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Iowa Watchdog

Iowa puts restrictions on welfare dollar use; enforcement measures unclear


DES MOINES – Leaders of the Iowa Department of Human Services will prohibit welfare recipients from using their benefits at strip clubs and casinos and other locations, though they have no way to enforce the new rules.

Officials have drafted proposed rules for how they plan to comply with a new federal law requiring the state to prevent welfare dollars from being spent at bars, liquor stores and the like, officials confirmed this week. But they are remain mum on how they will monitor spending, given their claim that they don’t have access to transaction details because of federal banking privacy laws.

When asked by Iowa Watchdog how they will enforce the rules, officials said they couldn’t publicly comment on the rules until they publicly posted.

Iowa set to unveil new restrictions on the use of welfare dollars but remain quiet on enforcement plans.

Iowa set to unveil new restrictions on the use of welfare dollars but remain quiet on enforcement plans.

“We have to release the rules to the public all at one time,” said Tiffany Vasey, policy team lead for the Department of Human Services. “Until those are published, we can’t comment on them.”

That, however, didn’t stop Vasey from detailing other parts of the plan in an email to Iowa Watchdog.

She said the drafted rules prohibit welfare recipients from “using their Electronic Access Card (EAC) at liquor stores, casinos, and adult-entertainment venues in which performers disrobe or perform in an unclothed state.”

Participants who use their cards at those spots are considered to have committed a fraudulent act and must repay the amount accessed, under the proposed rules. The household also is subject to an ineligibility period.

The state’s plan will be posted for public input Sept. 4 and will include “limited additional details,” Vasey said.

Iowa contracts with Xerox to provide debit cards to more than 90 percent of those who qualify for welfare benefits under Iowa’s Family Investment Program. State officials say they can’t access any information pertaining to transactions from Xerox because of federal law.

The office of Iowa Attorney General Tom Miller wrote in a letter to Iowa Watchdog earlier this year that it wasn’t the Department of Human Services’ job to oversee how the money was spent because it wasn’t considered a government function.

That means the state has no check on what Xerox does with the more than $100 million they receive from the state or if there is fraudulent activity happening in the program.

Iowa Watchdog requested in December a month’s worth of transactions, including when and where the transactions took place, as well as how much was spent or withdrawn. It did not request personal information of recipients. The state denied the request. has obtained similar data in other states, including New Mexico, Kansas and Pennsylvania. The information uncovered numerous transactions and withdrawals at liquor stores, bars, strip clubs and casinos. Media in other states, such as New York, turned up similar findings, which prompted the federal legislation.

States that fail to comply risk losing 5 percent of their federal funding for the program. In Iowa, that amounts to more than $6 million.

Contact Sheena Dooley at Sheena Dooley is the Iowa bureau chief for, where this story first appeared.

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