NewsOK: The state Department of Human Services is relying on the honor system to enforce a law prohibiting certain welfare funds from being used in casinos, liquor stores, tobacco shops and strip clubs.
The current setup doesn’t allow the department to block use of the money in these establishments, DHS spokeswoman Sheree Powell said, though the agency is working to remedy this situation through a new vendor contract.
Gov. Mary Fallin signed a measure into law in May 2013 prohibiting Temporary Assistance for Needy Families, or TANF, funds from being spent at casinos, liquor stores, tobacco shops and strip clubs. The law aims to ensure the federal funds are being spent productively by families who need it.
TANF is intended for children whose parent died or is incapacitated, absent or unemployed. Oklahoma distributed $20.3 million in TANF cash assistance in the 2013 fiscal year, with the average recipient receiving $1,546.
Powell said recipients can choose whether to have the funds deposited directly into their bank account or onto a state-issued debit card. One problem is the agency uses the debit cards for other types of cash payments, such as child support, foster care payments and adoption subsidies, which don’t have the same restrictions as TANF has now.
Powell added that the laws weren’t created in response to any widespread problems. “It was just something someone decided at a federal level that was an issue, and they wanted to try and enact change and many states ended up following suit,” she said.
But media organizations in other states have uncovered problems. A Los Angeles Times investigation in 2010 found that $1.8 million in TANF funds were withdrawn in casinos and $12,000 was accessed in strip clubs.
When asked for a list of locations where TANF funds were spent in Oklahoma, Powell said DHS doesn’t keep those records and the transactions are protected under Federal Reserve banking regulations. In California, the ATMs in casinos and strip clubs were able to be blocked from accepting state benefit cards after the withdrawal locations were publicized.
DHS has identified businesses where TANF funds are prohibited, using Oklahoma Tax Commission and state Secretary of State records, and sent them notice of the law and a photo of the debit card, Powell said.
“We’re relying on the businesses to honor our request to not use the card for those particular funds,” Powell said. But clerks can’t identify whether the funds on the card are TANF funds, or another form of aid such as child support.
When the contract is rebid, Powell said DHS will require the vendor provide a separate card for TANF funds, like they do now for food stamps.
Another loophole exists. Recipients can simply withdraw cash from an ATM using the card and spend it however they want. DHS doesn’t track the funds that are deposited into recipients’ bank accounts either.
Powell said DHS has been educating TANF clients on where their money can and can’t be spent. So far, the agency hasn’t received any reports of fraud.
Sen. Rob Standridge, R-Norman, who authored the legislation, said he didn’t expect such a delay in implementing the new cards. “However, we did put penalties in place for those knowingly using or accepting TANF benefits in these restricted establishments,” Standridge said. If a parent uses TANF funds in a prohibited business, their payments can be reduced and permanently revoked if violations continue.