New Mexico’s welfare recipients can use their federally funded cash assistance cards to buy items or get money from ATMs almost anywhere – including bars, liquor stores and strip clubs.
But the federal government is cracking down on where benefits can be spent or accessed, and New Mexico must get on board or be penalized.
The state Human Services Department will ask the Legislature in 2013 to pass a bill mirroring the restrictions approved by Congress this year: no transactions at liquor stores or bars, casinos or other gambling establishments, or strip clubs.
“This is a subject where Democrats and Republicans alike … have said we need to fight fraud, waste and abuse in our public assistance programs,” said Human Services spokesman Matt Kennicott.
But advocates for the poor say the scope of the problem is overstated. They want to be sure that any new law won’t make it harder for recipients – especially those in rural areas, where transportation is a challenge and ATMs are limited – to access their benefits.
The state must comply with the federal mandate by early 2014 or risk losing $5.5 million a year in federal funds.
New Mexico is already ahead of the game in one respect: There are some restrictions on the use of ATMs in casinos. But those may need to be broadened, according to HSD.
New Mexicans can qualify for cash help for up to 60 months from the Temporary Assistance for Needy Families program if they’re poor, have dependent children and meet other guidelines. They’re paid their benefits on electronic benefit transfer, or EBT, cards.
The program aided 16,636 households in October, according to HSD. A family of four, for example, that has income of less than $1,633 a month could qualify for $459 a month.
The EBT cards function like debit cards; they can be used at ATMs to withdraw money, or can be used to make purchases directly.
Unlike the federal food assistance program, there are no restrictions on where the cash assistance can be withdrawn or how the money can be spent.
“TANF cash assistance should be used for things like housing, utilities, clothing costs – really, your necessities to live, other than food,” Kennicott said.
Help with food comes from a separate source, the much bigger federal Supplemental Nutrition Assistance Program, or SNAP – formerly called the “food stamp” program.
Nearly 190,000 New Mexico households are getting SNAP; another 7,200 get both TANF and SNAP, according to the Human Services Department.
SNAP benefits also go on an EBT card; those who get both TANF and SNAP get one card, programmed for both. But SNAP has restrictions: There’s no cash back, for example, and you can’t buy alcohol, cigarettes, vitamins, hot food or nonfood items such as soap and paper products.
“We know that the people who are getting TANF benefits are some of the poorest families in New Mexico – and, of course, what they’re spending it on is basic necessities,” said Craig Acorn, a lawyer at the New Mexico Center on Law and Poverty.
Source of controversy
It’s the use of EBT cards in the TANF program that got some members of Congress exercised, after media reports in several states.
In California, the Los Angeles Times reported that more than $1.8 million in TANF funds were withdrawn at casinos from October 2009 to May 2010 – although that amount was less than 1 percent of welfare spending during that period, the newspaper said.
Advocacy groups for low-income people argue there’s no evidence that the problem is widespread, no data to show how much of the money withdrawn at a gambling site or a liquor store is actually spent on gambling or liquor.
Welfare recipients could be using casino ATMs because they work there as waiters or janitors, or using liquor-store ATMs because they’re the closest to where they live, they suggest.
The Federal Funds Information for States, which tracks federal budget and spending information, reported in February that the few states that have studied EBT transactions at the now-prohibited establishments found they accounted for fewer than one-10th of 1 percent of TANF transactions.
New Mexico doesn’t have similar statistics; The Human Services Department doesn’t routinely monitor where the thousands of daily EBT transactions occur.
However, the New Mexico Watchdog – operated by the conservative Rio Grande Foundation – recently published reports by writer Jim Scarantino on its website of its review of about 200,000 EBT transactions, largely from November and December 2011.
It said the “vast majority” of transactions “do not raise any suspicions,” with large volumes of purchases at Walmart, grocery stores and discount clothing retailers, and a large volume of cash withdrawals at convenience stores. But a “significant number” appeared to be questionable, the report said.
The Watchdog cited “frequent” cash withdrawals and/or purchases at Albuquerque liquor stores, and withdrawals and/or purchases at bars in Albuquerque and elsewhere. It also cited withdrawals at the Alamogordo VFW, a Moose Lodge in Las Cruces, an Albuquerque strip club, Hooters in Albuquerque and Las Cruces, and smoke shops.
According to Kennicott of Human Services, once restrictions on cash-assistance transactions are adopted in New Mexico, the department would provide its EBT administrator – JPMorgan Chase – with a list of locations at which to block access to ATMs and “point-of-sale” terminals, where customers pay.
Human Services doesn’t know how many sites that would be; it first has to figure out where all of them are.
New Mexico plans
The Human Services Department does not want to restrict access “to the point where people who live in rural and frontier areas cannot access their safety net benefits,” Kennicott said.
Under state-tribal gambling compacts, ATMs at Indian casinos in New Mexico are supposed to be programmed to block access by TANF EBT cards. And at racetracks and fraternal clubs, state law prohibits ATMs from being located in the rooms with slot machines.
According to Human Services, gambling-related restrictions will have to be broadened under the new federal rules – for example, it would include ATMs at bingo halls and preclude TANF access to ATMs anywhere at tracks or fraternal clubs, since the federal law refers to a “gaming establishment.”
— This article appeared on page A1 of the Albuquerque Journal