Loopholes remain in new tighter welfare rules
By Neal P. Goswami
VERMONT PRESS BUREAU | September 21,2013
MONTPELIER — Under federal pressure, state officials are prohibiting welfare recipients from using their benefit debit cards in liquor stores, casinos and strip clubs. But the new rules won’t keep beneficiaries from withdrawing cash from an ATM and spending it anywhere they choose.
Reach Up, part of the federal Temporary Assistance for Needy Families program, provides beneficiaries a direct cash deposit to their bank accounts or to a state-issued electronic benefits transfer card.
The Legislature’s Administrative Rules Committee approved the state Agency of Human Services’ proposed rule changes Thursday for the Reach Up program, which provides cash assistance for basic needs and services to families with children.
Heidi Moreau, a policy analyst for the Department for Children and Families, said the state is seeking to implement the changes as a result of the federal Middle Class Tax Relief and Job Creation Act enacted in February 2012.
The original aid program for families placed no restrictions on how or where beneficiaries spend the money, according to Moreau. But Congress included new restrictions in last year’s legislation that states must now implement.
Under the new rules, EBT cards cannot be accepted at retail locations that exclusively or primarily sell alcoholic beverages, at casinos or gaming establishments, or at retail establishments where performers disrobe or perform in an unclothed state for entertainment.
According to the new law, states must implement the new restrictions by February or face a 5 percent penalty in the block grants they receive for the program.
The state could write its own, more restrictive rules concerning the use of Reach Up benefits as long as recipients are still able to access money with minimal fees or charges, Moreau said. Any additional restrictions would have to be approved by the Legislature before the department could implement them, she said.
Moreau said the rules changes approved Thursday make Vermont compliant with federal law.
However, the new rules are unlikely to prevent beneficiaries from spending their state assistance cash on alcohol or other vices. An EBT card can be used at ATMs to withdraw cash that can be spent anywhere.
“In theory, they can use an ATM at an unrestricted location and withdraw cash,” Moreau said.
Additionally, the state has no regulatory authority over businesses to enforce the new restrictions. Enforcement is up to individual businesses for the most part.
“If they’re aware that it’s a prohibited purchase they can report it,” Moreau said.
A national working group is looking into restricting prohibited sales on point of sale machines, Moreau said. However, there is currently no system in place, she said.
If a prohibited transaction is discovered, the beneficiary who made the purchase must reimburse the state for the amount of assistance used in the transaction.
Because of the enforcement issues and loopholes in the new restrictions, Moreau said additional changes to the program are likely. The federal government is expected to issue its own set of rules, she said.
“If our rule ends up being inconsistent with the general regulations, then we would have to reconcile them,” she said.