WASHINGTON A program is being tested that allows welfare andfood stamp recipients to obtain their benefits with plastic cardssimilar to those used in automatic teller machines.
Currently, a number of states are developing such systems forthe main welfare program, Aid to Families with Dependent Children.The system being tested now in Maryland is intended to show thatgreater savings and convenience can be achieved by using cards formultiple benefits.
The Agriculture Department, which administers the food stampprogram, found in an earlier test in Reading, Pa., that using aplastic card in place of paper coupons was preferable in all respectsexcept for administrative costs, which were nine times greater. Thedepartment said the system could reduce costs substantially byintegrating food stamp and other benefit programs.
"The new system will be easier for people to use and willincrease financial efficiency by eliminating the problem of lost orstolen food stamp coupons," said Assistant Agriculture SecretaryCatherine Bertini.
About 5,000 Baltimore residents are participating in the firstsix-month phase of Maryland's "Independence System" program, whichbegan Nov. 30. The program then will be expanded to include 300,000recipients across Maryland. The total cost of the five-year programwill be $26 million, about $1 million less than it would costMaryland to process the benefits otherwise.
Welfare recipients will use the cards to collect their benefitsfrom machines linked to an electronic banking network.
Food stamp recipients will use the cards in authorized grocerystores. Purchase amounts will be automatically subtracted fromcardholders' monthly food stamp allotments, eliminating the need forpaper coupons.
Recipients, retailers and banks overwhelmingly preferred theelectronic system to the paper coupon system.
Retailers said they preferred it because it reduced paper workand they didn't have to make change in food stamp transactions.Recipients said they preferred it because it was easier.
The system substantially reduced food stamp handling costs oflocal banks in the Reading project, according to an evaluation forthe Agriculture Department by Abt Associates of Cambridge, Mass. Abtestimated banks' costs at $5.96 per $1,000 for coupons, compared with40 cents per $1,000 for the electronic system.
One complaint that grocery retailers do have is that theAgriculture Department has said each checkout lane in participatingstores needn't be equipped with a system terminal, even thoughfederal regulations state that grocery stores may not discriminateagainst food stamp recipients.
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