After a string of news stories highlighting that some public benefits recipients were accessing their benefits through ATMs located in places such as casinos, strip clubs, and liquor stores, states began taking action. As stories of misuse became more widespread, lawmakers in nine states, including Arizona, California, Colorado, Indiana, Missouri, and Washington, placed restrictions on where Temporary Assistance for Needy Families (TANF) benefits can be accessed, and twenty-two other states, such as Michigan, have introduced similar legislation.
Yet, in the midst of this media frenzy, facts were omitted and, while there have been some incidences of impropriety, the majority of public benefit recipients are not abusing the system. According to a survey by the Federal Funds Information for States (FFIS), the use of welfare electronic benefits at bars and casinos constitutes less than 0.1 percent of TANF transactions. Thus, while California was quick to put restrictions on TANF benefits when news stories highlighted cases of beneficiaries using their benefits at adult entertainment clubs, in fact less than one tenth of one percent of California’s TANF ATM withdrawals occurred at adult entertainment business. Similarly, Colorado, which also placed restrictions on access to TANF benefits, incurred only three tenths of one percent ATM access from casinos.
Despite the lack of evidence of widespread abuse, Congress took action this past December with the introduction of H.R. 3630. This bill included provisions, which were supported by a group of House Republicans led by Rep. David Camp (R-MI), to block the use of TANF benefits at various locations and for certain products such as alcoholic beverages, tobacco, lottery tickets etc. These provisions, which ultimately became part of the Middle Class Tax Relief and Job Creation Act of 2012, were signed into law this past February by President Obama.
The final law requires states to prevent the use of TANF assistance in electronic benefit transactions (EBT) at specific locations. In particular, states must prevent TANF funds from being used for any EBT transaction in any liquor store, casino, gambling casino or gaming establishment, or any retail establishment that provides adult-oriented entertainment in which performers disrobe. An EBT transaction is defined as the “use of a credit or debit card services, automated teller machines, point-of-sale terminal, or access to an online system for the withdrawal of funds or the processing of a payment for merchandise or a service.” Failure of states to comply with the new provisions will result in a 5% cut in their annual TANF funding. "This means that states could incur substantial costs to address an issue that does not appear to be a widespread problem," according to FFIS.
Although sections of the law aim to reduce fees for accessing TANF benefits, which is a good thing, the prohibitions on where TANF funds can be accessed perpetuate negative stigmatism of pubic benefit recipients. Not only does the evidence not support the view that public benefit recipients are using public aid on liquor, gambling, and adult entertainment, there are legitimate reasons why individuals may access their benefits in these locations. For example, in many low-income areas there are no bank branches, thus residents have limited choices in where they can access their TANF benefits. Often, the nearest ATM is in a liquor store. Banning withdrawals at these locations will impose barriers to TANF access on many individuals.
It is therefore vitally important that individuals and organizations provide their comments to OFA, as it develops the regulations, on how to minimize these barriers. At the same time, advocates should talk with legislators to explain the facts and encourage them to repeal these restrictions.
To submit your comments please click here. The deadline for submission is June 11th, 2012.