WIC EBT Feasibility Study and Cost‐Benefit Analysis

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Virginia Department of Health WIC EBT Feasibility Study and Cost-Benefit Analysis Improvement in Services for Participants WIC participants are more cognizant of the use of card technologies and processes than their predecessors during the implementation of Food Stamp EBT. When EBT was first implemented, many grocery stores were not accepting cards and recipients were usually “unbanked”, without debit card experience. WIC participants, who often have used EBT, credit, and/or debit cards, understand the anonymity of the card transaction, as well as the speed and accuracy of the approval and transaction process. Comments received from the survey included a general desire for: • A reduction in benefit issuance time • Being treated in a similar manner to other clients • Having an electronic method to confirm their selected food items are WIC-authorized • Eliminating the necessity of carrying the WIC ID Folder • Having the ability to return to a store to purchase the remainder of their WIC items • Cashiers being provided with easier processes to conduct a transaction 4.2 ISSUES/CONSTRAINTS The two greatest constraints facing the conversion of a WIC paper based system to EBT are the ability of the WIC information system to facilitate e-WIC and overcoming the barriers of the retailer environment. In coordinating the planning phases of e-WIC with their participation in the Crossroads SAM project, Virginia has mitigated this constraint and will seek to leverage the SAM project to its benefit. Retailers can look beyond implementation to see the advantages of e-WIC to support their operations and compliance with WIC Program policies. However, there are reservations noted, including cost of implementation, integration of electronic cash register (ECR) systems with the e-WIC system, and the possible impacts of e-WIC EBT terminals on in-lane footprints. For now, the State is communicating e-WIC news to retailers and coordinating their efforts with their retailer community. 62 V 1.2 August 20, 2008 Appendix B: Baseline Analysis
Virginia Department of Health WIC EBT Feasibility Study and Cost-Benefit Analysis 5. COSTS RELATED TO THE PAPER-BASED SYSTEM Costs of the paper-based system were acquired through data provided by the State; invoices from the banking contractor; and time estimates/time studies provided by State and local staff. Details of the paper based cost analysis are provided in Appendix C. As seen in Figure 10 displayed below, the annual baseline cost of materials, services and labor is $1.94 million. The largest portion of these costs ($1.1 million) is State and local labor, based solely on activities related to the paper based process. At $1.8 million, annual retailer costs are substantial. Labor costs include the time spent in-lane (by cashiers and managers), and back-office time spent in preparing deposits, reviewing rejects, and entering data into RSMS. BASELINE ESTIMATED COST FOR OUT‐YEARS, PAPER‐BASED ISSUANCE Calendar Year 2008 2009 2010 2011 2012 2013 2014 2015 Total Labor Costs $ 1,306,501 $ 1,345,696 $ 1,386,067 $ 1,427,649 $ 1,470,479 $ 1,514,593 $ 1,560,031 $ 1,606,832 State Level Labor $ 171,639 $ 176,788 $ 182,092 $ 187,554 $ 193,181 $ 198,976 $ 204,946 $ 211,094 Operations $ 18,478 $ 19,032 $ 19,603 $ 20,191 $ 20,797 $ 21,421 $ 22,064 $ 22,726 Retailer $ 46,446 $ 47,839 $ 49,274 $ 50,753 $ 52,275 $ 53,843 $ 55,459 $ 57,123 Technical $ 73,059 $ 75,251 $ 77,508 $ 79,833 $ 82,228 $ 84,695 $ 87,236 $ 89,853 Business $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ Nutrition $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ Contractor Support $ 25,239 $ 25,996 $ 26,776 $ 27,579 $ 28,407 $ 29,259 $ 30,137 $ 31,041 Indirect Costs $ 8,417 $ 8,669 $ 8,930 $ 9,197 $ 9,473 $ 9,758 $ 10,050 $ 10,352 Regional & Local Labor $ 1,134,862 $ 1,168,908 $ 1,203,976 $ 1,240,095 $ 1,277,298 $ 1,315,617 $ 1,355,085 $ 1,395,738 Food Instrument Issuance $ 945,456 $ 973,819 $ 1,003,034 $ 1,033,125 $ 1,064,119 $ 1,096,042 $ 1,128,923 $ 1,162,791 Material Management $ 124,160 $ 127,885 $ 131,722 $ 135,673 $ 139,743 $ 143,936 $ 148,254 $ 152,701 Contractor Support $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ $ ‐ Indirect Costs $ 65,247 $ 67,204 $ 69,220 $ 71,297 $ 73,436 $ 75,639 $ 77,908 $ 80,245 Material Costs $ 282,142 $ 290,606 $ 299,324 $ 308,304 $ 317,553 $ 327,080 $ 336,892 $ 346,999 Banking Contractor Costs $ 357,459 $ 357,459 $ 357,459 $ 375,331 $ 412,865 $ 412,865 $ 412,865 $ 412,865 TOTAL COST TO STATE $ 1,946,102 $ 1,993,761 $ 2,042,850 $ 2,111,285 $ 2,200,897 $ 2,254,538 $ 2,309,788 $ 2,366,695 Retailer‐Borne Costs $ 1,826,229 $ 1,869,912 $ 1,914,905 $ 1,961,249 $ 2,008,982 $ 2,058,147 $ 2,108,788 $ 2,160,947 Labor $ 1,456,094 $ 1,499,777 $ 1,544,770 $ 1,591,113 $ 1,638,847 $ 1,688,012 $ 1,738,653 $ 1,790,812 Loss $ 370,135 $ 370,135 $ 370,135 $ 370,135 $ 370,135 $ 370,135 $ 370,135 $ 370,135 TOTAL BASELINE COST Including Retailer‐Borne Costs $ 3,772,331 $ 3,863,673 $ 3,957,756 $ 4,072,533 $ 4,209,879 $ 4,312,685 $ 4,418,575 $ 4,527,643 FIGURE 10: BASELINE AND OUT-YEAR COSTS The costs identified in this analysis form the basis of the cost comparison in the e-WIC Feasibility Study. 63 V 1.2 August 20, 2008 Appendix B: Baseline Analysis
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