Feds to states: Don't privatize food stamps

AAS 12/01/09
Feds to states: Don't privatize food stamps
U.S. officials point to problems in Texas, Indiana.

Six years after Texas embarked on an ambitious social services outsourcing project that hit major problems, the federal agency in charge of food stamps is warning states against such efforts.

"These projects encountered severe problems in meeting critical performance standards and many eligible (food stamp) applicants have suffered as a result," says a Nov. 20 letter from the U.S. Department of Agriculture to the states. "We do not support furtherance of such projects, and believe that they put public funds and our clientele at risk."

The warning comes as the food stamp program is experiencing a recession-related surge across the country — and as Texas is negotiating a new contract with a private company that is already handling some aspects of enrollment. State officials said they don't expect the contract to be affected.

The message from federal officials to the states: We know these are tough times, but privatization isn't the answer.
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Texas in 2005 hired a group of companies led by Accenture LLP to run call centers enrolling Texans in programs such as food stamps and Medicaid. But the project, which stemmed from the 2003 legislation, hit training and technology problems — call center workers couldn't answer applicants' questions, and applicants got letters saying they hadn't submitted required paperwork, even though they had.

AAS 11/29/09
Texas slow to offer unemployment recipients a free alternative to debit cards

In August 2007, Texas became one of a growing number of states to distribute unemployment benefits by debit cards, making the mailing of paper checks a thing of the past.

Since then, the number of Texans receiving unemployment — 558,174 in October, a sixfold increase — has soared. So, presumably, have the bank fees earned by JPMorgan Chase, whose debit cards are now the only way Texans can get their unemployment benefits.

Consumer advocates are not happy about some debit card fees, and the U.S. Department of Labor wants states to provide an alternative guaranteed to cost those who are out of work nothing: direct deposit of their unemployment checks into their own banks. Texas has yet to do so.

"It's a disgrace," said Don Baylor, a policy analyst with the Center for Public Policy Priorities, a nonprofit group that advocates for low-income Texans.

Of the 32 states that now issue jobless benefits by debit card, only Texas does not offer direct deposit, paper checks or an automated system that lets recipients transfer benefits to their own bank accounts. These options are free to recipients, while debit cards incur fees if not used carefully.