EBT Restrictions Stigmatize Struggling Families

Feb 17, 2012

By Catlin Nchako and Elizabeth Lower-Basch 

As part of the payroll tax bill passed today, Congress extended the Temporary Assistance for Needy Families (TANF) block grant through the end of the fiscal year (September 30, 2012).  The TANF program was scheduled for reauthorization in 2010, but Congress has not taken it up, instead passing a series of short-term extensions. The bill passed by Congress did include one policy change, however.

Did the bill increase the TANF block grant, which has not been adjusted for inflation since it was created in 1996?  No, it did not.  Did the bill restore the TANF supplemental grants, which provided additional funding to 17 states with historically low grants per poor child or rising population? No, it did not.  Did it require states to raise their benefit levels, which were less than half of the poverty line in every state in the U.S in 2011?  No it did not. 

Instead, the bill requires states to implement rules to make sure that TANF recipients cannot access their benefits by withdrawing funds from ATMs or point-of-sale devices located at liquor stores, casinos and strip clubs. States that neglect to do so within a two-year period would risk losing a share of TANF funds. 

This new provision is part of a growing trend of policies that stigmatize struggling families. They hinge on the stereotype of welfare recipients as vice-ridden and wasteful spenders of taxpayer money. The idea that TANF recipients are using their cash benefits on gambling sprees or drinking them away may make for sensational headlines but is not based on facts.  A parent may withdraw funds to pay her rent at an ATM located in a liquor store simply because it is the lowest-cost or most convenient ATM. 

The bill did include one helpful provision that CLASP and our partner organizations urged be included. States must revise their TANF plans when they implement this requirement, and when they do so, they must also describe how they will ensure that recipients of assistance have adequate access to their benefits, including opportunities to access funds without fees or surcharges.

Welfare recipients typically are allowed a limited number of no-fee cash withdrawals at an ATM:  one per month in states such as Missouri and South Carolina, three in Maryland and New Jersey, four in California and Minnesota.  The fees subsequently charged after these no-fee withdrawals vary by state, from as little as 40 cents per cash withdrawal in Kansas and New Jersey to as much as $1.75 per withdrawal in Mississippi. In at least five states, fees are charged from the first withdrawal.  In addition, welfare recipients are typically charged a surcharge on top of any fee, as much as $4 or $5 per transaction, if they use an ATM that is not part of the network that operates the EBT system. Recipients may also be charged fees for balance inquiries.

Given that the maximum monthly benefit for a family of three is just $428 a month in the median state - and less than $300 a month in 14 states, this can add up to a significant tax on the lowest income families. Now that this bill is law, states should implement these rules in a way that minimizes the burden on families that are struggling to make ends meet during tough economic times, and allows them to access their funds without traveling large distances or paying fees that eat into their already tight budgets. 


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