By Paul Brennan | Iowa Watchdog
DES MOINES, Iowa — Iowa has a new strategy for preventing welfare recipients from using their electronic benefit transfer cards in liquor stores, casinos and strip clubs — sending a letter to the welfare recipients telling them not to do it.
The strategy actually is an improvement over what the state had been doing, which was nothing.
Until February, Iowa’s Family Investment Program had no restrictions on how the cash assistance it paid out could be spent or where its EBT cash cards could be used. Because there were no restrictions, FIP’s parent, the Iowa Department of Human Services, never bothered to track EBT card transactions.
The Family Investment Program receives almost half its funds from the federal government’s Temporary Assistance for Needy Families program. A 2012 federal law requires states taking federal dollars to take actions to prevent EBT cards from being used in liquor stores, casinos and “any retail establishment which provides adult-oriented entertainment in which performers disrobe.”
So while there are still no state restrictions on how and where welfare dollars can be spent, it’s now illegal to use an EBT card in such establishments.
States had until Feb. 22 to report to the U.S. Department of Health and Human Services on the steps taken to keep EBT cards from being used in the now prohibited locations.
IDHS waited until Feb. 17 to inform the federal government it intended to do the bare minimum to comply with the federal law.
It was left up to each state to determine what constitutes “a reasonable interpretation for purposes of complying with the federal law,” IDHS spokeswoman Amy Lorentzen McCoy told Iowa Watchdog.
“In the event that (HHS) determines the report Iowa submitted is insufficient in this area, or if final federal regulations require additional or other monitoring, Iowa will make any necessary adjustments,” McCoy said.
The state of Washington chose to have establishments that only serve those 18 or older alter their ATMs and point-of-sale machines so the devices no longer accept its welfare program’s EBT cards.
Connecticut now has the company it hired to administer the EBT card transactions of its welfare program track those transactions and identify any that occur at prohibited locations.
Iowa chose to send out letters to FIP participants alerting them to the change and that language regarding the new restrictions has been added to IDHS’s printed material for the program.
There will be no monitoring of EBT card activity, even though Xerox, the company IDHS uses to administer its EBT cards, boasts of how easily searchable its data is.
Should a welfare recipient use an EBT card at a prohibited location, the state Health and Human Services Department will refer the matter to the Iowa Department of Inspections and Appeals for an investigation.
Should Inspection and Appeals determine a violation of the law has occurred, the guilty party will have to repay the amount spent and also may face a temporary suspension of welfare benefits.
The report IDHS filed with HHS defends the state’s very minimal approach of just informing welfare recipients of where they are no longer able to use EBT cards. It states:
“Put simply, placing responsibility on the TANF recipient is reasonably expected to have the same net effect in terms of preventing an individual from using their cash assistance benefits for inappropriate purposes as other policies and practices a state may implement at considerable more cost and effort and Congress did not require States do more than this.”
It will be up HHS to determine whether Iowa is doing enough, but there is no fixed date by which HHS must make that determination.
Contact Paul Brennan at [email protected]