MISSISSIPPI STATE -- A magnetic card system is revolutionizing the way the government distributes benefits to needy Americans.

By 2002, all states will distribute food stamp payments electronically. Electronic benefits transfer will phase out coupon books, and magnetic strip cards will be used instead.

Dr. Katherine Cason, an Extension program coordinator at Clemson University in South Carolina, said the federally mandated system is making benefits transfer more accurate and convenient.

"Electronic benefits transfer is a system that allows the user to authorize the transfer of their government benefits from their federal account to their retail account to pay for products in stores," Cason said.

Once the system is in place in Mississippi, it will affect food stamp recipients. According to figures released by the Department of Human Services, Division of Economic Assistance, almost 114,000 Mississippi households received food stamps in April. That number fluctuates monthly, but is dropping, having come down about 40 to 45 percent in the last few years.

"Many people are being affected by this most recent welfare reform," said Dr. Bo Beaulieu, director of the Southern Rural Development Center at Mississippi State University. "With Electronic Benefits Transfer, users will have a new, more efficient way of receiving their government assistance."

The card works as a debit card, deducting purchases from benefit totals. Users buy food at grocery stores and pay with the card in much the same way other consumers use credit or bank cards. Users must provide a personal identification number when purchasing with the card. At the time of purchase, the system will let consumers know how much credit they have left.

Electronic Benefits Transfer was mandated in 1996 by the Personal Responsibility and Work Opportunity Reconciliation Act. This welfare reform bill put a deadline on the change, but left it up to states to determine how to put the program in place.

Nine of the Southern region's 13 states and two territories already have the system or are in the process of expanding it across the state. Kentucky, Mississippi, Puerto Rico, Tennessee and Virginia are in various stages of preparation, and the Virgin Islands have not yet started.

All states soon will distribute government food benefits in this way, and some will provide other services such as Temporary Assistance for Needy Families, unemployment, Medicaid and more using the electronic cards.

The cards will eliminate much paperwork as benefits will be added to the card balances at a central location and then accessed at retail stores or automatic teller machines. Where TANF payments are included in the system, users will be able to withdraw the cash payments from an ATM machine rather than wait for a government check.

Cason said the system was established to reduce administrative costs of the welfare program. In South Carolina, use of the cards is saving more than $2 million a year in reduced mailings, paperwork and administrative costs, she said. There are other benefits, as well.

"The system is more efficient, and it reduces some of the stigma attached to using food stamp coupons," Cason said. "Retailers can benefit from these cards, as it would help speed the process at checkout."

Another benefit of the system can be found in the data the cards collect on individual users' purchases. Cason is currently working to collect this information and compile it with demographic information about the card holders.

"The data the grocery stores have tells me a lot about the food purchasing of this population. That information could help direct the food education programs we develop so we can teach how to buy healthy and nutritious foods," Cason said.

The SRDC, which operates in 13 Southern states and the two territories, has been instrumental in educating state leaders, policy makers and educators on the changes this part of welfare reform will bring to the states. A December 1998 Information Brief released by the Center gives greater detail on this topic and can be obtained by calling the Center at (662) 325-3207.