INTERNAL OPERATIONS COMMITTEE
Meeting Date: SEPTEMBER 22, 2025
Subject: GIFT CARDS AS PROGRAM INCENTIVES
Submitted For: MONICA NINO
Department: COUNTY ADMINISTRATOR
Referral No: IOC 25/9
Referral Name: GIFT CARDS AS PROGRAM INCENTIVES
Presenter: JULIE ENEA
Contact: Julie.Enea@cao.cccounty.us
Referral History:
At the March 2025 IOC meeting, Vice Chair Burgis inquired about contractors issuing gift cards under County-funded contracts after the Auditor-Controller's annual internal audit plan presentation. On May 13, 2025, the Board of Supervisors (BOS) tasked the IOC with reviewing the County's policy and procedures for purchasing and distributing gift cards as program incentives, especially by community-based organizations contracted by the County.
The CAO presented a report with findings and recommendations to the IOC at its regular meeting on July 18, 2025. Briefly, to recap, the County Administrator issued Administrative Bulletin 615 in 2009 to manage the purchase and distribution of gift cards, addressing risks of fraud, waste, and abuse. From July 2009 to June 2025, 142 Board of Supervisors (BOS) actions authorized about $3.5M for gift card programs, primarily for Health Services Department initiatives. Regular audits by the Internal Audit Division flagged issues like unauthorized gift card allocations by contractors without BOS approval. A survey found 38 contracts involving gift card distribution managed by various county agencies, with fiscal divisions overseeing transaction documentation. Only Employment and Human Services included specific contract language for handling gift cards.
The CAO suggested updating the gift card incentive policy to clarify that the policy covers County programs managed by staff or contractors, and to require the incorporation of special conditions for contracts involving gift card incentives.
Vice Chair Burgis raised concerns about repeat incentives for the same individuals and non-residents, suggesting in-person verification. Chair Andersen reasoned this might be unfair to people with disabilities or busy parents. Vice Chair Burgis proposed that contractors take measures to ensure incentives reach the intended recipients. Deputy County Counsel Mainardi recommended clients be considered eligible for an incentive if they make a good faith effort to complete tasks rather than strictly in exchange for achieving a specific task (no quid-pro-quo transactions).
EHS’s Anissa Basoco-Villarreal mentioned using gift cards for juveniles' emergency needs, verified by the Workforce Development Board, which is not considered part of a gift card incentive program. Jamie Schecter from Health Services said online participation incentives are rare and, in such cases, IP addresses are verified to prevent outsiders from receiving incentives. The Committee indicated it preferred digital gift cards to physical gift cards for better security.
Referral Update:
Based on the input received from County department staff and direction provided by the IOC on July 28th, Committee staff, in consultation with County Counsel, modified the proposed Special Conditions for Contractors originally presented to the IOC on July 28, and prepared corresponding updates to County Administrative Bulletin 615 governing gift card incentives. Marked up and final drafts of both the Special Conditions and the administrative policy bulletin are attached for the Committee’s review and consideration.
Following are the material changes from the information provided at the July 28 meeting:
• For both documents, the definition of Gift Card was modified to include either physical or electronic vouchers that are for a fixed monetary amount that depletes with each use.
Special Conditions for Contractors (Attachments 4 and 5):
• Section 1, A ensures incentives are given only to clients meeting the programmatic goals defined in the contract Service Plan.
• In Section 1, E, iii of the Special Conditions for Contractors, a limit was added to address concerns about clients receiving multiple gift cards. It restricts the issuance of gift cards to one per client per year for each programmatic goal.
Policy (Attachments 1-3):
• Sections I and V now extend the policy to County departments and, to the extent applicable, to County contractors.
• Section IV defines Purchase Order and Warrant Request and updates the definitions for Gift Card and Agenda Item Request.
• Section VI, 3 limits clients to one gift card per programmatic goal annually, addressing concerns about multiple gift cards for the same program.
• Section VI, 4 permits gift cards for public transportation.
• Section VI, 8(a) allows gift card procurement via purchase order or warrant request.
• Sections VII, 2 and 3 require service contracts using gift card incentives to include gift card parameters in the Contract Service Plan and incorporate the proposed Special Conditions (Attachment 5).
Recommendation(s)/Next Step(s):
1. CLARIFY that the County's policy on incentives for County programs and services applies to certain programs and services, whether provided by County departments or their contractors.
2. DIRECT that the proposed Special Conditions and any applicable grant funding conditions should be incorporated with all future County service contracts under which County funding will be used to purchase and distribute gift card or other monetary program incentives, substantially in the form contained in Attachment 5 and as approved by County Counsel.
3. DIRECT the County Administrator to update the administrative policy on incentives for County programs and services substantially as proposed to be consistent with Recommendations 1 and 2, and to promulgate the revised policy to all County departments.
Fiscal Impact (if any):
Implementing the recommendations is expected to incur little to no cost. Department heads will ensure their staff follow County policy and procedures. The County Administrator’s Office, with help from the Auditor’s Internal Audit Division and the Purchasing Agent, will address noncompliance issues arising from lack of awareness or lack of training.