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October 31, 2013

Oklahoma’s Safety-Net payment system scrutinized

NORMAN — In recent years, at least three Oklahoma agencies have mostly stopped mailing checks for welfare and other safety-net aid to the poor, the elderly and the unemployed.

The state also has stopped sending checks for income tax returns and child support payments.

Instead, the agencies have handed off the services at no cost to an outside company — Affiliated Computer Services, a subsidiary of Xerox Corp. Instead of checks, the company sends recipients pre-paid debit cards loaded with the value of the state benefits or refunds. Recipients can opt out of the debit card and receive a direct deposit of the funds in their bank account.

The state is saving millions of dollars a year by outsourcing the function. But some lawmakers believe that the state also has effectively shifted a lot of expenses for delivering public-aid benefits to the people who receive them.

The reason is an unknown number of cardholders are using ATM machines, and thus paying fees, to access their welfare payments, child support payments and other benefits or their income tax returns. The ability to charge fees is in ACS’ contracts with the Oklahoma Department of Human Services, the Oklahoma Employment Security Commission and the Oklahoma Office of the State Treasurer.

How much Oklahomans are paying in fees is unclear. ACS is not required to disclose the numbers.

That caused state Rep. Scott Inman, D-Del City, to introduce legislation last session that would require ACS or other companies that issue such cards to disclose how much in card fees individuals were charged.

Inman said he introduced the bill after hearing complaints from constituents about being charged fees to get income-tax refunds.

“The agencies are saving millions of dollars, but I’m not sure the taxpayers are saving millions of dollars,” Inman said at a hearing last year on the issue.

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