Afraid of Losing Federal Funding, Kansas Tweaks New Welfare Law

A bill intended to ensure the state doesn't lose $100 million in federal aid as it sets new restrictions for welfare recipients has been signed by Gov. Sam Brownback.

By Bryan Lowry

A bill intended to ensure the state doesn't lose $100 million in federal aid as it sets new restrictions for welfare recipients has been signed by Gov. Sam Brownback.

The bill also increases a tax on health maintenance organizations in an effort to generate nearly $50 million more for state coffers.

The Legislature -- with strong backing from Brownback -- passed welfare reforms in April, including a provision that would limit to $25 a day the amount welfare beneficiaries could withdraw from an ATM using their electronic benefits transfer cards.

Supporters say the restriction -- the first of its kind -- will ensure that benefits money isn't squandered. They said beneficiaries can still use their cards as debit cards at the grocery store without a $25 restriction. Opponents called the restriction mean-spirited and said beneficiaries would be gouged by ATM fees since they'd be limited to withdrawing $25 at a time.

State officials later became aware the restriction could violate provisions in the Social Security Act requiring that welfare beneficiaries "have adequate access to their cash assistance" and be able to withdraw money "with minimal fees or charges."

The Brownback administration began seeking a fix to ensure the state would not lose $102 million in federal aid it receives for the Temporary Assistance for Needy Families program. That possibility was first reported by The Eagle and McClatchy's Washington bureau.

HB 2281, which the governor signed Friday, doesn't eliminate the restriction, which is set to take effect in July. Instead, it empowers the secretary of the Kansas Department for Children and Families to unilaterally raise or rescind an ATM withdrawal limit.

Sen. Michael O'Donnell, R-Wichita, who carried the original welfare reform bill and worked with the governor's office on the fix, said the legislation will allow DCF Secretary Phyllis Gilmore to work with the U.S. Department of Health and Human Services "to find a reasonable amount of cash for TANF recipients to receive from ATM withdrawals."

Theresa Freed, spokeswoman for DCF, said federal officials were evaluating the state's policy changes and would be consulted on what an appropriate restriction would be, if any.

"We are working closely with our federal partners on this issue," Freed said.

Gilmore could strike down the limit if needed, O'Donnell said.

The TANF change was paired with legislation that will increase a tax on health maintenance organizations, or HMOs, from 1 percent to 3.31 percent on total premiums and subscription charges.

That legislation is part of the state's solution for a $400 million budget hole and is estimated to bring in about $48 million in 2016.

The Legislature passed a tax increase package Friday that is projected to bring in another $384 million. Brownback is expected to sign it soon.

(c)2015 The Wichita Eagle (Wichita, Kan.)

Caroline Cournoyer is GOVERNING's senior web editor.
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