End to Food Stamps Called Success in S.D. : Welfare: Survey finds replacement of coupons with cash hasn’t led to undesirable buying habits.

Most people given cash instead of food stamps in a San Diego County experiment have not reduced their food purchases, a survey by the Department of Social Services shows.

The survey results undermine predictions that people receiving cash instead of food coupons would spend it on items such as alcohol and cigarettes that were not available under food stamp rules, or succumb to economic pressure and divert the cash to rent, medicine or other necessities, officials said.

The results show that the new program is working, “that people are not taking the cash and buying things other than what they would have gotten with food stamps,” said Joan Zinser, deputy director of the county’s Social Services Department. “And perhaps they have more options because they have more choices on where to spend their money.”

In an experiment being watched nationally, the county ended distribution of food stamps last September, replacing the vouchers with cash that, in many cases, is added to monthly welfare checks. About 56,000 households comprising 147,000 individuals receive an average of $99 monthly in food stamp money.

The pilot program, which followed a successful “food stamp cash-out” for 20% of the county’s recipients a year earlier, is an attempt by the social services department to eliminate the stigma felt by clients using food stamps and cut administrative costs.

Welfare officials say both goals are being achieved, apparently without a reduction in food purchases or increased spending on non-essentials and illegal drugs.

And the black market for food stamps, which involved selling the stamps for half their value to raise cash for drugs, has dried up, said Richard Jacobsen, Social Services Department director.

“I’m tickled to death,” Jacobsen said. “We got rid of these things. I thought they were demeaning, they were costly, they were prone to abuse.

“The food stores like” the cash, he added. “The checkout clerks don’t have to play cop.”

David Super, of the Food Research and Action Center in Washington, who had raised concerns that cash would be diverted, said that “if that information is representative of reality, that would be very encouraging.”

San Diego County Legal Aid attorney Carol Bracy, who, like Jacobsen, believes that fraud in the food stamp program was always minimal, also supports the cash-out program, noting that even clients who once sold coupons on the black market would be receiving more value now.

Zinser estimated that the department’s savings in postage, labor and other administrative costs since last September’s inauguration of the program will reach $1.4 million for the 10 months of fiscal 1991. The county will keep 25% of the savings, send 25% to the state and return 50% to the U.S. Department of Agriculture, which pays the $73.7-million annual cost of the county’s food stamp program.

Seeking further savings, the county is planning a pilot project next year to replace benefit checks in the Aid to Families With Dependent Children and Food Stamp programs with direct deposit of funds to recipients’ checking accounts. The project will involve 500 households.

Jacobsen and county officials say the four-year test of the food stamp cash-out could serve as a model for the federal Agriculture Department, producing substantial savings if adopted nationally. The concept is also being tested in Alabama and Washington state, and has previously been tried in Puerto Rico.

But a spokesman for the Agriculture Department said total conversion of the $15.5-billion food stamp program is not being contemplated.

“We wanted to try it and see how it would work,” Phil Shanholtzer said. “If it were wildly successful then, yes, it could be expanded into other areas.”

The Agriculture Department is conducting a major evaluation of San Diego’s food stamp experiment, the largest of the three tests. But, because the evaluation of 1989 data probably will not be finished until early next year, the county decided to distribute its own survey, Jacobsen said.

Jacobsen said that, even when the four-year test ends, the county will never go back to food stamps.

“They’ll take cash-out away from us over my dead body,” he said. “There is no way we will ever go back to distributing coupons.”

The Social Services Department’s survey, conducted at district offices in July, showed that 56% of 837 people responding were spending the same amount for food each month as when they were receiving coupons. Another 35% said they were spending more, and 9% said they were spending less.

Only 14% surveyed said they preferred coupons to cash, and only 23% did not favor the one-check-per-month system. In previous years, clients received two welfare checks monthly, plus a separate mailing of food coupons, if they were on both programs.

Zinser speculated that clients with cash instead of coupons have more options for purchases, such as farmer’s markets that did not accept food stamps. More control over budgeting may allow some to purchase more food, she said.

Eighty percent of respondents said they were able to budget their food stamp allotment for the month. It is not uncommon for some recipients to run short of funds for food near the end of the month, whether they receive coupons or cash, officials said. A part of the monthly AFDC checks is dedicated to food.

Food bank operators noted that they saw a rise in demand shortly after the cash-out experiment began. Jacobsen attributed that to the recession, not the program.

The state’s recent 4.4% cut in AFDC payments has tightened welfare recipients’ finances, but families on both food stamps and welfare received a slight increase in cash under the food program to compensate.