Texas Plans to Transfer Welfare Benefits Through Bank-Style Cards

Texas plans to begin providing welfare benefits electronically this year with bank-style cards that take the place of paper coupons.

The new system is designed to reduce administrative expenses, fraud and theft.

“While the rest of the country is still talking about welfare reform, Texas is implementing it,” state Comptroller John Sharp said Thursday.

The program, called electronic benefits transfer, is slated to begin in two counties this fall and be expanded statewide by 1996.

Under the Texas program, people who receive food stamps and Aid to Families With Dependent Children will be given a “Lone Star Card” instead.

The card works much like a bank debit card.

In a grocery store checkout line, for example, the new card will be processed through a computer terminal, the cardholder will enter a four-digit personal identification number, and the cost of the items being purchased will be deducted from the cardholder’s food stamp account.

The cards will eliminate the costs of printing, warehousing and mailing coupons. And with no paper coupons to steal, incidents of theft should decline dramatically, Sharp said.

The program also is aimed at discouraging fraud.

“No cash will change hands,” said Andy Welch, a spokesman for the comptroller’s office. Under the current system, Welch said, change from food stamp purchases is sometimes given in cash, which then can be used to purchase alcohol, cigarettes or other non-food items.

The card system will debit only the purchase of food items.

Officials said that once the system is implemented statewide, cards will be provided for some 2.7 million needy Texans. By 1996, the state plans to have 16,000 retailers lined up to participate.

The plan still needs final approval from the U.S. Departments of Agriculture and Health and Human Services.

The Agriculture Department has established federal regulations for electronic benefits transfer programs.

Three other states--Minnesota, New Mexico and Delaware--have tried pilot programs, but Texas is the first state to attempt to implement a program statewide.

“The Lone Star Card will make food stamp coupons obsolete,” Sharp said.