Stamping out crime?

Small-time food stamp fraud dwarfed by state's problems.

The one who calls himself O'Malley can usually be seen on the crowded corners and in the dark bars of First Avenue handing over cash for food stamps. He is old and bent and street smart.

"It's usually two for one," says O'Malley, a familiar figure around the Pike Place Market. "Forty bucks in stamps for $20, say."

Two-for-one is the standard rate for Jack, as well. But "I've gotten $80 worth of stamps for $20." Like O'Malley, Jack scours downtown bars for state food stamp recipients in need of cash. As he told us a while back, he sees himself as a do-gooder:

"Ninety percent of [stamp sellers] buy drugs, I'd guess. But is that a food stamp problem or a drug problem? One way or another they're going to get the money for their fix. Maybe I'm keeping people out of your house at night."

Of course, O'Malley and Jack reap some benefits: "Once I went into the Ballard Market and got $300 worth of groceries on food stamps," Jack recalled. "My actual cost was $100—what I paid for the stamps."

Such trades of course are fraud and stick taxpayers with the cost of giving stamps to those who don't need or deserve them. But that may be slowly coming to an end as the state issues new plastic debit-card food stamps.

In April, the Department of Social and Health Services began a test run of the new card system in seven southwestern Washington counties. Recipients can swipe the magnetic-striped cards through supermarket checkout machines, then punch in a personal ID number.

If the Electronic Benefits-Transfer System pilot run works as planned, DSHS by November will issue cards to all 400,000 state food stamp recipients. There's no hurry, though. Under federal mandate, the system does not have to be ready until October 2002.

But with that resolved, state government can concentrate on its real food stamp problem: itself.

Last year, by errantly giving some food stamp recipients too much aid while wrongly shortchanging others, Washington state's $400 million stamp program earned the title of most mistake-prone in the country.

The system-wide error rate of 14.8 percent was well above the national average of 9.9 percent. Officials blamed it on their big, cranky state computers which they say are now doing better. But they're still sorting out all those fouled-up benefits—$46 million in overpayments and another $11 million not paid to deserving recipients. Some could get bonuses while others may see offsetting reductions.

The state has promised to pay a negotiated $5.6 million penalty to the US if it can't fix the problems. DSHS assistant secretary Liz Dunbar says the fine will be waived altogether if Washington meets or beats the average US error rate this and next year. However, just last week the US said that while Washington's error rate had dropped to fourth highest, it was still around 15 percent.

When its hoped-for electronic fixes do take place and the new debit system gets to cruising along, the state is confident it will finally be getting its food stamp program under control.

Still, when we stopped O'Malley the other day and told him the supposedly bad news, his ruddy, lined face lit up.

"Their solution is plastic cards and government computers?" he said. "Well, kiss my Irish ass. With the foul-ups that'll generate, I'll have to take on a partner!"

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