconsistencies between these complementary
programs. Most, if not all, CalWORKs recipients receive
CalFresh benefits along with their cash assistance and
employment services.
Support and Opposition
The proponents of restricting EBT access state simply that the
funds need to be used for their intended purpose-basic needs-and
not to be abused. While there is no known definition for what
constitutes a basic need, the executive order arguably and
legally established what is not.
The Western Center on Law and Poverty (WCLP) believes that this
bill undermines the goals of CalWORKs and the EBT system - to
integrate welfare recipients into the world of work and personal
responsibility and that it promotes negative stereotypes of
low-income people.
The County Welfare Directors Association (CWDA) believes the
bill will have little or no impact on alcohol and tobacco use as
recipients will simply find another way to purchase these
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products. CWDA adds that while it sounds logical to ban these
items given that they are not essential to one's well-being,
starting down this path raises questions about what would be
banned next and where the list will end.
Others argue that there is no evidence that CalWORKs recipients
are misusing the funds for alcoholic beverages, tobacco,
gambling, or lavish vacations. They add that blocking cash
access in casinos limits access because many low-income workers
are employed at casinos and that in some areas of the state the
casinos may be the closest ATM.
Related legislation
SB 417 (Dutton) requires the EBT system used in the CalWORKs and
CalFresh programs to be designed to prevent recipients from
using the EBT card to purchase alcohol or tobacco products.
Failed passage in the Senate Human Services Committee on April
12, 2011 but was granted reconsideration.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Professional Firefighters (CPF)
California Statewide Law Enforcement Association
California Taxpayers Association
California Welfare Fraud Investigator's Association
Fresno Barrios Unidos
Opposition
California State Association of Counties
Coalition for California Welfare Rights Organizations
County Welfare Directors Association
Western Center on Law and Poverty
Analysis Prepared by : Frances Chacon / HUM. S. / (916)
319-2089