Qualifying accounts for direct deposit of publicly administered funds.

(1) Existing law requires unemployment compensation benefits administered by the Employment Development Department (EDD) , child support payments made through the State Disbursement Unit of the Department of Child Support Services, and specified public assistance payments, including payments made under the California Work Opportunity and Responsibility to Kids (CalWORKs) program, that are directly deposited to an account of the recipient's choice to be deposited into a qualifying account. Existing law defines "qualifying account" for these purposes to mean either a demand deposit or savings account at an insured financial institution in the name of the person entitled to receipt of the payments, as applicable, or a prepaid card account that meets certain requirements, including that the prepaid card account may not be attached to any credit or overdraft feature that is automatically repaid from the account after delivery of the payment. This bill would change the definition of qualifying account, including eliminating a prepaid card account and instead authorizing a prepaid account or a demand deposit or savings account offered by or through an entity other than an insured depository financial institution, as specified, that is not attached to an automatic credit or overdraft feature, unless the credit or overdraft feature has no fee, charge, or cost, or it complies with the requirements for consumer credit under the federal Truth in Lending Act. To the extent this bill would increase the responsibilities of counties in providing benefits under the CalWORKs program, the bill would impose a state-mandated local program. For purposes of the above-mentioned public assistance payments under the jurisdiction of the State Department of Social Services, including payments made under the CalWORKs program, the bill would authorize the department to implement, administer, interpret, or make specific those provisions through all-county letters or similar written instructions, to be issued no later than October 1, 2022, with the same force and effect as regulations. (2) Existing law also authorizes the EDD to administer the disability insurance compensation program, which includes family temporary disability insurance benefits. Existing law requires the EDD to make disability compensation payments through public employment offices or other agencies approved by the Director of Employment Development. Existing law requires, beginning January 1, 2024, the EDD to provide a person entitled to receive disability benefits and family temporary disability insurance benefits with the option to receive payments by direct deposit into a qualifying account, as defined, of the recipient's choice, in addition to other alternative disbursement payment methods. This bill would revise the description of a person to whom EDD must provide the option of direct deposit and would require, if the benefits are directly deposited to an account of the recipient's choice, the payments to only be deposited to an account that meets the requirements of a qualifying account. The bill would prohibit a person or entity that is not an insured depository financial institution, as defined, that offers, maintains, or manages an account that is not a qualifying account from soliciting, accepting, or facilitating the direct deposit of these benefits to the account. Under the bill, the EDD would not be held liable for authorizing a direct deposit of these benefits into an account designated by the recipient that is not a qualifying account. (3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.