NM Welfare Funds Spent Far Beyond State’s Borders
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From bustling Miami to sleepy Goffstown, New Hampshire, from San Diego to Minneapolis, recipients of New Mexico’s welfare funds use their state-issued EBT cards every day to spend money far from the Land of Enchantment. In a two month period examined by New Mexico Watchdog expenditures of the state’s welfare funds occurred in 45 states.
The evidence suggests recipients of New Mexico welfare funds leave the state in significant numbers after qualifying for and receiving an electronic banking card that allows them to withdraw cash from ATMs or make purchases directly. The funds are distributed under the Federal Temporary Assistance to Needy Families (TANF) program. Most of the funds are given to the state in a federal block grant, with state funds making up the difference.
Nearly 196,000 EBT (electronic benefit transfer) cards issued by the New Mexico Human Services Department are active each month. Substantial numbers of EBT transactions occur in and around El Paso, TX. That is to be expected considering the close interrelationship of that city with southern New Mexico communities. What New Mexico Watchdog found surprising was the high volume of substantial cash transactions occurring regularly far from New Mexico’s borders on a daily basis.
A second installment in this investigation will detail the evidence that EBT cardholders are using their welfare funds for liquor, gambling, adult entertainment, tobacco and other uses inconsistent with the program’s intended purpose of helping needy families obtain life’s essentials.
What We Examined
We examined every EBT transaction for November and December 2011. We had also requested the records for October, but NMSHD provided us with only the first two days of that month due to problems with the data reproduction.
We examined approximately 200,000 EBT transactions.
The EBT card acts like a bank debit card. The vast majority of the transactions we reviewed do not raise any suspicions. The largest volume of purchases occurred at Walmart stores, followed by grocery stores and discount clothing retailers.
Convenience stores such as Allsup’s saw a large volume of cash withdrawals on their premises. In many cases amounts of $500 and higher were withdrawn in a single transaction inside a convenience store, though most appeared to be in the range of $100 to $300.
ATMs of various banks also saw numerous withdrawals.
Once a cardholder has their cash there is no way to determine how it was spent. It could just as easily be spent on liquor or tobacco in a convenience store as on food and beverages. A record of a purchase inside a Walmart indicates nothing about how the money was spent other than the identity of the retailer.
In many cases, the cash withdrawals were made inside businesses or at locations that suggest but do not prove its eventual use. We deal with that in our following report, which will appear after Thanksgiving.
The records show the name of the business where the cash withdrawal or purchase was made, its street address, and the amount of the cash withdrawn or the purchase, and any cash given above the purchase amount.
The volume of transactions spikes on the first day of the month, when the cards are charged with that month’s cash benefit. Over $56 million a month is carried on New Mexico’s EBT cards in the Temporary Assistance to Needy Families program.
Cash for Welfare Recipients
The TANF program, known in this state as NMWorks, provides up to 60 months of cash assistance to qualifying families with children.
The recipient must live in New Mexico and have dependent children. Their children must be citizens or have eligible alien status, and be age 18 or younger. If age 19, they must be a full-time student expected to graduate before the end of the month in which they become 20.
Lastly, the family must meet the program’s income guidelines.
The more children in a family, the greater the monthly cash benefit. A family with one child may receive a cash benefit of $227 a month. A qualifying family with four children may receive $459.
The application process requires an in-person interview. To prove residency in New Mexico, applicants may use a driver’s license, a voter registration card, a rental agreement, a utility bill, pay stubs, church records, property tax records, a telephone directory, a letter from a landlord, an agreement to buy land, a rental agreement, rent receipts, or a letter from a post office.
An applicant may also present only a letter from someone identifying the applicant as a New Mexico resident.
Applicants are notified by mail should they qualify. They are then issued an EBT card charged with their monthly benefit, which is renewed each month they are in the program.
The TANF program was enacted as part of former President Bill Clinton’s welfare reform. EBT cards are required by federal law to be usable in all states.
What We Found
To get a sense of the volume of out-of-state transactions (excluding El Paso and border towns), consider the following list. These are some of the reported locations of transactions on New Mexico EBT cards outside the state’s borders on October 1, 2011.
Many of these locations saw multiple transactions on a single day, as well as on other days throughout the month. For example, Sioux City, IA is listed but once, yet NMHSD records show four transactions in that city on that day, totaling $520.
New Mexico EBT transactions (partial list) October 1, 2011:
Saint Louis, MO; Sacramento, CA; Buena Park, CA; Buffalo, NY; Arkadelphia, AR; Austin, TX; Avon, CO; Atlanta, TX; Camby, IN; Carthage, MO; Cassville, MO; Chandler, AZ; Daphne, AL; Edmond, OK; Fargo, ND; Fort Meyers, FL; Goodyear, AZ; La Habro, CA; Jackson, MS; Leesville, LA; Lehigh Acres, FL; Liberal, KS; Lithonia, GA; Midland, TX; Moreno Valley, CA; Napa, CA; Oak Grove, MO; Palmdale, CA; Pine Bluff, AR; Porterville, CA; Pueblo, CO; Riverdale, UT; Roeland Park, KS; Sarasota, FL; Sebring, FL; Sherman, TX; Show Low, AZ; Warsaw, IN; Wilton, NY; Anderson, SC; Bellingham, WA; Fridley, MN; Tempe, AZ; Topeka, KS; Franklin, LA; Hurst, TX; Olathe, KS; Pierre, SD; Palm Springs, CA; Reno, NV; East Palestine, OH; North Bend, WA; Hartville, SC; Lamedeer, MT; Omaha, NE; South Haven, MI; Kansas City, MO; Goffstown, NH; Goodletsville, TN; Greenboro, NC; Bismarck, ND; Portland, OR; Wichita, KS; Longbeach, WA; Sioux City, IA; Milwaukee, WI; Ft. Drum, NY; Ottawa, IL; Satsuma, AL; Ocala, FL; Elizabethtown, PA; Murfreesboro, TN; Las Vegas, NV; Idaho Falls, ID; Harding, MT; Grandview, WA; Oklahoma City, OK; Sioux City, IA; Oshkosh, WI; Victorville, CA; Douglas, WY; Phoenix, AZ; Dayton, OH; Mesquite, TX; Ogden, UT; Citronelle, AL; Denver, CO; Kissimmee, FL; San Jose, CA; Stapleton, AL; Warsaw, IN; St. Petersburg, FL; Englewood, FL; Idaho Falls, ID; Richmond, VA; Columbia, SC; Memphis, TN; Detroit, MI; Minneapolis, MN; Bakersfield, CA; Seminole, TX; Syracuse, NY; Central City, NE; Paris, TX; Los Angeles, CA; Sunnyside, WA; Bayonne, NJ.
The amount of cash flowing out of the state is considerable, even though it may be a small fraction of what is spent in-state. In Conroe, TX, on this day three cash withdrawals of $200 each were made. A single withdrawal of $500 occurred in Farrell, TX. Someone withdrew $460 in Sunnyside, WA, and so on for each of the thousands of transactions occurring outside New Mexico.
The out-of-state transactions continue every day of the month. The last out-of-state EBT transaction for 2011 occurred on December 31 at a Walmart in Timnath, CO. A purchase of $104.05 was followed by $100 cash back.
The records show a considerable volume of purchases and cash back in addition to cash withdrawals made out-of-state. The following three images demonstrate what the records hold. Click on each image for an expanded view.
First, a snapshot of EBT transactions at Walmart stores. The column at the far right indicates a purchase or ATM withdrawal. The column second from the right indicates cash back in addition to a purchase.
Second, a snapshot of EBT transactions at assorted businesses around the country.
As these very limited snapshots show, frequently there are multiple transactions at the same out-of-state location on the same day. Several possibilities exist: The same card holder used their EBT cash at the that location multiple times on one day or returned frequently during that day; by chance different New Mexico card holders used the same ATM at an isolated gas station in the middle of Kansas or an inner city Los Angeles ATM on the same day; or different New Mexico EBT card holders were traveling together out-of-state and made purchases with their benefits or withdrew cash at the same location on the same day.
Here’s one of the most curious examples of this phenomena: An ATM at a highway exit outside San Jose, CA reported on the same day about a dozen withdrawals of New Mexico EBT card funds for a total of $1,920. It would take a family of 25 children to qualify for a monthly benefit at this level. Alternatively, several New Mexico EBT cardholders traveling together may have decided to withdraw funds at this location.
It was not unusual to find cumulative withdrawals from the same ATM or different ATMs in the same out-of-state community on the same day exceeding $600. The level of benefits for a family with six children is $613.
People who claim New Mexico residency may be living in large cities outside the state, but they are hard to detect from these records. Their presence in smaller towns, on the other hand, is apparent. We observed repeated uses of New Mexico EBT cards days, weeks and months apart at small towns scattered across the country, such as Lehigh Acres, FL; Saint Rose, LA; Russellville, AR; Cantorelle, AL; Bridge City, TX; Dickinson, ND; and Ladies Island, SC. Sometimes the cash would be withdrawn or purchases made at the same business. This indicates that someone with a New Mexico EBT card was residing in those locations for that period of time as it is unlikely that a different New Mexico EBT card holder would use the same ATM in such small and sometimes remote communities.
But even in a large cities patterns emerge which suggest someone claiming New Mexico residency is living there. This is suggested by repeated transactions at the same small retail establishment, like Bandini Mart in Commerce, CA which experienced frequent use of New Mexico EBT cards.
Or Sky Liquor in Hesperia, CA. We found a series of purchases at this establishment, ranging from four on the same day to almost daily transactions for the next two weeks. The purchases at this liquor store stopped for a while then appeared again the following month.
We found transactions on New Mexico EBT cards occurring in vacation spots along the Florida coast, at an ATM on Wilshire Boulevard in Los Angeles, at California beach communities, Palm Springs and other locations inconsistent with the picture of a needy family that cannot feed, house and clothe their children without government assistance.
We even found two transactions in Hawaii.
Wandering EBT Cards in Other States
Reporter Chris Butler of Tennessee Watchdog found EBT cards being used to gain entrance to Graceland, Elvis Presley’s home, and being used in strip clubs and retailers of luxury goods. Though he examined hundreds of thousands of EBT transactions, he told us that found little out-of-state usage of EBT cards issued by the State of Tennessee.
But the Los Angeles Times found $69 million of EBT transactions in California welfare funds occurring outside the state, including millions in Las Vegas, NV, hundreds of thousands in Hawaii, and thousands on cruise ships sailing from Miami.
A Missouri investigation also found that state’s EBT cards being used in far away places.
EBT fraud and lack of accountability is a growing problem. For a compendium of recent reports on the issue, check this Watchdog.org story.
What is New Mexico Doing About Peripatetic EBT Cards?
“There are no out of state restrictions on EBT card use,” says Matt Kennicott, spokesman for NMHSD. “A person can use their EBT card in another state. We see this with the Border States like Texas and Arizona. FNS requires that EBT cards be interoperable with all other state systems. If the client is traveling out of state and a grocery store in the other state is an FNS approved retailer, the client must be able to use his/her card at that store. Many times we find that the person lives along the border and shops in the neighboring state due to the rural nature of New Mexico, are caring for a child in an out-of-state hospital, or are still using benefits issued several months ago in New Mexico but have since relocated.”
What does the Department do to enforce the requirement that the EBT card belong to a New Mexico resident?
Only one person in an overworked agency monitors compliance with the residency requirement. Residency is checked on a quarterly basis to see if recipients have been outside the state “for a prolonged period of time,” according to Kennicott.
How can one person monitor nearly 196,000 active EBT cards?
The Department, Kennicott wrote in an e-mail, “uses a filtering protocol on an established database report that allows the Department to identify households that are using their benefits out-of-state, on a consistent basis, in non-New Mexico border towns. Once filtered, the report is significantly smaller, allowing HSD staff to analyze the information efficiently and take appropriate action on a case-by-case basis.”
Kennicott went on to explain: “If a significant amount of a household’s transactions are made out-of-state (in non-New Mexico border towns) for longer than a month, the case is flagged and the household is contacted to re-evaluate if the household is still residing in New Mexico. Households with significant out-of-state activity must be reviewed on a case-by-case basis, as there may be extenuating circumstances for the household to use their benefits outside of the state of New Mexico but still be a resident of the state (e.g. out-of-state hospitalization for a dependent, attending to a dying relative, etc.). If the household has moved out-of-state, the case is closed and benefits will no longer be deposited into the account. Once the New Mexico case is closed, the household may apply for benefits in their new state of residence.”
Next report: Booze, Blackjack, Babes and Butts.
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Tags: Chris Butler, EBT abuse, EBT Cards, EBT fraud, electronic benefit transfer, Matt Kennicott, New Mexico Human Services Department, TANF, Temporary Assistance to Needy Families, Tennessee Watchdog, Watchdog.org, welfare