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entitled 'Food Stamp Program: Implementation of Electronic Benefit 
Transfer Systems' which was released on January 16, 2002. 

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United States General Accounting Office: 
GAO: 

Report to the Ranking Minority Member, Committee on Agriculture, 
Nutrition, and Forestry, U.S. Senate. 

January 2002: 

Food Stamp Program: 

Implementation of Electronic Benefit Transfer Systems: 

GAO-02-332: 

United States General Accounting Office: 
Washington, DC 20548: 

January 16, 2002: 

The Honorable Richard G. Lugar: 
Ranking Minority Member: 
Committee on Agriculture, Nutrition, and Forestry: 
U. S. Senate: 

Dear Mr. Lugar: 

This report addresses your request for information on the progress made 
by states in implementing electronic benefit transfer (EBT) systems for 
delivering benefits in the Food Stamp Program. In fiscal year 2001, the 
U.S. Department of Agriculture (USDA) provided about $15.5 billion in 
food stamp benefits to a total of about 17.3 million recipients. Until 
the mid-1990s, most recipients used benefits provided in the form of 
paper coupons to purchase allowable food, but currently about 80 
percent of all benefits are provided electronically. Recipients 
receiving their benefits electronically use cards, much like debit 
cards, to pay for their groceries at the checkout counter, and the 
benefits used are deducted from the recipients’ monthly allocation. 

You asked us to determine (1) the status of states’ efforts to 
implement statewide EBT systems and to make them interoperable and 
portable, (2) any barriers impeding nationwide implementation of EBT 
systems, and (3) any strategies that USDA’s Food and Nutrition Service 
(FNS) or the states have used to overcome barriers to EBT 
implementation. As agreed with your office, we examined the actions 
taken by the FNS and the 53 jurisdictions—the 50 states, the District 
of Columbia, Guam, and the Virgin Islands—that are required to 
implement EBT systems to deliver food stamp benefits. We conducted our 
work from August 2001 through December 2001 in accordance with 
generally accepted government auditing standards. On December 18, 2001, 
we briefed your staff on the results of our work. This report formally 
conveys the document used at that briefing. 

In summary, we found that 46 of the 53 jurisdictions will likely meet 
the October 1, 2002, deadline for having implemented a statewide EBT 
system. Thirty-nine states plus the District of Columbia had achieved 
statewide EBT system implementation by October 2001. Six other states 
had signed EBT contracts and were on track to achieve statewide 
implementation by October 2002. It appears that 7 jurisdictions will 
likely not meet the October 1, 2002, deadline for statewide EBT system 
implementation. Overall, we did not identify any principal technical 
barriers impeding the statewide implementation of EBT systems that are 
interoperable and portable. 

We are sending copies of this report to the Chairman, Senate Committee
on Agriculture, Nutrition, and Forestry, the Secretary of Agriculture, 
and will make copies available to others upon request. If you or your 
staff have any questions about this report, please contact me on (202) 
512-7215 or Ron Wood on (202) 512-2608. Dan Jacobsen and Jill Yost also 
made key contributions to this report. 

Sincerely yours, 

Signed by: 

Sigurd R. Nilsen: 
Director, Education, Workforce, and Income Security Issues: 

[End of section] 

Briefing Slides: 

Food Stamp Program: Implementation of Electronic Benefit Transfer (EBT) 
Systems: 

Briefing for Minority Staff of Senate Committee on Agriculture,
Nutrition, and Forestry: 

Overview: 

Objectives: 
Scope and Methodology: 
Summary of Results: 
Background: 
Status of States’ Implementation of EBT: 
Barriers to EBT Implementation: 
Strategies to Bring All States into Compliance: 

Objectives: 

* Describe the status of states’ efforts to implement statewide EBT 
systems and make them interoperable and portable; 

* Identify principal barriers impeding nationwide implementation of EBT 
systems; and; 

* Identify strategies that the Food and Nutrition Service (FNS) or 
states have used to overcome barriers to EBT implementation. 

Scope and Methodology: 

* Analyzed laws and regulations on EBT and pertinent documents from FNS 
headquarters and regional offices and from selected states. 

* Interviewed FNS officials responsible for EBT implementation, 
officials in states that have not yet implemented statewide systems 
that are interoperable and portable, and vendors for EBT systems. 

* Our work was conducted from August 2001 through December 2001 in 
accordance with generally accepted government auditing standards. 

Summary of Results: 

* Forty-six of the 53 jurisdictions have met or are on schedule for 
implementing EBT statewide by October 2002. 

* Most jurisdictions will have interoperable and portable EBT systems 
by October 2002. 

* There are no technical barriers impeding statewide implementation of 
EBT. 

Background: Food Stamp Program (FSP): 

* The primary source of nutrition assistance for low-income Americans--
7.45 million households were provided about $15.5 billion in benefits 
during fiscal year 2001. 

* Administered by the U.S. Department of Agriculture’s FNS in 
partnership with the states. 

* FNS funds the full cost of food stamp benefits and pays about half 
the cost of state administration, develops policies and regulations, 
authorizes retailer participation, and monitors retailer compliance. 

* States handle day-to-day operation and management, including 
certifying eligibility of participants, delivering the benefits, and 
monitoring recipients’ compliance. 

Background: Role of EBT Systems in Food Stamp Benefit Delivery: 

* EBT now delivers about 80 percent of food stamp benefits. 

* With EBT, recipients use a plastic card, much like debit cards, to 
pay for their food at the checkout counter at an authorized retail 
store. 

* Each recipient must enter a unique personal identification number 
into a terminal and the benefits used are deducted from the household’s 
allocation. 

Background: Statutory EBT System Deadlines for the States: 

* The Personal Responsibility and Work Opportunity Reconciliation Act 
of 1996 (Public Law 104-193) requires each state to implement a 
statewide EBT system for distributing food stamp benefits by October 1, 
2002. 

* The EBT Interoperability and Portability Act of 2000 (Public Law 106-
171) requires that states’ EBT systems be interoperable (capable of 
processing each other’s cards) and food stamp benefits be portable 
(useable in any state) by October 1, 2002. 

* These requirements apply to 53 jurisdictions--the 50 states, the 
District of Columbia, Guam, and the Virgin Islands. 

Status of States’ Implementation of EBT: 

Forty-six of the 53 jurisdictions will likely meet the October 1, 2002, 
deadline for having implemented a statewide EBT system: 

* 40 (39 states plus the District of Columbia) had achieved statewide 
EBT system implementation by October 2001. 

* 6 other states--Indiana, Mississippi, Montana, Nebraska, Nevada, and 
Virginia--had EBT contracts and were on track to achieve statewide 
implementation by October 2002. 

Seven jurisdictions will likely not meet the October 1, 2002, deadline 
for statewide EBT system implementation. 

* West Virginia and California have EBT contracts and should comply by 
July 2003 and November 2004, respectively. 

* Virgin Islands is negotiating an EBT contract and may or may not 
implement an EBT system by the deadline. 

* Delaware, Guam, Iowa, and Maine do not yet have EBT contracts, but 
intend to implement systems after the deadline. 

* All 7 jurisdictions plan to have interoperable and portable systems 
upon statewide implementation. 

Figure: Electronic Benefit Transfer (EBT) Statewide Implementation: 

[See PDF for image] 

This figure is a map of the United States and territories indicating 
EBT implementation in the following four categories: 

EBT implemented: total of 40 states; 

EBT implemented by 10/2002: 
Illinois; 
Kansas; 
Mississippi; 
Montana; 
Nevada; 
Virginia. 

EBT implemented after 10/2002, with contract: 
California; 
West Virginia. 

EBT implemented after 10/2002, no EBT contract: 
Delaware; 
Guam; 
Iowa; 
Maine; 
Virgin Islands. 

[End of figure] 

Of the 46 jurisdictions expected to meet the October 1, 2002, deadline 
for statewide EBT system implementation: 

* 36 (35 states plus the District of Columbia) had interoperable and 
portable EBT systems by October 2001. 

* 6 states--Indiana, Mississippi, Montana, Nebraska, Nevada, and 
Virginia-will have interoperable and portable EBT systems when their 
systems are implemented statewide. 

* 4 states--Illinois, Ohio, Texas, and Wyoming--are exempt by Public 
Law 106-171 from having to provide interoperable and portable systems 
by the deadline. 

Exemptions from the interoperability and portability deadline: 

* Illinois and Texas are exempt because their current EBT contracts 
were entered into prior to October 16, 2000. Their exemptions continue 
until the current contracts expire or are extended. 

* Ohio and Wyoming are exempt because they use EBT smart cards which 
are not currently compatible with the EBT systems used by all other 
jurisdictions. 

Figure: Electronic Benefit Transfer (EBT) Interoperability and 
Portability: 

[See PDF for image] 

This figure is a map of the United States and territories indicating 
EBT interoperability and portability in the following four categories: 

Interoperable: 36 states; 

Interoperable by 10/2002: 
Indiana; 
Mississippi; 
Montana; 
Nebraska; 
Nevada; 
Virginia. 

Interoperable after 10/2002: 
California; 
Delaware; 
Guam; 
Iowa; 
Maine; 
Virgin Islands; 
West Virginia. 

Exempt from 10/2002 deadline: 
Illinois; 
Ohio; 
Texas; 
Wyoming. 

[End of figure] 

Barriers to EBT Implementation: 

Overall, we did not identify any technical barriers impeding the 
statewide implementation of EBT systems. 

* In fact, 46 jurisdictions have implemented EBT systems or are on 
track to do so. 

* Delaware, Guam, Iowa, and Maine have made the least progress toward 
achieving EBT implementation. They distribute about 1.7 percent of food 
stamp benefits nationally. 

* These jurisdictions have delayed their implementation, in part, due 
to concerns over the higher cost of EBT over the old paper coupon 
system of food stamp benefit delivery. 

* EBT saves the federal government time and money because the process 
of printing, safeguarding, distributing, accounting for, and destroying 
the coupons is eliminated. 

* Some states have stated that EBT has increased their cost to 
administer the food stamp program. 

* Furthermore, an EBT system creates an electronic record of each food 
transaction, making it easier to identify and document instances of 
food stamp fraud or abuse. 

Strategies to Bring All States into Compliance: 

FNS is working with the five jurisdictions that lack EBT system 
contracts to assure that they: 

* have established reasonable plans to achieve full EBT implementation 
and; 

* are making reasonable progress toward meeting their established EBT 
development milestones. 

In August 2000, FNS completed a study entitled “Electronic Benefits 
Transfer Alternatives Analysis” that addressed the limited competitive 
environment in the EBT market. FNS is considering various options for 
addressing the problems noted in the study. 

[End of briefing slides] 

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