States Ignoring Stimulus Welfare Fund

Posted on Sep 8, 2009

By Michael Grabell, Christopher Flavelle and Emily Witt, ProPublica

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“We’re in an almost crisis level budget situation in Louisiana,” he said. “We’re facing budget cuts and staff reductions every day. So even to start a program is not an option right now.”

Tweedie and other public policy experts have been traveling around the country educating states on the program’s flexibility. The 20 percent portion doesn’t have to come from state budgets, he said. It can be paid by cities, counties, private donors or nonprofits like homeless shelters or food banks.

“If they want to do back-to-school payments, go talk to Wal-Mart or Target and have them put up the 20 percent,” Tweedie said.

Economist Lawrence Mishel said giving money to low-income people is one of the most effective ways to stimulate the economy, because they’re more likely to spend it than average consumers.

“Whether you call it back-to-school money or just go-out-and-spend-it money, I don’t think it really matters much,” said Mishel, president of the Economic Policy Institute. “Why would somebody get upset about money going to people on TANF? As opposed to rich people buying flat-screen TVs” with tax cuts?

Like New York, Texas is using stimulus money to help poor families buy back-to-school supplies, albeit on a much smaller scale, just $6 million for the entire program. Welfare recipients got just $105 per child and they could use the money only at specific stores, not at ATMs.

Texas also announced its program weeks in advance, avoiding the confusion New Yorkers experienced when the money came their way.

Niurka Ventura, a mother of five in the Washington Heights section of Manhattan, said she heard about the money from a friend, who told her she had to withdraw the money by midnight. She noticed a crowd waiting at the ATM next to her apartment and sent her daughter to stand in line, which she said took three hours.

Ventura said she spent the money on phone and electricity bills, took her kids to the zoo and treated them to pizza. She said she didn’t get the letter telling her that the money was for school supplies until a week later.

Kristin Proud, the state’s deputy director for operations, said there was no other way to get the money out in time for back-to-school sales.

The state couldn’t limit it to a certain number of stores, because rural residents might be an hour’s drive from a major chain. It would have taken years to create a card system that could limit purchases to a list of items, as food-stamp cards are designed to do, she said.

“It would be very difficult to determine what kind of clothing, for example, is a back-to-school item,” Proud said. “Like is a woman’s size 12—is that OK for a purchase for back-to-school for children? Some would argue no. I would argue that I have friends who have large children who are 15 and wear clothing bigger than I do.”

Proud said the federal government signed off on New York’s plans. When asked about allegations that the money was being misspent, Wolfe, the Health and Human Services spokesman, referred ProPublica to remarks that an agency official made when the New York program was announced, praising the idea. Wolfe did not respond to the criticisms of how the program was implemented.

Don White, a spokesman for the Health and Human Services inspector general, said his office is aware of the New York allegations but wouldn’t confirm or deny whether investigators were looking into them.

Mimi Corcoran, who works with George Soros’ foundation, said Soros was happy with the outcome. He was inspired to donate the money by his own experience after World War II, she said, when Quakers gave him school money with no strings attached.

“We respect and honor that even if individuals are poor, they will spend the money appropriately for their children,” she said

Outside the Washington Heights food stamps office two weeks ago, Tokina Julius, a single mother, said she didn’t know how she would have afforded new clothes for her 7-year old daughter Jacqueline without the money. She said she bought four pairs of jeans and three shirts at Old Navy, as well as jumpers, stockings and a pair of Hush Puppies sneakers. She said she has $50 left, which she said she’s saving for notebooks.

“I was happy it came,” Julius said. “It really helped me out in a big way.”

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