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Welfare payments for booze, broads, and slots

Posted by Richard on November 8, 2010

It's called the Food Assistance Program. Back in the old days, beneficiaries received Food Stamps — pieces of paper that vaguely resembled Monopoly money, which they could use at grocery stores to pay for their purchases. Some years ago, the Food Stamp booklets were replaced by EBT (Electronic Benefits Transfer) cards, which are essentially debit cards.

In Colorado, they're called Quest cards, and supermarkets and convenience stores have signs stating that Quest cards are welcome. But those aren't the only places they're welcome, according to a 7News investigation:

 Colorado welfare recipients have been able to withdraw thousands of tax dollars at casinos, liquor stores and even a Glendale strip club, a CALL7 Investigation found.

CALL7 Investigators looked into a database of ATM withdrawals over 12 months by people who have the state public assistance electronic benefit cards and matched it to the addresses of liquor stores, casinos and strip bars. The analysis found that nearly $10,000 of taxpayer-funded welfare money has been taken out at the questionable locations.

"I don't think there's any question of what you revealed here in your research and your investigation points to real abuses of the system," said Penn Pfiffner, a former state legislator and Colorado Union of Taxpayers board member. "This is outrageous behavior."

Investigator Tony Kovaleski questioned why the state hasn't blocked the use of Quest cards at ATMs in liquor stores, casinos, and strip clubs. California blocked access at casinos and on cruise ships a while back, and recently expanded the ban so the cards no longer work in "psychic parlors, tattoo parlors, pot dispensaries, bail bond establishments, or bingo halls."

But I have a more basic question: why do Quest cards work in ATMs at all? Blocking access to cash in a liquor store or strip club ATM just tells the cardholder he or she has to stop at the bank or convenience store ATM before buying booze or getting a lap dance. That may improve appearances, but it has no substantive effect. 

Back in the days of Food Stamps, they could only be used at groceries and only for approved items. I wondered when that had changed, so I checked the Colorado Dept. of Human Services FAQ for the Food Assistance Program. It says: 

Households CAN buy foods such as: breads, cereals, fruits, vegetables, meat, fish, poultry, dairy products, seeds and plants which produce food for the household to eat.

Households CANNOT buy any nonfood items such as: beer, wine, liquor, cigarettes, tobacco, pet foods, soaps, paper products, household supplies, toothpaste, cosmetics, vitamins, medicines, foods that can be eaten in the store and hot foods.

Food assistance benefits cannot be exchanged for cash.

Cannot be exchanged for cash? Then why do they work in ATMs??

Clearly, there's something fundamentally wrong here. Maybe the CDHS staff just isn't aware that Quest cards work in a way that's contrary to their own usage regulations. Maybe this is all news to them. 

Um, no. They not only have known about it forever, they're determined to preserve the status quo, usage regulations be damned: 

Colorado Department of Human Service officials said they have known for years that the money was being withdrawn at questionable locations but did nothing to stop it.

"Should you be preventing this type of access at liquor stores, casinos and strip clubs?" Kovaleski asked.

"I think it's important that clients be able to access benefits easily, and they are allowed to do it at those locations," said Pauline Burton, who heads the public assistance division at CDHS.

Notice the phrase "access benefits," which neatly obscures the distinction between using the cards to get food and using them to get cash — the latter of which is explicitly prohibited by their own rules. Which they've apparently deliberately made it easy to circumvent.

Pfiffner said it is important that the state reprogram the cards so they are turned down at liquor stores, casinos and bars, but Burton did not agree.

"So this kind of activity has been going on for four or five years and you are doing nothing about it," Kovaleski asked.

"We've been monitoring it and seen it happen for four or five years, yes," Burton said.

"And you have changed nothing?" Kovaleski asked.

"Access continues to be allowed," Burton said.

I disagree with Penn Pfiffner. The state shouldn't just "reprogram the cards" so they can't be used in ATMs at certain locations. The state should simply stop allowing the cards to be used to withdraw cash at ATMs, period — regardless of their location.

Better yet, the state should stop subsidizing (and thus encouraging) irresponsible behavior, dependency, and helplessness, and leave assistance to the truly needy to private charities using voluntary donations, not coerced tax dollars, and thus much more careful about whom the assistance goes to and how it's used. 

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6 Responses to “Welfare payments for booze, broads, and slots”

  1. Hathor said

    Some states include a cash benefit with that card, rather than the state cutting a check for welfare benefits or separate ATM.

  2. David Bryant said

    ”Back in the days of Food Stamps, they could only be used at groceries and only for approved items.”

    That’s just a myth, Richard. About 15 years ago Channel 9 News did a story about the thriving black market in food stamps. A bunch of entrepreneurs hung around the welfare office and offered cash to the welfare recipients as they came out the door with their newly issued food stamps. The going rate was about 35 or 40 cents on the dollar, and according to the news story, roughly half of all the food stamps in Denver were being sold for cash.

    I even remember reading one story about a house in Massachusetts (?) that was sold for $40,000 (face value) in food stamps.

    The point is that money is fungible. 40 years ago, when the food stamp program was first introduced, there were plenty of economists who pointed out that a black market in food stamps was inevitable. Experience is a great teacher. Unfortunately, most politicians are apparently ineducable.

  3. rgcombs said

    David, you’re right, of course, and I misspoke. Whenever there’s a money substitute — whether it’s WWII ration coupons, S&H Green Stamps (remember those?), or Food Stamps — there will be a secondary market. Today, there are websites where you can sell (at a discount) those unwanted gift cards you got.

    I should have said Food Stamps “could only be ”legally” used at groceries.” My focus was on government ”policy” and whether it had changed.

    According to the Dept. of Human Services website, it hasn’t. They still tell applicants that they can only buy food and “benefits cannot be exchanged for cash.” That certainly suggests, Hathor, that Colorado isn’t lumping cash assistance in with the Quest card funds. And yet, the cards work in ATMs and Human Services has no intention of changing that. So someone has decided to implement the Quest card program in a way that ”subverts” the agency’s stated regulations (and perhaps state law).

    Did you guys watch the 7News video? Pauline Burton, who’s in charge of the Food Assistance program, exhibits a tight-lipped passive-aggressive attitude that makes it clear that she thinks her “clients” are entitled to have taxpayers take care of their “needs,” whether they decide that they need food, booze, broads, or slots.

    As I said, I don’t think they’r ”entitled” to ”squat” at taxpayers’ expense. My interest in publicizing the story (to the extent I’m able) is to undermine public support for this redistributionist program. And I’m curious about whether the way the program is being administered by Burton and her ilk is a deliberate undermining of the law.

  4. Hathor said

    It would have to work at an ATM, because that is what the grocery uses. As you mentioned it would be a matter of programming where the cashier enters a a specific code or something like it.

    I am not sure how it works in PA to separate cash from the food benefit, but I have seen people get cash back from their card. The cash register computer also knows how to pay for grocery items which are not food or covered by the food benefit. The difference between Hi-C and Hawaiian Punch, one has 5% juice the other doesn’t. 5% is OK.

    Personally I think the cards are a boon to the cashier, having been a cashier in the olden days, when I had to remember what was acceptable, look at beverage labels and handle funny money when the purchases didn’t even out to the dollar.

    I would go to the state’s website FAQ about welfare, like you would be a client, to find out really how it is administered.

  5. Jamie said

    As a government employee, I do know that food assistance benefits are regulated and recipients are only able to buy food items and monies issued may NOT be withdrawn at ATM’s. However, there are other programs in Colorado such as TANF cash assistance (Temporary Assistance to Needy Families), LEAP (Low-Income Energy Assistance Program), and supportive service programs in which money benefits are put on the welfare recipients Quest card, these programs are not regulated and the money can be used on whatever the recipient wishes. It’s a crock, I know!!

  6. rgcombs said

    Thanks for the clarification, Jamie! So Hathor was right. I didn’t realize that TANF and LEAP payments were “loaded” onto the same Quest card used for the Food Assistance program.

    I guess there’s a certain efficiency in using one account for all of the various handouts and making the computer system smart enough to segregate the access methods for the different categories. But I agree, it’s a crock. 🙂

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