Several New York legislators want the state to drop out of a regional consortium organized to develop an electronic benefits transfer system.
If New York quits the seven-state Northeast Coalition, it will follow the lead of Florida, which decided last week to back out of a similar eight-state group in the Southeast.
Like their Florida counterparts, New York legislators are pushing the executive branch to reconsider participation in the multistate effort.
In letters to Gov. George E. Pataki and other officials, the legislators urged abandoning the project launched last summer with the issuance of a request for proposals. The states want to sign a contract with a company that will process electronically delivered government payments, such as welfare and food stamps.
In electronic benefits transfer, or EBT, automated teller machines and point of sale devices replace checks and food stamps sent through the mail.
"I find myself perplexed at the feverish pitch at which the agency (Department of Social Services) is advancing this EBT initiative, and the apparent disregard for spending state taxpayer dollars in a wise and efficient manner, particularly during these austere times," wrote state Sen. Efrain Gonzalez Jr. in a letter to Gov. Pataki.
The letter, which was widely distributed to other legislators and state officials, continued: "I am strongly recommending that the recent (request for proposals) and agency selection of a vendor be abolished before the Department (of Social Services) enters into negotiations with a soon-to-be- announced vendor."
In another letter - to Brian Wing, acting commissioner of the social services department and a decision-maker for the Northeast Coalition of States - two state Assembly members wrote: "A number of serious questions regarding the implementation of EBT remain unanswered. ... I also request that no bidder be selected until we have had a full opportunity to resolve all of these issues."
The letter was signed by Herman D. Farrell Jr. and Rhoda S. Jacobs, who head the Ways and Means and Social Services committees respectively.
Mr. Wing did not return telephone calls seeking comment.
Unlike the Southeastern Alliance, in which a Citicorp unit had gotten a U.S. Treasury Department endorsement to sign EBT contracts with the states, the Northeast Coalition has not yet selected a winning bidder.
It is considering five finalists: banking units of Citicorp, Chemical Banking Corp., Fleet Financial Group, NationsBank Corp., and First Security Corp. of Utah.
Their bids had assumed the participation of New York, which has much higher numbers of benefit recipients than any of the other states - Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.
Consultants say that by losing New York, the coalition would lose economies of scale. The unit cost of delivering benefits electronically would go up in the six remaining states.
"It would be easy for New York to drop out," said Gerald Goldman, an attorney with Paramus, N.J.-based Forman Stern, which represents the National Check Cashers Association. Mr. Goldman, who has been closely observing EBT efforts nationwide, pointed out that under the terms of the original request for proposals, the winning bidder would have to sign individual contracts with each state. No state is obliged to work with the designee.
The legislators who want out of the coalition say that New York deserves special treatment. They also say they are concerned about the costs of the program.
In the letter to Mr. Wing of the Social Services department, the assembly members wrote, "The population density of New York City poses unique problems of access. Any benefits distribution system operating in the city of New York must also ensure that each and every issuance location is secure, convenient, able to respond to the language needs of every community, and able to operate profitably to ensure the long-term viability of all distribution locations. These concerns have not been fully addressed."
Sen. Gonzalez's letter raised 20 questions, pointing up issues he says he believes were overlooked in the crafting of the original request for proposals. He then wrote, "It would appear more prudent to abolish the (request for proposals) than to have to invalidate an executed contract. ... I believe that such an approach will allow for the reissuance of an RFP that is, in fact, cost effective."
