Lawmakers propose new restrictions on welfare cards

EBT card
The Electronic Benefits Transfer card that welfare recipients use for food and cash assistance. Republican lawmakers have proposed new restrictions on where and how the cards can be used.
MPR Photo/Jeffrey Thompson

Republican lawmakers in the Minnesota House included new restrictions on welfare cards in a Health and Human Services omnibus bill released Monday.

Several Republican lawmakers have said tougher restrictions are needed to prevent welfare recipients from spending government money on alcohol and tobacco. The state uses Electronic Benefits Transfer (EBT) cards, which resemble debit cards, to distribute monthly cash assistance from several welfare programs.

For example, most childless adults who cannot work due to an illness or disability receive $203 a month.

The restrictions in the omnibus bill released Monday vary slightly from those proposed by Republican lawmakers earlier this session.

Earlier proposals would have made it illegal for welfare recipients to use their EBT card to get cash at an ATM. Welfare recipients had said the restriction would make it impossible to pay for basic needs, like rent and laundry.

The new bill would allow EBT cardholders to receive up to $20 a month in cash from an ATM or up to $20 cash back from a vendor.

The omnibus bill, like earlier proposals, would make it illegal to use an EBT card to buy tobacco and alcohol and would restrict the card's use to within Minnesota. The law would not apply to food support money, which recipients get via the same transaction card, but is regulated by the federal government.

A MPR News review of a month's worth of transaction data found welfare misuse was minimal. About 0.01 percent of non-food support money was spent or withdrawn at stores with a name that includes the word "liquor." Some of those retailers also sell groceries.

The omnibus bill would provide an incentive for retailers to report fraud. Retailers who report EBT card fraud to the Department of Human Services would receive 5 percent of any recovered funds.

The new bill would also require the state to include the name of the welfare recipient on the EBT card. The state would also print the following statement on the cards: "It is unlawful to use this card to purchase tobacco products or alcoholic beverages."

Earlier versions of the EBT card legislation did not offer detailed plans for how to prevent alcohol and tobacco purchases. The omnibus bill would create a Minnesota EBT Business Task Force to "create a workable strategy to eliminate the purchase of tobacco and alcoholic beverages" by welfare recipients.

Under the current system, the Department of Human Services contracts with a private company to manage EBT cards. DHS officials run quarterly reports to search transaction data for suspicious purchases.

The omnibus bill would require the commissioner of DHS to issue a request for proposals from private third-party credit card processors to prohibit the use of the card for tobacco and alcohol purchases.

The commissioner would be required to sign a contract by October 2011 with a credit card processor that could implement the restrictions.