New EBT Mandate in Extension of TANF Block Grant through FY 2012; State Penalty Risk for Non-compliance  

March 15, 2012 

On February 22, the President signed P.L. 112-96, the “Middle Class Tax Relief and Job Creation Act of 2012.”  Included in this law was an extension of the Temporary Assistance for Needy Families (TANF) block grant, with policy changes and a new penalty for states.  The TANF block grant, which includes the Contingency Fund, is extended through September 30, 2012.  The TANF Supplemental Grants were not provided for in this legislation.

The law includes a new mandate that requires states to maintain policies and practices that would prevent TANF assistance provided through Electronic Benefit Transfer (EBT) transactions from taking place in liquor stores, casinos/gaming establishments, and any retail establishment that provides adult-oriented entertainment.  The definition of “casino” would not include grocery stores or other establishments with “gaming activities” as long as gambling was not the principle purpose of the business.  Similarly, a “liquor store” is defined as a store that primarily sells liquor, as opposed to a store that sells a variety of items that happens to include liquor.  The EBT access provision only applies to EBT benefits funded by the TANF block grant.  It does not apply to other program benefits that are delivered by EBT card including Unemployment Insurance, Supplemental Nutrition Assistance Program (SNAP/food stamps), Women Infant and Children Special Feeding Program (WIC) or Child Support payments.

States will have to report to the Secretary of the U.S. Department of Health and Human Services (HHS) where they are in establishing policies and procedures to prevent the EBT access of benefits in the aforementioned locations in two years.  If a state has not made enough progress in establishing policies and procedures to prevent EBT access at banned locations, or fails to make a report to HHS, the state will be subject up to a 5 percent penalty of the next year’s TANF block grant.  Attaching the penalty is significant not only because of the financial risk to states, but because it allows HHS to promulgate regulations on the details of the requirement.  HHS only has the authority to promulgate TANF rules if a penalty is included.  HHS will determine how progress in establishing policies and procedures is defined and how existing state statutes will be treated.

NCSL Human Services and Welfare Chairs Senator Tom Hansen (South Dakota) and Representative Barbara Ballard (Kansas) had sent a letter to Congress opposing this mandate as a preemption of state authority over the TANF block grant.  The letter was discussed during the House floor debate on a similar stand-alone bill.  While many members expressed concern about preempting state authority and the potential for increased costs to states, most members ultimately voted for the stand alone bill, H.R. 3567.  The provision was then incorporated into the payroll tax extension legislation that became P.L. 112-96.  The letter can be viewed at Also included in the extension is a requirement that states modify their TANF plans to ensure that TANF recipients have “adequate access” to their TANF benefits as well as detailing how states are ensuring that TANF recipients can access their benefits with minimal fees or charges.  It is unclear what “adequate access” means and is subject to guidance from HHS.

Finally, P.L. 112-96 requires HHS to establish non-proprietary data elements to collect across all the states.  This language is nearly identical to what was included in P.L. 112-34, which re-established HHS’ authority to grant waivers in the use of Title IV-E funding in the child welfare system.

NCSL will continue to engage HHS in their development of regulations/guidance and implementation of this law.  To read the law, go to:

For further information, please contact either Sheri Steisel  or Emily Wengrovius at  or NCSL’s Washington DC office at 202-624-5400.