RETAILERS APPLAUD TEXAS WIC PILOT

MICHAEL GARRY

AUSTIN, Texas - A pilot program in Texas that has enabled thousands of recipients of a federal nutrition-assistance program to pay for designated food products using a chip-based smart card is being touted as a viable model for a national rollout.

WIC - a federal grant program aimed at supporting the nutritional needs of low-income women, infants and children - currently uses a cumbersome paper-based voucher system to distribute benefits for targeted products such as milk, cheese and infant formula. An effort by the Food & Nutrition Service, Washington, a division of the U.S. Department of Agriculture, to switch WIC to a card-based electronic benefits transfer (EBT) system, comparable to the system now used nationally for food stamp benefits, has so far resulted in only eight state-based pilots.

Joe Williams, vice president of regulatory and member services for the Texas Retailers Association here, contends that Texas, which is working with New Mexico, has already proved the viability of a WIC EBT system through a year-old pilot in El Paso and Hudspeth counties that was expanded last October to Grayson County and in February to Collin County.

"Our study is in. We know the cost/benefit analysis on the pilot," he said last month at FMI's Electronic Payment Systems Conference in San Diego and reiterated to SN last week. "We have close to 200 retailers and 50,000 families, and have paid out $35 million in claims. There's a cost savings for grocers, states and the federal government."

Among the retailers in Texas participating in the WIC program are Kroger, Safeway, Wal-Mart Stores, Target, Brookshire Bros., Rice Epicurean Markets and Gerland's Food Fair.

The Texas system is available to any other state, Williams noted. "They don't have to go through the cost of development and implementation. They can just pick up where Texas and New Mexico are at." Williams has had discussions with other states about the Texas system, he said. The Food & Nutrition Service, he added, should support Texas' system as a national WIC EBT system.

But FNS said it is sticking to its five-year plan for WIC EBT that includes support for smart-card and magnetic-stripe card pilots. "By the end of fiscal year 2008, FNS hopes to identify national models that are technically and financially feasible," said Suanne Buggy, public affairs specialist at FNS.

Texas next plans to pilot the WIC EBT system elsewhere in West Texas in June, followed by the Texas Panhandle in September. But then the program will be put on hold for a year while the state beefs up the security of the system by switching from a file-based chip card to a Java-based card, Williams explained. That will be followed by a year-long rollout to the rest of the state.

One retailer who attested to the Texas WIC pilot at the Electronic Payment Systems Conference was Gary Huddleston, director of administration for Kroger's Southwest Division, Irving, Texas. Among the advantages of a smart card over a paper voucher system, he said, was that it took only two days to be reimbursed by the state compared with 45 to 60 days.

Jennifer Hatcher, director, government relations, Food Marketing Institute, Washington, acknowledged the Texas WIC program's potential but stopped short of endorsing it. "When they get a full caseload in pilot, it will be a big test."

While Texas and several other states have piloted an "offline" smart-card WIC system, Washington and Michigan are testing an alternative "online" mag-stripe card system, similar to what most states use in food-stamp EBT programs. Washington's test ended in November while Michigan's is getting a new contractor in June that will resume the test in October. FMI has declined to endorse either model until the results are fully evaluated, said Hatcher.

Williams said Texas opted for a smart card because the chip can hold other data in addition to WIC benefits, including Medicaid, child support and other benefits.

Among other smart-card tests, only Wyoming has a statewide system, encompassing both WIC and food stamp benefits. Smart-card systems have also been tested in New England, Ohio and Nevada.

Some state pilots have been terminated in the past year. Most recently, in January, a multi-state program earmarked for six New England states ended due to concerns about state resources. Last June, a pilot in Dayton, Ohio, was cut off, also because of cost issues.

The Texas/New Mexico test is also notable for the fact that at most retailers the WIC process is integrated into the existing POS system, in contrast to the "stand-beside" smart-card terminal format in Wyoming.

Also on the WIC front, FNS is working to develop a national database of products eligible for WIC coverage that would support state agency operations as well as participating retailers.