Texas Prospects Electronic Transfers For Welfare Benefits
AUSTIN, TEXAS — MANY Texans will soon carry a new piece of plastic.
The Oct. 1 debut of the Lone Star card in the Houston area marks the state's transition from food stamps and welfare checks to electronic benefits transfers. The EBT system will reach statewide by November 1995, delivering assistance worth $2.5 billion a year.
Once that happens, the new benefit-delivery system will reach 10 percent of the 11 million United States households receiving food stamps.
A federal task force is working to establish EBT systems nationwide by 1999. The systems will eventually deliver other aid, such as payments under the Women, Infants, and Children program.
One purpose is to increase efficiency of service. After applicants are approved for assistance, ``they can use their benefits at 12:01 a.m. the next day,'' says Robert Ambrosino, EBT project director at the Texas Department of Human Services.
Another is to hold down costs. Texas will pay Transactive Corporation of Austin around $230 million total to set up the EBT system and to operate it for seven years. That's the same as the current annual cost of distributing assistance, Mr. Ambrosino says.
Texas will save money, though, by avoiding future increases in postage and handling costs, he says. Eliminating food stamps will also relieve retailers and banks of the burden of counting them by hand. The food-stamp program in Texas is the nation's largest. The Houston branch of the Federal Reserve Bank shreds a half million used food stamps every day.
The Clinton administration has estimated that EBT will save $195 million a year when implemented nationwide. Printing food stamps, which are used once and then destroyed, costs US taxpayers $45 million a year. An estimated $111 billion in assistance could be delivered by a national EBT system.
Fraud detection is another incentive behind EBT. Food stamps are used as currency in the black market, where they have been used to buy drugs, guns, sex, cars, and even houses. Ambrosino says that an aid recipient who illegally trades food stamps for cash might receive half of their face value from a dishonest retailer, who then redeems the stamps for full value from the federal government.
EBT can help reduce fraud because transactions create an audit trail. On a daily basis Transactive will hunt among the 1 million transactions at 16,000 Texas retailers for anomalies that might indicate fraud.
Just what anomalies will pique auditors' interest the company won't say. Meanwhile, fraud-busting state agents will continue to make undercover visits to retailers.
The only statewide EBT system now operating is in Maryland, where the number of cardholders is equaled by Houston's welfare recipients alone. ``We will implement in one month [in Houston] what it took Maryland two years to do,'' Ambrosino says. Six other states operate EBT pilot programs.
Transactive will deploy video kiosks to train some 2.7 million Texans how to use the ATM-like cards. The video is available in English, Spanish, and sign language. No reading ability is required.