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Kansas pols pass quick fix for controversial ATM cash limit law

Under threat of federal intervention, the state backtracked on a $25 daily limit for ATM cash withdrawals made with prepaid EBT cards.

June 16, 2015

In April, Kansas Governor Sam Brownback signed into law a bill that imposed new restrictions on where and how citizens receiving public benefits could use their prepaid EBT cards.

Immediately, citizens rights groups started the outcry over the bill's $25 daily limit on ATM cash withdrawals, declaring it mean-spirited and even stricter than it appeared, since: a) few ATMs dispense anything but $20s; and b) the limit would force more frequent cash withdrawals, resulting in more surcharge fees and a de facto reduction in benefits.

According to a Bloomberg report:

The restrictions on ATM withdrawals could eat up as much as 10 percent of that in transaction fees, according to Shannon Cotsoradis, president and chief executive officer of the advocacy group Kansas Action for Children. She says state lawmakers acted on anecdotes about TANF cards being used at casinos and, in one instance, on a cruise ship. "This is not a data-driven policy decision," she says. "This is a solution seeking a problem."

It didn't take the federal government long to weigh in on the fracas between legislators hell-bent on welfare reform and citizens hollering about regressive legislation. The Department of Health and Human Services said it would review the law to determine whether it complied the Social Security Act, which requires that benefits recipients have "adequate access to their cash assistance ... with minimal fees or charges."

If the Kansas law were found to have contravened the act, the state could be penalized with the loss of $102 million in annual federal block grant funds, media reports said. So, with summer recess looming and big money at stake, the Kansas legislature feverishly set to work to amend the law and avoid a federal showdown. On Friday, Brownback signed the new bill into law. According to a Kansas City Star report:

H.B. 2258, 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.

According to a report by the Wichita Eagle:

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.