OK Plan for TANF Restrictions
The federal Middle Class Tax Relief and Job Creation Act of 2012 directs states to take measures to prevent access to TANF (Temporary Assistance to Needy Families) funds at liquor stores, casinos, and adult entertainment facilities and to report those measures by February 2014.
Oklahoma Senate Bill 667, effective July 1, 2013, broadened the federal prohibition to include debit cards and electronic benefit transfer cards that contain state or federal funds from programs including, but not limited to, TANF. This law prohibits use of these funds at:
- Liquor stores
- Casinos and gaming establishments
- Retail establishments which provide adult-oriented entertainment in which performers disrobe or perform in an unclothed state for entertainment
- Retail establishments whose principal business is selling cigarettes, cigars or tobacco products
This legislation has tasked the Oklahoma Department of Human Services (DHS) with implementing and enforcing a law involving private businesses over which the agency has no regulatory or enforcement authority. The only penalties included in the Oklahoma law are against TANF recipients. State legislators declined to include in the law a prohibition against these businesses from accepting state-issued cards or any penalties. Had the law put the enforcement responsibility on the prohibited businesses, the implementation of the law would have been much faster and would have been less costly for taxpayers.
Despite these challenges, DHS has worked diligently to fulfill this responsibility in a fiscally responsible manner. Learning from other states’ experiences, the agency has incorporated what works best using a phased-in approach. For example, because these laws became effective in the middle of an existing contract period with the state card processor, Xerox, DHS chose not to immediately make extensive system changes estimated to cost in excess of a million dollars.
Instead, DHS started with voluntary cooperation of the businesses, education of TANF clients, and manual monitoring of the restricted locations. The current DHS contract with Xerox to process benefit transactions expires on September 10, 2015. The new contract with Xerox in 2015 will include a line of MasterCard branded debit cards that are restricted by vendor type and a line of cards that are unrestricted. This will enable the blocking of the restricted cards at prohibited locations.
Although DHS was able to avoid more costly changes by negotiating new contract provisions, this solution will still be expensive as it involves manual and electronic monitoring and programming by the state card processor. Early estimates are that it may cost DHS $10,000 more a month for these services.
To restrict the use of TANF cards far more cheaply and without spending more taxpayer dollars for vendor services, DHS will continue to advocate for a law preventing the prohibited businesses from accepting cards with TANF funds. Liquor stores, bars, casinos and adult entertainment clubs already are required to turn away minors and face penalties if they do not. Refusing to swipe a TANF card should be no different.
Some of the information in this document was obtained from the eGovernment Payments Council, “Restricting Access to TANF Funds at Specific Merchant Locations: The experience of State EBT Directors in restricting benefits”, and the Xerox Corporation white paper “Restricting TANF Benefit Use”.
ABOUT THE EGOVERNMENT PAYMENTS COUNCIL
The eGovernment Payments Council is an association of public and private sector professionals involved in the design, development and operation of payment systems that deliver government benefits or payments to consumers.
The mission of eGPC is to inspire and promote business practices favorable to the adoption of government-driven electronic payment systems. It does this through collaboration, cooperation and inclusion in its meetings, teleconferences, white papers, task forces and an annual conference.
The eGPC is a service of the Electronic Funds Transfer Association, the nation’s leading inter-industry professional association promoting the adoption of electronic payment systems and commerce.