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Increased oversight coming to SF agencies’ use of prepaid gift cards

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City agencies are increasingly issuing prepaid gift cards to clients for retailers like Target, pictured, as an incentive for healthy behavior. (Kevin N. Hume/S.F. Examiner)

City departments are using gift cards to help San Francisco’s neediest residents by incentivizing them to take medicines or hit recovery goals and purchase basic items like baby formula.

The little-known practice is now coming under tighter rules, however, prompted not by abuse but by new requests to purchase more prepaid gift cards and recommendations from city accounting managers, city officials say.

It’s not exactly clear how many city departments use gift cards, but the San Francisco Examiner was able to confirm at least three. Uses cover a wide range, from encouraging tuberculosis patients to take “their meds because it is a pretty arduous regimen,” to attracting young homeless residents to participate in a survey or helping a mother whose public benefits run out to purchase baby food.

The City Controller’s Office and the Office of Contract Administration have asked city departments to adopt a new gift card purchases policy. City Controller Ben Rosenfield said his office has drafted a model policy that is now being reviewed by city departments to that end.

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Rosenfield said in an email that he was unable to provide the total amount The City spends on gift cards annually because his office doesn’t have a “way to centrally track their use or prevalence through the City’s financial system.” He referred the Examiner to individual departments for those details.

The Department of Public Health purchases gift cards as incentives for tuberculosis patients to take medications, for mental health and substance use patients to meet their goals of their recovery plans and for pregnant mothers to participate in family planning programs, according to a May 3 department memo.

The Health Commission adopted a gift card policy last week upon the City Controller’s request. The policy states the cards cannot exceed $50 and can only go to clients, not “city employees, contractors and other staff working on behalf of DPH.” The policy also requires a log of the gift cards showing the name of who received them, the amount and type.

Regular audits checking the inventory of gift cards on hand as well as an annual audit of usage must occur under the policy. And only a one-month supply of gift cards can be on hand at any time, with the rest locked in a safe.

Rachael Kagan, a spokesperson for DPH, was unable to provide the total amount the department spends on gift cards annually by press time. She said that gift card purchasing and use was spread out across the department and until now they haven’t had a “a single accounting process.”

She noted that another use of gift cards was giving volunteers on patient advisory boards for primary care clinics $20 gift cards for Safeway, Target or Walgreens for attending monthly meetings.

The Human Services Agency, whose oversight commission adopted a similar gift card policy in November, said it has spent about $42,000 on gift cards this fiscal year, out of a total $160,000 gift card budget that runs until June 2019. It’s policy notes that “gift cards are quasi-cash and must be handled in a similar manner to petty cash funds.”

Chandra Johnson, HSA spokesperson, said in an email that the gift cards are “primarily” for Safeway or Target “because those retailers are more universally accessible and useful to our clients” and the cards are “available for immediate needs and to improve outcomes for new supportive housing placements, nutrition, etc.”

Clients include “low-income or vulnerable individuals participating in services offered by HSA” as well as “families caring for foster youth, caregivers for seniors and adults with disabilities and child care providers.”

Johnson said those enrolled in the agency’s Project 500 program, which was announced by the late Mayor Ed Lee in 2015 to help families climb out of poverty, may receive gift cards from the agency such as “to purchase additional baby formula when WIC does not provide enough to get through the month, or items needed when moving in to the subsidized housing.”

“While gift cards assist clients with additional and much needed resources, they are not intended as a public benefit,” she noted. “Most often clients will need to have achieved specific milestones and goals on a case plan or pathway to self-sufficiency as identified by their social worker.”

The Department of Homelessness and Supportive Housing also uses gift cards, but a spokesperson did not provide information on total spending by press time.

City departments use funds from their annual budget allocations to pay for the gift cards. Mayor Mark Farrell unveiled Thursday an $11 billion city budget for the fiscal year that begins July 1. It is now pending review by the Board of Supervisors.

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