Kansas limits welfare recipients to $25 at ATMs

WASHINGTON — A first-of-its-kind provision that prevents welfare recipients in Kansas from withdrawing more than $25 a day from an ATM might violate federal law, and could jeopardize the state’s federal funding if not amended.

The Social Security Act requires states to ensure that recipients of Temporary Assistance for Needy Families, or TANF, “have adequate access to their cash assistance” and can withdraw money “with minimal fees or charges.”

At stake is about $102 million in TANF block-grant funds that Kansas receives every year from the federal government.

The state’s ATM limit was an amendment to a welfare bill signed in April by Gov. Sam Brownback, a Republican. The new law also bars welfare recipients from spending their benefit money at certain places, including movie theaters, massage parlors, cruise ships and swimming pools. It also set stricter eligibility requirements and shortened the amount of time people can receive assistance.

Brownback said in an interview on Friday that he is aware of the possible conflict with federal law and that the affected state agencies in his administration are working to fix it.

The governor said he’s open to raising the limit if necessary to comply with federal policies.

“We’ll work with them; it’s a joint program,” Brownback said. “We’ll do what we have to do to work with the federal partnership.”

He stressed that the $25 limit didn’t originate with his administration.

The legislative history shows the original bill was submitted to the legislature by the Kansas Department of Children and Families, the state agency that administers welfare in Kansas. That version didn’t have any cap on daily ATM withdrawals.

The House Committee that first worked the bill inserted a $60 limit. The amount was cut further on the Senate floor to $25 with the adoption of an amendment by State Sen. Caryn Tyson, a Republican who represents Parker, Kan.

No other state has enacted legislation imposing a $25 limit on the maximum amount of cash that welfare recipients can withdraw from an ATM.

“The $25 limit is uncharted territory,” said Liz Schott, senior fellow at the Center on Budget and Policy Priorities in Washington.

Schott pointed out that ATMs don’t permit withdrawals in five-dollar increments, so people would be able to withdraw only $20. And they would have to pay any fees charged by the banks on top of a $1 fee assessed by the state for all ATM withdrawals.

“The question is, given the transaction fees and the limit, when you put those two together, is that a reasonable access to assistance?” Schott said.

That’s the question the U.S. Department of Health and Human Services will have to answer. States routinely submit any changes to their welfare policies and procedures to the department for review.

“These amendments must meet the requirements of the federal law, so we work closely with each state throughout the review process,” said Laura Goulding, a spokeswoman for the department’s Administration for Children and Families.

Specifically HHS’s review will examine Kansas’ cap on ATM use against two paragraphs in section 402 of the Social Security Act. Those provisions require states to guarantee welfare recipients “adequate access” to their benefits and “access to using or withdrawing assistance with minimal fees or charges.”

If deemed not in compliance with those statutes, a state could forfeit its federal grant money.

The Kansas Department for Children and Families will work with HHS to ensure that the state is in compliance with federal laws, said Theresa Freed, a spokeswoman for the department.

“If they give us any guidance that we’re not (in compliance) then we’d take necessary action,” Freed said. “We want to ensure we receive continued funding.”

Meanwhile, Kansas lawmakers are trying to come up with a legislative fix before the end of the session.

Republican state Sen. Michael O’Donnell of Wichita is working on a bill that would address the problem by raising the ATM withdrawal limit to $60 per day.