Date of Hearing: August 14, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 470

Author:(Skinner) – As Amended Ver:June 20, 2019

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the electronic benefits transfer (EBT) system, administered by the Department of Social Services (DSS), to limit the purchase of food via an online transaction only to retailers authorized to accept CalFresh benefits by the United States Department of Agriculture (USDA).

The bill also requires DSS to work with stakeholders to establish the qualifications, processes and standards to certify retailers as eligible to accept payments online using cash benefits through the EBT system and to determine the allowable online purchases that may be made using cash benefits. When determining allowable cash-benefit purchases, the bill requires DSS to consider the allowable payment of delivery fees for food purchased using CalFresh benefits via the EBT system.

FISCAL EFFECT:

1. Ongoing costs of approximately $400,000 (GF) per year to DSS for additional personnel to establish the qualifications, process and standards for approving retailers to accept online cash benefits payments through the EBT system.
2. Unknown one-time automations cost, likely between $500,000 and $1 million (GF), to DSS and the Office of Systems Integration (OSI) for necessary updates to the EBT system and to limit online payments to only authorized retailers.

COMMENTS:

1. Purpose. This bill seeks to establish consumer protections for CalFresh recipients in the event the U.S. Secretary of Agriculture authorizes nationwide implementation of online food purchasing using CalFresh benefits. According to the author:

Online EBT access would be a game-changing resource for low-income families without means of transportation to a grocery store. [This bill] lays the groundwork for consumer protection laws when EBT online access is adopted in California.

1. Electronic Benefits Transfer (EBT) System. Both food and cash benefits provided through CalFresh and CalWORKs, respectively, are administered through the EBT system and delivered through an EBT card. EBT cards function like bank-issued ATM cards, and can be used at more than 15,000 businesses and more than 54,000 ATMs in California. CalFresh benefits cannot be withdrawn as cash. Instead, individuals may use benefits to purchase food items where EBT transfers are accepted. CalWORKs benefits, however, can be withdrawn from an ATM or point-of-sale device as cash. Additionally, unlike ATM and credit cards, EBT cards cannot be used for any online transactions.
2. Federal Online Purchasing Pilot. In April 2019, the USDA launched a pilot program allowing federal SNAP recipients to pay for groceries online with three retailers in New York. California is not currently a participant in the pilot. It is unclear at this point when the pilot will conclude and whether the USDA will expand the program nationwide and under what guidelines.

In January 2017, Food and Nutrition Service (FNS) announced that seven retailers had been selected for the initial launch of the SNAP Online Purchasing Pilot, including: Amazon, Safeway and WalMart, among others with Alabama, Iowa, Maryland, Nebraska, New Jersey, New York, Oregon and Washington anticipated to participate in the initial project. In April 2019, the USDA launched the New York pilot project and program participants are now able to purchase groceries online using their SNAP benefits. The provisions of the pilot prohibit benefits from being used to pay for delivery, service or convenience fees.

The pilot is expected to last two years and to eventually expand to other selected states, although California was not selected to participate. It is unclear at this point whether the USDA will expand the program nationwide and under what guidelines.

1. CalFresh. CalFresh benefits are funded entirely by the federal government through the United States Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP), which provides food benefits to eligible households nationwide. The maximum gross income allowed to be eligible is 200% of the federal poverty level. The average monthly benefit for a CalFresh recipient in fiscal year 2017-18 was $253 per household and $126 per person.
2. CalWORKs. CalWORKs is the state’s Temporary Assistance for Needy Families (TANF) program, providing eligible low-income families with cash grants and supportive services. CalWORKs is administered at the county level and funded largely through the federal TANF block grant and state maintenance-of-effort contributions. For fiscal year (FY) 2018-19, the average monthly CalWORKs cash grant is estimated to be $568 per household. In FY 2017-18, the average monthly CalWORKs caseload was 423,121 households.
3. Prior Legislation. SB 675 (Skinner), of 2017-18 Legislative Session, was similar to this bill and would have required the EBT system to only permit online purchases of food from retailers that comply with various specified requirements and the EBT system to prohibit payment of delivery fees for online food purchase using CalFresh benefits. That bill was held on the Assembly Inactive File.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: June 18, 2019

ASSEMBLY COMMITTEE ON HUMAN SERVICES

Eloise Gómez Reyes, Chair

SBPCA Bill Id:SB 470

Author:(Skinner) – As Amended Ver:May 17, 2019

SENATE VOTE: 38-0

SUBJECT: Electronic benefits transfer system

SUMMARY: Establishes processes and standards for the use of CalFresh benefits, via the electronic benefits transfer (EBT) system, for the online purchase of food and requires the California Department of Social Services (CDSS) to work with stakeholders to establish the qualifications and process for approving retailers to accept online cash benefits payments through the EBT system. Specifically, this bill:

1. Defines “commissary” as a store that sells food to the personnel or workers at a military post.
2. Defines “retailer” as a grocery establishment as defined in current law, a grocery store as defined in current law, a commissary, a community-supported agriculture program as defined in current law, or a restaurant that has entered into a memorandum of understanding (MOU) with a county human services agency to serve CalFresh recipients who are elderly, homeless, or have a disability through the Restaurant Meals Program (RMP).
3. Requires, to the maximum extent feasible and to the extent permitted by federal law and the rules of the program providing benefits, or pursuant to a waiver from the United States Department of Agriculture (USDA), the EBT system to limit the purchase of food through an online transaction to retailers who are authorized by the USDA to accept CalFresh benefits, and who comply with all of the following requirements:
   1. Provide reasonable access to exchange the food within four hours of receiving the food;
   2. Meet state and local food safety requirements and require that food purchased online is packed and delivered by employees of approved food retailers with appropriate food safety credentials; and,
   3. Provide an in-person confirmation of delivery as an option for a customer to either pick up at the store or to receive in which the signature of the person delivering the food and of the person receiving the food is secured and stored by the retailer.
4. Requires CDSS, in consultation with the Office of Systems Integration (OSI) and other relevant stakeholders, as specified, to establish protocols to block retailers from accepting online food benefit payments through the EBT system if they do not meet the qualifications enumerated by the provisions of this bill regarding the use of existing processes for blocking EBT use at certain retailers.
5. Makes provisions of this bill related to online food EBT purchases inoperative upon certification by the director of CDSS that federal regulations for online food EBT purchases already include the consumer protections established by the provisions of this bill.
6. Specifies that a waiver to the staggered issuance of California Work Opportunity and Responsibility to Kids (CalWORKs) benefits over three days would require CalWORKs benefits be issued on the first of the month, as specified.
7. Requires, unless otherwise required by federal law, CalFresh benefits, with the exception of Disaster CalFresh benefits, be staggered over a period of 10 calendar days.
8. Requires CDSS, to the extent feasible and to the extent permitted by federal law and the rules of the program providing the benefits, or pursuant to a waiver from the USDA, in consultation with OSI and other relevant stakeholders, as specified, to establish qualifications and processes for approving retailers to accept, and standards for accepting, online cash benefits payments through the EBT system.
9. Requires the EBT system to limit the ability to make online payments using cash benefits, including, but not limited to, a fee for the delivery of food purchased using CalFresh benefits through the EBT system, to retailers approved by CDSS to accept online cash benefits payments through the EBT system.
10. Requires a retailer approved by CDSS to receive online cash benefits payments to comply with the standards created pursuant to stakeholder process created by the provisions of this bill, as specified.
11. Allows CDSS to implement and administer the provisions of this bill through all-county letters or similar instruction until regulations are adopted, and thereafter requires CDSS to adopt regulations to implement the provisions of this bill within two years following the federal approval of online EBT purchases for California EBT cardholders, as specified.
12. Instructs CDSS, no later than January 1, 2021, to issue an all-county letter or similar instructions from the director describing the qualifications, process, and standards developed pursuant to the stakeholder process created by the provisions of this bill, as specified.
13. Makes technical changes.

EXISTING LAW:

1. Establishes the Supplemental Nutrition Assistance Program (SNAP) under federal law pursuant to the Food Stamp Act of 1964 and establishes, in California statute, the CalFresh program to administer the provision of federal SNAP benefits to families and individuals meeting certain criteria, as specified. (7 United States Code [U.S.C.] Section 2011 et seq., Welfare and Institutions Code [WIC] Section 18900 et seq.)
2. 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.)
3. Establishes the EBT Act, and defines the EBT system as the program designed to provide benefits to those eligible to receive public assistance benefits such as CalWORKs and CalFresh. (42 U.S.C. 601 et seq., WIC 10065 et seq.)
4. Requires CalWORKs benefits to be staggered over a period of three calendar days, unless a county requests a waiver from CDSS and the waiver is approved, or in cases of hardship determined on a case-by-case basis. (WIC 10072 (c))
5. Defines a “grocery establishment” as a retail store that is over 15,000 square feet in size and that sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods. (Labor Code 2502 (d))
6. Defines a “grocery store” as a store primarily engaged in the retail sale of canned food, dry goods, fresh fruits and vegetables, and fresh meats, fish, and poultry and any area that is not separately owned with the store where food is prepared and served, including a bakery, deli, and meat and seafood counter. (Health and Safety Code 113948 (d)(3))
7. Defines a “community-supported agriculture program” as a program under which a registered California direct marketing producer or a group of registered California direct marketing producers, grow food for a group of California consumer shareholders or subscribers who pledge or contract to buy a portion of the future crop, animal production, or both, of a registered California direct marketing producer or a group of registered California direct marketing producers. (Food and Agriculture Code 47060 (a))
8. Establishes the RMP under SNAP to allow eligible recipients who are experiencing homelessness, have a disability, or are elderly to purchase hot, prepared food from participating restaurants. (7 U.S.C. Section 2020, WIC 18919 et seq.)

FISCAL EFFECT: According to the Senate Appropriations Committee on May 16, 2019, this bill may result in the following costs:

1. Ongoing costs of approximately $400,000 per year to CDSS for additional personnel to establish the qualifications and the process for approving retailers to accept, and standards for accepting, online cash benefits payments (General Fund); and,
2. Likely minor costs to CDSS and OSI for any necessary updates to the EBT system.

COMMENTS:

CalFresh: SNAP provides food access to low-income individuals who meet certain eligibility criteria; in California, this program is known as CalFresh. CalFresh benefits are entirely federally funded, and administration at the federal level lies with the USDA. The USDA is tasked with setting specific eligibility requirements for SNAP programs across the country, as well as a gross and net income tests, work requirements, and other documentation requirements. Currently, the maximum allowable gross income is 200% of the Federal Poverty Level (FPL), although households with elderly members or members with disabilities are not subject to gross income criteria, but must have a net monthly income at or below 100% of the FPL. In California, CalFresh is administered at the local level by county human services agencies, with federal, state, and county governments sharing the costs of program administration. Nearly 4 million individuals in California receive CalFresh benefits; on average, an individual receives approximately $135 per month in benefits.

CalWORKs: California’s CalWORKs program provides monthly income assistance and employment-related services to eligible individuals in order to move children out of poverty and ensure families can meet basic needs. CalWORKs also includes a Welfare-To-Work (WTW) component which can include public or private sector subsidized or unsubsidized employment, on-the-job training, community service, secondary school, adult basic education and vocational education and training, as well as certain mental health, substance use, or domestic violence services, if they are determined to reduce barriers to employment for participants. Funding for the CalWORKs program comes from the federal TANF block grant, and a family’s grant amount is based on specific eligibility criteria, including citizenship, age, income, resources, and assets, among others. In Fiscal Year (FY) 2018-19, the average monthly cash grant was $568 per household, and the average monthly grant, per person, was $238. In FY 2017-18, the average CalWORKs caseload was 423,121 households.

Both food and cash benefits provided through CalFresh and CalWORKs, respectively, are administered through the EBT system and delivered through an EBT card, which is similar to an automated teller machine (ATM) card. Unlike an ATM card, however, CalFresh benefits cannot be withdrawn in cash at point-of-sale (POS) terminals or ATMs; instead, individuals may use benefits to purchase food items to be prepared and consumed at home. CalWORKs benefits, however, can be withdrawn from an ATM or POS device as the benefits are provided in the form of cash, rather than food, benefits.

SNAP Online Purchasing Pilot: In 2014, H.R. 2642 (Lucas), P.L. 113-79, the Farm Bill, mandated that a pilot be conducted to determine the feasibility and implications of allowing retail food stores to accept SNAP benefits through online transactions. The pilot requires online purchases be secure, private, easy to use, and provide supports similar to those available when SNAP transactions are made in-person at a retail store. The provisions of the pilot prohibit benefits from being used to pay for delivery, service, or convenience fees. In September 2016, the Food and Nutrition Service (FNS) released a request for retail volunteers to solicit applications for a two-year SNAP Online Purchasing Pilot; applications for the pilot were due November 2016.

On January 5, 2017, FNS announced that seven retailers had been selected for the initial launch of the SNAP Online Purchasing Pilot, including: Amazon, Safeway, and WalMart, among others with Alabama, Iowa, Maryland, Nebraska, New Jersey, New York, Oregon, and Washington anticipated to participate in the initial project. On April 18, 2019, the USDA announced the New York pilot project went live and that program participants are now able to purchase groceries online using their SNAP benefits. The pilot is expected to last two years and will eventually expand to other selected states, though California has not been selected to participate in future expansions of the pilot project.

It should be noted that, while the 2014 Farm Bill included provisions that required pilot projects test the feasibility of online purchases using SNAP benefits and report those findings and results to Congress, H.R. 2 (Conaway), P.L. 115-334, known as the Agriculture Improvement Act of 2018, or the 2018 Farm Bill, removed these reporting requirements. H.R. 2 also provided for the nationwide expansion of the pilot projects upon the authorization of the U.S. Secretary of Agriculture, Sonny Perdue, and through the federal rulemaking process. In short, it is possible that, upon authorization and prior to the completion of the pilot projects, states could have the ability to implement online food purchasing using SNAP benefits without first allowing Congress to review the outcomes of the pilot projects, and whether there exist benefits or drawbacks to nationwide implementation of online food purchasing using SNAP benefits.

To date, Secretary Perdue has not authorized a nationwide expansion of the online acceptance of SNAP benefits, and it is unclear if and when this authorization will occur, however, the provisions of this bill related to the use of SNAP benefits for online purchases are contingent upon the permissions of federal law and program rules, or pursuant to a USDA waiver.

Need for this bill: The provisions of this bill seek to codify consumer protections when CalFresh recipients use their benefits to purchase food online when permitted by federal law and in the event that the Secretary of Agriculture authorizes nationwide implementation of online food purchasing using SNAP benefits. Specifically, the bill requires retailers to meet certain standards in order to accept the purchase of food using SNAP benefits through an online transaction and requires CDSS to establish protocols that would prevent retailers who do not meet these standards from accepting online food purchases using SNAP benefits. The provisions of the bill also require, to the extent permitted by federal law, CalFresh benefits be staggered over a period of 10 calendar days, and, when a waiver is approved by CDSS, CalWORKs benefits to be issued on the first of the month. Finally, this bill would require CDSS to work with stakeholders to establish qualifications, and processes, for approving retailers to accept online cash benefits payments through the EBT system.

According to the author, “Online EBT access would be a game-changing resource for low-income families without means of transportation to a grocery store. [This bill] lays the groundwork for consumer protection laws when EBT online access is adopted in California.”

Recommended committee amendments: In order to ensure clarity of the standards with which retailers must comply in order to accept online food purchases using CalFresh benefits committee staff recommends the following amendments:

In order to maintain current state flexibility when issuing CalFresh benefits, committee staff recommends the following amendments:

In order to clarify that it is the role of CDSS and relevant stakeholders to determine which online purchases using cash benefits are allowable, committee staff recommends the following amendments:

PRIOR LEGISLATION:

H.R. 2 (Conaway), P.L. 115-334, 2018, known as the Agriculture Improvement Act of 2018, or Farm Bill, repealed various reporting requirements for pilot projects examining the online acceptance of SNAP benefits.

AB 2313 (Stone), Chapter 718, Statutes of 2018, established protections for recipients of public benefits issued via EBT cards whose benefits are stolen.

SB 675 (Skinner) of 2017 was substantially similar to this bill and would have required the EBT system to only permit online purchases of food from retailers that comply with various specified requirements and the EBT system to prohibit payment of delivery fees for online food purchase using CalFresh benefits. SB 675 was held on the Assembly Inactive file.

H.R. 2642 (Lucas), P.L. 113-79, 2014, known as the Agriculture Reform and Risk Management Act of 2014, or Farm Bill, authorized nutrition and agriculture programs in the United States for the years 2014 through 2018.

AB 1614 (Stone), Chapter 720, Statutes of 2014, required users of EBT cards to be provided access to transaction history via toll-free telephone hotline and Internet website, among other methods, required the EBT system to be designed so that users are informed when the system is down and funds are not accessible, and required users of EBT cards be informed of where they can use their cards to withdraw funds without fees.

AB 1280 (Perez), Chapter 557, Statutes of 2013, authorized 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, provided that a recipient would not incur any loss of cash benefits that are taken by an unauthorized withdrawal, removal, or use of benefits that does not occur by the use of a physical EBT card issued to the recipient or authorized third party to directly access their benefits.

REGISTERED SUPPORT / OPPOSITION:

Support

Western Center on Law & Poverty, Inc. (Sponsor)
United Food and Commercial Workers, Western States Council

Opposition

None on file

Analysis Prepared by: Kelsy Castillo / HUM. S. / (916) 319-2089

 THIRD READING  

Bill No: SB 470

Author: Skinner (D)

Amended: 5/17/19

Vote: 21

SENATE HUMAN SERVICES COMMITTEE: 6-0, 4/22/19

AYES: Hurtado, Stone, Beall, Jackson, Pan, Wiener

SENATE APPROPRIATIONS COMMITTEE: 6-0, 5/16/19

AYES: Portantino, Bates, Bradford, Hill, Jones, Wieckowski

SUBJECT: Electronic benefits transfer system

SOURCE: Western Center on Law & Poverty

DIGEST:

This bill requires the electronic benefit transfer (EBT) system to limit the online purchase of food only to retailers that are authorized by the United States Department of Agriculture (USDA) and the California Department of Social Services (CDSS), as specified. This bill also makes technical changes regarding timing of benefit issuance to confirm with current practice.

ANALYSIS:

Existing law:

1. Establishes under federal law the Supplemental Nutrition Assistance Program (SNAP) within the USDA to promote the general welfare and to safeguard the health and wellbeing of the nation’s population by raising the levels of nutrition among low-income households. It establishes SNAP eligibility requirements, including income that net income must be at or below 100 percent of the federal poverty level and is a substantial limiting factor in permitting a recipient to obtain a more nutritious diet. (7 CFR 271.1; 7 CFR 273.9)
2. Establishes in state statute the CalFresh program to administer the provisions of federal SNAP benefits to families and individuals meeting specific criteria. (WIC 18900, et seq.)
3. Establishes in EBT Act a system for the distribution and use of public assistance benefits, such as CalWORKs and CalFresh, and requires EBT access to be provided through automated teller machines (ATMs), point-of-sale devices and other devices that accept EBT transactions. (WIC 10065, et seq.)
4. Directs the USDA Secretary to authorize the use of mobile technologies for the purpose of accessing SNAP benefits, after conducting no more than five demonstration projects to pilot the use of such technologies. Further requires nationwide implementation of the online acceptance of SNAP benefits after the pilots required in the 2014 Farm Bill are implemented and would no longer require a report to Congress on the matter. (P.L. 115-334)

This bill:

1. Requires the EBT system, to the maximum extent feasible and to the extent permitted by federal law and the rules of the program providing the benefits, or pursuant to a waiver from the USDA, to limit the purchase of food through an online transaction only to retailers that are authorized to accept CalFresh benefits and that comply with all of the following:
   1. Provide reasonable access to exchange the food within four hours of receipt of the food.
   2. Meet state and local food safety requirements and requires that food purchased online is packed and delivered by employees of the approved food retailer with appropriate food safety credentials.
   3. Provide an in-person confirmation of delivery as an option for a customer to either pick up at the store or to receive in which the signature of the person delivering the food and of the person receiving the food is secured and stored by the retailer.
2. Requires CDSS to, in consultation with the Office of Systems Integration (OSI) county human services agencies and other specified stakeholders, establish protocols to block retailers from accepting online food benefits payments through EBT if they do not meet the specified qualifications.
3. Defines “retailer” to mean a grocery establishment, a commissary, or a community-supported agricultural program, as defined in current law, or a restaurant that serves CalFresh recipients who are elderly or homeless or who have disabilities through the CalFresh Restaurant Meals Program, as specified.
4. Defines “commissary” to mean a store that sells food to the personnel or workers at a military post.
5. Provides that specified requirements regarding use of EBT to purchase food via online transactions shall become inoperative upon certification by the director of CDSS that federal regulations for online food EBT purchases already include specified consumer protections.
6. Requires that CalWORKs benefits shall be staggered over a period of three calendar days, unless a county requests a waiver from the department to issue those benefits on the first of the month  and the waiver is approved, or, in cases of hardship,  as specified.
7. Requires CalFresh benefits to be staggered over a period of 10 calendar days unless otherwise required by federal law.
8. Requires, to the maximum extent feasible and to the extent permitted by federal law and the rules, or pursuant to a waiver from the USDA, CDSS to, in consultation with OSI, county human services agencies, consumer advocates, public benefit recipient advocates, representatives of public benefit caseworkers and food workers, grocery industry representatives, and other relevant stakeholders, establish the qualifications, and process, for approving retailers to accept, and standards for accepting, online cash benefits payments through the EBT system.
9. Requires the EBT system to limit the ability to make online payments using cash benefits, including, but not limited to, the payment of a fee for the delivery of food purchased using CalFresh benefits through the EBT, to only retailers approved by CDSS to accept online cash benefits payments through the EBT system.
10. Requires a retailer approved by CDSS to accept online cash benefits payments to comply with specified standards for the online acceptance of cash benefit payments through the electronic benefits transfer system.
11. Permits CDSS to implement and administer provisions of this bill through an all-county letter or similar instruction until regulations are adopted.
12. Requires CDSS to adopt regulations to implement this bill within two years following the federal approval of online EBT purchases for California EBT cardholders.
13. Requires CDSS to issue an all-county letter or similar instructions describing the qualifications, process, and standards developed for retailers to accept online cash benefits payments through the EBT system.
14. Makes technical and non-substantive changes.

Comments

CalFresh recipients receive monthly food benefits on an EBT card. While these cards are meant to be similar to standard debit cards, EBT cards cannot be used to make online purchases. This bill establishes standards for online purchases via EBT cards. According to the author, “Our struggling families depend on the EBT system to ensure timely and secure benefits and purchases.” The author states further, “because these families are very low-income, they tend to be more susceptible to food-borne illness and poor customer service. As a result, families need a system that ensures retailers are food safe and practice fair and reliable food retail practices.”

CalFresh

According to the California Association of Food Banks, one in eight Californians (4.6 million people) currently struggle with food insecurity, which they define as the occasional or constant lack of access to the food one needs for a healthy, active life. CalFresh, the state’s largest anti-hunger program, was created to address the fact that hunger, undernutrition, and malnutrition are present and continuing problems faced by low-income California households.

CalFresh, California’s version of the federal SNAP program, provides monthly food benefits to qualified low-income individuals and families to assist them with purchasing the food they need to maintain adequate nutrition levels. CalFresh is the largest nutrition assistance program in California.  It is administered by CDSS at the state level and California’s 58 counties are responsible for administering CalFresh at the local level. CalFresh benefits are 100 percent federally funded and national income eligibility standards and benefit levels are established by the federal government.

The program issues monthly benefits on EBT cards, which may be used to purchase food (and seeds or plants that grow food for human consumption) at any grocery store or famers’ market that accepts EBT cards.

For most households in California, monthly gross income must be at or below 200 percent of FPL ($3,463 for a family of three) in order to be eligible for CalFresh. Household net income must be at or below 100 percent of FPL. The benefit amount a household may receive is dependent on household circumstances such as size, countable income, and monthly expenses, such as housing and utilities. The average CalFresh household received about $253 a month for Fiscal Year 2017-2018 and the average CalFresh benefit per person was about $126 per month. Currently, the maximum benefit for a household of one is $192 a month.

Electronic Benefits Transfer

California’s EBT system automates the delivery, redemption, and reconciliation of public assistance benefits such as CalWORKs and CalFresh. EBT cards function like a bank-issued ATM cards. EBT cardholders can slide the card through a point-of-sale device, or use the card at an ATM. California EBT cards can be used at more than 15,000 businesses and more than 54,000 ATMs in California. Unlike other types of benefits that may be accessed through an EBT card, CalFresh benefits cannot be withdrawn as cash. Additionally, unlike ATM and credit cards, EBT cards cannot be used for any online transactions.

OSI is charged with development and maintenance of California’s EBT system. Changes to the EBT system, such as online access to transaction history and account balances, are implemented and overseen by OSI.

Federal Pilot Project for Online SNAP Purchases

The federal government is taking steps toward allowing online purchase of food via SNAP. The 2014 Farm Bill mandated a pilot to test the feasibility and implications of allowing retail food stores to accept SNAP benefits through online transactions. The stated goal for the pilot is to ensure that the foundational infrastructure necessary for running SNAP transactions online operates in a safe and secure manner. The 2018 Farm Bill (Section 4001) requires nationwide implementation of the online acceptance of SNAP benefits after the pilots are implemented and no longer requires a report to Congress on the matter. Instead, implementation of online SNAP purchases will be authorized by federal rulemaking. This provision also amended the definition of a retail food store to include online entities.

Online SNAP transactions within the pilot project are required to be secure, private, easy to use, and provide similar support to that found for SNAP transactions in a retail store. Benefits cannot be used to pay for fees of any type, such as delivery, service, or convenience fees. Seven retail firms, operating in eight different states (California is not one of them) were selected to take part in the two-year pilot. Launch of the first pilot, which will take place in New York, was announced on April 18, 2019. WalMart, Amazon and ShopRite are the participating retailers. The pilot will test both online ordering and payment. SNAP participants will be able to use their benefits to purchase eligible food items, but will not be able to use SNAP benefits to pay for service or delivery charges. The pilot is scheduled to last for two years. USDA anticipates all eligible and interested retailers who can meet the requirements to process online SNAP transactions will eventually be able to take part, though the timeline is dependent on the progress of the pilot and any regulations which may need to be issued.

Approved Retailers

The Food and Nutrition Service of the USDA licenses qualified retailers to accept SNAP benefits, provides information to retailers, monitors retailers to make sure they are following the rules, and withdraws or disqualifies retailers who no longer qualify to be in the program or who have broken program rules.

SNAP laws and regulations require that retail food stores must meet one of the following criteria:

• The store must offer for sale, on a continuous basis, at least three varieties of qualifying foods in each of the four categories of staple foods: breads/cereals, fruit/vegetables, meat/fish/poultry and dairy products. At least two of these categories must include perishable foods.
• The store must have more than 50 percent of its total gross sales in staple foods, not counting food items such as coffee, tea, cocoa, soda, candy, condiments, spices, and prepared, ready-to-eat foods.

According to the sponsor, “California’s EBT system has some of the most comprehensive protections and financial empowerment tools in the country. These protections have been made stronger through several pieces of state legislation enacted as new challenges for safe, affordable distribution of benefits through EBT emerged. The upcoming changes to EBT require the same advanced planning and thoughtful policymaking.” For this reason, this bill gives CDSS new authority to establish the qualifications and a process for approving retailers to accept online CalFresh benefits through the EBT system.

Under current federal law, FNS approves retailers who may receive SNAP payments. CDSS does not. This bill requires the EBT system to limit the ability to make online payments for delivery fees using CalWORKs cash benefits to retailers approved by CDSS.

Related/Prior Legislation

AB 2313 (Stone, Chapter 718, Statutes of 2018) established protections for recipients of public benefits issued via EBT cards whose benefits are stolen.

SB 675 (Skinner, 2017) would have required the EBT system to only permit online purchase of food from retailers that comply with various specified requirements and the EBT system to prohibit payment of delivery fees for online food purchase using CalFresh benefits.

AB 1614 (Stone, Chapter 720, Statutes of 2014) required users of EBT cards to be provided access to transaction history via toll-free telephone hotline and Internet Web site, among other methods. The bill also required the EBT system to be designed so that users are informed when the system is down and funds are not accessible, as specified. This bill required 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.

AB 1280 (Perez, Chapter 557, Statutes of 2013) authorized 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) provided that a recipient would not incur any loss of cash benefits that are taken by an unauthorized withdrawal, removal, or use of benefits that does not occur by the use of a physical EBT card issued to the recipient or authorized third party to directly access the benefits.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• Ongoing costs of approximately $400,000 per year to CDSS for additional personnel to establish the qualifications and the process for approving retailers to accept, and standards for accepting, online cash benefits payments. (GF)
• Likely minor costs to CDSS and OSI for any necessary updates to the EBT system.

SUPPORT: (Verified 5/16/19)

Western Center on Law & Poverty (source)

United Food and Commercial Workers, Western States Council

OPPOSITION: (Verified 5/16/19)

None received

Prepared by: Taryn Smith / HUMAN S. /

5/20/19 13:31:25

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 470 (Skinner) - Electronic benefits transfer system

Bill Summary:

SB 470 would require the electronic benefit transfer (EBT) system to limit the online purchase of food only to retailers that are authorized by the United States Department of Agriculture (USDA) and comply with various requirements; require the California Department of Social Services (CDSS) to establish the qualifications, and process, for approving retailers to accept, and standards for accepting, online cash benefits payments through the EBT system; and would require the EBT system to limit the ability to make online payments using cash benefits to only those retailers approved by CDSS.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 16, 2019

Fiscal Impact:

• Ongoing costs of approximately $400,000 per year to CDSS for additional personnel to establish the qualifications and the process for approving retailers to accept, and standards for accepting, online cash benefits payments. (GF)
• Likely minor costs to CDSS and the Office of Systems Integration (OSI) for any necessary updates to the EBT system.

Author Amendments:

Require, until federal regulations are established, CDSS to establish protocols to block retailers that do not meet specified qualifications. Make other technical and clarifying changes.

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SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 470 (Skinner) - Electronic benefits transfer system

Bill Summary:

SB 470 would require the electronic benefit transfer (EBT) system to limit the online purchase of food only to retailers that are authorized by the United States Department of Agriculture (USDA) and comply with various requirements; require the California Department of Social Services (CDSS) to establish the qualifications, and process, for approving retailers to accept, and standards for accepting, online cash benefits payments through the EBT system; and would require the EBT system to limit the ability to make online payments using cash benefits to only those retailers approved by CDSS.

Fiscal Impact:

• Ongoing costs of approximately $400,000 per year to CDSS for additional personnel to establish the qualifications and process for approving retailers to accept, and standards for accepting, online cash benefits payments. (GF)
• Likely minor costs to CDSS and the Office of Systems Integration (OSI) for any necessary updates to the EBT system.

Background:

The CalFresh program (California’s version of the federal SNAP program) provides qualified low-income households with Electronic Benefits Transfer (EBT) cards which are used to purchase food and seeds or plants that grow food for human consumption in order to maintain adequate nutrition levels. CalFresh benefits are funded entirely by the federal government and are made available on a monthly basis for food purchase through an ATM-like EBT card. The EBT system is used for the delivery, redemption, and reconciliation of public assistance benefits. In order to be eligible, households must have a gross income below 200% of the federal poverty level and net income at or below 100% of the federal poverty level. For fiscal year 2017-18, the average monthly CalFresh benefit was $253 per household and $126 per person, or less than $5.00 per day. Currently, the maximum benefit for a household of one is $192 a month.

The OSI is charged with development and maintenance of California’s EBT system. Changes to the EBT system are implemented and overseen by OSI.

The federal government is taking steps toward allowing online purchase of food via SNAP. The 2014 Farm Bill mandated a pilot to test the feasibility and implications of allowing retail food stores to accept SNAP benefits through online transactions. The 2018 Farm Bill (Section 4001) requires nationwide implementation of the online acceptance of SNAP benefits after the pilots are implemented and no longer requires a report to Congress on the matter. Instead, implementation of online SNAP purchases will be authorized by federal rulemaking.

Proposed Law:

This bill would make a number of changes concerning using the EBT system to purchase food online. Specifically, this bill would:

• Require the EBT system, to the maximum extent feasible and to the extent permitted by federal law and the rules of the program providing the benefits, or pursuant to a waiver from the USDA, to limit the purchase of food through an online transaction only to retailers that are authorized to accept CalFresh benefits and that provide reasonable access to return or exchange the food within four hours of receipt of the food, meet state and local food safety requirements, and provide an in-person confirmation of delivery in which the signature of the person delivering the food and of the person receiving the food is secured and stored by the retailer;
• Require that CalWORKs benefits shall be staggered over a period of three calendar days, unless a county requests a waiver from CDSS to issue those benefits on the first of the month and the waiver is approved;
• Require CalFresh benefits to be staggered over a period of 10 calendar days unless otherwise required by federal law;
• Require, CDSS, to the maximum extent feasible and to the extent permitted by federal law and the rules, or pursuant to a waiver from the USDA, in consultation with OSI, county human services agencies, consumer advocates, public benefit recipient advocates, representatives of public benefit caseworkers and food workers, grocery industry representatives, and other relevant stakeholders, to establish the qualifications, and process, for approving retailers to accept, and standards for accepting, online cash benefits payments through the EBT system;
• Require CDSS, by January 1, 2021, to issue an all-county letter or similar instructions from the director describing the qualifications, process, and standards for use of online cash benefits though the EBT system;
• Require the EBT system to limit the ability to make online payments using cash benefits to only retailers approved by CDSS to accept online cash benefits payments through the EBT system;
• Require a retailer approved by CDSS to accept online cash benefits payments to comply with specified standards for the online acceptance of cash benefit payments through the electronic benefits transfer system.

Related Legislation:

SB 675 (Skinner, 2017) would have required the EBT system to only permit online purchase of food from retailers that comply with various specified requirements and the EBT system to prohibit payment of delivery fees for online food purchase using CalFresh benefits. The measure was held on the Assembly inactive file.

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SENATE COMMITTEE ON HUMAN SERVICES

Senator Hurtado, Chair

2019 - 2020 Regular

Bill No: SB 470

Subject: Electronic benefits transfer system

SUMMARY

This bill requires the electronic benefit transfer (EBT) system to limit the online purchase of food only to retailers that are authorized by the United States Department of Agriculture (USDA) and comply with various requirements, including providing reasonable access to return or exchange food within four hours of receipt of the food. This bill also requires the California Department of Social Services (CDSS), in consultation with the California Office of Systems Integration (OSI) and other stakeholders, to establish the qualifications, and process, for approving retailers to accept, and standards for accepting, online cash benefits payments through the EBT system. The bill requires the EBT system to limit the ability to make online payments using cash benefits to only those retailers approved by CDSS. The bill also makes technical changes regarding timing of benefit issuance to confirm with current practice.

ABSTRACT

Existing Law:

1. Establishes under federal law the Supplemental Nutrition Assistance Program (SNAP) within the US Department of Agriculture (USDA) to promote the general welfare and to safeguard the health and wellbeing of the nation’s population by raising the levels of nutrition among low-income households. It establishes SNAP eligibility requirements, including income that net income must be at or below 100 percent of the federal poverty level and is a substantial limiting factor in permitting a recipient to obtain a more nutritious diet. (7 CFR 271.1; 7 CFR 273.9)
2. Establishes in state statute the CalFresh program to administer the provisions of federal SNAP benefits to families and individuals meeting specific criteria. (WIC 18900, et seq.)
3. Establishes in the Electronic Benefits Transfer (EBT) Act a system for the distribution and use of public assistance benefits, such as CalWORKs and CalFresh, and requires EBT access to be provided through automated teller machines (ATMs), point-of-sale devices and other devices that accept EBT transactions. (WIC 10065, et seq.)
4. Directs the USDA Secretary to authorize the use of mobile technologies for the purpose of accessing SNAP benefits, after conducting no more than five demonstration projects to pilot the use of such technologies. Further requires nationwide implementation of the online acceptance of SNAP benefits after the pilots required in the 2014 Farm Bill are implemented and would no longer require a report to Congress on the matter. (P.L. 115-334)

This Bill:

1. Requires the EBT system, to the maximum extent feasible and to the extent permitted by federal law and the rules of the program providing the benefits, or pursuant to a waiver from the USDA, to limit the purchase of food through an online transaction only to retailers that are authorized to accept CalFresh benefits and that comply with all of the following:
   1. Provide reasonable access to return or exchange the food within four hours of receipt of the food.
   2. Meet state and local food safety requirements.
   3. Provide an in-person confirmation of delivery in which the signature of the person delivering the food and of the person receiving the food is secured and stored by the retailer.
2. Defines “retailer” to mean a grocery establishment, a commissary, or a community-supported agricultural program, as defined in current law, or a restaurant that serves CalFresh recipients who are elderly or homeless or who have disabilities through the CalFresh Restaurant Meals Program, as specified.
3. Defines “commissary” to mean a store that sells food to the personnel or workers at a military post.
4. Requires that CalWORKs benefits shall be staggered over a period of three calendar days, unless a county requests a waiver from the department to issue those benefits on the first of the month  and the waiver is approved, or,  in cases of hardship,  as specified.
5. Requires CalFresh benefits to be staggered over a period of 10 calendar days unless otherwise required by federal law.
6. Requires, to the maximum extent feasible and to the extent permitted by federal law and the rules, or pursuant to a waiver from the USDA, CDSS to, in consultation with OSI, county human services agencies, consumer advocates, public benefit recipient advocates, representatives of public benefit caseworkers and food workers, grocery industry representatives, and other relevant stakeholders, establish the qualifications, and process, for approving retailers to accept, and standards for accepting, online cash benefits payments through the EBT system.
7. Requires CDSS, by January 1, 2021, to issue an all-county letter or similar instructions from the director describing the qualifications, process, and standards for use of online cash benefits though the EBT system.
8. Requires the EBT system to limit the ability to make online payments using cash benefits, including, but not limited to, the payment of a fee for the delivery of food purchased using CalFresh benefits through the EBT, to only retailers approved by CDSS to accept online cash benefits payments through the EBT system.
9. Requires a retailer approved by CDSS to accept online cash benefits payments to comply with specified standards for the online acceptance of cash benefit payments through the electronic benefits transfer system.
10. Makes non-substantive changes.

FISCAL IMPACT

This bill has not yet been analyzed by a fiscal committee.

BACKGROUND AND DISCUSSION

Purpose of the Bill:

CalFresh recipients receive monthly food benefits on an EBT card. While these cards are meant to be similar to standard debit cards, EBT cards cannot be used to make online purchases. This bill establishes standards for online purchases via EBT cards. According to the author, “Our struggling families depend on the EBT system to ensure timely and secure benefits and purchases.” The author states further, “because these families are very low-income, they tend to be more susceptible to food-borne illness and poor customer service. As a result, families need a system that ensures retailers are food safe and practice fair and reliable food retail practices.”

CalFresh

According to the California Association of Food Banks, 1 in 8 Californians (4.6 million people) currently struggle with food insecurity, which they define as the occasional or constant lack of access to the food one needs for a healthy, active life. CalFresh, the state’s largest anti-hunger program, was created to address the fact that hunger, undernutrition, and malnutrition are present and continuing problems faced by low-income California households.

CalFresh, California’s version of the federal SNAP program, provides monthly food benefits to qualified low-income individuals and families to assist them with purchasing the food they need to maintain adequate nutrition levels. CalFresh is the largest nutrition assistance program in California.  It is administered by CDSS at the state level and California’s 58 counties are responsible for administering CalFresh at the local level. CalFresh benefits are 100 percent federally funded and national income eligibility standards and benefit levels are established by the federal government.

The program issues monthly benefits on EBT cards, which may be used to purchase food (and seeds or plants that grow food for human consumption) at any grocery store or famers’ market that accepts EBT cards.

For most households in California, monthly gross income must be at or below 200 percent of FPL ($3,463 for a family of three) in order to be eligible for CalFresh. Household net income must be at or below 100 percent of FPL. The benefit amount a household may receive is dependent on household circumstances such as size, countable income, and monthly expenses, such as housing and utilities. The average CalFresh household received about $253 a month for Fiscal Year 2017-2018 and the average CalFresh benefit per person was about $126 per month. Currently, the maximum benefit for a household of one is $192 a month.

Electronic Benefits Transfer (EBT)

California’s EBT system automates the delivery, redemption, and reconciliation of public assistance benefits such as CalWORKs and CalFresh. EBT cards function like a bank-issued ATM cards. EBT cardholders can slide the card through a point-of-sale device, or use the card at an ATM. California EBT cards can be used at more than 15,000 businesses and more than 54,000 ATMs in California. Unlike other types of benefits that may be accessed through an EBT card, CalFresh benefits cannot be withdrawn as cash. Additionally, unlike ATM and credit cards, EBT cards cannot be used for any online transactions.

OSI is charged with development and maintenance of California’s EBT system. Changes to the EBT system, such as online access to transaction history and account balances, are implemented and overseen by OSI.

Federal Pilot Project for Online SNAP Purchases

The federal government is taking steps toward allowing online purchase of food via SNAP. The 2014 Farm Bill mandated a pilot to test the feasibility and implications of allowing retail food stores to accept SNAP benefits through online transactions. The stated goal for the pilot is to ensure that the foundational infrastructure necessary for running SNAP transactions online operates in a safe and secure manner. The 2018 Farm Bill (Section 4001) requires nationwide implementation of the online acceptance of SNAP benefits after the pilots are implemented and no longer requires a report to Congress on the matter. Instead, implementation of online SNAP purchases will be authorized by federal rulemaking. This provision also amended the definition of a retail food store to include online entities.

Online SNAP transactions within the pilot project are required to be secure, private, easy to use, and provide similar support to that found for SNAP transactions in a retail store. Benefits cannot be used to pay for fees of any type, such as delivery, service, or convenience fees. Seven retail firms, operating in eight different states (California is not one of them) were selected to take part in the two-year pilot. Launch of the first pilot, which will take place in New York, was announced on April 18, 2019. WalMart, Amazon and ShopRite are the participating retailers. The pilot will test both online ordering and payment. SNAP participants will be able to use their benefits to purchase eligible food items, but will not be able to use SNAP benefits to pay for service or delivery charges. The pilot is scheduled to last for two years. USDA anticipates all eligible and interested retailers who can meet the requirements to process online SNAP transactions will eventually be able to take part, though the timeline is dependent on the progress of the pilot and any regulations which may need to be issued.

Approved Retailers

The Food and Nutrition Service of the USDA licenses qualified retailers to accept SNAP benefits, provides information to retailers, monitors retailers to make sure they are following the rules, and withdraws or disqualifies retailers who no longer qualify to be in the program or who have broken program rules.

SNAP laws and regulations require that retail food stores must meet one of the following criteria:

• The store must offer for sale, on a continuous basis, at least three varieties of qualifying foods in each of the four categories of staple foods: breads/cereals, fruit/vegetables, meat/fish/poultry and dairy products. At least two of these categories must include perishable foods.
• The store must have more than 50 percent of its total gross sales in staple foods, not counting food items such as coffee, tea, cocoa, soda, candy, condiments, spices, and prepared, ready-to-eat foods.

According to the sponsor, “California’s EBT system has some of the most comprehensive protections and financial empowerment tools in the country. These protections have been made stronger through several pieces of state legislation enacted as new challenges for safe, affordable distribution of benefits through EBT emerged. The upcoming changes to EBT require the same advanced planning and thoughtful policymaking.” For this reason, the bill gives CDSS new authority to establish the qualifications and a process for approving retailers to accept online CalFresh benefits through the EBT system. Under current federal law, FNS approves retailers who may receive SNAP payments. CDSS does not. The bill also requires the EBT system to limit the ability to make online payments for delivery fees using CalWORKs cash benefits to retailers approved by CDSS

Related/Prior Legislation:

AB 2313 (Stone, Chapter 718, Statutes of 2018) established protections for recipients of public benefits issued via EBT cards whose benefits are stolen.

SB 675 (Skinner, 2017) would have required the EBT system to only permit online purchase of food from retailers that comply with various specified requirements and the EBT system to prohibit payment of delivery fees for online food purchase using CalFresh benefits.

AB 1614 (Stone, Chapter 720, Statutes of 2014) required users of EBT cards to be provided access to transaction history via toll-free telephone hotline and Internet Web site, among other methods. The bill also required the EBT system to be designed so that users are informed when the system is down and funds are not accessible, as specified. This bill required 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.

AB 1280 (Perez, Chapter 557, Statutes of 2013) authorized 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) provided that a recipient would not incur any loss of cash benefits that are taken by an unauthorized withdrawal, removal, or use of benefits that does not occur by the use of a physical EBT card issued to the recipient or authorized third party to directly access the benefits.

POSITIONS

Support:

Western Center on Law & Poverty, Inc. (Sponsor)

Oppose:

None received

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