Audit: N.H. Can’t Track Welfare Cash

Saturday, September 14, 2013
Concord — It’s almost impossible for the state government to track how the cash benefits it provides to welfare recipients are spent, and the goals of those cash assistance programs are defined only broadly by state law, according to a performance audit released Friday.

The report, prepared by the Legislature’s budget and audit office, recommends lawmakers consider setting specific goals for programs that provide cash directly to low-income New Hampshire residents, and then restrict how the money can be spent in order to advance those goals.

More than 13,000 people were receiving cash benefits as of March. In June, the state stopped issuing paper checks, so all benefits are now provided via direct deposit into a bank account or on an Electronic Benefit Transfer, or EBT, card that, like a bank debit card, can be used at stores or to withdraw money from ATMs.

In the first nine months of fiscal 2013, more than $23 million in benefits was spent via EBT cards, and 78 percent of that money was withdrawn as cash from an ATM. That means the state doesn’t have any way to know what people eventually bought with the money, which also is true of money distributed by direct deposit, according to the audit, which was prepared by the nonpartisan legislative budget assistant’s office.

“There’s really no oversight. . . . It seems like a pretty open checkbook,” said Rep. Peter Leishman, D-Peterborough, as the report was presented Friday to the Legislature’s Fiscal Committee.

The state Department of Health and Human Services simply doesn’t have the staff to check how benefits are being spent, said Terry Smith, director of the Division of Family Assistance.

“Given our current resources, that would be impossible,” he said. “We have 13,000-and-change individuals on cash assistance, and were we to get into the personal purchasing habits of each, that would require a staffing increase of significant financial burden.”

In any case, the state doesn’t place many restrictions on how cash assistance can be spent, the report found.

Food stamps, a federal benefit formally called the Supplemental Nutrition Assistance Program, are provided via EBT cards and can only be spent at retailers on eligible food items.

But there are no such restrictions on the cash provided under programs such as Temporary Assistance to Needy Families, Old Age Assistance, Aid to the Permanently and Totally Disabled, Aid to the Needy Blind and Refugee Cash Assistance.

Some rely entirely on state funding, while others use federal money or a mix of federal and state funding. They have broad goals under state law, for example helping people provide for themselves in a manner “compatible with decency and health,” or to “eliminate or reduce the harmful effects of poverty.”

Auditors said they asked a nonstatistical sample of 52 cash-aid recipients how they spend the money. Most, 54 percent, said they use it for rent, and 46 percent said they use the money to pay utility bills. Toiletries, transportation, food and clothing were also popular items. Only a few people said they use the benefits for cigarettes (6 percent) or alcohol (2 percent).

The Division of Family Assistance tells its clients the money is intended for “life essentials,” but “life essentials is not defined, leaving interpretation to recipients,” said Vilay DiCicco, a senior audit manager at the legislative budget assistant’s office.

As of this summer, New Hampshire did enact a new federal requirement that bars EBT benefits from being spent at liquor stores, gambling establishments such as casinos and adult-entertainment venues such as strip clubs. But “these restrictions will likely be largely ineffective and difficult to enforce,” the audit found.

The report did find that EBT cards provide “a cost-effective way to distribute cash assistance to recipients.”

But it recommends, among other things, that the Legislature “consider clearly outlining the goals of the cash assistance” provided by state programs, and then DHHS should “adopt administrative rules for restrictions on the use of cash assistance that are aligned with stated program objectives in state law.”

Last year, then-House Speaker Bill O’Brien, a Mont Vernon Republican, said he planned to introduce legislation in 2013 to ban EBT cards from being used for “unnecessary items.” But the plan was dropped after Democrats won a majority in the House last November.

Sen. Jeanie Forrester, a Meredith Republican and chairwoman of the Senate Finance Committee, thinks legislators should act next year.

The report, Forrester said in a statement, “highlighted some significant concerns that should be addressed in the next legislative session. While the audit shows that a majority of EBT spending is directed towards necessary living expenses, such as rent, food, transportation and health care, it also suggests that clearer statutory guidance and improved regulatory oversight could save the programs millions by reducing the use of these cash benefits on goods and services outside the scope of this taxpayer funded assistance program.”

Rep. Ken Weyler, a Kingston Republican, indicated yesterday he’d be willing to sponsor legislation next year, if HHS would support the bill.

But Smith said the devil is always in the details.

“Certain things are pretty clear. I don’t think anybody intended the taxpayers’ cash assistance to be spent on alcohol or cigarette or adult entertainment. . . . But after that, it begins to get very controversial,” Smith said.

For example, he said, some might see the purchase of a gun as appropriate “because our clients live in the lowest-income housing where crime is higher,” while others might object.

“Those are the kinds of things that the department can’t decide, but we could certainly raise the issues for you,” Smith told Weyler.

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