GAO: Treasury should push e-benefits

The increased use of electronic benefits programs would support Treasury’s goal of moving to an all-electronic government, the Government Accountability Office said in a report released June 23. Agencies increasingly use electronic benefits transfer, but the Agriculture Department’s Food Stamp Program is the only large program that relies completely on electronic payments, the report said. GAO said the Labor, Veterans Affairs, Health and Human Services, and Interior departments and the Social Security Administration also deliver benefits to some extent through electronic benefits transfer and electronic payment cards, which are debit or stored value cards. Agencies typically have made benefit payments by paper check, but electronic payments are more convenient, secure and timely, GAO said. Agencies  report using some form of electronic payment for at least some of their recipients, but they must consider the effects on recipients who do not use banks before choosing electronic payments over paper checks, the report said. Data on the extent of electronic payments was difficult to obtain for some programs because states issue the benefits on behalf of federal agencies, GAO noted. Although Treasury does not distribute payments for all federal benefit programs, it has introduced efforts to increase the use of electronic payments where it does disburse payments, such as Social Security benefits, GAO said. For example, Treasury has met with chief financial officers and program managers of large agencies to discuss its cash management initiatives, including electronic payments. However, that department told GAO it has no formal plans to regularly schedule such meetings. Treasury’s role as federal government’s leader for payments and its experience with electronic payment methods suggest that it could provide valuable information and assistance to smaller agencies, said Yvonne Jones, GAO’s director of financial markets and community investment. “Regularly scheduled outreach efforts to other agencies could provide opportunities for Treasury to increase the use of electronic payments,” she said in the report. Treasury has an initiative to market to and educate check recipients about the benefits of direct deposit. During the last three years, 1.8 million recipients have converted from paper checks to direct deposit, but the rate of growth has recently slowed, GAO said. In April, Treasury began offering its Direct Express debit card through MasterCard for Social Security and Supplemental Security Income recipients without bank accounts. Cardholders can use the card at retailers and to withdraw cash at automatic teller machines. GAO recommended that Treasury’s Financial Management Service consider developing a process for conducting outreach to agencies on a regular basis to identify opportunities for expanding the use of electronic payments. Treasury said it would comment to congressional committees on the recommendation.