Kansas rescinds limit of $25 per day on ATM withdrawals of cash assistance

Kansas has eliminated a $25-a-day limit on ATM withdrawals with cash assistance cards over concerns from U.S. officials about the much-criticized part of a larger effort to ensure that poor families use their benefits for necessities and not alcohol, gambling or luxuries such as concerts or tattoos.

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The state Department for Children and Families announced Tuesday that it was rescinding the cap before it was put into effect for 15,000 poor residents receiving cash assistance each month. Secretary Phyllis Gilmore said the state agency received an email Monday from a division of the U.S. Health and Human Services Department, saying the limit appeared to prevent poor families from having "adequate access" to their benefits.

Legislators approved the limit on ATM withdrawals in April as part of a broader measure rewriting rules for cash assistance. Copies of emails obtained by The Associated Press through an open records request show U.S. officials had questions weeks ago about how the limit would affect poor families. In June, state lawmakers passed a follow-up measure giving Gilmore the authority to raise or rescind the limit.

The cap was aimed at preventing recipients from converting their benefits to cash to get around limits on how the assistance could be used. But even some Republican lawmakers who support a limit acknowledged that $25 — set during a Senate debate — was too low.

Gilmore noted that her agency did not propose the $25 limit. DCF officials have been trying for weeks to assess whether U.S. officials opposed it enough to threaten to withhold more than $100 million in federal welfare funds from Kansas.

"It was distracting from the good parts of the law," said state Sen. Michael O'Donnell, a Wichita Republican who supported a $60-per-day limit and said lawmakers might reconsider the issue next year.

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The first welfare measure included a list of items for which benefits couldn't be used and places where cash assistance can't be spent. The list remains in place and includes alcohol, tobacco, gambling and sexually oriented materials, as well as entertainment. Cash assistance also can't be used in nail salons or spas, on cruise ships or at tattoo or body-piercing parlors.

"Although there is no ATM withdrawal limit in place, we encourage clients to use their assistance for necessities as they work toward self-sufficiency," Gilmore said in a statement.

Critics argue such policies are punitive. They said the cap on ATM withdrawals would force families to make many trips to ATMs a month and incur fees each time to pay expenses such as rent or utility bills.

"I'm glad to see that the federal agency has weighed in quickly so that we avoid unnecessary costs and unnecessary burdens for Kansas families," said Shannon Cotsoradis, president and CEO of Kansas Action for Children. "

Kansas DCF officials had said it would take up to a year to make the technical changes with cash assistance cards to enforce the ATM limit. They submitted a new plan for the program last week to HHS officials for their review.

But the copies of emails between Kansas and regional HHS officials obtained through the records request showed the HHS officials had questions about the ATM policy within days of Republican Gov. Sam Brownback signing the first welfare legislation.

A state official sent an email April 23 to regional HHS officials replying to questions "about access to benefits for payment of rent." A regional HHS official's May 7 email asked what Kansas would do to ensure poor families had enough places at which to withdraw benefits "with minimal fees or charges," expressing concern about a potential "dearth" of rural locations.

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Online:

Kansas Department for Children and Families: http://www.dcf.ks.gov/

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Follow John Hanna on Twitter at https://twitter.com/apjdhanna .