April 8 2014

Missouri Taxpayers Fund Out-of-State Welfare

National Review

Jillian Kay Melchior

Missouri taxpayers are fronting the cost of welfare benefits for recipients who may not even live in the state, a recent audit suggested. State legislators are considering legislation to curb such long-term out-of-state usage, but the proposals may also open up potential for new abuses.

Missouri taxpayers cover 19 percent of the cost of Temporary Assistance for Needy Families (TANF) benefits, cash benefits that are distributed on an electronic benefits transaction (EBT) card alongside Supplemental Assistance for Needy Families (SNAP) benefits.

In December 2013, the state auditor reported 366 instances where welfare beneficiaries had received Missouri EBT cards but had accessed their cumulative $461,000 in benefits exclusively out-of-state for three months or more. These included one beneficiary who accessed $1,191 over 153 days spent in the Virgin Islands.

Legislation proposed in Missouri would suspend benefits for any recipient who goes more than 90 days without making a single in-state transaction, terminating them for anyone found to no longer be a resident.

David Stokes, director of local government policy at the Show-Me Institute, a Missouri free-market think tank, says such legislation would make sense, especially in light of the December audit.

“It’s imperative that, in order to make sure that the people who truly need help in Missouri get the help that they need, the state does everything it can to prevent fraud and abuse,” he says. “I think this bill and a 90-day limit is a good step toward that.”

But Janette Mott Oxford, the executive director of the Missouri Association of Social Welfare, says, that it makes sense that state benefits aren’t only spent at home, especially given that Missouri borders eight states.

“And for other states that are further away,” she says, “there may be explanations that are perfectly reasonable — perhaps [recipients] have a relative dying or in hospice, or perhaps they have a job interview. There are good reasons that people travel, even if they’re very poor.”

The proposed house bill would also expand the policy governing access to benefits, allowing recipients to withdraw them at casinos, liquor stores and strip clubs.

“It’s still illegal to use your card for alcohol or lottery tickets or gambling, but now you’d be able to purchase food in some of those places,” Stokes says. “I don’t think that’s unreasonable. In some places, the closest place to you may be a convenience mart that sells a lot of liquor.”

Even under the existing, tougher restrictions on access, the Missouri state auditor reported in December that 1,615 welfare recipients had spent more than $251,000 “in transactions occurring in businesses that appear to be an alcohol, tobacco, gaming, or other inappropriate establishment.”

The auditor identified one recipient who alone had more than 20 transactions at a liquor establishment, totaling $2,925. (That particular beneficiary received $3,504 in TANF benefits in fiscal year 2012.) Another recipient charted 26 transactions at “tribal casinos or bingo halls in Oklahoma,” accessing $1,478 in benefits there.

Oxford says abuse of TANF funds remains difficult to stop.

“If a person has a $5 bill in their pocket and they buy a pack of cigarettes, how do you know if that was part of a birthday card . . . or if, two weeks ago, they went and got some cash off of an ATM card, and it was their TANF cash?” she says. “I’m not sure you can really implement that adequately without a kind of surveillance that would be costly to implement and objectionable from a civil-liberties standpoint, and not just for poor people. [Restrictions] may make people feel good in concept, but how to implement that is really hard to figure out.”

— Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center. She is also a senior fellow at the Independent Women’s Forum.

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