Federal officials are reviewing new rules Kansas lawmakers approved that restrict poor families’ access to cash assistance.
“This is new territory,” said Liz Schott, a senior fellow with the Center on Budget and Policy Priorities in Washington, D.C. “I don’t know of any other state that’s done what Kansas is doing, and I don’t know that anybody knows what the feds will do.”
In April, Gov. Sam Brownback signed into law a bill that prevents families in the state’s Temporary Assistance for Needy Families program from using the program’s debit cards to withdraw more than $25 a day from an ATM.
Though administered by the state, TANF is federally funded and subject to federal regulations. The regulations require states to ensure that TANF families have “adequate access to their cash assistance” and the option of withdrawing cash “with no fee or charges.”
Alerted that the law could be too restrictive, the Legislature passed a modification that gives Kansas Department for Children and Families Secretary Phyllis Gilmore authority to adjust the ATM restriction to whatever the U.S. Department of Health and Human Services will allow.
“We are aware of the requirement,” said Theresa Freed, a DCF spokesperson. “The ATM limit is under review.”
Still, she said, DCF intends to enact the $25 limit on July 1 “unless we are directed otherwise.” Freed said she couldn’t predict when HHS might rule on the restriction.
“We’ve been in discussion with our federal partners,” she said. “It’s under review. We’ll follow any guidance that we receive.”
The consequences of enacting the $25 limit without first having HHS approval are unclear.
“It would make sense not to do this July 1 if they (DCF) don’t have to,” said Schott, who studies TANF policies. “But they can if they want to. States can take the first step.”
Though the federal regulations were enacted in 2012, she said, HHS has yet to define what constitutes “adequate access.”
“Bottom line: No one really knows what the feds are going to do,” Schott said. “But when you stop and think about it, limiting someone to withdrawals of $25 a day and having them pay 10 or 20 percent fees to access that $25 doesn’t sound ‘adequate.’ But, again, no one knows at this point.”
The new law does not stop TANF recipients from using the “cash back” debit card option when paying at, for example, Wal-Mart or a large grocery store.
Shannon Cotsoradis, CEO with the advocacy group Kansas Action for Children, said the “cash back” option might not meet the adequate-access threshold once it is defined.
“All this does, really, is expose poor families to unnecessary fees and add yet another hassle to their day-to-day lives,” Cotsoradis said. “We’re eroding what was already a very minimal benefit.”
According to DCF reports, the average monthly cash assistance for a TANF family in April was $111 per person, or $333 for single parent with two children.
The reports also show that over the last five years, the number of Kansas families enrolled in TANF has fallen by almost 60 percent, from 14,200 in March 2010 to 6,000 in April 2015.
Originally, the bill limited TANF recipients to withdrawals of $60 a day. During debate of the bill, the Senate approved an amendment to reduce the limit to $25. Lawmakers said the limit was needed to combat welfare fraud and abuse.
Marilyn Harp runs Kansas Legal Services, a government-funded legal aid program for low- and modest-income people. She said any limit on cash withdrawals could make it more difficult for low-income families to pay their rent.
“The biggest expenditure that the vast, vast majority of the people on TANF make each month is for housing, which is almost always due early in the month,” Harp said. “And the vast majority of the landlords who rent to low-income people are not in a position to take somebody’s (TANF) benefit card. They want cash or a money order.”