At Congress' behest, the Agriculture Department has issued a rule making it clear that the country's nearly 300 shelters for battered women and children may distribute food stamps to eligible residents. The rule was necessary because a 1977 law banned "institutions" from distributing food stamps to residents. Exceptions had already been made for drug and alcohol treatment centers. The new exception, which takes effect Thursday, will cost the program an estimated $2 million.
At the same time, USDA continues to worry about food stamp fraud, and hopes to reduce it by cutting back the number of firms authorized to turn the stamps into banks for cash. The rules, which take effect Jan. 28, revoke the licenses of all 2,300 wholesale food distributors, which each year redeem some $600 million in stamps passed on by retailers. (USDA says that, rather than costing them money, the rule will save these wholesalers time and effort; retailers will now pay for food with cash so wholesalers will be free of reporting requirements for firms handling food stamps.) A few wholesalers will be permitted to redeem food stamps they receive from drug treatment programs, group living arrangements and homes for battered women and children.