Electronic Benefit Transfer: A New System for Distribution of Food Stamps and Possibly Cash Benefits Information Packet (April 2001)

ELECTRONIC
BENEFIT
TRANSFER

A new system for distribution of food stamps
and possibly cash benefits

Information Packet
April 2001

ELECTRONIC BENEFIT TRANSFER
A new system for distribution of food stamps
and possibly cash benefits

What is EBT?

EBT stands for Electronic Benefit Transfer. It is the new method being used to deliver food stamp benefits. In some counties, it will also be used to deliver CalWORKs, General Assistance/Relief and Refugee Cash Assistance to people receiving public assistance benefits.
How does it work?

People receiving food stamp benefits will no longer receive food stamp coupons every month. Instead, they will use a plastic debit-like card and a personal identification number (PIN) to access their benefits and pay for their groceries, or to access their cash benefits (in those counties which choose EBT for cash benefits).
Why the change?

EBT is part of the 1996 federal welfare reform. The federal government decided that food stamp coupons are too expensive to manufacture, distribute, and destroy. They also believed moving to an electronic system would reduce fraud. All states are required to change to EBT by October 2002. Although food stamp benefits must be converted to EBT, in California, each county has the choice whether to also distribute cash benefits through the EBT card.
Who will run the EBT system?

The State will hire a private vendor to provide the electronic delivery of Food Stamp Program benefits and cash benefits. Citicorp Services, Inc. is the likely vendor to implement EBT in California. They have over half the state EBT contracts nationwide.
What's happening in other states?

As of October 2000, 40 states (and the California counties of San Diego and San Bernardino) have started using EBT to distribute food stamp benefits. Most of these states are using EBT for both food stamp and cash benefits distribution.
When does it start in California?

EBT will be rolling out in groups of counties over the next two to four years. Alameda County is the pilot county for California. Alameda will start using EBT cards around the middle of next year (2002). Each county will have many important decisions to make before EBT is rolled out. The first (and perhaps the biggest) decision counties will have to make is whether to include cash benefits on the EBT card. This decision will be made by each county within the next several weeks.
Which counties will also use EBT for cash benefits?

The State is giving each county the option of also distributing CalWORKs, GA/GR, and/or Refugee Cash Assistance benefits through the EBT card. Each county will soon be told how much it will cost them to use EBT for cash benefits. Each county will then have twelve weeks to make their decision and get back to the State.
If advocates and recipients wish to have a say in their county's decision about putting cash benefits on the EBT card, then they need to act now. Please see the suggestions under "What can I do?" below.
What are some of the advantages and disadvantages of putting cash benefits on EBT?

Please see the attached table of "Cash EBT Advantages and Disadvantages."
What other decisions will counties have to make?
- After the cash decision, counties will have to make several other decisions. These decisions must be made by each county about ten months prior to EBT rolling out in the given county.
- For a list of the county decisions, please see the attached "County Decisions for EBT" and the "EBT County Options" table distributed by the State.
What can I do?

Become informed and learn more about EBT.
Tell other people and organizations about EBT.
Work with others to influence your county's decisions.
Call your county's EBT Primary County Contact person and tell him or her that you want to have a say in your county's decision-making process.

For more information about the provisions of EBT or to find out who your EBT Primary County Contact is, call Debra Garcia of Consumers Union at (415) 431-6747 or email at GarcDe@consumer.org.

ELECTRONIC BENEFIT TRANSFER

CASH EBT
AND OTHER
COUNTY DECISIONS

April 2001

CASH EBT FEATURES

County Decision

Each county must decide within the first half of 2001 whether to distribute CalWORKs and/or General Assistance/Relief benefits through the Electronic Benefit Transfer (EBT) system. Recipients in counties choosing cash EBT will use an EBT card similar to a debit card to access their cash benefits. Under EBT, the State will hire a private vendor to run the system.

Access to Cash Benefits

The EBT system must provide "a reasonable distribution of cash access locations that are free of any fee to recipients."
The vendor must enter into an agreement with a major regional network of ATMs for recipients to access their benefits. This access is not guaranteed to be surcharge-free.
CalWORKs benefit availability to the recipient will be staggered over the first three calendar days of the month. General Assistance/Relief benefit availability must be staggered for at least three calendar days of the month, but the County may choose a longer period.

Fees

Recipients will have four cash withdrawals without a fee from the vendor.
The EBT system must provide a "reasonable distribution" of cash access locations that are free of any fee to recipients. At other locations, the ATM or POS owner may charge a fee.
Retailers may charge a fee for purchases or purchases with cash back only if the retailer customarily charges other debit card users.

Amount of Withdrawals

Recipients will be able to make a withdrawal of at least $200 per transaction.
Full withdrawal of cash benefits in one transaction is not guaranteed, but it may be provided. There may be a surcharge.
Retailers may limit the amount of cash back with a purchase.

Cash Access Plan

The vendor must prepare a Cash Access Plan for every county that chooses EBT for cash benefits.
The vendor is required to "work closely" with the State and County Welfare Departments to develop the cash access plans.
The vendor and County Welfare Departments are expected to consult with community organizations.
Non-traditional cash access locations such as utility companies, housing authority offices and other community locations may be a part of the plan.
The vendor must provide the State with a County Cash Access Plan for each county choosing cash EBT five months before the county is scheduled to convert to EBT.

Lost or Stolen Cards

A 24-hour hotline will be available to report lost or stolen cards.
Recipients will be fully liable for benefits stolen using their card and PIN until the card is reported lost or stolen. Recipients will not have the same protections bank card users have.
A lost or stolen card will be replaced within three business days after reporting.

Keeping Track of Balances

A recipient's balance should be printed on each transaction receipt.
Balances can be checked by phone at no charge.
Balances can be checked at ATMs with a possible surcharge.
No monthly statements will be issued. The cardholder can call the hotline to get the past ten transactions by phone or to request a mailed two month transaction history.

Unknowns

Where will recipients be able to withdraw their cash benefits?
Will a recipient be able to withdraw the full amount of their cash benefits at one time?
How effective will community input be in influencing the locations for no-fee cash withdrawals?

For further information on the provisions of EBT, please call Debra Garcia at Consumers Union at (415) 431-6747 or e-mail at GarcDe@consumer.org.

CASH EBT

Advantages	Disadvantages

Fees and budgeting

May reduce fees to recipients currently using check cashing services to get their cash benefits; recipients will have four free cash withdrawal transactions per month of at least $200, at selected ATMs or POS machines	May increase cost for recipients to access their benefits if they do not use designated free locations; after the first four cash withdrawals, recipients will have to pay a fee to the contractor and may have to pay a fee to the ATM or POS owner
Allows recipients to make incremental withdrawals against their monthly benefits amount	Recipients will have to request that the CWD reinstate their benefits if not accessed in 90 days; benefits are lost if not claimed within 270 days
Recipients can make cash withdrawals at participating ATMs	Recipients may have to pay a surcharge fee to use ATMs (plus they must pay a fee to the contractor after the first four cash withdrawals per month)
Recipients may be able to withdraw all of their funds in one transaction (this has not yet been decided)	Recipients may have to pay a surcharge fee to withdraw all of their benefits at one time (this has not yet been decided)
Balances can be checked by phone at no charge; each transaction receipt will print the remaining balance	No monthly statements will be provided; balance inquiries at an ATM will probably have a fee
Increases familiarity with the technology of the commercial banking system

*Safety*

Benefits on a lost or stolen card cannot be accessed by anyone who does not know or guess the PIN	Benefits stolen from a lost or stolen card before it is reported will not be replaced; the recipient must report the card lost or stolen to a toll-free number as soon as possible to protect his or her benefits
Increases safety because recipients will not have to carry large sums of cash; purchases can be made using the EBT card	May be charged a fee to make purchases, but only if the business also charges other debit card holders such a fee

*Other*

Counties are expected to consult with advocates as they work with the contractor to decide (along with the contractor) where the no fee locations will be for cash withdrawals	Potential for poor cash access because the cash access plans will be drafted after the county has already decided to use EBT for cash benefits
Three day staggering for CalWORKs recipients in Los Angeles County, rather than the current 10 day staggering	Unless a county obtains a waiver from the State, three day staggering for cash benefits even in counties which do not stagger now
	Creates privacy concerns because the government can track where recipients are accessing their benefits
	May create obstacles and reduce financial independence of some disabled, elderly, and homebound recipients

COUNTY DECISIONS FOR EBT

Individual California counties have many options that affect the transition to this new means of food stamp and possibly cash assistance benefit delivery.

The following serve as brief examples of some the decisions that counties will make and therefore are areas in which advocates and recipients might influence the EBT system.

County Decisions about Food Stamp Implementation

Will recipients receive their new cards, PINs, and all training information by mail or will any of these steps occur in person at designated locations?
If the county chooses to mail out the cards, there will be walk-in training centers. Where will they be located? How many will there be?
If cards are issued in person, where will this take place - at a central county office, district offices or at other locations?
If a recipient loses a card, will he or she receive a replacement by mail (which can take three business days) or immediately at a county office?
In which languages will training materials be provided?
Which community-based organizations will receive free training about EBT?

County Decisions about Cash Benefit Implementation

Unlike food stamps where the transition to EBT is federally mandated, California counties have to chose whether or not recipients will receive their cash benefits on this same card. If a county chooses cash EBT, many of the decisions that counties make regarding the transition of food stamps coupons are the same for cash. In addition to the questions listed above under food stamp implementation, there are some other county options for cash:

Will the county choose to distribute cash benefits through EBT?
Which cash benefits will be distributed by EBT? CalWORKs, GA/GR and/or Refugee Cash Assistance?

The county and the state will work closely with the vendor to decide another key issue:

Where will recipients be able to access their cash benefits free of charge?

For further information on the provisions of EBT, please call Debra Garcia at Consumers Union at (415) 431-6747 or e-mail at GarcDe@consumer.org

The following table provides a list of the high level options as described in the EBT ITP that each county has in regards to the implementation of EBT.

Subject Area	Decision Points	Timeline (When decisions must be finalized)
Cash Decision	Will the county utilize EBT to issue cash benefits? Will county utilize EBT to issue GA/GR benefits?	Prior to EBT Contract execution
Cash Stagger	Will the county request a waiver of the cash stagger requirement from CDSS?	County Readiness Phase
	How will cash benefits be staggered? (case number, case name, application date �)	County Readiness Phase
	How and when will clients be notified of the cash stagger?	Planning and Installation Phase
Conversion Methodology	Will conversion be mail-based or will cards be issued over-the-counter?	County Readiness Phase
	If conversion is mail-based, which locations would be best for walk-in training centers?	County Readiness Phase
	If conversion is over-the-counter, which locations would be best for conversion sites?	County Readiness Phase
	How will the county convert homeless cases?	Planning and Installation Phase
Conversion Staging	How will conversion be staged in the county? (% of caseload; geographically; small portion of caseload first month followed by remaining caseload over the following two months�)	Planning and Installation Phase
On-going Card Issuance Methodology	Will on-going card issuance be mail-based, over-the-counter or a combination?	County Readiness Phase
	If mail-based, where will PIN selection equipment be located?	County Readiness Phase
	If cards are issued over-the-counter, where will card issuance sites be located?	County Readiness Phase
	How and where will the county issue cards for emergency case situations (immediate need and expedited services)	County Readiness Phase
Card Issuance Timing	When will EBT cards be issued to recipients - at the time of application or after eligibility is established?	County Readiness Phase
Replacement Card Issuance	How will replacement EBT cards be issued - over-the-counter or via the mail?	County Readiness Phase
	If over-the-counter, what locations will be utilized for card replacement?	County Readiness Phase
Food Stamp Coupon Conversion	Will the county issue food stamp coupons to recipients who move out of the EBT area or will the county have the EBT Contractor mail coupons to the requesting recipient?	County Readiness Phase

updated 3/6/01

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