§ Requires the Department of Human Services (DHS) to close certain electronic benefits transfer accounts for financial assistance that have not been used by an account holder for the previous 12 months.

§ Requires the Comptroller of Public Accounts to withdraw any unused benefits remaining in the accounts, and disburse them as authorized by federal and state law.

§ Establishes an interagency task force on electronic benefits transfers (EBT) to assist the Health and Human Services Commission (HHSC) in adding new programs to the state EBT system.

§ Requires HHSC to develop a data matching project between all agencies using electronic funds transfer and other participating agencies.

§ Requires the Texas Department of Health (TDH) to implement a data matching project to locate people eligible to participate in the federal special supplemental food program for women, infants, and children (WIC), and to begin the database matching not later than July 1, 1998.

§ Requires agencies to implement EBT or direct deposit by September 1, 1999 if the task force determines that using these mechanisms is feasible.

§ Requires the Attorney General, TDH, and the Texas Workforce Commission (TWC) to analyze the cost-effectiveness of using EBT in conjunction with direct deposit to distribute child support payments, WIC benefits, and unemployment benefits.

§ Authorizes each agency to work with the interagency task force on EBT to determine the cost-effectiveness of using EBT to distribute payments or benefits.

§ Requires each agency to complete an analysis not later than December 30, 1997, submit a plan for implementing an EBT system if the mechanism is cost-effective, and execute the plan not later than August 31, 1998.

§ Requires each agency that provides benefits or recurring payments through EBT to evaluate the cost-effectiveness of using automated teller machines.

§ Requires financial assistance granted under Aid to Families with Dependent Children to be used only to purchase goods and services that are considered essential and necessary for the welfare of the family. Requires DHS to define, by rule, what constitutes essential and necessary goods and services.

§ Requires DHS to encourage nonfood retailers to accept payment for essential and necessary goods and services through the state's EBT system.

§ Allows recipients of financial assistance, authorized to make cash withdrawals using an EBT card, to only be able to do so at the customer service department of the area provider.

§ Requires DHS to conduct a pilot project with retailers using the EBT system to provide families with essential and necessary goods and services. Requires DHS to work with the Health and Human Services Commission to determine the feasibility of the EBT system, and if found feasible, to promote use of the EBT system statewide.

§ Authorizes DHS to extend the period of supported employment for families who receive financial assistance under Temporary Assistance to Needy Families (TANF) using fill-the-gap budgeting or other methods whereby DHS disregards the earnings of family members who obtain employment while receiving assistance.

§ Requires DHS to implement statewide the fill-the-gap budgeting program.

§ Requires HHSC in consultation with the Legislative Budget Board and subject to approval of the Governor, to develop and implement a plan to integrate eligibility determination and service delivery by health and human services agencies, the Texas Workforce Commission (TWC), and other agencies.

§ Authorizes HHSC, in developing and implementing the plan, to contract for appropriate professional and technical assistance. Requires HHSC to also consult with agencies whose programs are included in the plan.