EBT still popular with grocers and food stamp shoppers: a look at Reading, Pennsylvania – electronic benefit transfer
The large red-and-white signs in the windows of DeCarlo’s Meat Market in Reading, Pennsylvania, advertise that chicken breasts, Lebanon bologna, pork chops, and bananas are on sale through the rest of the week.
Augusta Woodall likes shopping at the store on Penn Street not only because of the specials, and because it’s close to her home, but also because she can use her plastic food stamp card there.
As she pushes her cart along the clean aisles leading to the check-out lanes, Woodall reaches into her purse and pulls out a small brown plastic envelope. She explains that it’s a protective case for her food stamp card. The card has her photograph on it and a magnetic stripe that contains information needed to access her food stamp account.
The cashier, in a brown smock with “DeCarlo’s” embroidered on it, rings up the items Woodall can purchase with her assistance card and pulls the card through a telephone terminal device. The terminal is part of the nuts and bolts of an automated system called electronic benefit transfer or, more commonly, EBT.
When Woodall enters her special four-digit code on a keypad, the network accesses a central file at the Pennsylvania Department of Public Welfare in Harrisburg. The system checks Woodall’s benefit total, deducts the amount of her food purchase, and immediately credits the store’s EBT account. The deposit will be posted the next business day.
The transaction goes smoothly and quickly. Woodall tucks her receipt, which shows the purchase amount plus the remaining balance, into her benefit card folder.
The 68-year-old food stamp participant used to use paper food coupons until about 6 years ago when Reading was selected to participate in a trial run of the electronic system.
She says she didn’t have any problems the first time she used the card because staff at the Berks County Assistance Office had shown her movies on how it would work. She says she prefers the plastic card because with it she doesn’t have to worry about losing a handful of food stamps.
Outside behind the sparkling white store, owner Frank DeCarlo rolls up his shirtsleeves and starts to unload a truck full of geraniums, marigolds, and other flowering plants. He doesn’t know where he’s going to put them all–the stockroom is packed with canned goods and other nonperishables.
While storage space is a problem at the popular family business, EBT has eliminated some other headaches that used to be part of daily life.
No more counting
piles of stamps
Before EBT, when all of his food stamp customers paid with paper coupons instead of the plastic cards, DeCarlo had to count and bundle piles of food stamps and take them to an area bank. Sometimes it took as long as a week to be reimbursed.
While a few shoppers still pay with paper food coupons–most of them from neighboring locations that do not have EBT–the large majority of his food stamp customers use the automated system. DeCarlo’s clerks process about 1,000 electronic food stamp transactions in a month. The turnaround of dollars to the store’s account occurs within 24 to 48 hours after each business day.
DeCarlo agrees with Woodall that there’s no comparison between using the old system and the card. In addition to liking how quickly and easily he gets paid for the food he sells, he likes the photo identification required because it means added security for his customers. And, he favors not giving cash change for food stamp purchases. The electronic system figures the sale to the penny.
Woodall and DeCarlo aren’t the only two people in Reading who appreciate the ease, simplicity, and speed of the electronic system. According to a study done by Abt Associates of Cambridge, Massachusetts, nearly three-fourths of the recipients and retailers surveyed liked the benefit card more than paper coupons.
A first for the Food
While Reading’s EBT system practically operates itself, setting it up was a complex process. It took a lot of planning, careful coordination, and some trial and error.
The system was the first of its kind for the Food Stamp Program, and it was often “back to the drawing board” before the bugs were worked out.
Now state operated, Reading’s EBT system began as a federal demonstration project. Work on it got underway in July 1983 when USDA’s Food and Nutrition Service hired Planning Research Corporation (PRC) of McLean, Virginia, to develop, implement, and operate an electronic funds transfer and point-of-sale system.
The company selected an area of Reading, within four central zip code locations, that fit USDA’s very specific requirements. For 7 months, PRC worked closely with federal, state, and local level food stamp staff as well as representatives of retailer groups, community organizations, and financial institutions to develop a working prototype of an EBT system that would satisfy everyone.
Gary Rightmire, executive director of the Berks County Assistance Office, says this close working relationship was one of the most important contributors to the new system’s success.
“We spent a lot of time with advocacy groups, explaining the system and, in some instances, demonstrating what would happen,” says Rightmire. “People are often offended by change. The immediate challenge was to gain acceptance in the community for using this new type of technology.”
PRC and county employees devoted many hours to developing training materials for food stamp recipients and retailers. They wrote the script for and starred in an easy-to-follow 15-minute video that is still being used as a training tool. They also held special training sessions for recipients with mental, emotional, or physical handicaps.
All of the various hardware and software components had to work together, too, and as could be expected, there were times when human error and equipment failures caused problems.
“The slow response time and down-time that are typical for a new system created frustration,” says Rightmire. “There were frayed nerves on all sides. But it actually gave us an opportunity to understand everyone’s perspective better. “During the rough times, we learned to be patient with each other and to better manage crisis. Retailers learned to have faith that there would be good crisis management.”
Once local agency staff encoded the benefit cards, which cost about $2 each to produce, the system was tested. Some adjustments were needed, but within a short time, the Reading project was set to go.
Soon were serving
By October 1984, more than 2,500 food stamp households within a 5-mile radius of Reading were phased into the system and approximately 125 retail outlets were equipped to serve them. By the end of January 1985, another 1,000 households were added.
Because of its wide acceptance by recipients, grocers, banks, and government agencies, the EBT operation was extended as a federal demonstration project through March 1986.
By an agreement with USDA, Pennsylvania’s Department of Public Welfare chose to keep running the card system beyond that time despite the costs, which were nine times more per participating household per month than the normal coupon system (including the $2.3 million start-up cost).
However, federal and state officials believed that certain changes–such as redesigning the EBT computer program to operate as part of the state agency’s computer network and serving more households–would bring costs down.
The state completed the transition by April 1988 with relatively few problems. “It was not extensive work,” says Jerry Friedman, Deputy Secretary of the state’s Office of Income Maintenance. “The major effort involved converting the database.”
Under the redesigned system, Pennsylvania and USDA share operating costs up to a specified limit, and Pennsylvania pays any additional costs.
Switching to a state-operated system has been helpful in a number of ways.
“Moving the EBT file from small processing units to a much larger single one tremendously improved response time and almost eliminated account problems,” says Gary Rightmire. “That change has really increased the system’s credibility in the eyes of the retail community.”
As project coordinators had hoped, costs have gone down. The cost of using the EBT system to provide benefits to a participating household ranges from $5 to $9 per month, depending on actual expenditures.
State officials think that figure will be reduced within the next 2 years. During this time, they hope to expand EBT to the rest of Berks County, add four western counties, and include AFDC (Aid to Families with Dependent Children) payments. They also would like to piggyback on existing point-of-sale terminals at stores to keep equipment purchase costs to a minimum.
For anyone contemplating starting an electronic benefit assistance system, the seasoned federal, state, and county staff say to really think it out thoroughly. Also, they say:
* Keep reasonable expectations because it’s a massive undertaking. It’s easy for planners to get misled.
* Prepare the community for the change–keep retailers and advocacy groups well informed. This is helpful in avoiding resistance to the new way of doing business.
* And, bring the various partners of the project into balance in terms of cost sharing. If the project is to go forward, negotiate seriously about balancing out the costs.
Reading’s EBT system–which now serves members of more than 5,300 households–has proved to be enormously popular with everyone involved.
Grocers like the added security and faster reimbursement possible with EBT. Recipients go through fewer steps to get their benefits. Government agencies spend less time on paperwork and battling problems caused by lost or stolen food stamps. And street trafficking in food stamps has virtually been eliminated. What began as an idea has developed into a reliable system that delivers more than $800,000 in benefits each month.
“In all my years in public service, and that’s more than 20, EBT has been one of the few projects I’ve seen that everyone likes,” says Friedman. “It’s because of their happiness with the project that we decided to keep it.”
For more information, contact: Jerry Friedman, Deputy Secretary Office of Income Maintenance Department of Public Welfare P.O. Box 2675 Harrisburg, Pennsylvania 17105-2675 Telephone: (717) 783-3063
COPYRIGHT 1991 U.S. Government Printing Office
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