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Federal law limits welfare debit card use at casinos, strip clubs

Oklahoma Department of Human Services already has begun working with the provider of debit cards for the cash welfare program TANF to limit the cards use at strip clubs, casinos and liquor stores.
BY MEGAN ROLLAND Published: July 9, 2012

Oklahoma joined at least seven states this year in allowing drug tests to disqualify welfare recipients, but a federal law taking effect in 2014 will go a step further, trying to prevent welfare dollars from being spent in casinos, liquor stores and strip clubs.

“There are certain establishments that we are all uncomfortable with state and federal assistance being used at, and those are spelled out in this law,” said Sheree Powell, spokeswoman for the Oklahoma Department of Human Services. “Is it going to be foolproof? We don't know.”

Every month about 4,000 adults and 16,000 children in Oklahoma enroll in the Temporary Assistance for Needy Families program — the traditional federal cash welfare system that those in need can use for a maximum of five years during their entire lifetime.

The benefit, which cost roughly $24 million last year in Oklahoma, is distributed to clients through direct deposit to their checking account or through a debit card issued by a vendor of the state.

It's the use of the debit card that now will be restricted.

As part of the Middle Class Tax Relief and Job Creation Act of 2012, states must ensure that debit cards cannot be used in any electronic benefit transfer at liquor stores, casinos, gambling or gaming facilities or any strip clubs.

Failure to comply by 2014 could result in a loss of federal assistance for the welfare program which includes some state matching dollars.

Working out logistics

Powell said officials already are working out the logistics of limiting the use of those cards at certain locations and working closely with the state's debit card provider, a subsidiary of Xerox, to implement a program.

“It's difficult,” Powell said.

“This is a specific client behavior, and how do you control client behavior? It is our intent that you use this money for certain purposes, but in the end, once that person receives their cash, whether it's through their own bank account or a debit card, we have no more or less control over that cash than we did when we were issuing paper checks.”

Powell said additionally, it's more than just the cash welfare system that uses the debit cards.

In fact, about 52 percent of the clients who chose to use debit cards are parents receiving child support that the state has collected from a private individual on their behalf.

“This would affect them, as well, and that's not even state or federal money,” Powell said. “That's part of some of the barriers we've run into in the past.”

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