Report 2023-105 Recommendation 2 Responses

Report 2023-105: Middle Class Tax Refund Payments: The State Could Improve Its Approach to Future Financial Relief Payments by Addressing Weaknesses From This Program (Release Date: March 2024)

Recommendation #2 To: General Services, Department of

To prepare the State for future financial relief efforts involving debit cards, after consulting with departments that wish to use or have previously used debit-card services, General Services should enter into master agreements with debit-card vendors. To the extent possible, the master agreements with debit-card vendors should include:

- Terms that clearly define key performance indicators for required services—such as customer service and fraud prevention—and how these indicators will be measured.

- Transparent payment provisions that allow the State to assess the reasonableness of the costs to be incurred, mitigate the risk of making advance payments, and provide a means to recover or withhold funding in the event of vendor nonperformance, short of terminating the agreement.

- Options for fee-free services, such that departments using the master agreements could decide whether to provide fee-free debit cards to their recipients.

6-Month Agency Response

DGS has begun drafting a MSA Scope of Work (SOW) and is currently developing a Request for Information (RFI) to engage the supplier community and receive feedback regarding industry standards. The RFI intends to ask the supplier community the most effective method for implementing performance indicators, transparent payment provisions, and options for fee-free services.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

DGS will start the Master Service Agreement (MSA) procurement development for Debit Card Services in July 2024, engaging with the supplier community and conducting market research related to standard industry practices to determine the following elements:

- Terms that clearly define key performance indicators for required services - such as customer service and fraud prevention - and how these indicators will be measured.

- Transparent payment provisions that allow the State to assess the reasonableness of the costs to be incurred, mitigate the risk of making advance payments, and provide a means to recover or withhold funding in the event of vendor nonperformance, short of terminating the agreement.

- Options for fee-free services, such that departments using the master agreements could decide whether to provide fee-free debit cards to their recipients.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2023-105

Agency responses received are posted verbatim.