Georgia’s Reaction to Reports of Welfare Waste Poses Administrative Nightmare

This week the General Assembly began considering House Bill 138 (HB 138), legislation designed to discourage the misuse of cash benefits under the Temporary Assistance for Needy Families (TANF) program. Though seemingly well-intentioned, the bill could present a huge logistical challenge for retailers, all in an attempt to remedy a problem that may not be widespread.  

Georgia receives $331 million in federal funds through the TANF program to help low-income families become financially independent through four broad objectives: providing temporary cash assistance to help families stay together, promoting job preparation, work and marriage, preventing out-of-wedlock pregnancies and encouraging two-parent families.  Georgia allocates $51 million of its federal TANF funds to cash assistance, while supplementing that with $100,000 in state funds.

The roughly 19,000 families who receive TANF “cash” assistance receive that benefit through an Electronic Benefit Transfer (EBT) card.  The EBT card can be used at many grocery stores and retailers, as well as at ATMs.

The U.S. Congress passed the Welfare Integrity and Data Improvement Act in 2012 on the heels of media reports of TANF recipients accessing cash or conducting EBT transactions at liquor stores, casinos, and adult entertainment venues. The law requires states that accept TANF funds to “maintain policies and practices as necessary” to prevent TANF cash assistance from being used in any electronic transaction in liquor stores, casinos, and adult entertainment venues.  States are required to institute these preventive policies and practices by February 2014, or risk losing up to 5 percent of their total TANF grant.

Georgia’s legislative response is HB 138. The bill would include some of the existing restrictions on the use of TANF funds for adult entertainment, gambling, and alcohol, as well as require more mechanisms for enforcing these restrictions. The bill also mandates operators of liquor stores and adult entertainment venues prevent access to TANF cash assistance through EBT transactions in their establishments. 

The proposed law, however, exceeds federal requirements for increasing welfare integrity. It forbids TANF recipients from using cash assistance to purchase the following products or services from any retailer: lottery tickets, tobacco products, pornographic materials, firearms and ammunition, vacation services, tattoos or body piercings, jewelry, salon services, gambling, gift cards, or payment to any government entity for fines, fees, bail, or bail bonds. The bill also mandates that retailers not accept cash assistance for these products and services, whether or not a TANF EBT card is used.  This essentially burdens retailers with speculating about the source of cash that is used to buy items on the prohibited list.

The new law would enforce its restrictions by: (1) establishing a toll-free telephone number and a website to receive reports of suspected violations; (2) requiring retailers to post signs listing the restrictions at each cash register; and (3) mandating that the Georgia Department of Human Services monitor reports of cash misuse and refer those to investigators within the department. Retail establishments and recipients who violate the restrictions would be subject to sanctions and penalties by the department.

We can all agree that TANF cash benefits should be used only to meet the most basic needs of a family living in poverty (including rent, transportation, child care, work-appropriate clothing). However, this bill has some serious structural problems.

Most importantly, retailers are asked not to accept cash assistance for the purchase of certain products and services.  To comply with this provision, retailers would presumably need to question the source of any cash presented to them, for fear that the cash is public assistance.  Not only does this pose an administrative nightmare, this questioning would likely be applied unevenly, depending on the individual retailer. 

As the TANF bill is considered by the General Assembly, policymakers should carefully consider the implications for enforcement at the retail point of sale. 

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