
                         THE VIRGINIAN-PILOT
                 Copyright (c) 1994, Landmark Communications, Inc.

DATE: THURSDAY, June 2, 1994                    TAG: 9406020476 
SECTION: FRONT                     PAGE: A9    EDITION: FINAL  
SOURCE: THE WASHINGTON POST 
DATELINE: 940602                                 LENGTH: WASHINGTON

BENEFITS SYSTEMS HEADING TOWARD CASHLESS AUTOMATION \

{LEAD} Welfare recipients, unemployed workers and military pensioners have moved closer to joining the cashless society as Vice President Gore announced plans for a new nationwide system of delivering federal and state benefits electronically.

In five years, Gore said, the governments will be delivering more than $111 billion in benefits annually to recipients through electronic transfers, with recipients using magnetically encoded ``benefit security cards'' to make transactions at bank automatic teller machines and to receive food stamp credit when buying groceries.

{REST} The new system, one of the ``reinventing government'' proposals in Gore's National Performance Review last year, will save up to $195 million a year in paperwork and greatly reduce fraud and theft of benefit checks, the vice president said Tuesday.

Pilot electronic transfer programs for food stamp distribution will be gradually expanded from the few states already involved to cover Aid to Families With Dependent Children, the main state-federal welfare program, Veterans Affairs compensation, military pensions, civil service retirement programs, Supplemental Security Income, unemployment insurance and other benefit programs.

An electronic benefits task force, headed by Elizabeth Sawhill, associate director for human resources at the Office of Management and Budget, is working with the Southern Alliance of States to develop the first federal-state prototype of the new benefits system.

Gore said thousands of automatic teller machines and supermarkets across the country will be linked to federal and state agencies by commercial computer networks so that by 1999 food stamps and paper checks will be virtually eliminated in most government benefit programs.

The vice president said bank executives had expressed support for the program because it will give them opportunities to add new customers.

He said recipients of 12 programs who receive $31 million a year in benefits but do not have bank accounts would still be able to withdraw cash benefits through automatic teller machines by using the benefits card and a personal identification number.

Agriculture Secretary Mike Espy, who joined Gore in a news conference to announce the plan, said his department spends $75 million a year printing and distributing $22 billion worth of food stamps and $22 billion more to retrieve and destroy the used coupons and reconcile them. He said welfare recipients still would not be able to purchase excluded items such as alcohol with food stamp credit because the computer automatically would reject such purchases.

The Consumers Union, however, criticized the plan, calling it a ``disaster for public assistance recipients'' and accusing the government of ``bowing'' to banks seeking to make more profits and state governments wanting to cut administrative costs.

Michelle Meier, counsel for the union, said welfare recipients not only will have to pay a withdrawal fee for each automatic teller machine transaction, but will be exempted from regulations that require other consumers to bear only a portion of the loss when funds are stolen from their account.

by CNB