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Wash. pays JPMorgan more for electronic benefits than other states

OLYMPIA, Wash. – JPMorgan Chase charges Washington approximately 700-thousand dollars a month to issue food and cash welfare benefits via debit card. But public records show Washington is paying a premium compared to other states. Olympia Correspondent Austin Jenkins continues our coverage of Washington’s electronic benefits program.

Each month in Washington, more than 450-thousand households receive money to buy food. Sixty-four thousand families get welfare cash. In the old days, these benefits were doled out on paper. Remember food stamps and welfare checks? But these days poor people on state assistance are issued a bank card that is automatically reloaded each month. Washington has joined with several other western states to contract with JPMorgan Chase – the second largest bank in the country - to provide these benefits electronically. But it turns out Washington pays more – in some cases a lot more – than other states.

Babs Roberts: “I’d certainly like to see us lower.”

Babs Roberts is with Washington’s Department of Social and Health Services. Her agency recently conducted a survey of what other states are paying for electronic benefits services. Of the 16 states that responded, Washington ranks sixth highest. The state pays a combined food-and-cash benefit charge to JPMorgan of $1.65 per client per month. That’s forty-five cents more than Oregon pays its vendor – eFunds Corporation. And nearly seventy cents more per client, per month than Colorado pays even though Colorado also contracts with JPMorgan. That’s because last year Colorado renegotiated the rate it pays. But Babs Roberts explains there’s another factor too.

Babs Roberts: “Colorado purchased very little beyond the base contract whereas Washington purchased quite a bit more and that will drive up the cost per case month.”

So what did Washington buy? The ability to collect damages from JPMorgan should the debit card system fail. Washington also purchased call center services in eight foreign languages from Spanish to Somali so clients can call to get their account balance or request a new card. And Washington signed up for disaster services so the state can quickly issue debit cards to – say – flood victims. State Senator Joe Zarelli is the ranking Republican on the budget committee. He says Washington can’t afford what he calls the premium package from JP Morgan.

Joe Zarelli: “I think that on behalf of the taxpayers we ought to be doing this at as low a cost as possible. I think it’s nice to maybe provide those extras, but when it’s coming out of the taxpayers it’s probably not the best approach.”

Washington’s Department of Social and Health Services did negotiate a thirty percent rate cut with JPMorgan back in 2008 in exchange for two more years on the contract. The agency is currently requesting another rate reduction in light of the state budget crisis. One more point about other states and their electronic benefits. Michigan doesn’t contract with JPMorgan and doesn’t participate in a debit card consortium of states. Yet each month it manages to spend about a quarter of what Washington does per client.

Copyright 2011 Northwest News Network

Since January 2004, Austin Jenkins has been the Olympia-based political reporter for the Northwest News Network. In that position, Austin covers Northwest politics and public policy as well as the Washington State legislature. You can also see Austin on television as host of TVW's (the C–SPAN of Washington State) Emmy-nominated public affairs program "Inside Olympia." Prior to joining the Northwest News Network, Austin worked as a television reporter in Seattle, Portland and Boise. Austin is a graduate of Garfield High School in Seattle and Connecticut College in New London, Connecticut. Austin’s reporting has been recognized with awards from the Association of Capitol Reporters and Editors, Public Radio News Directors Incorporated and the Society of Professional Journalists.