A growing number of states experimenting with welfare reform are replacing food stamps that must be spent on groceries with cash that recipients can spend as they choose.
Advocates for the poor worry about the trend they see in what is known as "cashing out" the food stamp program. They believe some parents will spend their food stamp money on rent, utilities or even drugs instead of groceries for their families. They also worry that cash-outs may diminish political support for a program that helps 27-million people buy food and pumps $22-billion a year into the economy.
But Andrew Hornsby, commissioner of the Alabama Department of Human Resources, says "people can be trusted to make proper shopping decisions."
States like cash-out. It eliminates food-stamp trafficking, cuts administrative costs and erases the stigma of shopping with paper coupons.
In recent months, the Clinton administration has given Wisconsin and Colorado permission to conduct cashing-out experiments. Oregon, Missouri, and Mississippi have applications pending at the Agriculture Department to try welfare demonstrations with cash-outs, and Alabama wants to continue its four-year experiment for another two years.
San Diego, New York state and Utah also are running cash-out experiments approved by prior administrations, and Minnesota begins one next month.
The research is mixed on how cash-outs have succeeded. Studies for the USDA found that cash-out families in Alabama spent just as much on food as those who received coupons, but cash recipients in San Diego spent 5 percent to 8 percent less on groceries. An Urban Institute study of Washington state's five-year demonstration, which ended in June, found that families receiving cash spent less on groceries and more on rent and transportation.