What the EBT misuse data really tells us

Robert W. Glover, University of Maine 

Roughly three weeks ago, I wrote about Governor LePage’s allegations of fraud and abuse in the state’s EBT (electronic benefit transfer) system–the primary means by which 7700 needy families in the state access cash and food benefits. At the time, I said, “…we lack any systematic evidence that such ‘misuse’ is widespread.” Despite any appearances to the contrary, that remains true today.

At the time the Governor first announced his intentions to pursue EBT reform this legislative session, he promised data which would support his allegations that the system is “unchecked” and has “no accountability.” Yesterday, he produced that data. It’s available here.

The data provided above is a three-page spreadsheet of instances in which EBT cards were used in bars, pubs, or strip clubs–3701 instances of inappropriate use between January 1, 2011 and November 15, 2013.  These were likely cash transactions conducted through onsite ATMsHowever, there are no dollar figures attached to these instances of misuse. Absent such information, we can only weight this alleged misuse against overall transactions. During this period, there were approximately 1.725 million EBT transactions. As Steve Mistler of the Portland Press Herald points out, “…that means the inappropriate transactions accounted for about two-tenths of 1 percent of all EBT use during that period.” 

There are references made to more data showing the geographic scope of usage, though its seems that the data itself is not yet publicly available. The Maine Wire, an online news service managed by the Maine Heritage Policy Center appears to have this data, gained through a Freedom of Access Act (FOAA) request.

The Maine Wire reports that EBT benefits in the 2011-2013 period were used in a variety of locales other than Maine. These are mostly bordering states such as New Hampshire and Massachusetts, none of which is illegal. Mainers who are residents can access benefits wherever they happen to be. And as the Maine Wire notes, there are a variety of legitimate reasons why benefits might be accessed out of state: “..it may be more convenient or cost effective to shop in a bordering state; military families receiving benefits in Maine might be transferred to another state; natural disasters, domestic violence, or divorce, may displace people, making it necessary to seek shelter with out-of-state family members or friends; or families may move to find employment.”

A handful of EBT transactions appear to have been made in vacation hotspots such as Las Vegas and Disney World. This is certainly cause for concern, but given the volume of transactions, it appears to be an isolated phenomenon. It remains to be seen why the Department of Health and Human Services (DHHS) can’t simply “flag” such transactions in the same way that Mastercard or Visa do for fraudulent activity on one’s debit or credit card.

So with what we’ve discovered so far, what can we say about the supposedly “broken” EBT system in Maine?

1) It is not broken. 

What has been produced seems to suggest that the cases of misuse are a very small phenomenon relative to the proportion of Mainers who play by the rules. Potential misuse occurring in .2% of transactions does not constitute a crisis or a broken system. These are likely isolated instances of misuse that should be investigated swiftly rather than sensationalized in order to make political hay. This is not to excuse any instance of misuse, fraud, or corruption. It is only to say that we must place the prevalence of such potential misuse in its proper context and ensure that we legislate to the norm, rather than the exception.

As a point of comparison, 8.6% of all economic activity in the US goes unreported and untaxed, our “shadow economy.” This is illegal non-disclosure and fraud that results in roughly $337 billion dollars of lost tax revenue every year. If anything, those receiving public benefits in Maine are substantially more honest than the median American citizen and consumer, in part because their lives and their economic decisions are more heavily scrutinized.

2) Enforcement of existing regulations would combat the alleged misuse identified here. 

Presumably, Governor LePage wants to ensure that those accessing benefits through their EBT card are Maine residents who are entitled to them, and that they are using them in such a way to improve their situation (i.e. on food and basic necessities). But the laws designed to ensure this already exist. Non-residents are not qualified to continue receiving such benefits. In addition, a law passed in 2012 restricted EBT card use in any business that “…derived more than 50% of its gross revenue…from the sale of liquor,” or establishments where “…performers disrobe or perform in an unclothed state for entertainment.” Bars, liquor stores, and strip clubs.

With such laws on the books, it remains unclear why we need an overhaul of this system. DHHS can investigate those who have not made an in-state transaction for a certain duration of time to determine their continued eligibility. They can investigate those who have made transactions in unauthorized or questionable establishments. Why they have not done so must be made clear before we propose or enact any new legislation.

3) The way to fight potential misuse is through enforcement of existing laws, not further restrictions that will create obstacles to pathways out of poverty for needy Maine families. 

Lastly, what should be clear is that the overwhelming majority of those accessing benefits play by the rules. My last post on this subject aimed to dispel misinformation about recipients of TANF and food supplements who rely upon their EBT transactions to survive and put food on the table. I won’t retread that ground here. The key point is this. Regardless of these instances of potential misuse, we must not erect barriers that prevent needy families from surviving and leading a dignified life even while attempting to emerge from poverty.

Recommend this article
Research Shows

About Research Shows

Education. Jobs. Health. Poverty. Crime. Immigration. Environment. Campaigns. Rights. What does research show? Avoiding jargon, Maine’s Scholars Strategy Network explores pressing issues and democratic life.