[Code of Federal Regulations]

[Title 7, Volume 4]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR274.3]



[Page 799-801]

 

                          TITLE 7--AGRICULTURE

 

    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE

 

PART 274_ISSUANCE AND USE OF COUPONS--Table of Contents

 

Sec. 274.3  Issuance systems.



    (a) System classification. State agencies may issue benefits to 

households through any of the following systems:



[[Page 800]]



    (1) An authorization document system that uses a document produced 

for each month's issuance. The intermediary document, such as an ATP, 

may be distributed on a monthly basis to each household and surrendered 

by the household to the coupon issuer, or provided monthly to issuers 

with either single household authorizations or multiple household 

authorizations on each (such as a computer-generated listing). For 

reconciliation and identification purposes, the authorization document 

shall contain the following:

    (i) Serial number;

    (ii) Case name and address;

    (iii) Case number;

    (iv) Allotment amount;

    (v) Benefit month or expiration date;

    (vi) Name of issuing project area; and,

    (vii) Space for signature of household member. An additional space 

for an authorized representative may be included.

    (2) A direct access system that directly accesses a master issuance 

file at the time that benefits are issued to households. This system 

shall use manual card access or an automated access to the master 

issuance file. Systems of this type include the manual Household 

Issuance Record (HIR) card system and on-line issuance terminals.

    (3) A mail issuance system that directly delivers coupons through 

the mail to households.

    (4) An on-line Electronic Benefit Transfer system in which food 

stamp benefits are stored in a central computer database and 

electronically accessed by households at the point-of-sale via reusable 

plastic cards.

    (5) An off-line Electronic Benefit Transfer system in which benefit 

allotments can be stored on a card or in a card access device and used 

to purchase authorized items at a point-of-sale terminal without real-

time authorization from a central processor.

    (b) Other systems. A State agency may develop an issuance system 

which cannot be readily categorized into one of the systems described in 

paragraph (a) of this section. FNS shall prescribe the reporting and 

reconciliation requirements which apply to that system.

    (c) Alternative benefit issuance system. (1) If the Secretary, in 

consultation with the Office of the Inspector General, determines that 

Program integrity would be improved by changing the issuance system of a 

State, the Secretary shall require the State agency to issue or deliver 

coupons using another method. The alternative method may be one of the 

methods described in paragraph (a) of this section, or the Secretary may 

require a State agency to issue, in lieu of coupons, reusable documents 

to be used as part of an automated data processing and information 

retrieval system and to be presented by, and returned to, recipients at 

retail food firms for the purpose of purchasing food. The determination 

of which alternative to use will be made by FNS after consultation with 

the State agency. The cost of conversion will be shared by the 

Department and the State agency in accordance with the cost accounting 

provision of part 277.

    (2) The cost of documents or systems which may be required as a 

result of a permanent alternative issuance system pursuant to this 

section shall not be imposed upon retail food firms participating in the 

Program.

    (d) System requirements. (1) The State agency shall establish a 

master issuance file which is a composite of the issuance records of all 

certified food stamp households. The State agency shall establish the 

master issuance file in a manner compatible with its system used for 

maintaining case record information and shall separate the information 

on the master issuance file into active and inactive case file 

categories. The master issuance file shall contain all the information 

needed to identify certified households, issue household benefits, 

record the participation activity for each household and supply all 

information necessary to fulfill the reporting requirements prescribed 

in Sec. 274.4.

    (i) The master issuance file shall be kept current and accurate. It 

shall be updated and maintained through the use of documents such as 

notices of change and controls for expired certification periods.

    (ii) Before entering a household's data on the master issuance file, 

the State agency shall review the master



[[Page 801]]



issuance file to ensure that the household is not currently 

participating in, or disqualified from, the Program. If an authorization 

document is issued under the expedited service requirements of 

Sec. Sec. 273.2(i) and 274.2(b), the State agency shall complete as 

much of the master issuance file review as possible prior to issuing the 

authorization document. Any uncompleted reviews shall be completed after 

issuance and appropriate corrective action shall be taken to recover 

overissuance.

    (2) State agencies should divide issuance responsibilities between 

at least two persons to prevent any single individual from having 

complete control over the authorization of issuances and the issuances 

themselves. Responsibilities to be divided include maintenance of 

inventory records, assembly of benefits and preparation of envelopes for 

mailing. If issuance functions in an office are handled by one person, a 

second-party review shall be made to verify coupon inventory, the 

reconciliation of the mail log, and the number of mailings prepared.

    (3) State agencies shall establish controls to prevent a household 

from concurrently receiving benefits through more than one issuance 

system.

    (4) State agencies shall clearly identify issuances in their 

accountability systems as initial, supplemental, replacement, or 

restored benefits.

    (5) State agencies shall establish a Statewide record of replacement 

issuances granted to households to prevent a household from receiving 

more than two countable replacement issuances as defined in Sec. 

274.6(b) in a six-month period.

    (6) State agencies which issue benefits by mail shall, at a minimum, 

use first class mail and sturdy nonforwarding envelopes or packages to 

send benefits to households.

    (e) Validity periods. (1) State agencies shall establish validity 

periods for issuances made in both authorization document and direct 

access systems. A validity period is the time frame during which a 

household may obtain benefits by transacting an authorization document, 

or receiving the benefits directly at an issuance point. Generally, the 

validity period coincides with the issuance month or the period of 

intended use, which may or may not be a calendar month. However, in 

instances in which authorization documents are distributed, or benefits 

become available for ongoing households late in the issuance month, the 

State agency shall extend the validity or availability period for either 

twenty (20) additional days, or until the end of the following issuance 

month, at the State agency's option. The State agency may also choose 

one of two dates which will initiate this extension of the validity or 

availability period. The State agency may choose to extend the period 

for authorization documents distributed or for benefits made available, 

on or after the 20th day of the issuance month or after the 15th day of 

the issuance month. Whichever date the State agency chooses to initiate 

the required extension, the State agency must use the date consistently 

for all extensions in this category. A household which does not transact 

its authorization document, or obtain the benefits directly from an 

issuance point during the issuance's validity period, shall lose its 

entitlement to the benefits, and the State agency shall not issue 

benefits to such a household for such a period.

    (2) State agencies experiencing excessive issuance losses may 

develop systems that have authorization documents that expire in shorter 

time frames than those set forth in paragraph (e) of this section. 

However, such systems shall include methods that allow households the 

opportunity to obtain their benefits for the full validity period of a 

month's issuance.



[54 FR 7004, Feb. 15, 1989, as amended at 54 FR 51351, Dec. 15, 1989; 57 

FR 11249, Apr. 1, 1992; 60 FR 20183, Apr. 25, 1995; Amdt. 390, 65 FR 

59110, Oct. 4, 2000]