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IA: Welfare money flows to recipients without state oversight


DES MOINES — Iowa lawmakers and taxpayers have no way of knowing where and how welfare recipients spend roughly $100 million a year in federal and state money.

Federal banking laws prohibit state officials from obtaining transactions made on EBT — Electronic Benefit Transfer — cards  issued to welfare recipients, according to Roger Munns, spokesman for the Iowa Department of Human Services. The cards work much like a debit card and are issued to about 16,000 low-income families that receive benefits under the Family Investment Program. The state contracts with Xerox to manage the cards once officials determine an applicant’s eligibility.

Critics question the state’s assertion.

“I can’t imagine that the federal government would have a prohibition on the states keeping them from having that information when they are going to require next year that states put in place restrictions on where the money is used,” said Ken Bunting, executive director for the National Freedom of Information Coalition at the University of Missouri School of Journalism. “Those things don’t jive. They are totally inconsistent.”

Iowa Watchdog this week requested a month’s worth of transactions — including dates, locations and amounts — after news reports surfaced in other states of people using the cards or withdrawing money from ATMs at strip clubs, casinos and hookah lounges. The New York Post, for example, published a story Sunday that found dozens of withdrawals were made at ATMs inside porn shops, bars that had a history of violence and liquor stores.


A review by New Mexico Watchdog in November of transactions over a two-month period obtained through the Freedom of Information Act showed much of the same — money meant to help needy families obtain the essentials being used at stores selling booze, cigarettes and adult entertainment.

In an email, Munns said, “Recipients are entitled to use the benefits to pay rent, buy food, pay for childcare, or any other purposes … Banking laws prohibit the (sic) DHS from having information about how the money is spent.”

During a phone conversation Wednesday, Munns said his department can only urge Xerox to turn over records pertaining to the “cash-assistance” program.

“I’m guessing they will tell us to go fly a kite,” he said.

Federal lawmakers recently passed legislation in an effort to crack down on welfare purchases. Under the law, all states must prevent recipients from using cash benefits in liquor stores, gambling establishments and adult entertainment businesses by 2014. Those that fail to establish such policies risk losing federal funding.

Iowa officials estimate the Hawkeye State will receive $44.8 million in federal money for the program next fiscal year, representing just less than half of the total budget. The state expects to kick in just less than $47.9 million, with an additional $9.3 million coming from additional unidentified sources, according to a report from the Iowa Legislative Services Agency

LOSING TRACK: State leaders don’t track where welfare recipients use their EBT cards, which are loaded with taxpayer dollars.

LOSING TRACK: State leaders don’t track where welfare recipients use their EBT cards, which are loaded with taxpayer dollars.

The average family receiving benefits has a one-parent household with two children younger than 6. A family with two children must earn less than $361 a month – or $4,332 annually — to qualify. The average annual payment per person is $1,572, although many collect additional money through food stamps and receive health care through Medicaid, the report said.

States must track transactions to comply with the new federal rules that have already been passed, with states most likely having to implement them by this summer, Munns said.

“The odd part of this is it isn’t going to make a difference,” Munns said. “If someone wants to use government benefits inappropriately this won’t do anything to stop them. It’s a huge waste of time, but we don’t make the rules.”

Contact Sheena Dooley at dooley@iowawatchdog.org. Sheena Dooley is the Iowa bureau chief for Watchdog.org, where this story first appeared.

— Edited by John Trump at jtrump@watchdog.org

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