A proposal in the Missouri Senate that has already passed the House would prohibit welfare recipients from cashing out benefits at ATM machines.

State Rep. J. Eggleston, R-Maysville, speaks on the Missouri House floor in February 2017 (file photo courtesy of Tim Bommel at House Communications)

The measure from Republican Representative J. Eggleston of northwest Missouri’s Maysville also does two other things.  It adds pornography to the list of items that are prohibited from being purchased with welfare (TANF) or food stamp (SNAP) benefits using an EBT card.  And it adds penalties for misuse of welfare benefits with an EBT card on a prohibited item or at a prohibited establishment.

A person who misuses benefits once would be disqualified from receiving benefits for three months.  A second offense would carry a six-month penalty, while a third violation would bar a person from access to welfare benefits for five years.

The penalty for a third offense was stiffened from Eggleston’s initial proposal of two years during the amendment process on the House floor. The amendment passed despite vigorous opposition from Democrats, who pointed out that five years is a longer period than the lifetime eligibility of 45 months for welfare.

During the Senate panel hearing on Eggleston’s bill, most of the focus was on the proposed prohibition on cashing out welfare benefits at ATM’s.  Eggleston says he hears from managers of stores that accept EBT cards that abuse of welfare benefits is widespread.

“Often times they’ll have a little mini kiosk ATM in the corner, and they will see that abuse going on where they will go and cash out the benefits and then walk over to the liquor counter and buy a six-pack beer with that money, or lotto tickets or things like that,” said Eggleston.

Senator Jill Schupp of Creve Coeur is one of two Democratic members of the Seniors, Families and Children Committee that heard the proposal.

She asked Eggleston whether he knew if people could pay rent with their EBT cards.  He responded by stating that an apartment manager had testified during the House committee hearing on the bill that people who qualify for welfare almost always qualify for rental assistance, and therefore, almost never pay rent.

Schupp dismissed Eggleston’s examples as anecdotal information and said welfare recipients were being unfairly portrayed as wrongdoers.  “I have real concerns about the characterization of people who sometimes need temporary help as abusing or misusing the system when all they’re trying to do is get by and take care of themselves and their families,” said Schupp.

Colleen Coble, Chief Executive Officer of the Missouri Coalition Against Domestic Violence, also pushed back on the notion that reliance on welfare and rental assistance go hand-in-hand, claiming that only 20% percent of people on welfare in Missouri receive subsidized housing.

She also stated that the vendor who supplies the state with EBT cards, Quest, would withdraw from Missouri if it bans cash withdrawals of ATM benefits.

“They would not any longer participate in providing EBT cards to the state of Missouri for fear that they would lose their contracts nationwide for being in violation of the federal rules that say that you have to give recipients access to cash,” said Coble.

NACHA, the electronic payment company that services Quest’s EBT rolls, did not directly verify Coble’s contention.

In response to an inquiry from Missourinet, NACHA chief operating officer Jane Larimer said, “New limitations on cash distribution that are not consistent with commercial network operations would have systemic impacts that may increase the costs of benefits distribution and should be fully vetted before any such changes are adopted.  We encourage legislators to consult with EBT system providers and ATM operators to inform their decision-making in this area.”

On its website, Quest lists 44 states and the District of Columbia among its participating jurisdictions.

When Republican Committee Chairman David Sater of Cassville asked Coble for ideas on how to curb the misuse of welfare benefits, she rejected the notion.  “I don’t agree with the premise that this is a program ripe with fraud,” Coble said.  “Are there bad actors in any program?  Yes.”

Coble said the state Department of Social Services had reported a decrease in fraud activity with welfare benefits since the tracking of purchases became available when the state initiated the use of EBT cards a decade ago.

Sater himself sponsored legislation in 2015 has been linked to a sharp reduction in Welfare recipients in Missouri.  His “Strengthening Missouri Families Act” limited lifetime eligibility for welfare at 45 months.

Numbers provided by the low-income advocacy group Empower Missouri show the number of parents on welfare dropped from 22,711 in May of 2015 to 6,195 in February of 2018 while children on welfare over the same period dropped from 48,201 to 20,043.

According to the Department of Social Services, an applicant for welfare must be the parent or legal caretaker of a child who is either under age 18, or the child is attending high school and is expected to graduate before age 19.  The applicant’s household can’t own resources, excluding a home and car, valued at more than $1,000.

An independent legislative research group has estimated that if EBT vendor Quest abandons Missouri, it would cost almost $1 million to issue replacement cards.

In the hearing, bill sponsor Eggleston stated that those costs would be entirely funded by the federal government, an assertion that would seem to be backed up by language in the legislative group’s analysis.

Missouri would also be the first state to prohibit cash access to welfare benefits.  Eggleston’s bill states that if the Department of Social Services determines that a waiver is necessary for the implementation of the prohibition, it will apply for a waiver from the Federal Department of Health and Human Services.

There’s been speculation among Republican state lawmakers that such a request would be much more warmly received by the administration of Republican President Donald Trump that under the previous administration of Democratic President Barack Obama.

In 2015 while Obama was in office, Kansas rescinded its plan to limit welfare withdrawals to $25 after receiving a chilly response from the U.S. HHS Administration for Children and Families.

Representative Eggleston is on his third attempt to get his legislation to the finish line, having sponsored similar bills the past two years.