In 2010, Goodwills provided services to nearly 160,000 people who received Temporary Assistance for Needy Families (TANF), and received over 112,000 referrals from TANF agencies. With the number of families living in poverty at an all-time high, Goodwill actively seeks opportunities to educate Congress and the public about our programs that assist this vulnerable population.
To extend the TANF program through September 30, 2012, Congress passed the Middle Class Tax Relief and Job Creation Act on February 17; it was signed into law by President Obama on February 22. The TANF extension does not make broad changes, but two new provisions were added.
Following the lead set by several state legislators, the law now prohibits Electronic Benefit Transfer (EBT) cards from being used in liquor stores, casinos and adult entertainment venues. States will have to adopt and implement policies meeting the requirements to be spelled out by HHS, or risk losing federal funds. States face a five percent cut in their annual TANF funding for failure to create policies within two years.
Reports of TANF EBT Fund Misuse
Supporters of the new provision cite several news accounts and investigations highlighting abuses of EBT funds. For example, an investigation conducted by the Los Angeles Times last year found that $1.8 million in TANF funds were withdrawn in casinos. Governor Arnold Schwarzenegger than issued an executive order urging officials to crack down on fraud and requiring TANF beneficiaries to promise to use funds only to “meet the basic subsistence needs” of their families.
Probes in Atlanta discovered $150,000 in TANF benefits was accessed in liquor stores and nightclubs, while a report in Michigan found more than $87,000 had been withdrawn from a Detroit casino over a 12-month period. Representative Dave Camp (R-MI), Chairman of the House Ways and Means Committee cited these examples among others when proposing the change to the law.
Opposition to TANF EBT Provision
Advocacy groups on behalf of low-income individuals state that the new restrictions further stigmatize TANF recipients and are unnecessary for struggling families. Funds that may be used to pay rent may be withdrawn at a local liquor store because it is the closest or lowest-cost ATM available to some TANF recipients.
The Federal Funds Information for States has reported that few states have studied the use of EBT cards at the venues in question and those that have studied this have found less than 0.1 percent of TANF transactions had occurred at these locations. Some states have also expressed concern with the costs of keeping up with new requirements including identifying the ATMs and keeping updated records.
Congress has tasked the Government Accountability Office with examining the TANF program and whether it is vulnerable to fraud, waste and abuse. The report is expected to be released in May or June and will look at 10 states, where TANF benefits are accesses and type of retailers. The report will likely assist with Congressional efforts to reauthorize the program when it expires at the end of September.
Additionally, the bill now requires the Department of Health and Human Services (HHS) to set data exchanges, likely a useful improvement in the quality and usability of TANF information. The creation of the data exchanges will occur through the regulatory process.