Audit: Changes, Clarifications Needed in Lone Star Card Program

By JUAN B. ELIZONDO Jr. / Associated Press

AUSTIN - Despite a rocky start, the state's program for distributing welfare benefits electronically is working well, according to a new state audit.

Retailers and program participants criticized the Lone Star Card program when it began about a year ago for delayed benefits and for communications problems with the electronic system.

But the state audit released Tuesday says the system now is "effectively providing government benefits."

Auditors added, though, that the system needs changes, including clearer instructions for retailers when the electronic system isn't working.

The Lone Star Card looks like a debit card. The more than 1 million Texans who get assistance from the Aid to Families with Dependent Children program and other welfare benefits have accounts on the system. Grocery purchases and withdrawals are deducted from the accounts as they would be from traditional bank accounts.

The system is run by Austin-based Transactive Corp., a subsidiary of the controversial GTECH Corp. that runs the state's lottery system.

Jessica Shahin, a spokeswoman for the Texas Department of Human Services, said there were problems when the system first started.

"Ninety-nine percent of transactions run electronically" now, she said. "We run $3.6 billion through the system at 99 percent. We want 100 percent."

Ms. Shahin said DHS withheld some payments from Transactive during the program's start-up to force to company to get the system in better shape. She said Transactive responded and is doing a better job.

She hadn't seen the audit and could not comment on its recommendations.

Marc Palazzo said the problems that arose when the system first opened have been resolved.

"You have to put into context the size of this program and look at the record. Fraud has been reduced, over 250,000 people have been reduced from the rolls, retail sales are up and the system has saved taxpayers money," he said. "The overall of this program is a documented success."

But the audit said retailers still don't have a clear process to follow when the electronic system is not available.

Palazzo said the company continues to educate retailers on what to do when the system is off line.

According to DHS officials, retailers can manually authorize $50 worth of purchases when the system is down if they get permission from Transactive. If they can't reach the company, they can authorize only $25 in purchases.