Md. card program may become model for states FOOD STAMPS UNDER FIRE

March 08, 1995|By Sandy Banisky | Sandy Banisky,Sun Staff Writer

When Maryland's food stamp users hit the check-out line, they pay for their groceries with a plastic Independence Card. The use of plastic instead of paper, recipients and state officials agree, lessens the welfare stigma, cuts administrative costs and reduces the chances of fraud and abuse.

Now, if reformers in Congress making over the food stamp program have their way, the other 49 states will convert to similar programs if they want the flexibility of managing their own food stamp systems.

Thirteen states already use some form of electronic benefits, Maryland officials say. But only Maryland has a statewide system that encompasses a variety of programs.

It lets users charge groceries, collect monthly welfare benefits, receive child support payments, even pay public housing rents and utility bills -- all with plastic that looks like a credit card.

There are no checks to get lost in the mail. There are no food stamps to be stolen and trafficked illegally on street corners. For more than 99 percent of welfare recipients, paper simply doesn't exist any more, state officials say.

And where fraud was hard to prove when food stamps came in coupon books, auditors now can follow an electronic trail whenever they find suspicious transactions.

"We can track it," said Helen Szablya, spokeswoman for the Maryland Department of Human Resources. "There's evidence that holds up in court, and we can prosecute people and put them away."

In Washington, where the House Agriculture Committee is considering cuts of more than 10 percent over five years in the food stamp program, electronic programs such as Maryland's have bipartisan support.

"We want to promote greater use" of electronic systems, said Jackie Cottrell, spokeswoman for the House Agriculture Committee.

About $1.8 billion is wasted in the food stamp program each year through errors such as faulty calculation of benefits or erroneous applications, Ms. Cottrell said. Even harder to track is trafficking in stolen stamps, or stamps redeemed by merchants for cash instead of food.

"It's up to $3 billion a year," Ms. Cottrell said of the various forms of abuse. "But that's only an estimate."

The proposal now before the committee would give states the option of staying with the federally-run program or taking over the system and setting their own requirements -- but only if the states have electronic transfer systems in place. Funds would be frozen at the fiscal 1995 level. But lawmakers say some states could use their new authority to find ways to economize.

Maryland Gov. Parris N. Glendening has not taken a position, state welfare officials say. And members of the National Governors Association are divided on the issue, a spokeswoman said.

"All states want more flexibility," said Page W. Boinest, the spokeswoman. "The conventional wisdom is, if you go to a block grant, there are fewer strings attached. But the question is: At what level will the funding level be?

"The governors have discussed this at length and have said they cannot come to agreement," she added. "So governors are lobbying on their own on both issues."

Electronic systems have been around since 1984, when a demonstration project began in Reading, Pa. Maryland started an experiment with 5,000 recipients in Baltimore's Park Circle community in 1989. In 1993, the system, encompassing its multiple programs, went statewide.

Dale Brown, who heads the system for the Maryland Department of Human Resources, said she estimates savings of $3 million a year in state and federal administrative costs: "The feds don't have to print coupons, store them, transport them, destroy them. It's cheaper for banks too. There were a lot of man-hours used in counting and distribution."

And the clients, who have to attend a training session before they receive their cards, like the process better, too.

"It gives the client independence," said Walinda West, a Maryland Department of Human Resources spokeswoman. "It gives recipients control over their money. And it gives them a paper accounting of their finances," which officials hope helps users budget wisely.

Maryland's 395,000 food stamp recipients can use the Independence Card at 1,800 automated teller machines in Maryland plus about 8,000 retail outlets, including grocery stores here and in communities just across the Washington, Pennsylvania, Delaware and West Virginia borders. Charges are deducted from a state account that holds the recipients' monthly allowances.

State officials cannot document the amount by which the system has cut fraud -- because, they say, they were unable to document the level of abuse in the old program.

And though any system can be defrauded, the electronic system "provides us with awesome tracking capabilities," Ms. West said. "We can disqualify clients and merchants. We have real evidence."

Bert Finkelstein, inspector general for the Human Resources Department, said that both his office and federal agencies can read computer records to track suspicious transactions. "If it's 10 o'clock at night and you see a $50 transaction at one outlet followed three minutes later by another $50 transaction followed by another $50 transaction, you can say, 'Hey, something might be wrong.'

"We knew fraud existed before. Now we can measure it."

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