Program Gives Cash for Coupons

SAN Diego County, one of the first to pioneer ``workfare'' for welfare recipients, is now trying another reform that enthusiasts say could become a national model but critics say has flaws. The idea: Give food-stamp recipients cash instead of coupons.

Proponents believe it will save the government money, boost the self-esteem of the poor, and reduce fraud. But skeptics worry that by giving out cash instead of coupons some of it will be spent on items other than food.

One who likes the idea is Diane Brancaccio. A single parent and mother of two, she used to go to the corner convenience store and see Wonder bread on sale for 49 cents or see chili marked down at the local K-mart.

But she rarely bought the items because the stores did not accept food stamps. Now, with cash instead of coupons, she can shop anywhere she wants.

``I still use the money for food,'' she says. ``I can just get it without being rejected.''

The new policy, an expansion of an earlier pilot project, got under way in September when the county started sending all 46,000 households in the area that receive food stamps checks instead of coupons.

Officials anticipate the move will save $600,000 in administrative costs at the state, county, and federal levels between now and next July. Most of that will come in reduced printing and handling charges. Mailing the bulky coupon books alone was a big expense. The county will also close stamp storage facilities and cancel armored transport service.

Although this represents only a fraction of the county's $67 million annual food-stamp budget, officials contend that any savings in an era when welfare costs are rising and government revenues shrinking is significant.

Administrators also expect to reduce certain kinds of fraud. Some food stamps that were sent out were lost or stolen. A few recipients would sell the coupons for cash. While little could be done to stop this, with a check, they can cancel payment.

A chief reason for the move, though, was to alleviate the stigma that many welfare recipients feel as they fumble through coupon books in the grocery store while customers look on.

``It can be very humiliating,'' says Richard Jacobsen, director of the county Department of Social Services.

San Diego is not the first to trade coupons for currency. A pilot project is also under way in Alabama, which, like the experiment here, is being closely watched by the US Department of Agriculture (USDA), the agency that administers the federal food-stamp program.

Washington state has instituted the practice in some locations as part of a broader welfare reform package. Minnesota is moving toward it. Some elderly have been receiving cash instead of food stamps for years. Puerto Rican residents have, too.

The San Diego and Alabama experiments, though, are of particular interest to USDA officials because of the diverse and varied populations involved. If the $16 billion federal food-stamp program is ever to move toward cash, officials would want to know as much as possible about the effects.

``I think the big question is whether the money that is intended to go for food is still going for food,'' says Bonny O'Neil, assistant deputy administrator for the federal food-stamp program.

Some don't see the idea ever going very far. Politicians, they argue, will not support a program in which money earmarked for milk and eggs could be spent on liquor and lottery tickets.

(Food stamps can be used only for food, and not for non-essential items such as beer and cigarettes, though policing those who trade them for money is difficult.)

There is also concern that, if the poor receive cash instead of coupons, landlords may raise their rent.

``I think it is an idea fraught with dangers,'' says David Super of the Food Research and Action Center, a Washington, D.C., advocacy group.

However, officials in this community, who have heard all the arguments before, believe the poor can - and should - be trusted to make their own decisions with money.

But at least one single mother, Annette White, has qualms about the program. She says she finds it easier to budget the money she would spend each month on food using coupons rather than cash.

``If the cash is in my purse,'' says Ms. White, ``there is always going to be something we want to spend it on - and it may not be food.''

Her teenage daughter, Christine, prefers the money. Christine is often the one who goes to the store and buys the groceries, and says she feels embarrassed using food stamps.

``She says, `we are people now - we are not a charity case,' '' says White.