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PAN Amendments Take Effect Sept. 1

About 400 out of 4,000 retailers have sent applications; advertising campaign planned to educate the public


July 19, 2001
Copyright © 2001 CARIBBEAN BUSINESS. All Rights Reserved.

Only 10% of the island’s eligible retainers are ready to participate in the federally subsidized Nutritional Assistance Program (PAN by its Spanish acronym).

That’s the number of retailers who have applied to and been certified by the local Family Socioeconomic Development Administration (Adsef by its Spanish acronym) ready to participate in PAN by the time the recently enacted amendments to the program go into effect on Sept. 1.

"Some 400 retailers of an estimated 4,000 have sent applications, but we expect the number to significantly increase as Sept. 1 approaches," said Orlando Gonzalez, Adsef administrator. "We are advising food retailers islandwide about the amendment and the certification. The Food Marketing Industry & Distribution Association (MIDA) has been doing a great job educating retailers as well."

Starting Sept. 1, PAN beneficiaries will have to use at least 75% of the funds on food items. The PAN program, the third largest federal program on the island after Social Security and Medicare, allows the needy to buy food.

Adsef must certify the retailers that can participate in the 75%-food part of the program. Under the Department of the Family umbrella, Adsef implements the PAN and Electronic Benefits Transfer (EBT) programs. EBT is an electronic system that allows recipients to authorize transfer of their government benefits from a federal account to an individual debit account to pay for products purchased.

Adsef will have a booth with computers and necessary equipment to certify stores at the MIDA convention this weekend at the Hyatt Regency Cerromar Beach (See MIDA Supplement in this issue) and at the United Retailers Association convention on July 27-29 at the same hotel. Gonzalez also told CARIBBEAN BUSINESS that a full-fledged advertising campaign starts next week with ads in television, radio, and print to educate the public about the program’s amendments.

To qualify for the 75% of the program, half of a retail store’s total sales must be on staple food items (foods considered essential such as milk and bread). Retail stores with less than 50% sales in staple food items can also qualify if half of their food sales are in staple goods. For instance, a retail store that sells 30% of its total sales in staple food items can qualify if 15% of those 30% food sales are in staple food items for consumption off premises. "Our interest is to benefit the program’s participants. I believe it’s been structured so both small and large businesses will have equal opportunity," Gonzalez said. Beneficiaries can use the 25% of the program funds to buy any type of desired products.

Participating stores need to have point of sale (POS) equipment to process debit transactions. The POS equipment is connected to bank networks such as Banco Popular A Toda Hora and Banco Santander’s Unicard. The POS system requires a dedicated telephone line, a personal identification (PIN) number pad, a printer, and a processor.

Cost is estimated about $40 for each station.

PAN funds to Puerto Rico, which are estimated $1.3 billion in fiscal year 2001, are distributed among 429,000 families via EBT debit cards. Other federal funds that will also be distributed through debit card include U.S.D.A. Food Program for Women, Children, and Infants, and unemployment. PAN cardholders will have two accounts in the debit card (think checking and savings account): the 75% PAN funds and another account that will include the 25% portion of the PAN funds and any other federal benefit program that applies.

Unlike the U.S. mainland, where food stamp program benefits are restricted to food, Puerto Rico asked to receive PAN benefits in a block grant in 1984, instead of food stamps. Puerto Rico’s block grant doesn’t impose restrictions on the use of its funds. Only since the introduction of EBT have any restrictions on the expenditure been established.

MIDA, as well as members of Congress, including Rep. Bob Goodlatte (R-Va.), were concerned that the use of PAN funds in Puerto Rico could jeopardize or alter the block grant. Last year MIDA sponsored a study conducted by Deloitte & Touche that revealed 58% of PAN benefits are used to purchase food products and 38% is spent on non-food items.

U.S. Congress traditionally authorizes the PAN program for Puerto Rico as a block grant every five years. The last approved block grant ends in September 2002.

Fernando Bonilla, vice president of Pueblo Supermarkets and member of the MIDA EBT committee said it is crucial for the amended PAN program to start Sept. 1. "There is no program authorized after Sept. 2002," he said. "It is important to demonstrate that measures have been taken to assure the legitimate use of the PAN funds in order to assure a smooth reauthorization of the program by Congress."

This Caribbean Business article appears courtesy of Casiano Communications.
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