Treasury seeks EBT answers

Congress has mandated that all agencies and departments issue payments electronically
starting Jan. 1, 1999.

The law excludes tax refunds and allows some other exemptions, but it generally
requires agencies to use EBT and electronic funds transfer whenever possible.

Each year the government pays $100 billion in benefits to some 30 million Americans.

The Social Security Administration and the Veteran Affairs Department issue the bulk of
the benefits.

Treasury officials said they estimate that roughly a third of the benefit recipients do
not have bank accounts and that some do not want them for personal reasons, such as
mistrust in the government or fear of a financial collapse.

Donald Hammond, deputy fiscal assistant secretary of Treasury, said current systems at
SSA and VA are robust enough to handle the additional electronic transfers.

"Some work may be needed in improving the accounting systems," he said.
"In the long term, there may be a question of building up a central system
application for things like a vendor registration database."

John Hawke Jr., Treasury undersecretary for domestic finance, told the House Government
Reform and Oversight Subcommittee on Government Management, Information and Technology
last month that EBT and EFT will save government $500 million over five years. He said
Treasury's Financial Management Service last year issued more than 850 million payments on
behalf of civilian agencies, including benefits, salaries, tax refunds, vendor payments,
grants and loans.

Hawke said electronic payments will eliminate redundancy because each year Treasury
replaces more than 800,000 checks that are stolen, lost, delayed or damaged during mail

Hammond and others said an automated teller-type card or some form of magnetic-strip
debit card, usable at banks, government-approved financial institutions or kiosks, is a
likely final solution.

Treasury expects to receive suggestions during a 90-day comment period that just began.

The electronic payment debate also has spurred discussion about the merit and the
extent to which agency employees should have access to smart cards.

"What we are interested in is an integrated solution rather than giving employees
three different cards for different transactions," said G. Martin Wagner, General
Services Administration's associate administrator for governmentwide policy.

He said several agencies are interested in developing frameworks and pilot projects.

GSA issued a request for proposals for smart cards this month and will award a contract
next January.

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