Friday, June 27, 2014

Very low tolerance for misuse of welfare funds

This is an intriguing story. 

Indiana spends $250 million on TANF (largely equivalent to our Sole Parent Support) in a population of 6.5 million. NZ spends 7 times more for a population 31 percent smaller.

But what really surprised me was the small numbers that followed.

$120,000 withdrawn from ATMs in no-go places like liquor stores in 2012.

$45,000 spent developing technology to stop it.

$400 a month to run the system.

These are highly motivated and efficient bureaucrats.

Of course there is nothing to stop people withdrawing cash elsewhere and still spending it on things like alcohol and tobacco. But TANF spending is already very low because the US moved towards a system of emphasis on in-kind assistance over cash. A lot of federal and state funds are spent getting people into work, job subsidies, Medicaid, food stamps, utility payments, housing subsidies, childcare etc. There's not that much cash splashing around.

Cutting Down on Welfare Abuse in Indiana

June 26, 2014
What has kept welfare recipients from spending taxpayer dollars on alcohol, slot machines and strip clubs? Very little, writes Jillian Kay Melchior for National Review, until Congress passed a bill in 2012 outlawing the use of benefits at such places and encouraging state governments to institute similar controls.
Indiana has been especially successful in its crackdown on unlawful use of welfare funds:
  • The state passed a law requiring ATM vendors to block withdrawals of cash benefits at certain restricted locations.
  • The Indiana Family and Social Services Administration spent $45,000 to develop technology that can match electronic-benefits-transfer (or EBT) transactions and track EBT users who have received warnings from the state's Alcohol and Tobacco Commission about unlawful withdrawals. Now, the technology costs less than $400 per month in monitoring, including staff time.
  • Welfare recipients who withdraw cash at an unlawful location receive a strongly worded letter, followed by a letter and investigation after their second offense and action by the local prosecutor after their third offense. Beneficiaries found guilty of unlawful withdrawals face a $500 fine and up to 60 days in prison.
The state began a major media mail campaign to inform residents of the new rules affecting Temporary Assistance for Needy Families (TANF) recipients. The new rules have been effective:
  • In 2012, Indiana TANF users withdrew more than $120,000 from ATMs with their EBT cards in liquor stores, strip clubs, tobacco shops, casinos, resorts, golf clubs and amusement parks.
  • In 2014, fewer than 15 first-time EBT violations have taken place each month, according to Indiana officials. Additionally, there have been less than 5 second-time offenses each month and only two third-time violations in all of 2014.
Of the $250 million in the state's TANF program, officials have identified less than $6,000 in unlawful fund use.
Source: Jillian Kay Melchior, "Welfare Abuse Almost Quelled," National Review, June 24, 2014.

1 comment:

S. Beast said...

Most NZ dairies have some kind of alcohol and supermarkets too. Plus rural locations have a handful of local stores. It's hardly Indiana.

And given examples from the recent past NZ would likely spend 4.5 million contracting in an Aussie company only to find it still didn't work a couple of years later.