Iowa lawmakers stall on measure to track welfare spending

DES MOINES – A bill to limit the use of Iowa welfare dollars at strip clubs, bars and casinos stalled Wednesday when members of the Iowa House approved an amended version they then returned to the Iowa Senate.

With the Legislative session winding down, House members spent more than four hours debating the bill, which sets the budget for the Iowa Department of Human Services, among other things. Lawmakers attached the measure to limit the use of welfare dollars to the appropriations bill after both senators and house members failed to pass bills out of committee.

During their debate, state representatives didn’t once bring up the new federal requirements, despite Iowa’s inability to comply with federal regulations that are set to take effect Jan. 1. If Iowa fails to comply, it risks losing $6.6 million in federal funds for the program, which would have to be offset by either state funds or program cuts, according to the new requirements.

NOT YET: Iowa lawmakers have yet to pass legislation putting the state in compliance with new federal rules regarding welfare spending.

When asked how the state would offset the potential loss of funds, one lawmaker said it wouldn’t happen.

“I’m not sure what you are asking,” Republican Rep. Linda Miller, who chairs the House Human Resources Committee told Iowa Watchdog. “We are going to pass the legislation.”

Iowa is one of 19 states with legislation pending regarding the change in federal rules that require them to adopt measures that prevent the misuse dollars doled out to families through the federal Temporary Assistance for Needy Families.

Specifically, states must begin to track transactions on the debit cards issued to welfare recipients to prevent the use of taxpayer dollars at strip clubs, casinos, bars and liquor stores.

Similar measures in another at least three states, including New Mexico, Tennessee, Virginia, failed to gain legislative approval. Another 13 states already have enacted legislation. Of those, only five carry penalties for failing to comply with the restrictions, according to figures from the National Conference of State Legislatures. 

NCSL is a “bipartisan organization that serves the legislators and staffs of the nation’s 50 states, its commonwealths and territories,” and “provides research, technical assistance and opportunities for policymakers to exchange ideas on the most pressing state issues,” according to its website.

Iowa’s proposed legislation provides a vague plan to comply with federal regulations that officials currently don’t track. Roger Munns, spokesman for the Iowa Department of Human Services, has said the state doesn’t have access to the transactions made with state-issued debit cards because of federal banking privacy laws.

Iowa contracts with Xerox at no cost to manage the program. State officials don’t track transactions, nor do they provide any oversight of the roughly $100 million in state and federal taxpayer dollars that they hand over to Xerox each year, according to Munns.

Additionally, Iowa Attorney General Tom Miller told Iowa Watchdog in letter last month that it’s not the state’s job to oversee the program and, therefore, the transactions are not public information.

None of those issues are addressed in the legislation. A ranking Republican lawmaker who was the floor manager for the bill said it’s the department’s job to flesh out the details, although others disagree.

“Administrative rules will hammer out how it works,” Miller said. “DHS will get guidance from … the Feds on how to implement.”

Republican Sen. Brad Zaun, of Des Moines, said he has requested a meeting with Charles Palmer, head of the Iowa Department of Human Services, after learning of the state’s lax oversight of the program through Iowa Watchdog reports. Zaun said it he had just assumed the department was monitoring and overseeing the program to ensure dollars are spent appropriately.

He declined to comment Wednesday, saying he wasn’t prepared to talk about the issue.

The legislation before state lawmakers will allow Iowa officials to begin the rule-making process once they receive guidance from the federal government, Munns said.

“Pending federal rules will inform states about what actions are required or are optional,” Munns wrote in an email. “We anticipate the rules will permit states to make unlawful the use of a FIP (Family Investment Program) card to be a condition of eligibility. The proposed legislation also authorizes the department to take additional measure as may be required by the pending federal regulations.”

Iowa Watchdog requested in January a month’s worth of transactions, including the date, location and amount. The state has refused to provide the information, which they say they don’t have and isn’t public information.

Watchdog.org received transaction information in other states including Kansas, New Mexico and Pennsylvania. A review of the data in those states showed multiple transactions at strip clubs, bars, casinos and liquor stores. Investigations in other states turned up similar findings, prompting the federal legislation.

Iowa’s proposed plan lacks teeth and fails to address the state’s alleged lack of access to the information, according to state documents. It also doesn’t include consequences for those who violate it. However, the bill makes the misuse of welfare dollars a fraudulent act.

Munns did not respond to questions regarding what criminal charges, if any, a recipient would face if they were found in violation of the law.

The matter now will go before a conference committee before the Senate votes on the amendments to the bill. It’s unclear when the matter will come up for a final vote.

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