Track 2: Food and Nutrition Service Update

Transcription:

Tim O'Connor (00:09):

I am currently the Director of the EBT Community Council. In our prior life, I worked my career at the Food and Nutrition Service and led the team of very talented people that brought up EBT in the SNAP program. This year marks the 40th anniversary of the pilot project for EBT in SNAP.

(00:34):

So 40 years ago right now, we were working with a company to get rid of these paper food stamps, and the question was, would it work? I think it did. Part of the proof is that we are also celebrating the 20th anniversary of statewide implementation of, I'm sorry, nationwide implementation of EBT and SNAP. So credit goes out to an awful lot of people. This wasn't done by a single group or whatever. It was done by a community of people. And that community included Feds and states, the payment processors, grocers, advocates, and many others that had a piece of that. It was a wonderful opportunity to bring so many voices together to get a goal accomplished. The EPT council, which I'm now the Director of, is trying to keep that community together. We are looking at, and you're going to hear from my good friend Lisa here in a little bit, some of the issues facing SNAP, EBT, and the only way that we're going to get a successful resolution of those things is to keep the entire community engaged so that there are no voices left behind. The worst thing you can do is go down a path and then find out you left a voice out, and then you have to start kind of all over again and make adjustments. So hopefully the EBT Council can help to bridge that gap. If you want to learn more about what we're doing, we have a booth outside and we can explain it more to you and that kind of thing.

(02:08):

Today we're going to be talking, like I said about EBT in SNAP, EBT is used in an awful lot of programs. And let me talk a little bit about what we're not talking about. We're not talking about WIC, EBT, we're not talking about, which is almost nationwide, which is an incredible accomplishment on the part of our Wix difference, we're not going to talk about summary EPT in part because in talking to some of you, trying to bring that up right now, we don't want to hear about your pain points, but no hats off to all of you that are making that a huge success because there are a lot of kids that have been hungry every summer, and this is going to go a long way to plugging that gap to making kids have good nutrition during the summer months. We're also not going to be talking about some of the other related programs like the healthy benefit cards that are out there, the produce prescription benefits, all different kinds of things that are confronting the EBT world.

(03:08):

Right now we're going to focus on just those small issues in SNAP, which are going to take the breath away from everybody if they haven't already. One of the things I was going to do before I turned this over to Lisa real quick is I wanted to find out who's in the audience. So what I was going to say was, could you put your hand up when I call out a group? However, our friends in the back who I've been chatting with decided to blind Lisa and I with the lights. So instead of putting your hands up, which we won't see, so it won't make any difference. Can you at least applaud when I name your group so we have a sense of who's here or not? So if you're a Fed, let me know. This is sounding like a contest. If you're a state, let me know. I think the states are winning so far. If you're from the EBT processing industry, let me know. Okay, I don't think we have any grocers here. Is that true? Okay. And I'm not sure if we have any advocates here. So those are two voices that we would have at the EBT Community Council meetings and stuff. So if you're here from none of the groups, none of the groups mentioned above, can you let me know?

(04:36):

Good. That gives us a sense of audience and then we hope that we'll have a little bit of time for q and a at the end, but I'm taking up too much now. I'm going to turn this over to Lisa Gifaldi, who is a running point on an awful lot of the issues and the solutions on SNAP EBT and stuff, and Lisa's going to give you a little bit of background and some context for things and then let you know what's coming over the horizon. Lisa?

Lisa Gifaldi (05:05):

Thanks Tim. You can hear me? Yeah. Okay. Typically, if you guys may know her, Shelly Pierce would be doing this update, but she is on vacation with her family out of the country. So I got nominated to do this update for you all. So please bear with me. I want to start with the SNAP landscape. So in February of 23, we had roughly 27 million SNAP households that made a purchase at all authorized store types. And then in February of 24 it decreased and we had a little over 22 million SNAP households that made a purchase across all SNAP store types. I'll go into more of why, but I'm sure you guys can imagine the PHE is over. And so we're going to talk about the authorized stores. As of fiscal year 23, there were roughly 261,000 firms authorized to participate in SNAP. There has been a slight increase in authorized firms each year since 2019.

(06:14):

Currently as of the end of February we are at 262,000 authorized retailers. What was different this year, the changing landscape now includes online retailers. So woo, at this time, non-participating states include Guam and Virgin Islands and almost 4 million households a month shop online and we can continue to add retailers and several are in the queue. So let's look at the redemptions. SNAP redemptions decreased in fiscal year 23 to 124 billion, a 10% decrease from the prior year. A significant factor in the redemption decrease has been the reduction in SNAP emergency allotments and PEBT benefits. So that is the landscape. So we're going to go into now what's going on currently? So first thing we're going to talk about is SNAP regulations and policy. So in December of 22, congress passed a law requires state agencies to replace some benefits that were stolen due to card cloning, card skimming, and other similar fraud schemes. And in 2023 FNS approved all 53 SNAP State agencies to implement the replacement of stolen benefit plans. To hear more about this and how states are fighting benefit theft and protecting SNAP clients, check out the EBT fraud prevention and security measures, which is the next session.

(07:50):

So due to the increase in benefit theft, some states are looking to implement chip cards and two states are currently working on this, which is California and Oklahoma, who plan to go live roughly at the end of summer or fall of this year. So that will add a new layer of security for their clients to secure their benefits. So once we started working with those states to implement ship card, we realized this is a lot bigger than just states and EBT processors that we needed to get the whole EBT community involved because there was a lot of backend system changes that needed to be made and it would impact a variety of stakeholders, including most significantly retailers and third party processors along with the EBT host processors. So what we implemented under the ACS X9, we coordinated with them and the industry and advocates, retailers, state agencies and FNS and the EBT processors, the EBT card industry forum. And that was created in November of 23. And the first thing we needed to look at was the X958 EBT technical specification. So we needed to update certain pieces of that in order to be able to process a chip card transaction. So once we worked through those changes and we had to look at some other pieces of implementation, the next step was the EBT card industry forum White paper sessions, we call them round table sessions.

(09:48):

These discussions are centered around the technology that would be used for chip card and mobile payment implementation amongst other implementation areas like card customization, POS software, hardware upgrade certification and testing. And so these sessions are currently ongoing on a weekly basis. It's open to anyone who wants to join and we have more information at our table outside if you want to join. So from those sessions, white papers will be developed to inform stakeholders on CHIP mobile implementation as well to help mitigate any unknown issues along the way. So as well, in parallel to this, we made the approved changes to the X958 specification, but that was sort of informal. Now it's moving to a more formal process going to the X958 A11 committee. So this committee is based on voting members, so people who pay to be a part of this community, it goes into the actual document updating those changes and the more formal voting process to approve those changes.

(11:08):

So currently in the A11 group, we are moving the spec to the voting process. So hopefully within the next few months it will be approved and published for everyone. So that's also a big step. The next big thing we're doing, as you may have heard, is mobile payment pilots. So in March of 23, FNS announced that is partnering with five states to test mobile payment technology. SNAP participants in Illinois, Louisiana, Massachusetts, Missouri and Oklahoma will have the option to use mobile payment methods like tapping or scanning their personal mobile device as an alternative to their physical SNAP card. Due to the increase in card skimming, all stakeholders agreed that to effectively plan for and implement mobile payment technology and EBT chip cards, national standards would need to be established. So currently we're waiting for the chip card implementation to go live and then we will move into mobile payments because we realized the same technology that will be used for CHIP will be used for mobile. So we all needed to be on the same page on how the backend would work because we wanted to make sure it was universal on the backend for everyone so it didn't impact interoperability or EBT database conversions. So coming soon, mobile will be happening.

(12:45):

Next thing we wanted to touch on is online purchasing pilot. So just going to give you some recent numbers on this. So in January of 24, around 11% of SNAP redemptions occurred online, which is pretty cool. Over 300 retailer chains live with SNAP online purchasing representing thousands of actual stores. And in January of 24, close to 3.9 million SNAP households shopped online, which is a substantial increase from March, 2020 when about 35,000 SNAP households shopped online. So again, pretty cool households receiving SNAP now have access to online purchasing across 50 states and the District of Columbia, only two agencies, Guam and Virgin Islands have yet to implement. So big, big gains there. The next thing we wanted to talk about is SIMTECH. So in December of 22, FNS awarded a $5 million grant to the SNAP for the SNAP EBT modernization technical assistance Center to the National Grocers Association Foundation. On November 27th of 23, SIMTECH was officially launched to the public and SIMTECH will provide guidance and technical expertise to retailers increasing client access to SNAP online purchasing and increase the agency's capacity to provide support tailored to the needs of small retailers. And that has been going pretty well.

(14:14):

The next thing we wanted to talk about was EH Under the American Rescue Plan Act of 21 USDA authorized $25 million on a competitive basis to enter into a cooperative agreements with state agencies to carry out electronic healthy incentive projects under USDA's framework to transform the food system. EIP will evaluate the delivery of fruit and vegetable incentives through state's EBT systems to incentivize and reward SNAP households for purchasing healthy foods, delivering incentives using EBT integration establishes a new method for consistent and effective incentive delivery. USDA awarded three EIP grantees in May 23 to Colorado, Louisiana, and Washington. All three states are working on their system development and plan to launch in 20 later in 24, Colorado will offer a $1 for $1 match for qualifying purchases of fruits and vegetables up to $60 a month per household. Louisiana will offer 30 cents for every $1 spent on qualifying fruits and vegetables up to $25 a month per household, and Washington will offer a dollar per dollar match to qualify purchases of fruits and vegetables up to $20 per transactions and $60 a month per household.

(15:36):

So pretty cool stuff going on. The last big thing I wanted to touch on are EBT database conversions. So this year New York and Tennessee will be converting. New York will be converting at the end of May from conduit to FIS, and Tennessee will be converting from conduit to FIS in September of 24. And next year we have three conversions that are going to be occurring, which is Mass, Maine and Connecticut. So that's our nifty map that outlines who the host processors are for each state and who manages their EBT system for the folks who do not know that. So currently this is the end of our update, sorry. And we can ask questions and we have some resources here.

Tim O'Connor (16:39):

Thanks, Lisa. One of the things for me to come to a conference like this is to run into new folks as well as to renew acquaintances with folks who have been through a lot of the development in the early stages of EBT as well. And just before this session, I was commiserating with one of those people about sort of the arc that EBT and SNAP has been on. In a way, we went through the intense pressure of trying to bring EBT up in all of the states and then it sort of hit somewhat of a stasis. It doesn't mean that things were always easy and not bumpy, but things were just kind of rolling along and all of a sudden there's all these things that Lisa was just touching on, whether it's online shopping, mobile payments, anti-fraud, intercessions, you name it, as well as the same kinds of things to some degree happening in sister programs, new programs coming up, hats off to those of you that are still involved in doing all of this.

(17:43):

And I think that the strong community that brought up EBT and SNAP in the first place is what's going to make this happen and make all of these challenges achieved or whatever gotten through and stuff like that. I'm just glad that it's folks like Lisa and you all that are doing it and it's not me anymore. I'll try to keep you informed on things, but it's going to take a lot. The other observation I would make is that if you think about the summary EBT program and those of you who know about that, which is a brand new program that Congress wanted to set up and what was it, seven months, eight months in order to deliver on an EBT card benefits to children for the summer months, it's a really unrealistic deadline that was put in front of the states and the Feds and the processors and whatever to do, and they're going to make it happen.

(18:38):

You're going to make it happen. And that's emblematic, I think, of what's gone on over the last 30 years, which is that this community has come together so well to make EBT happen so seamlessly that people think you SNAP your fingers and stuff happens. And that's because it has happened, not with a finger SNAP with an awful lot of words I can't express in the outside like this, but behind the scenes and all. But in the end, the goals get met because I think everybody has their eyes set on the bottom line, which is that there are hungry people that need to be getting access to benefits in order to be able to get from one month to the next. So my hat's off to all of you for all of what you have done and what you're continuing to do. We do have time for questions and you can't raise your hand, you're going to have to clap or something like that unless there's somebody, I think we have some folks with microphones that can bring a mic to you. Maybe they can see you, but we can't. So who has a question?

Audience Member Kelan Peter (19:57):

Hi, Kelan Peter from the Midwest region SNAP, EVT coordinator. You had my wheels turning when you were talking about the replacement of stolen benefits and we've received a few questions in terms of has there been any talks in terms of what process is going to replace replacement of stolen benefits at the, I think it's what is at the end of this year, September 30.

Lisa Gifaldi (20:25):

Erica. Did you hear that Erica would be okay?

Audience Member Erica Kane (20:39):

Hi Erica Kane, FNS from National Office. So our appropriators Congress has only given the authority to replace benefits that have been stolen during federal fiscal year 23 and federal fiscal year 24. So as we approach the end of fiscal year 24, I think we are all excited to see what the Hill does in this area regarding their replacement of stolen benefits as FNS, we don't have anything else to say on that topic. Now we have to rate for congressional action.

Tim O'Connor (21:14):

If I can add something to that for the folks in the audience that may be from the commercial banking arena, you're all familiar with Reg E and how Reg E covers commercial banking issues and stuff like that. Food stamps SNAP has always been not subject to Reg E. And so now when we come up to the situation where we're seeing that people need to have their benefits replaced the program, the congress has to step in and provide the authority. So you may be wondering why there may be issues around replacing benefits in the SNAP program. It's because in part Reg E does not apply, and so the program has to find its way around that authority.

Audience Member Sharron Reed-Burns (22:00):

Hello, my name is Sharron Reed-Burns representing the state of Maryland Human Services. My question is with the chip card implementation, understanding that the states will have to absorb the costs to take it to the CHIP implementation, is there any type of government funding or possible program waiver that states can advocate or try to apply for to receive some type of assistance in helping with that?

Lisa Gifaldi (22:35):

Unfortunately no. Just the 50 50 reimbursement. Yeah, I know we wish for you too down the road. We don't know what the farm bill's going to say, right?

Audience Member Ron (22:56):

Lisa, this is Ron from Illinois regarding that 50 50. So that's 50 50 for those costs, right? So if we're going to pay 40 million to implement, it's 50 50 there.

Lisa Gifaldi (23:12):

I'm not, yeah, it is the admin costs. So yeah, that's all I think we would need to see what you're spending that 40 million or on and match that with what we can. Yep.

Audience Member Justin King (23:33):

It's EBT chip card round Robin, Justin King from Propel, the company that makes the providers app. Lisa. Tim, thank you so much for all your work here. I'm wondering, given the cost constraints that are evident from the last couple of questions and the pace of chip, which I've been a part of the X nine process, I want to applaud to everybody who's been a part of that is a tremendously challenging complex effort to set up this new standard and people have moved really, really quickly. With that said, people are getting robbed blind as we sit here and making them seek reimbursement is a very, very challenging thing. It is less preferable than having the theft blocked at the source. Do you have an expectation at this time when you'll get to not two states offering chip, but 10 or 25 or towards 50? Is there any sort of timeline that advocates and consumers can look forward to see when this new intervention will start to scale?

Lisa Gifaldi (24:44):

Sure. So currently there is no regulation or law in place to make states switch over to chip. So it would be up to the state. We're not stopping states. So any state that wants to do it, we are happy to help and support them in any way. So yeah, that's really all I can answer right now.

Tim O'Connor (25:17):

Come on folks. There have to be other questions.

Audience Member Lulu Meza (25:25):

Hi, my name is Lulu Meza. I'm the founder and CEO of SNAP. And we're on a mission to help grocers be able to more easily and digitally transact the eHIP and the GUS net programs. We're a startup fairly young. My first two questions, yes. My questions are for eHIP for example, the pilots that are going on in the five states, are there already protections in place in these pilots to prevent the same kind of fraud that we see happening with the non chipped EBT cards? And then my second question is how do you see the role of tech startups and private industry working together in terms of promoting these AHAB programs and making them more easy for consumers to use?

Lisa Gifaldi (26:18):

Yeah, go ahead. Eden's got me on this one.

Audience Member Eden (26:25):

So eEIP is currently being implemented in three states, and that's essentially, it is an integrated incentive program. So when we talk about eHIP, we're talking about folks being able to go to a grocery store, swipe their SNAP card, and they're earning those benefits on their SNAP card, so to speak. So it's a little bit different than we might see Gus NP operating currently in the environment today. But I guess to your first question, when those benefits are spent, it's on the same EBT card. It's interacting the exact same way. So there are not necessarily any additional protections per se because it's integrated on the same EBT card. And then because of the integration, it's really a lot more working with the EBT host processors who are standing this program up with these states as opposed to with additional third parties and things like that. To the second part of your question, did you have anything you wanted to add, Lisa?

Lisa Gifaldi (27:44):

No, thank you.

Audience Member 1 (27:52):

I write a lot about fraud, have a story in our website today about visa's, latest fraud tools, which are barely staying ahead of the rapidly evolving fraud techniques that are out there. I wondered since I wasn't here earlier, I hope you didn't miss this, but I wondered if you could address where you see fraud moving next and whether it's going to affect the EBT arena, especially with generative AI, which I'm told is a looming threat in terms of the kinds of rapid scams they can develop using these new technologies.

Lisa Gifaldi (28:30):

Yeah, Erica will talk more probably to that in her next session, but we are currently seeing that now and because we are the government, we have a lot of red tape that we need to get through and we're a little bit slower moving because the cost of security and things like that. We don't have the money in our world like Visa, MasterCard and all of that. But we do see those type of scams right now and I think we look towards what the commercial world is doing and we will probably follow that as much as we can.

(29:12):

What we continue to say is that there's no silver bullet to anything that we do because we're seeing so many different things and it's happening so quickly. So we try to advise the card holders on how they can protect their benefits. The EBT processors are implementing fraud mitigation controls for their cardholders to use and different mitigation tools to help analyze and mitigate different fraud schemes from happening, as well as the implementation of chip card. And then just the communication from the states to the card holders as well is really important. We're still using magstripe, we have a pin, and a lot of the things are with card cloning due to skimming, clients are using common pins like 111, 222. So it's just like teaching the cardholders too. You need to be better with that. And we're trying to figure out ways that the cardholders can sort of with EBT cardholders are able to use their benefits across state lines, which we call interoperability benefits need to be interoperable.

(30:27):

So the processors are implementing tools on their cardholder apps to be able to say, Hey, I just want to shop in my state, and they can turn off their interoperability, but it has to be the choice of the card holder as well to do that. They don't want to make online purchases, right. We're seeing a lot of fraud in the online world too that we're trying to mitigate. So again, it's helpful for us to be in this type of environment because we're learning from you guys what you're seeing. So hopefully we can catch up and learn from you all on what you're doing and how you can help us. If you want to come into those industry conversations, the EBT card forum conversations, please do. We would love your support to help us in any way. But yeah, I don't know if that helped answer your question.

(31:36):

No, I would say it's probably the opposite. I don't know.

Tim O'Connor (31:42):

I don't know. One of the things I would say, and this may be my lifetime as a bureaucrat, and it may sound a little bit defensive, but I don't think people understand how difficult the regulatory process is for a federal agency. In the early days of EBT, when we issued the first EBT regulations, we started drafting. Six months later, we issued the proposal. Six months after that we issued the final rule. Now you're lucky if you can get from the beginning of the process to the end in five years, that's almost lightning speed unless you have some sort of special dispensation from Congress to bypass a lot of the things that were set up. So I offer that to say that the world has changed bureaucratically and it has changed in a way that makes it difficult to pivot very quickly. So a lot of stuff has to happen in essence, almost outside the regulatory process.

(32:45):

And again, I keep coming back to this and harping on it. It's a lot of people working together with goodwill, understanding what the bottom line is and what you're trying to achieve, and being willing to do that in terms of whether or not the commercial industry is better at detecting and dealing with the stuff than the government. It may just be the speed with which they can do things as opposed to the ability of the government to be able to recognize what it is and then get to the end. So I'm not sure if that helps answer the question, if it just clouds it up or makes you say, oh, the hell with it. I don't want to deal with these issues anymore. I apologize if it's the latter, but there are a lot of things that come into play. It's interesting what Lisa just said about interoperability.

(33:36):

Interoperability was a big deal in the early days when it was suddenly realized, oh my god, people want to use their benefits across the state line. That was a big thing for people to be able to swallow. And so the legislation now requires interoperability and now it's like, oh man, you mean I can't turn off interoperability? So I mean, you can see how the issues change over time. And again, I think that it's hard to stay on top of all these things or especially hard to get in front of them. But it's encouraging to see some of the things that are happening that are in essence, I want to say outside the regulatory process. And the folks from FNS don't have to nod their heads when I say that. If they don't want to, they can. If they want to. I don't care.

Audience Member Larry Brash (34:30):

Hi, Larry Brash from New Jersey. I just wanted to make a statement that I think you guys aren't allowed to say. So I'm going to say it to those in the room who are unfamiliar with EBT and the chip card process and everything. So there is a bill, bipartisan bill that was introduced by Andy Kim and John Federman, I know, and a couple other people, but it was bipartisan, I forget what it's called. Enhancing cybersecurity of EBT or something like that, which requires chip cards and things like that. So as a public policy nerd, I would recommend to anybody in this room. Additionally, the overall EBT statutes are part of the farm bill that authorizes all of this, which is up for renewal this year. It's actually delayed. So I would encourage anybody interested in this space, interested in protecting our recipients and those sorts of things to reach out through your government affairs people through whatever your advocacy sort of thing is to make sure that these things are on the record and thought about and highly considered as farm Bill comes back up.

Tim O'Connor (35:41):

Yeah, we're done. I think that's the end, unless anybody has another question, in which case we will be at the table in the next sessions or at the wind down. Wind down. Thank you all very much. Thank you.