Rule-Making Standards and Procedures s16

Title of Proposed Rule: / Implementation of H.B. 15-1255 Identifying the Penalties Associated with Misuse of the Electronic Benefit Transfer (EBT) Card for Temporary Assistance for Needy Families (TANF)/Colorado Works and Adult Financial Cash Benefits
Rule-making#: / 15-8-18-1
Office/Division or Program: Office of Economic Security/ Employment and Benefits Division / Rule Author: Danielle Dunaway / Phone: 303-866-2788
E-Mail:

STATEMENT OF BASIS AND PURPOSE

Summary of the basis and purpose for the rule or rule change. (State what the rule says or does, explain why the rule or rule change is necessary and what the program hopes to accomplish through this rule. How do these rule changes align with the outcomes that we are trying to achieve, such as those measured in C-Stat?)

H.B. 15-1255 was signed into law on May 1, 2015. This law requires that on or before January 1, 2016, the State Department shall adopt rules to enforce the prohibition of clients accessing benefits at an Automated Teller Machine (ATM) located in an establishment in which a client is prohibited from accessing benefits by federal law. The rules must include increasing penalties for multiple violations.

The purpose of these rules is to identify the enforcement mechanisms for customers who utilize their electronic benefit transfer (EBT) cards at ATMs located in prohibited locations.

An emergency rule-making (which waives the initial Administrative Procedure Act noticing requirements) is necessary:

to comply with state/federal law and/or
to preserve public health, safety and welfare

Explain:

Authority for Rule:

State Board Authority: 26-1-107, C.R.S. (2015) - State Board to promulgate rules; 26-1-109, C.R.S. (2015) - state department rules to coordinate with federal programs; 26-1-111, C.R.S. (2015) - state department to promulgate rules for public assistance and welfare activities

(continued)

Initial Review / 10/02/2015 / Final Adoption / 11/06/2015
Proposed Effective Date / 01/01/2016 / EMERGENCY Adoption / N/A

______

[Note: “Strikethrough” indicates deletion from existing rules and “all caps” indicates addition of new rules.]

STATEMENT OF BASIS AND PURPOSE (continued)

Program Authority: (give federal and/or state citations and a summary of the language authorizing the rule-making)

26-2-104, C.R.S. (2015), as amended by S.B. 15-065 and H.B. 15-1255 - requires prohibited use of EBT cards in certain establishments, State Board to promulgate rules to implement the EBT card system, and requirement to create rules that enforce the prohibition of clients accessing benefits at an automated teller machine (ATM) located in an establishment in which a client is prohibited from accessing benefits by federal law. The rules must include increasing penalties for multiple violations;

26-2-111, C.R.S. (2015) - eligibility for public assistance and authority for the Adult Financial Programs;

26-2-702, C.R.S. (2015) - legislative intent in implementing the Colorado Works Program;

42 U.S.C. Section 608(a)(12) (2012)- requires states to maintain policies and practices to prevent TANF funds from being used in any electronic benefit transfer transaction in any liquor store; any casino, gambling casino, or gambling establishment; or any adult-oriented establishment. Each state is required to report to the Department of Health and Human Services its implementation of policies and practices related to restricting recipients from using their TANF assistance in EBT or point-of-sale (POS) transactions at the locations specified;

Colorado’s Temporary Assistance for Needy Families (TANF) State Plan requires compliance with 42 U.S.C. Section 608(a)(12) and includes marijuana shops as additional restricted establishments

Yes / X / No
Yes / X / No

Does the rule incorporate material by reference?

Does this rule repeat language found in statute?

If yes, please explain.

The program has sent this proposed rule-making package to which stakeholders?

County Human Services Directors Association; Colorado Commission on Aging; Colorado Legal Services; The Legal Center; Colorado Senior Lobby; Single Entry Point agencies; Community Centered Boards; Economic Security Sub-PAC; Colorado Gerontological Society; All Families Deserve a Chance (AFDC) Coalition; Area Agencies on Aging; Legal Aid of Metropolitan Denver; Colorado Center on Law and Policy; Colorado Counties, Inc.; Colorado Department of Health Care Policy and Financing; Colorado Department of Revenue, Enforcement Division, Liquor and Tobacco Enforcement; and, Colorado Department of Human Services Food Assistance Division, Low-Income Energy Assistance Program, and Division of Child Welfare

Attachments:

Regulatory Analysis

Overview of Proposed Rule

Stakeholder Comment Summary

REGULATORY ANALYSIS

(complete each question; answers may take more than the space provided)

1. List of groups impacted by this rule:

Which groups of persons will benefit, bear the burdens or be adversely impacted by this rule?

All individuals who have cash benefits made available through the Electronic Benefits Transfer (EBT) card for Colorado Works and Adult Financial programs will be impacted by these proposed rules. While most individuals do not use their EBT cards in prohibited establishments, individuals who are currently accessing benefits through these establishments will need to find alternative locations to withdraw their cash benefits. Individuals who continue to use EBT cards at prohibited locations will face increasing penalties for continued violations.

2. Describe the qualitative and quantitative impact:

How will this rule-making impact those groups listed above? How many people will be impacted? What are the short-term and long-term consequences of this rule?

These rules will identify the penalties for any Colorado Works and Adult Financial cash benefit recipients who use EBT cards at the prohibited ATMs in establishments such as, but not limited to, liquor stores, casinos, gambling casinos, gambling establishments, adult oriented establishments and marijuana shops.

There are approximately 18,001 Colorado Works and 32,152 Adult Financial recipients. These recipients either have their benefits direct deposited to their bank accounts or utilize EBT cards to access their benefits. Data demonstrates that .096% of individuals used their EBT cards in locations which are now considered prohibited. With initial education of prohibited locations occurring at application and redetermination, frequent monitoring of data, and escalating penalties for both the customer and the vendor housing the EBT machine, it can be assumed that most individuals will find acceptable alternatives to withdraw their cash benefits. This could impact individuals who have to find alternative locations to withdraw their cash benefits as they may have to go greater distances to find appropriate alternatives. Individuals who choose to continue to use prohibited locations will be impacted by the required penalties associated with this new law.

3. Fiscal Impact:

For each of the categories listed below explain the distribution of dollars; please identify the costs, revenues, matches or any changes in the distribution of funds even if such change has a total zero effect for any entity that falls within the category. If this rule-making requires one of the categories listed below to devote resources without receiving additional funding, please explain why the rule-making is required and what consultation has occurred with those who will need to devote resources.

State Fiscal Impact (Identify all state agencies with a fiscal impact, including any Colorado Benefits Management System (CBMS) change request costs required to implement this rule change)

CDHS will bear the burden regarding the cost of educational and communication materials. This will be minimal cost to print brochures and posters which will be provided to the county departments.

REGULATORY ANALYSIS (continued)

County Fiscal Impact

None

Federal Fiscal Impact

None

Other Fiscal Impact (such as providers, local governments, etc.)

None

4. Data Description:

List and explain any data, such as studies, federal announcements, or questionnaires, which were relied upon when developing this rule?

Internal queries were done to identify individuals currently using prohibited locations. Data reflects that in 2014, .096% of individuals used their EBT cards in locations which are now considered prohibited.

5. Alternatives to this Rule-making:

Describe any alternatives that were seriously considered. Are there any less costly or less intrusive ways to accomplish the purpose(s) of this rule? Explain why the program chose this rule-making rather than taking no action or using another alternative.

There are no other viable alternatives as these changes are required in order to be in compliance with state law.

OVERVIEW OF PROPOSED RULE

Compare and/or contrast the content of the current regulation and the proposed change.

Section Numbers / Current Regulation / Proposed Change /

Stakeholder Comment

3.609.3, J / Payments made in Colorado Works Program / Revised to identify the penalties associated with misuse of the EBT card at an identified prohibited location / __ / Yes / X / No
3.800.7 / New proposed rule / Identify the penalties associated with misuse of the EBT card at an identified prohibited location / __ / Yes / X / No

STAKEHOLDER COMMENT SUMMARY

DEVELOPMENT

The following individuals and/or entities were included in the development of these proposed rules (such as other Program Areas, Legislative Liaison, and Sub-PAC):

Food and Nutrition Division, Electronic Benefits Transfer and Low-Income Energy Assistance Program sections

THIS RULE-MAKING PACKAGE

The following individuals and/or entities were contacted and informed that this rule-making was proposed for consideration by the State Board of Human Services:

Are other State Agencies (such as Colorado Department of Health Care Policy and Financing) impacted by these rules? If so, have they been contacted and provided input on the proposed rules?

Rules were sent to the Colorado Health Care Policy and Financing and the Colorado Department of Revenue.

No input has been received.

X / Yes / No

Have these rules been reviewed by the appropriate Sub-PAC Committee?

Yes / X / No

Date presented to be presented September 3, 2015. Were there any issues raised? ____ Yes _X__ No

If not, why.

STAKEHOLDER COMMENT SUMMARY (continued)

Comments were received from stakeholders on the proposed rules:

Yes / X / No

If “yes” to any of the above questions, summarize and/or attach the feedback received, including requests made by the State Board of Human Services, by specifying the section and including the Department/Office/Division response. Provide proof of agreement or ongoing issues with a letter or public testimony by the stakeholder.

(9 CCR 2503-6)

3.609.3 PAYMENTS [Rev. eff. 9/15/12]

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J. ELECTRONIC BENEFIT TRANSFER AND POINT OF SALE DEVICE RESTRICTION

A PARTICIPANT IS PROHIBITED FROM USING HIS/HER EBT CARD AT AUTOMATED TELLER MACHINES (ATMs) AND POINT OF SALE (POS) DEVICES LOCATED IN ESTABLISHMENTS AS DESCRIBED IN SECTION 3.602.1, E, 2, k.

INDIVIDUALS’ TRANSACTIONS SHALL BE MONITORED QUARTERLY. INDIVIDUALS WHO USE PROHIBITED ATMs OR POS DEVICES SHALL BE CONTACTED BY THE COUNTY DEPARTMENT. INAPPROPRIATE USAGE SHALL RESULT IN:

1. A WARNING THAT USE OF THE EBT CARD IN PROHIBITED ESTABLISHMENTS WILL RESULT IN THE CARD BEING DISABLED. THE COUNTY DEPARTMENT SHALL PROVIDE EDUCATION ABOUT APPROPRIATE USE, ACCESS, AND ALTERNATIVES;

2. IF CONTINUED MISUSE OCCURS (IDENTIFIED ON THE USAGE REPORT AFTER A WARNING HAS OCCURRED), THE EBT CARD SHALL BE DISABLED, REQUIRING PERSONAL INTERACTION WITH THE COUNTY DEPARTMENT FOR ADDITIONAL ASSESSMENT; AND,

3. IF MISUSE CONTINUES, THE COUNTY DEPARTMENT SHALL INITIATE THE CASE CLOSURE PROCESS FOR DEMONSTRABLE EVIDENCE AS DESCRIBED IN SECTION 3.608.4.

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(9 CCR 2503-8)

3.800.7 ELECTRONIC BENEFIT TRANSFER AND POINT OF SALE DEVICE RESTRICTION

A PARTICIPANT IS PROHIBITED FROM USING HIS/HER EBT CARD AT AUTOMATED TELLER MACHINES (ATM) AND POINT OF SALE (POS) DEVICES LOCATED IN ESTABLISHMENTS AS DESCRIBED IN SECTION 3.520.4, D, 6 (9 CCR 2503-5).

INDIVIDUALS’ TRANSACTIONS SHALL BE MONITORED QUARTERLY. INDIVIDUALS WHO USE PROHIBITED ATMS OR POS DEVICES SHALL BE CONTACTED BY THE COUNTY DEPARTMENT. INAPPROPRIATE USAGE SHALL RESULT IN:

A. A WARNING THAT USE OF THE EBT CARD IN PROHIBITED ESTABLISHMENTS WILL RESULT IN THE CARD BEING DISABLED. THE COUNTY DEPARTMENT SHALL PROVIDE EDUCATION ABOUT APPROPRIATE USE, ACCESS, AND ALTERNATIVES;

B. IF CONTINUED MISUSE OCCURS (IDENTIFIED ON THE USAGE REPORT AFTER A WARNING HAS OCCURRED), THE EBT CARD SHALL BE DISABLED, REQUIRING PERSONAL INTERACTION WITH THE COUNTY DEPARTMENT FOR ADDITIONAL ASSESSMENT; AND,

C. IF MISUSE CONTINUES, THE COUNTY DEPARTMENT SHALL DENY OR DISCONTINUE THE CASH BENEFIT FOR A MINIMUM OF ONE MONTH. THE CLIENT SHALL BE REQUIRED TO COMPLETE A NEW APPLICATION IF HE/SHE REQUESTS ASSISTANCE AFTER THE ONE MONTH TIME PERIOD.

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