This week, the Administration for Children and Families (ACF) at the U.S. Department of Health and Human Services issued a “program instruction” to state agencies operating Temporary Assistance for Needy Families (TANF) programs. It provides first-ever guidance on the important requirement that states ensure clients have free or low-cost access to their benefits. In a 2014 joint paper from CLASP, the California Reinvestment Coalition (CRC), and the Asset Building Program at the New America Foundation, we addressed this issue and highlighted best practices for electronic benefit transfer (EBT) payment cards used to deliver TANF benefits.  

Among the key points raised in the new guidance are:

• States should maximize the flexibility for recipients to access cash withdrawals, including allowing clients to have benefits direct deposited into their own bank accounts.  Direct deposit to a consumer’s bank account often confers significant advantages, including access to a wider ATM network, the ability to pay bills and make purchases online, and a mechanism for saving and participating in the financial mainstream, which can be particularly helpful once the household has transitioned off of TANF. 
• States should minimize or eliminate restrictions on the frequency or number of cash withdrawals and the amount that a recipient may withdraw at any one time. The guidance is clear that provisions such as Kansas’ proposal to limit recipients to $25 withdrawals a day are disallowed because they would “prevent a needy TANF family from having adequate access to its cash assistance and impose an additional burden by requiring multiple trips to an ATM to access assistance.”
• States should strive to minimize or eliminate withdrawal fees and ATM surcharges for TANF recipients, and must provide recipients an opportunity to access assistance with no fees or charges. While most states already provide a limited number of free withdrawals each month, others charge fees starting with the first transaction.  States can also limit the surcharges that clients experience by contracting with a network having a large number of ATMs. For example, California recently announced a new EBT contract that, starting in 2017, will allow TANF recipients to withdraw cash and check their balance without surcharges at Bank of America and NYCE network ATMs statewide.
• States should maximize geographic distribution of ATMs and/or provide other cash access points so clients do not have to travel excessive distances—sometimes requiring significant expense and time—in order to access their benefits without surcharges.

In a CRC study, parents receiving TANF described the impacts of ATM fees: “Being on assistance means we need financial help and every cent matters. Paying fees to withdraw money takes away from the money our families need.” In this guidance, ACF commits to reviewing state TANF plans to ensure that they are addressing these issues.  All states should review their policies and contracts to ensure that TANF benefits are helping needy families, and not being diverted to bank fees and that they are not otherwise creating unnecessary hurdles to accessing benefits.