In most states, including Maine, welfare recipients have Electronic Benefit Transfer cards that function like debit cards and allow them to withdraw cash at ATMs. A federal law enacted in 2012 banned the cards’ use at liquor stores, casinos and businesses that provide adult entertainment. All states must demonstrate how they intend to meet the required ATM withdrawal restrictions by Feb. 22, or face a reduction in their TANF block grant funding. In Maine, the state legislature passed its own law to implement and enforce the federal requirements. The policy hasn’t been 100 percent effective, based on data released by the state’s Department of Health and Human Services.
“This information is eye-opening and indicates a larger problem than initially thought,” LePage said in a written statement after learning that at least 650 transactions appeared to violate state and federal law. Another 3,000 or so took place in businesses with “smoke shop” in the title, which is currently legal in Maine, but still the subject of some criticism by LePage. The data also show that some people used EBT cards in all 50 states, including when a person had not been in Maine for more than a year.
The public benefits under scrutiny in Maine come from a federal block grant program that gives states broad discretion on how the funds may be used. In general, the money is meant to get families off public assistance through employment, reduce out-of-wedlock childbirths, promote marriage and keep poor children with their families. States have allowed the funds to be used in a variety of ways, including child care, transportation, job training and education. Even under broad interpretations of the law, however, some of the ATM withdrawals in Maine -- if they resulted in purchases at the same stores -- appear to violate the original intent of the program.
So far, the governor's office hasn't produced any conclusive evidence that people actually spent money on alcohol, lottery tickets or adult entertainment with their TANF funds. Nonetheless, the ATM withdrawal itself counts as a transaction at restricted businesses, according to a clarification published by the federal Administration of Children and Families.
It is unclear how frequently this type of violiation takes place with Maine’s EBT cards. The state’s analysis was based on a few keyword searches, according to Adrienne Bennett, the governor's press secretary. Local news outlets, such as the Sun Journal, have pointed out that roughly 1.1 million EBT card transactions took place in the 23-month period examined by the state. In other words, the potentially dubious transactions amount to about a third of 1 percent of all transactions. A more thorough and sophisticated search, however, could reveal other cases of misuse. Even if the real number were relatively small, “any amount of fraud is worth investigating,” Bennett said.
The state's speaker of the house and senate president were quick to voice support for weeding out welfare fraud in a letter to the attorney general's office. "If it is verified that these funds were used in violation of the law, we urge you to prosecute," they wrote. In media interviews, however, House Speaker Mark Eves, a Democrat, has charged that the governor is merely using welfare fraud to score political points with his Republican base. (LePage is running for re-election this year.)
Maine public officials may learn that it is difficult to completely prevent the types of transactions restricted by federal and state law. "Mostly what the [data] highlight is how hard these rules are to implement," said Elizabeth Lower-Basch, a senior policy analyst for the Center for Law and Social Policy (CLASP).
Two years ago, Lower-Basch reviewed state policies to prevent EBT card transactions at restricted locations and cited three basic approaches already in place: centralized blocking (as California does), placing the onus on businesses to make sure their ATMs do not accept EBT cards (as Washington state does) or placing the onus on card holders not to use their cards at restricted locations. At the time, she raised a number of concerns about how the client-based policies could place an unreasonable burden on poor people to remember the specifics of both the state and federal rules and make a judgment call about whether the business falls under a restricted category. (Maine's current law, for example, doesn't allow EBT transactions at businesses where half the gross revenue comes from liquor sales -- something that would be difficult for a customer to know offhand.)
"Clients are at significant risk of being sanctioned — or even charged with criminal fraud — for an inadvertent error," Lower-Basch wrote.
A 2012 report by the U.S. Government Accountability Office points to other problems states have faced in the past with regulating TANF cash withdrawals at ATMs. California, for instance, blocked the use of EBT cards at certain ATMs across the state, but soon learned that incomplete data about retailer type, ATM location and other relevant information hindered a perfect execution of the policy.
