State agencies that have switched to issuing debit cards instead of paper checks to clients and taxpayers are saving Oklahoma millions of dollars a year, officials told a legislative committee Tuesday.
But those same officials couldn't come up with an estimate whether the switch is costing clients and taxpayers extra fees by having to use debit cards instead of paper checks.
“Right now there is a cloud of secrecy,” House Minority Leader Scott Inman, D-Del City, told members of the House Government Modernization Committee.
“The taxpayers are being told we're saving money on the agency side, but in reality what it looks like is we've just shifted costs,” he said afterward. “Instead of the state agencies paying for it, the taxpayers are footing the bill for millions of dollars in unwanted fees and charges. So at the end of the day, they may actually be paying more than they were paying when the state agencies were paying to run their systems. I just want to shine a light on it and get to the bottom of this.”
New state law
In the past, the Oklahoma Tax Commission has printed and mailed paper checks to those who don't or can't use direct deposit. But a state law that took effect this year requires all state transactions to be conducted electronically.
A third-party vendor, chosen by competitive bidding, was selected for the debit cards. Xerox ACS has the contract for the Oklahoma Tax Commission, the Department of Human Services and the Employment Security Commission.
Those who get the card can cash it in at some banks for free in most cases, but those who keep a balance on the card may incur fees.
In most cases, the state doesn't pay the cost for the debit cards, and the debit card company mails out the cards. But Inman said he is concerned about the cost to those who get the cards, such as in fees or in other costs passed on by the bank. Inman, who asked for the interim study on the issue, said he has been trying to find the cost to taxpayers for the past six months.
“It should be readily available to say here's how much money the banks made off the state of Oklahoma in the contract that they signed with them, but we can't get that information,” he said
Bobby Stem, a lobbyist for Xerox ACS, said he had been hired by the company recently and didn't have any figures to give to committee members.
He later released a statement from Ken Ericson, director of corporate communications for Xerox ACS, in Washington, D.C: “The service that Xerox provides the state lets people receive their funds faster and more convenient than with paper checks and also offers multiple ways to access funds without incurring fees. We appreciate the discussion in today's interim study and look forward to working with our partner agencies and the members of the Oklahoma Legislature to make sure the citizens of Oklahoma are best served.”
Orland Olandese, of Del City, told committee members he didn't like the debit card. He preferred getting a check; he apparently didn't fill out a preference on his state income tax form, and the debit card is the default option. The other option is direct deposit.
“Change it back to the way it was,” he said.
Tony Mastin, administrator of the Tax Commission, said the agency prefers taxpayers have refunds deposited directly to their bank accounts.