BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 1614|
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THIRD READING
Bill No: AB 1614
Author: Stone (D)
Amended: 8/19/14 in Senate
Vote: 21
SENATE HUMAN SERVICES COMMITTEE : 4-0, 6/10/14
AYES: Beall, DeSaulnier, Liu, Wyland
NO VOTE RECORDED: Berryhill
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 77-0, 5/15/14 - See last page for vote
SUBJECT : Electronic benefits transfer cards
SOURCE : California Reinvestment Coalition
Western Center on Law and Poverty
DIGEST : This bill requires users of Electronic Benefits
Transfer (EBT) cards to be provided access to transaction
history via toll-free telephone hotline and Internet Web site,
among other methods. Requires the system to be designed so that
users are informed when the EBT system is down and funds are not
accessible, as specified. Requires users of the EBT card to be
informed of where they can use their cards to withdraw funds
without fees, and other information regarding fees.
ANALYSIS :
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Existing law:
1.Establishes in Federal law the Temporary Assistance for Needy
Families (TANF) program to provide assistance to needy
families so that children may be cared for in their own homes
or in the homes of relatives, and to end the dependence on
government benefits by promoting job preparation, work and
marriage.
2.Establishes in California the California Work Opportunity and
Responsibility to Kids (CalWORKs) Act, to provide cash
benefits, employment training and other supports to low-income
families through a combination of state and county funds and
federal funds through the TANF block grant.
3.Establishes under federal law the Supplemental Nutrition
Assistance Program (SNAP) to promote the general welfare and
to safeguard the health and well-being of the nation's
population by raising the levels of nutrition among low-income
households.
4.Establishes in California statute the CalFresh program to
administer the provision of federal SNAP benefits to eligible
families and individuals.
5.Establishes in the EBT Act a system for the distribution and
use of public assistance benefits and requires EBT access to
be provided through automated teller machines (ATMs),
point-of-sale devices and other devices that accept EBT
transactions.
6.Requires the state's EBT system to have a 24-hour per day
toll-free telephone hotline for the purpose of reporting a
lost or stolen card and receiving information on how to have
the card and personal identification number (PIN) replaced.
7.Protects a recipient from incurring any loss of electronic
benefits or cash benefits after reporting a lost or stolen EBT
card, and requires prompt replacement of any electronic
benefits withdrawn without the use of an authorized PIN or
cash benefits taken through an unauthorized withdrawal or
unauthorized use of an EBT card after a card is reported lost
or stolen, as specified.
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8.Requires CalWORKs benefits provided through EBT transactions
to be staggered over a three-day period unless the county has
exempted an individual from the three-day staggering
requirement due to hardship, as specified.
9.Requires each county to make an agreement with one or more
financial institutions, as specified, and requires counties to
provide direct deposit by electronic fund transfer of payments
to any beneficiary who authorizes the direct deposit of
benefits into a qualifying account, as defined.
10.Requires all individuals over 16 years of age, unless they
are otherwise exempt, to participate in welfare-to-work
activities as a condition of eligibility for CalWORKs.
This bill:
1.Requires the CalWORKs/CalFresh 24-hour toll-free telephone
hotline to provide recipients, at no additional cost, the
ability to view transaction history detail (at least 10
transactions over the telephone), and to request at least two
months of transactions be sent by mail.
2.Requires the EBT system to be designed to ensure that CalWORKs
recipients have access to using or withdrawing benefits with
minimal fees or charges, including an opportunity to access
benefits with no fees or charges.
3.Requires the EBT system to have an Internet Web site to
provide recipients, at no additional cost, information on how
to replace a lost or stolen EBT card and PIN, the ability to
view transaction history detail (at least 10 transactions over
the telephone), and to request at least two months of
transactions be sent by mail.
4.Requires a county human services agency make available to an
authorized representative or head of household, at no
additional cost to the authorized representative or head of
household, all electronic benefit transaction history details
that are available to the county human services agency within
10 business days after a request has been received by the
agency.
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5.Requires the EBT system be designed to inform recipients that
access to electronic benefits is temporarily unavailable if
the system does not function or is expected not to function
for more than a one-hour period between 6 a.m. and midnight
during any 24-hour period.
6.Requires counties to inform recipients of CalWORKs and General
Assistance/General Relief of various information provided by
DSS, including the methods of electronic delivery of benefits
available, including the EBT system or direct deposit, and the
applicable charges, fees, or surcharges associated with each
method, how to avoid fees/charges, consumer and privacy
protections, liability for theft, as well as where to withdraw
benefits without a surcharge when using the EBT system.
7.Requires counties to inform recipients of CalWORKs of the
available methods of delivery of benefits and instructions
regarding how to select or change the preferred method, as
specified.
Background
CalWORKs . The average monthly CalWORKs cash grant for a family
of three is $463, or $15.43 per day to meet basic needs such as
rent, clothing, utilities and other necessities. A family of
three receiving the average grant amount would have an annual
household income at $5,556 per year - about one quarter of the
Federal Poverty Guidelines level for the same size family of
$19,790. According to recent data from DSS, 554,292 families
rely on CalWORKs, including more than 1 million children.
Nearly 80% of the children are under age 12.
Electronic Fund Transfers . The federal Electronic Fund Transfer
Act was established in 1978 to protect individual consumers
engaging in fund transfers. It establishes the rights,
liabilities, and responsibilities of financial institutions that
offer such services and of the customers who use them. In 2010,
the federal Department of the Treasury mandated that federal
benefit payments such as social security, veterans' benefits and
others be delivered through an electronic transfer.
EBT cards . Food benefits for CalFresh recipients are
distributed through an EBT system, which allows recipients to
access funds at point-of-sale terminals, automated teller
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machines (ATMs) and other electronic fund transfer devices. EBT
cards look similar to ATM debit cards, and are swiped through
the same machines using magnetic strips to transfer information.
While the EBT system was designed in California to deliver
CalFresh benefits, all of California's 58 counties also deliver
either CalWORKs or General Assistance benefits, or both, through
the EBT cards. According to DSS, in 2013 there were 35.5
million EBT transactions, with about one-fifth of them charged
fees or surcharges. Of that, 17 million transactions were used
for direct purchases, 2.5 million were for cash back only from a
purchase of service location and nearly 5.5 million transactions
were purchases with cashback. These transactions incurred
relatively minimal fees. However, 71% of the 10.4 million
transactions that were cash withdrawals (7.4 million
transactions) incurred fees. According to the DSS Internet Web
site, EBT food and cash aid benefits can be redeemed at more
than 80,000 locations in California.
Fees and Charges . A 16-page report issued in March 2014 by the
California Reinvestment Coalition calculated $19 million per
year in public benefits is going to pay for bank fees and
another $6.7 million is spent annually on fees to pay bills and
make purchases using prepaid cards, money orders, independent
check cashers and in-person pay locations.
"The current EBT program provides recipients limited access
to ATMs before charging fees to withdraw cash while most
banks and other ATM owners charge a fee of up to $4 every
time someone uses an EBT card in their machines. As a
result, families that receive an average CalWORKs benefit
of only $510 a month use a significant portion of that
money just to pay ATM fees.
Unfortunately, the $19 million captures only the cost of
using EBT cards. CalWORKs recipients who don't have access
to affordable, full service bank or credit union accounts
are paying additional fees to pay bills and make purchases
using prepaid cards, money orders, check cashers and
in-person pay locations. We estimate that an additional
$6.7 million of the state's CalWORKs funds is going to pay
for these services. In total, $25.7 million of the state's
aid meant to support the wellbeing of families is instead
going to fees charged to conduct the most basic financial
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transactions."
Among other suggestions, the organization recommended educating
EBT card users about how to avoid excessive fees.
Prior Legislation
AB 1280 (Perez, Chapter 557, Statutes of 2013) authorizes public
assistance payments to be directly deposited by electronic fund
transfer to a qualifying account and required those accounts to
meet specified consumer protection regulations.
AB 2035 (Bradford, Chapter 319, Statutes of 2012) protects
recipients against the loss of EBT benefits that are stolen
electronically.
AB 1542 (Ducheny, Chapter 270, Statutes of 1997) implemented
federal welfare reform and conformed to federal law in
establishing the EBT system to deliver CalWORKs and CalFresh
(then Food Stamps) benefits.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Ongoing state-reimbursable administrative costs to counties to
inform all CalWORKs recipients of specified information
provided by DSS regarding the electronic delivery of benefits.
Based on CalWORKs recipient cases of about 550,000, to the
extent the information is provided verbally in person or over
the phone, an additional five minutes of eligibility worker
time for each recipient will result in costs of $2.6 million
(General Fund).
Minor, absorbable costs to DSS, as most of the requirements of
the EBT system are already implemented and part of the
existing system.
SUPPORT : (Verified 8/19/14)
California Reinvestment Coalition (co-source)
Western Center on Law and Poverty (co-source)
AFSCME
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Alameda County Board of Supervisors President, Keith Carson
Alameda County Community Food Bank
Alameda County Social Services Network
California Asset Building Coalition
California Catholic Conference, Inc.
California Food Policy Advocates
California Partnership
California WIC Association
Center for Asset Building Opportunities
Center for Responsible Lending
Coalition of California Welfare Rights Organizations, Inc.
Community HousingWorks
Consumer Action
County Welfare Directors Association
East Bay Community Law Center
Home Preservation & Prevention, Inc.
Hunger Action Los Angeles
Mission Economic Development Agency
National Association of Social Workers, California Chapter
Opportunity Fund
Pacific Asian Consortium of Employment
Rio Hondo College
OPPOSITION : (Verified 8/19/14)
Department of Finance
ARGUMENTS IN SUPPORT : The author states that this bill seeks
to improve consumers' access to information about their EBT
transactions and to facilitate their economic empowerment.
While current state policies are predominantly focused on the
provision of assistance and the myriad requirements recipients
must comply with in order to remain eligible for benefits, this
bill seeks to help recipients know their consumer rights and
facilitates access to the tools they need to be able to manage
their benefits, according to the author.
Recently shortened time limits and other restrictions on the
provision of state assistance make it even more important to
equip our needy families with the tools they will need to
maintain and surpass whatever level of financial stability the
state helps them achieve, the author states.
ARGUMENTS IN OPPOSITION : The Department of Finance (DOF) is
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opposed to this bill because they claim it is unnecessary and
could result in a reimbursable state mandates to the extent
counties incur additional costs to provide recipients
information about direct deposit, surcharge-free access
locations, and transaction history. DOF states that DSS
currently provides 24-hour telephone and internet support for
EBT customers, including card or PIN replacement and transaction
history. DOF states that California's EBT Internet Web site
also provides recipients a list of surcharge-free ATMs.
ASSEMBLY FLOOR : 77-0, 5/15/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. P�rez, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Eggman, Mansoor, Vacancy
JL:e 8/19/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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