BILL ANALYSIS �
AB 2354
Page A
Date of Hearing: April 29, 2014
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Mark Stone, Chair
AB 2354 (Conway) - As Introduced: February 21, 2014
SUBJECT : Electronic benefits transfer cards: photo
identification.
SUMMARY : Requires an initial or replacement electronic benefits
transfer (EBT) card issued on or after January 1, 2015, as
permitted by federal law, to have printed on either the front or
back of the card a photograph of the person to whom the card is
issued.
EXISTING LAW
1)Establishes, under federal law, the Supplemental Nutrition
Assistance Program (SNAP), pursuant to the Food Stamp Act of
1964 and subsequent revisions, and establishes, in California
law, the CalFresh program to administer the provision of
federal SNAP benefits to low-income families and individuals
meeting specified criteria. (WIC 18900 et seq.)
2)Establishes, under federal law, eligibility requirements for
receipt of SNAP benefits, including income that is at or below
130% of the federal poverty level and is determined to be a
substantial limiting factor in permitting a recipient to
obtain a more nutritious diet, as specified. (7 CFR 273.9)
3)Establishes under federal law the Temporary Assistance for
Needy Families (TANF) program to provide aid and
welfare-to-work services to eligible families and, in
California, provides that TANF funds for welfare-to-work
services are administered through the CalWORKs program. (42
U.S.C. 601 et seq., WIC 11200 et seq.)
4)Establishes income, asset and real property limits used to
determine eligibility for the program, including net income
below the Maximum Aid Payment (MAP), based on family size and
county of residence, which is approximately 40% of the Federal
Poverty Level. (WIC 11450, 11150 et seq.)
5)Denies CalFresh eligibility to individuals convicted of
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unlawfully transporting, importing, selling, furnishing,
administering, giving away, possessing for sale, manufacturing
a controlled substance, possessing precursors with intent to
sell, or cultivating, harvesting or processing marijuana, and
individuals who have been convicted of soliciting, inducing,
encouraging or intimidating a minor to participate in any such
crimes. (WIC 18901.3(b))
6)Authorizes the establishment of an electronic benefits
transfer (EBT) 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 (POS)
devices and other devices that accept electronic benefits
transfer transactions. (WIC 10065 et seq., 123302)
7)Requires the state's EBT system to provide reasonable access
to benefits for recipients who are unable to use an EBT card
or other aspect of the system due to disability, language,
lack of access, or other barrier, and requires alternative
methods to be in compliance with the Americans with
Disabilities Act and include reasonable accommodations for
people with physical and mental disabilities. (WIC 10072 (d))
8)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 PIN replaced. (WIC 10072 (f))
9)Provides that a recipient shall not incur 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. (WIC 10072 (g))
10)Authorizes designated persons to make EBT purchases on behalf
of a CalFresh household, as specified. (7 CFR 273.2(n))
11)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. (WIC 10072(c),
10072 (l))
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12)Requires equal treatment of EBT users and all other
individuals making the same purchases, as specified. (7 CFR
278.2 (b))
FISCAL EFFECT : Unknown
COMMENTS : EBT cards are used in California primarily for the
purpose of providing CalFresh and CalWORKs benefits to needy
families. This bill seeks to require EBT cards to include
photos of cardholders.
Electronic Benefits Transfers Act : AB 1542 (Ducheny), Chapter
270, Statutes of 1997, which implemented federal welfare reform
and established the CalWORKs program, also conformed to federal
law in establishing the Electronic Benefits Transfer (EBT) Act,
which makes the following declarations:
1)The development of incompatible systems for electronic
benefits transfer will create significant hardships on
recipients of public social services and businesses that
accept electronic transactions as payment for goods and
services; and
2)The goals of electronic benefits transfer are to reduce the
cost of delivering benefits to recipients, to ensure that all
systems within California are compatible, and to afford public
social services recipients the opportunity to better and more
securely manage their financial affairs.
California's official move from a paper-based system to an
electronic system for the distribution and use of public
assistance benefits occurred in 2002. This shift was essential
in helping the CalWORKs and CalFresh (then Food Stamps) programs
keep pace with technological advances in point-of-sale and
automated teller systems.
CalWORKs : The California Work Opportunity and Responsibility to
Kids (CalWORKs) program provides monthly income assistance and
employment-related services aimed at moving children out of
poverty and helping families meet basic needs. Federal funding
for CalWORKs comes from the Temporary Assistance for Needy
Families (TANF) block grant. CalWORKs cash aid and services are
provided to low-income families with children and needy
caretaker relatives of children in, or at risk of placement in,
the foster care system, with the goal of lifting children out of
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deep poverty. According to recent data from the California
Department of Social Services, 554,292 families rely on
CalWORKs, including over one million children. Nearly 80% of
the children are under age twelve and 40% are under age five.
The average monthly cash grant for a family of three on CalWORKs
(one parent and two children) is $463. Average grants of $463
per month for a family of three means $15.43 per day, per
family, or $5.14 per family member, per day to meet basic needs,
including rent, clothing, utility bills, food, and anything else
a family needs to ensure children can be cared for at home and
safely remain with their families. This average grant amount
puts the annual household income at $5,556 per year. The
maximum monthly grant for a family with no other income is $638,
resulting in an annual household income of $7,656. Federal
Poverty Guidelines show that 100% of poverty for a family of
three is much higher at $19,790 per year.
CalFresh : Nutrition benefits provided through the CalFresh
program are funded entirely by the federal government through
the Supplemental Nutrition Assistance Program (SNAP). The
United States Department of Agriculture (USDA) sets specific
eligibility requirements for SNAP programs across the United
States, including a gross and net income test, work
requirements, and other documentation requirements. The maximum
allowable gross income is 130% of the Federal Poverty Level
(FPL), and households with elderly or disabled members are not
subject to gross income criteria but must have a net monthly
income at or below 100% of the FPL. Other households must meet
both gross and net monthly income tests. CalFresh is
administered locally by county human services agencies, and the
federal, state, and county governments share in the cost of
administration of the program. The average monthly benefit for
a CalFresh recipient is $153.13 per month, or $5.10 per person
per day, whereas the maximum monthly CalFresh benefit for a
household of four is $632, or $5.27 per person per day.
EBT usage restrictions : Recipients of CalWORKs cash aid often
receive their benefits on an EBT card and use the card as they
would any other debit card for ATM withdrawals and purchases to
meet their families' basic needs. Because EBT cards do not have
any credit insignia, use beyond ATM or POS machines is limited,
resulting in the need for CalWORKs recipients to often withdraw
cash to pay utility bills, for example, which are payments that
could otherwise be made electronically with a standard
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commercial debit card.
Unlike CalWORKs benefits, CalFresh benefits are only accessible
through use of an EBT card and cannot be used for cash
withdrawals or for the purchase of basic necessities that don't
qualify as food. CalFresh benefits can only be used to purchase
food items to be prepared and consumed at home, as well as seeds
and plants that can be grown at home and produce food.
While EBT cards provide much of the same access to purchases and
withdrawals as commercial debit cards, there are federal and
state restrictions on EBT transactions in certain locations.
The federal Middle Class Tax Relief and Job Creation Act of
2012, signed into law on February 22, 2012, required all states
receiving a TANF block grant to prevent EBT transactions in
liquor stores that do not also sell food; casinos, gambling and
gaming establishments; and any retail establishment that
provides adult-oriented entertainment. Prior to this federal
policy change, DSS had already responded to Executive Order
S-09-10, issued by Governor Schwarzenegger, and by September
2011, had blocked EBT usage at more than 6,000 ATM machines that
were determined to be in violation of the Executive Order. It
is important to note that DSS moved to remove EBT access for ATM
machines at these establishments although there was no record of
EBT withdrawals at all of these locations.
Additionally, EBT cards are very different from commercial
credit cards in that they do not carry a credit line, and the
withdrawals or purchases a recipient makes cannot exceed the
amount that is available on the card. Lack of overdraft
potential is an important feature that helps poor families have
access to their minimal benefits as they become available each
month without the threat of a future month's aid payment having
to be used to pay back debts or overdraft fees.
State benefits going to banks : Although funds distributed
through EBT cards are protected from some of the fees imposed on
commercial credit cards, there are still four types of
surcharges that impact EBT card usage for CalWORKs recipients.
These include ATM surcharge fees that are applied at some ATMs
and POS machines when cash is withdrawn, ATM balance inquiry
fees, POS machine surcharge fees for getting "cash back" on a
purchase, and an $0.85 transaction fee paid to the state's EBT
vendor that is in addition to any surcharge and is applied when
cash is withdrawn from ATM or POS machines more than four times
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within a single month.
Additionally, the issue of bank surcharges and fees being
applied to EBT cash withdrawals was highlighted in a recent Los
Angeles Times article, which stated that $18.9 million in EBT
dollars had gone to banks through ATM fees in 2013, and $19.4
million had been taken from EBT transactions at ATMs in 2012.
Recipients' grant amounts are not padded to account for
potential fees or surcharges, meaning that every dollar that
goes to a bank is a dollar that was intended for a needy family,
but can't be used by that family to pay for their basic needs.
Need for the bill : According to the author, "[This bill] would
require all EBT cards in California have photo identification on
either the front or back of the card. This would prevent
individuals from illegally selling their EBT cards and reduce
incidents of theft. This legislation will crack down on food
stamp cheats who are trying to profit off the sale of
taxpayer-funded benefits. [This bill] also reduces theft and
ensures that only those who have really fallen on hard times
receive the assistance they need to get back on their feet?[This
bill] is a common-sense solution that ensures taxpayer funds are
being spent as intended and CalFresh benefits get to those who
truly need them.
Opposition : Writing in opposition to this bill, the California
Hunger Action Coalition states:
"Similar proposals have been proposed and rejected by numerous
other states and should likewise be rejected here in California.
It is not clear how the bill would reduce fraud as purported
without violating federal law, and implementation would be
costly to administrators, burdensome for retailers and difficult
for benefit recipients. If passed, [this bill] would encourage
illegal practices at retailers subject to rules which prohibit
them from treating EBT consumers differently than consumers
using alternative methods of payment. For these reasons, the
U.S. Department of Agriculture (USDA), Food and Nutrition
Service (FNS), recommends against requiring photos on benefit
cards as proposed in [this bill].<1>"
[This bill] does not reduce the likelihood of program fraud, and
it diverts our efforts away from what should be the core of our
---------------------------
<1> James C. Arena-DeRosa, Regional Administrator for the USDA,
FNS Northeast Region. May 3, 2012 Letter to Commissioner Curley.
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state's EBT efforts: reducing costs associated with using the
card to access cash assistance,<2> improving the experience of
cardholders, implementing the new Farm Bill requirements
concerning duplicate card issuance and CDSS CalFresh Integrity
Plan."
Staff comments : In addition to diverting attention from the
very real problem of state taxpayer dollars going to banks
instead of needy households, implementation of the provisions of
this bill will be costly, and there is no real way for the
photograph requirement to have the intended effect without
violation of federal law. Retailers, which would be the
presumed entities responsible for enforcement of the EBT photo
requirements provided in this bill, are prohibited from treating
EBT users differently than any other electronic payment card
users. Furthermore, EBT cards have PIN numbers meaning that in
most cases, as with debit cards, there would be no need-and
likely no desire on the part of the retailer-to verify the
cardholder's identification. Any act on the part of a store
clerk to question the identity of the EBT user, after not
checking identification for everyone else among the hundreds of
debit and credit card users at the store, would be in direct
violation of federal law.
This bill is also poses specific logistical problems for elderly
and disabled EBT consumers who might frequently have an
authorized user do their shopping for them, as the authorized
users would not be required to have their photographs on the
cardholder's EBT card. Finally, in addition to the federal
prohibitions and logistical impediments to achieving the
author's goal, implementation of this bill will likely be
extremely costly, as evidenced by the decisions made in much
smaller states to abandon similar requirements due to
insufficient cost savings. This bill will require new EBT cards
for millions of EBT consumers throughout the state with no proof
that the photograph requirement will be effective.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
---------------------------
<2>
http://www.inthepublicinterest.org/article/californias-welfare-fa
milies-paid-banks-millions-fees-public-assistance
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Opposition
California Catholic Conference
California Food Banks
Coalition of California Welfare Rights Organizations, Inc.
Hunger Advocacy Network
San Diego Hunger Coalition
Western Center on Law and Poverty
Analysis Prepared by : Myesha Jackson / HUM. S. / (916)
319-2089