The Oklahoma Department of Human Services faces several challenges in enforcing a 2013 law that prohibits Temporary Assistance for Needy Families funds from being used in casinos, liquor stores, tobacco shops and strip clubs. DHS spokeswoman Sheree Powell said currently the agency depends on the honor system to stop the use of public assistance funds in these establishments. “We’re doing the best we can with the federal and state laws that have passed,” Powell said.
TANF funds are to be spent on children whose parent has died or is incapacitated, absent or unemployed. In fiscal 2013, Oklahoma distributed $20.3 million in TANF cash assistance at an average of $1,546 per recipient.
Powell said recipients can choose whether to have the funds deposited directly into their bank account or onto a state-issued debit card. She added that the Oklahoma law was not 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.
However, investigative reports have indicated specific cases of fraud. In 2010 the Los Angeles Times found that $1.8 million in TANF funds were withdrawn in casinos and $12,000 was accessed in strip clubs. 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.
But Oklahoma does not keep such records and those transactions are protected under Federal Reserve banking regulations, Powell said. However, DHS identified businesses where TANF funds are prohibited, using Oklahoma Tax Commission and state Secretary of State records, and sent them notice of the law plus 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.
One problem is that the debit cards also are used for other forms of welfare assistance, such as child support. That makes it difficult for clerks to identify whether the funds on the card strictly are TANF funds. Powell said when the contract is rebid next year, DHS will require the vendor to provide a separate card for TANF funds, like they do now for food stamps. Currently, Xerox is contracted to manage the cards.
Another loophole is that recipients simply may withdraw cash from an ATM using the card and spend it in any way. DHS also does not track funds that are deposited into recipients’ bank accounts.
Powell said DHS has been educating TANF clients on where they can and cannot spend the funds. To date, she said, the agency has not received any reports of fraud. Recipients have been informed that if a parent uses TANF funds in a prohibited business, the payments may be reduced and permanently revoked if violations continue.
