Honorable Richard Peña Raymond, Chair, House Committee on Human Services
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB1973 by Schaefer (Relating to electronic benefits transfer cards used for recipients of benefits under certain assistance programs.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB1973, As Introduced: a negative impact of ($7,292,793) through the biennium ending August 31, 2017.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2016
($588,548)
2017
($6,704,245)
2018
($2,525,199)
2019
($2,525,199)
2020
($2,525,199)
Fiscal Year
Probable (Cost) from General Revenue Fund 1
Probable (Cost) from Federal Funds 555
Change in Number of State Employees from FY 2015
2016
($588,548)
($565,242)
0.0
2017
($6,704,245)
($6,438,756)
7.1
2018
($2,525,199)
($2,425,201)
7.1
2019
($2,525,199)
($2,425,201)
7.1
2020
($2,525,199)
($2,425,201)
7.1
Fiscal Analysis
The bill would amend Chapter 531 of the Government Code to require the Health and Human Services Commission (HHSC) to ensure that the front side of each electronic benefits transfer (EBT) card issued to recipients of Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) cash assistance programs to display the name and photograph of each recipient or person authorized to use the card along with certain other information and statements. The bill also requires HHSC to ensure that EBT cards for TANF and SNAP used on or after September 1, 2016 to conform to the requirements of the bill. The bill authorizes HHSC to seek federal approval to implement the provisions of the bill and delay implementation if necessary.
The bill would go into effect on September 1st, 2015.
Methodology
The bill is estimated to result in a cost of $7,292,793 in General Revenue and $14,296,791 in All Funds through the biennium and $14,868,391 in General Revenue and $29,147,992 in All Funds over five years.
An increase in FTE-related costs due to overtime and an increase of 7.1 FTEs (5 Investigators, 2 Customer Service Representatives, and 0.1 Program Specialist) for the Office of the Inspector General is estimated as $1,633,704 in General Revenue and $3,202,714 in All Funds in fiscal year 2017 and $893,193 in General Revenue and $1,751,016 in All Funds per fiscal year through fiscal years 2018-20. This estimate assumes that clerical workload would be increased by 5 minutes per client to take photos for an estimated total workload of 96,351.25 hours in fiscal year 2017 for new and replacement EBT cards and 47,542.42 hours per fiscal year through fiscal years 2018-20 for new EBT cards.
There is a one-time EBT vendor implementation of $3,436,419 in General Revenue and $6,736,755 in All Funds in fiscal year 2017 to replace all existing EBT cards (2,449,729 cards at $2.75 per card). The estimated cost per card is based on the cost in Massachusetts for similar legislation.
HSSC has indicated that, due to the requirements of the bill, there will be ongoing costs associated with additional EBT cards issued projected at $1,621,909 in General Revenue and $3,179,591 in All Funds per fiscal year through fiscal years 2017-20. HHSC estimates that 1,156,215 cards will be issued per year at a cost of $2.75 per card, based on the cost per card in Massachusetts due to similar legislation.
HHSC assumes there may be a reduction in unauthorized transactions resulting from photo verifications. However, federal SNAP rules prohibit a merchant from requiring identification in order to make a purchase. This analysis assumes that any cost savings generated by verification of EBT cards apply only to TANF cash withdrawals. A specific estimate can not be determined this time because the number of transactions currently made by unauthorized individuals and the amount of these transactions is unknown. Additionally, the bill contains no legal mechanism which would require merchants to verify the photo on EBT cards and refuse service if the photo does not match the individual presenting the EBT card. As a result, the percent of merchants who will verify the photo on EBT cards cannot be estimated.
HHSC has assumed that, due to the timeframe associated with the Texas Integrated Eligibility Redesign System (TIERS) and vendor system changes, a mass replacement of EBT cards beginning January 1, 2016 is not feasible. Therefore this cost estimate assumes that EBT cards issued on or after September 1, 2016 will comply with the requirements of the bill.
Technology
FTE-related technology costs are estimated at $12,212 in General Revenue and $23,941 in All Funds in fiscal year 2017 and $10,114 in General Revenue and $19,793 in All Funds per fiscal year through fiscal years 2018-20.
Application/System modifications to TIERS are estimated to be $178,535 in General Revenue and $350,000 in All Funds for fiscal year 2016. This includes 3,500 programming hours billed at a rate of $100 per hour.
Application/System modifications to the EBT vendor software are estimated at a one-time cost of $410,013 in General Revenue and $803,790 in All Funds for fiscal year 2016. This includes $300,000 for requirements gathering, design, and implementation; $426,250 for software development; $17,540 for data center storage costs; and $60,000 for USB cameras.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.