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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Reagan, Ronald: Gubernatorial Papers,
1966-74: Press Unit
Folder Title: Issues - Welfare Reportition
(2 of 2)
Box: P32
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
STATE OF CALIFORNIA-HEALTH AND WELFARE AGENCY
RONALD REAGAN, Governor
DEPARTMENT OF SOCIAL WELFARE, 2415 FIRST AVENUE
STATE SOCIAL WELFARE BOARD
SACRAMENTO 95818
CALIFORNIA
MRS. ALEXANDER RIPLEY
DR. WALTER W. DOLFINI
CHARLES A. BOWERS
J. STEVE WILLIAMS,
Chairman
June 14, 1968
ARTHUR R. TIRADO
SENATOR H. L. RICHARDSON
SENATOR TOM CARRELL
ASSEMBLYMAN JOHN G. VENEMAN
ASSEMBLYMAN JOHN BURTON
JACK W. THOMPSON, EXECUTIVE SECRETARY
TO: SOCIAL WELFARE BOARD MEMBERS
ADVISORY COMMITTEE ON WELFARE ABUSE
FROM: Jack W. Thompson, Executive Secretary
RE: Report on Welfare Fraud - Third Draft
Attached for your consideration is the third draft of the Board's
report on welfare fraud. The third draft is the result of the
Board's deliberations at the last meeting in San Francisco.
There has been considerable discussion about the method of signing
the report when it is in final form. Because of the turnover in
Board membership since the work began, it is felt that the current
chairman should sign the transmittal letter to the Governor and
that the names and terms of all Board members having official status
during the course of the study should be listed in the body of the
report.
If you will be kind enough to review this draft it will be considered
for adoption at the next Board meeting.
Attachment
State Social Welfare Board
Report on Welfare Fraud
Third Draft
CONF IDENTIAL
June 18, 1968
SUGGESTED DRAFT OF TRANSMITTAL LETTER
WELFARE FRAUD REPORT
The Honorable Ronald Reagan
Governor of California
State Capitol
Sacramento, California 95814
Dear Governor Reagan:
Transmitted herewith is the report of the State Social Welfare Board
on the subject of welfare fraud as requested in your charge to this
Board contained in your letter of July 11, 1967.
Through the use of public hearings the Board received written and
oral testimony on a variety of subjects related to welfare fraud and
abuse. The transcripts of the hearings and the written testimony
are available for reading by anyone interested.
The attached report includes a general discussion of the major points
developed in the hearings. A summary of our findings begins on page 25
and our recommendations begin on page 27.
On the basis of the information developed in the inquiry, we believe
that welfare recipients are no more fraudulent than other humans.
Obviously, there is much crime in the United States that has not been
detected and, therefore, does not become a part of the percentages
reported. In the same way that income tax evasion convictions do not
reflect the number of people cheating on their income tax, convictions
for welfare fraud do not represent an authoritative measure of the
extent of welfare fraud.
There are methods other than public hearings which could be used to
more accurately determine the extent of fraud in welfare caseloads.
One method would be the use of traveling audit groups nonoriented to
social welfare but skilled in fraud detection. The audit teams could
make spot checks of recipients' files throughout the state. This
would be a very costly and time consuming operation which is not
necessarily recommended by us but is pointed out as a more accurate
way of determining the extent of fraud than the use of public hearings.
Our report places heavy emphasis on fraud prevention and makes specific
reference to a five*point prevention program in the report summary on
page 25.
Governor Reagan
-2-
(Date)
The Board wishes to express gratitude for the excellent cooperation
received from members of the Advisory Committee on Welfare Abuse as
well as the many individuals who gave their time, knowledge and experi-
ence on this subject.
We believe that the recommendations contained in this report should be
implemented at the earliest possible date.
Respectfully,
STATE SOCIAL WELFARE BOARD
J. Steve Williams
Chairman
Attachment
TABLE OF CONTENTS
Page
0
The Governor's Charge.
I
The State Social Welfare Board
3
Advisory Committee on Welfare Abuse.
3
Study Plan
4
Roster of Witnesses,
5
Definition of Fraud
10
Forms of Fraud
12
Discussion of Major Factors Related to Welfare Fraud
.......
13
Summary
25
Recommendations
27
State of California
GOVERNOR'S OFFICE
SACRAMENTO 95814
RONALD REAGAN
GOVERNOR
July 11, 1967
Mr. Nelson A. Howard, Chairman
State Social Welfare Board
Department of Social Welfare
2415 First Avenue
Sacramento, California
Dear Chairman Howard:
Please consider this letter my formal charge to you and the members of the
State Social Welfare Board, as you assume your duties as the advisory body
to the Governor and the State Director of Social Welfare.
The principal public welfare concern to which I am now asking the Board to
address itself is the abuse of the public assistance program in California.
We are confronted with separate and distinct bodies of opinion as to the magni-
tude of welfare cheating and abuse of the program. One opinion is that cheating
is widespread among the 1, 200, 000 persons receiving cash subsistence grants
in California. The other opinion is that there is only a minimal amount of
cheating.
As long as this divisive disagreement exists, the public assistance program is
hampered in fulfilling its necessary role of aiding the needy. Until the general
public is given the facts, and all of them, this disagreement will continue. Thus,
to clear the air of this disagreement, I request that you accept the heavy responsi-
bility of gathering the facts about fraud and welfare chiseling, to check out and
weigh carefully the evidence and to report to me the full picture of the situation
as you find it. I am sure there is no need to caution against giving weight to
unsupported hearsay, rumors, claims and charges that cannot be documented.
You and I want no witch hunts. We need a thorough gathering and sifting of
factual evidence upon which valid conclusions can be based. I further ask that
in this endeavor, you work closely with a standing committee which will be
designated by the Administrator of the Health and Welfare Agency.
Yesterday, you attended the Governor's conference on the "The Role of the
Legal Profession in Public Welfare, If and I urge that you give due consideration
Mr. Nelson A. Howard, Chairman
-2-
July 11, 1967
to the conclusions reached by the Conference as you prepare to assess the extent
of fraud in public welfare.
You are authorized to hold such public hearings at various locations around the
State to call witnesses and to do all other similar things necessary for a full
and effective study of this matter. I will appreciate your advising me as to the
date that I may expect to receive your report.
In order for the Board to function as strongly and effectively as possible in its
advisory responsibilities to the State Director, John C. Montgomery, I have
authorized him to augment and broaden this charge from time to time during
the months ahead. It is Mr. Montgomery's concept and mine that the "public
forum" role of the Board can be of great advisory value to him in carrying
out his administrative authority and the policy decisions that are his responsi-
bility.
Very truly yours,
Ramer Regan
RONALD REAGAN
Governor
-2-
THE STATE SOCIAL WELFARE BOARD
Mr. J. Steve Williams, Chairman
Mrs. Estella Dooley
San Bernardino, California
San Francisco, California
(5/10/67 - present)
(5/5/67 - 3/14/68)
Mr. Nelson A. Howard, Chairman
Senator H. L. Richardson
Pasadena, California
Pasadena, California
(5/8/67 - 5/17/68)
(9/18/67 - present)
Mr. Raymond E. Lee
Senator Tom Carrell
Beverly Hills, California
San Fernando, California
(5/4/67 - 5/23/68)
(5/12/67 - present)
Walter W. Dolfini, M.D.
Assemblyman John Veneman
Eureka, California
Modesto, California
(5/4/67 - present)
(5/12/67 - present)
Col. Charles A. Bowers
Assemblyman John Burton
Sacramento, California
San Francisco, California
(3/14/68 - present)
(9/8/67 - present)
Mrs. Alexander Ripley
Mr. Jack W. Thompson
Los Angeles, California
Executive Secretary
(5/8/67 - present)
Sacramento, California
(2/19/68 - present)
Mr. Arthur R. Tirado
Fresno, California
(5/11/67 - present)
THE ADVISORY COMMITTEE ON WELFARE ABUSE
Mr. Edwin C. Steckman
Mr. Leslie J. Pryde
Welfare Investigator
Supervisor - Butte County
San Diego County
Gridley, California
San Diego, California
Mr. John C. Montgomery
Mr. Granville C. Peoples
Ex-Officio Member
Director
Director
Orange County Department of
State Department of Social
Social Welfare
Welfare
Santa Ana, California
Sacramento, California
Miss Mary M. O'Neill
Mr. James M. Shumway
Deputy Director
Ex-Officio Member
Los Angeles County Department of
Assistant Administrator
Public Social Services
Health and Welfare Agency
City of Commerce, California
Sacramento, California
Mr. Louis P. Bergna, Esq.
District Attorney
Santa Clara County
San Jose, California
-3-
STUDY PLAN
In an attempt to gain authoritative insight into the subject of welfare fraud
in California, this Board convened public hearings in five locations in the State as
follows:
January 12, 1968
Redding, California
January 26, 1968
San Bernardino, California
February 3, 1968
Fresno, California
February 16, 1968
San Francisco, California
March 1, 1968
Los Angeles, California
Invitations were extended via press releases, radio, television, letters,
and personal contacts to individuals and agencies throughout the state to pre-
sent evidence on the controversial subject of welfare fraud. In addition to those
who presented verbal testimony at the hearings, a significant number of people
submitted written testimony but did not appear. Those who testified represented
recipient organizations, county welfare departments, district attorney's offices,
social workers organizations, public legal foundations and schools of social work
as well as individual recipients and other private citizens.
-4-
INDIVIDUALS WHO PRESENTED TESTIMONY AT HEARINGS
Mr. Harold Barnett, Northern Valley Chapter, National Association of Social
Workers, Redding, California
Mr. Oran Bollinger, Director, Imperial County Welfare Department, El Centro,
California
Mr. Ronald Born, Director, San Francisco County Department of Social
Services, San Francisco, California
Dr. Scott Briar, Associate Professor, School of Social Welfare, University
of California, Berkeley, California
Dr. Thomas Brigham, Associate Professor of Sociology, School of Social
Work, Fresno State College, Fresno, California
COUNTY
Mr. John Cartwright, Public Administrator, City of Fresno, Fresno,
California
Mr. Reed Clegg, Director, Fresno County Department of Public Welfare,
Fresno, California
Mr. Lynn D. Compton, Chief Deputy District Attorney, Los Angeles County,
Los Angeles, California
Mr. R. C. Currier, Los Angeles, California
Mr. William C. Daly, District Attorney, Fresno County, Fresno, California
Miss Frances S. Engel, President, San Bernardino-Riverside Chapter,
National Association of Social Workers, San Bernardino, California
Mrs. Alice Escalante, Member, Committee for the Rights of the Disabled,
Los Angeles, California
Dr. Frances Feldman, Associate Professor, School of Social Work, University
of Southern California, Los Angeles, California
Mr. William F. Ferroggiaro, Jr., District Attorney, Humboldt County,
Eureka, California
Mr. Marvin Freedman, Assistant Director, Los Angeles County Department
of Public Social Services, City of Commerce, California
Mr. Hilmi Fuad, Director, Tulare County Welfare Department, Visalia,
California
Mrs. Cherie A. Gaines, Chief Attorney, Appeals Unit, Legal Aid Society
of Alameda County, Oakland, California
Mr. L. Gibbons, Deputy District Attorney, Inyo County, Independence,
California
-5-
INDIVIDUALS WHO PRESENTED TESTIMONY AT HEARINGS (Cont.)
Mrs. Susan Goodfellow, Local 535, Social Workers' Union of Alameda County,
Oakland, California
Mrs. Judi Graham, Yuba City, California
Mr. Louis Gray, Social Workers' Union #535, Santa Clara County, San Jose,
California
Dr. Charles Guzzetta, Associate Professor, School of Social Work, San Diego
State College, San Diego, California
Mr. Robert Hargrove, Deputy District Attorney, San Bernardino County
San Bernardino, California
Mrs. Bernice Holson, Eligibility Screener, Alameda County Welfare Department,
Union Representative, Local 535, Social Workers' Union of Alameda County,
Oakland, California
Dr. Donald S. Howard, School of Social Welfare, University of California
at Los Angeles, Los Angeles, California
Mrs. Nancy A. Humphreys, Los Angeles Chapter, National Association of
Social Workers, Los Angeles, California
Mrs. Catherine Jermany, President, Los Angeles County Welfare Rights
Organization, Los Angeles, California
Mr. David C. Kelly, Director, Humboldt County Department of Public Welfare,
Eureka, California
Mrs. Helen Little, Chairman, Bay Area Welfare Rights Orgenization, San
Francisco, California
Mr. Cirilo Lopez, Welfare Recipient, Madera County Welfare Rights Organization,
Madera, California
Mr. Roscoe Lyda, Director, San Berrardino County Welfare Department,
San Bernardino, California
Sister Rosemary Markham, Sisters of Social Service, Los Angeles, California
Mr. Henry Mesple, Director, Fresno City Farm Bureau, Fresno, California
Mr. John J. Morrill, Special Investigator, Shasta County Welfare Department,
Redding, California
Mr. Myron Moskovitz, Directing Attorney, California Rural Legal Assistance,
Marysville, California
Mr. Robert M. Nelson, Social Work Consultant, Project Headstart, Long Beach,
California
-6-
INDIVIDUALS WHO PRESENTED TESTIMONY AT HEARINGS (Cont.)
Mr. J. Botello, Farm Worker, Yuba City, California
Mrs. Ollie Payne, Community Worker, El Centro Office, California Rural
Legal Assistance, Brawley, California
Mr. Richard B. Peterson, Chief, Family Support Division, Fresno County
Department of Public Welfare, Fresno, California
Mrs. Molly Piontkowski, Chairman, Committee for the Rights of the Disabled,
Los Angeles, California
Mr. Peter C. Rank, Deputy District Attorney, Contra Costa County, Martinez,
California
Professor Wallace N. Rich, School of Social Work, Fresno State College,
Fresno, California
Lt. Dwayne Smith, Bureau of Investigations, District Attorney's Office,
Los Angeles County, Los Angeles, California
Mr. Lucian Vandegrift, District Attorney, Butte County, Oroville, California
Mrs. Esther Washington, President, San Bernardino Welfare Rights Organization,
San Bernardino, California
Mr. Albert L. Wells, Deputy District Attorney, San Diego County, San Diego,
California
Mrs. Mabel G. Wells, ACSW, Fresno, California
Mrs. Atleary Williams, Welfare Rights Organization, Fresno, California
Mr. Norman Yates, Executive Director, Apartment Association of Inland
Empire, Inc., San Bernardino, California
-7-
THOSE WHO SUBMITTED WRITTEN TESTIMONY BUT DID NOT APPEAR
Mrs. Kloh-Ann Amacher, Chairman, Public Social Services Commission of
Golden Gate Chapter, National Association of Social Workers, Richmond,
California
Mr. Steven Antler, Attorney, San Francisco Neighborhood Legal Assistance
Foundation, San Francisco, California
Mr. Stephen Arian, Attorney, San Francisco Neighborhood Legal Assistance
Foundation, San Francisco, California
Mr. Lloyd Breakey, Central California Chapter, National Association of
Social Workers, Fresno, California
The Honorable Willie Brown, Assemblyman, Eighteenth District, San Francisco,
California
Mrs. Mary L. Charles, President, California Social Workers Organization,
Santa Clara, California
Dr. Milton Chernin, Dean, School of Social Welfare, University of California,
Berkeley, California
Mrs. Kathleen Dohner, Social Worker, San Francisco County Department of
Social Services, San Francisco, California
Mrs. Charlie Harris, United People Arriba Welfare Rights, Santa Clara,
California
Mr. J. V. Henry, Madera Office, California Rural Legal Assistance, Madera,
California
Mr. James Karls, Bay Area Council of Social Work Organization, San Francisco,
California
Mosignor Roger Mahony, Director, Catholic Charities, Fresno, California
Mrs. Kristin Ockershauser, Legal Aid Foundation of Long Beach, Long Beach
California
Mr. John T. O'Neill, Executive Vice President, California Apartment Association,
Anaheim, California
Mr. Antonio Pacheco, Farm Worker, Yuba City, California
Mr. Norman Ribera, Fresno Realty Board, Fresno, California
Mr. Armando Rodriguez, Attorney, Madera Office, California Rural Legal
Assistance, Madera, California
Mrs. Deloras Shaw, Hawailan Gardens Welfare Rights Organization, Hawaiian
Gardens, California
Mr. Keith Sorenson, District Attorney, San Mateo County, San Mateo, California
-8-
THOSE WHO SUBMITTED WRITTEN TESTIMONY BUT DID NOT APPEAR (Cont.) )
Dr. Harry Specht, Associate Professor, School of Social Welfare, University
of California, Berkeley, California and First Vice President, Golden Gate
Chapter, National Association of Social Workers
Mrs. Emilia Tellos, Community Worker, California Rural Legal Assistance,
Santa Rosa, California
Mr. Charles Ward, Director, Del Norte County Department of Public Welfare,
Crescent City, California
Paul Weinberger, D.S.W., Associate Professor and Coordinator of Research,
Department of Social Welfare, San Francisco State College, San Francisco,
California
-9-
DEFINITION OF FRAUD
In the course of the hearings, and in the review of the written
testimony, there were encountered a variety of definitions of welfare
fraud. We interpreted the Governor's Charge as being related to recipient
fraud. For the purpose of this report the definition of welfare fraud
as contained in Department of Social Welfare Bulletin #624 (Revised) will
be used. It is as follows:
Fraud by applicants for or recipients of public assistance exists
when the applicant or recipient has:
1. Knowingly and with intent to deceive or defraud, made a false
statement or representation to obtain aid, obtain a continuance
or increase of aid, or avoid a reduction of aid.
2. Knowingly and with intent to defraud, failed to disclose a fact,
which, if disclosed, could have resulted in denial, reduction
or discontinuance of aid.
3. Accepted aid knowing he is not entitled thereto, or accepted
any amount of aid knowing it is greater than the amount to
which he is entitled.
4. For the purpose of obtaining, continuing, or avoiding a reduc-
tion or denial of aid, made statements which he did not know to
be true with reckless disregard of the truth.
When aid is obtained by fraudulent means a crime is committed. The
number of convictions for such crimes is not necessarily the measure of the
extent. The evidence presented tended to establish that the percentage
of convictions of welfare recipients for fraud reported in this state is
relatively small.
-10-
The amount of suspected fraud presently reported to the research
statistical division of the State Department of Social Welfare is not
necessarily accurate. The existing levels of orientation and training
may limit the ability of the social worker to detect fraud.
-11-
FORMS OF FRAUD
There exists a variety of ways in which an individual may fail to
report a situation or event or so misrepresent these occurrences as to
constitute a suspicion of fraud. By far, the two most prevalent are
unreported income and family composition. In Los Angeles County, for
example, the referrals to the district attorney's office for investigation
revealed that about 55% of these cases were for unreported income, about
40% on the basis of family composition, most of these being an unreported
man in the home, and about 5% miscellaneous.
Aside from unreported income and family composition, some of the
other more frequently misrepresented factors are:
1. Children Living Out of the Home
2. Reconciliation with Husband
3. Concealment of Husband
4. Social Security, Unemployment and Disability Benefits
5. Child Support Payments from an Absent Father
6. Allowable Expenses
7. Assets
8. Residency
9. Private Medical Benefits
10. Use of Medical Card by Another Person
-12-
DISCUSSION OF MAJOR FACTORS RELATED TO WELFARE FRAUD
In the course of the inquiries, testimony was offered on a variety
of factors directly or indirectly related to fraud in California welfare
programs. Much of this material was of a subjective nature. Some of the
major points brought out in the testimony are outlined below.
The caseworker potentially is the single most important person in
the prevention of fraud on the part of the welfare applicant or recipient.
In spite of this potential, many caseworkers, because of their training,
view themselves in an almost exclusive service role in relation to the
recipient. Some feel that enforcement of regulations should be the
responsibility of others.
The service-oriented caseworker and the recipient must realize that
each has certain obligations and responsibilities. The caseworker has the
responsibility to become fully acquainted with all of the various aid
programs and their governing regulations, to obtain for the prospective
recipient the maximum amount of aid to which he is entitled (Sec. 10500
Welfare and Institutions Code of the State of California) and to insure
that the recipient has a full understanding of the requirements and
restrictions imposed by regulations relating to that particular form
of aid.
The recipient, on the other hand, must be made to understand the
importance of his meeting the terms of the restrictions and the serious
consequences that can result in the event of failure on his part. In
this connection, the caseworker must find the means to overcome language
barriers and resolve problems related to the recipients' ability to com-
prehend this important information. This should not be viewed as a law
enforcement function but rather as one of the basic goals of casework
relationship; that of encouraging individual responsibility on the part
of the recipient.
-13-
Finally, however, the social worker must be mindful that he is a
guardian of a public trust, that he must guard against misuse of public
funds and, in the face of a fraudulent situation should take steps to
insure an effective and prompt investigation and cooperate in the prosecu-
tion of the case. From the standpoint of the social worker some relief
from their varied role seems to be in sight. The State Department of
Social Welfare has provided for separation of the eligibility and case
service functions in the old age security category and is moving in that
direction in the other aids. As this separation is accomplished on a
broader basis, more time should be available for the social worker to
provide direct service to the recipient.
Many counties are taking effective steps to free social workers for
more frequent and meaningful recipient contacts. This is an effort that
should be continued, encouraged and supported. As social workers are
freed from menial tasks and given more time to function in a capacity
consistent with their training and orientation, they may be better able
to reduce the incidence of welfare fraud.
As a practical matter many conditions affect the ability of the
caseworker to carry out the responsibilities outlined above. Some of
those factors are set forth below.
Turnover among public welfare department caseworkers amounts to
an average of approximately 30% annually. Such staff turnover creates
almost insurmountable in-service training problems not to mention the
extremely high cost of such training and the period of time when the new
caseworker is not productive. One authority estimated that it takes six
months to a year for a new caseworker to become thoroughly familiar with
the basic rules and regulations of the particular program to which he is
-14-
assigned. Administrative changes resulting in the reassignment of case-
workers further complicate this problem. In Los Angeles County which has
an average annual turnover of approximately 30% among its 3300 caseworkers
over 76% of the social workers have less than two years' experience and
over 41% have less than one year. The problem of orienting staff members
and attempting to interpret the complex rules and regulations of the
various welfare programs to the recipient is self evident.
Many counties are making excellent progress in developing in-service
training programs which underscore fraud prevention as an integral part
of the casework relationship. The best of such programs involve the forma-
tion of close consultative relationships with district attorneys' offices
taking full advantage of the techniques, training and experience within
the district attorneys' staff. Such training programs not only emphasize
the need for the caseworker to acquaint the recipient with his responsi-
bilities but, also, trains the caseworker to be alert for the danger signals
which, on investigation, often lead to recognition of some conflict between
the information in the record and the situation as it actually exists.
The early recognition of these danger signals and the resolution of the
conflicts is a major step in an effective prevention program.
Another major factor related to the question of fraud is the ability
of the recipient to comprehend the regulatory requirements for reporting
such things as income and changes in family composition, assuming a thorough
explanation by the caseworker was given. There is ample evidence that
welfare regulations are quite complex and the present effort of the State
Department of Social Welfare to simplify will have some positive effects,
although many requirements result from federal mandates. Therefore, in
spite of efforts to simplify, it is of vital importance that caseworkers
exercise special care to interpret the recipient's responsibilities into
-15-
the simplest and most easily understood form, as free as possible from
administrative terminology and language. The intent of the regulations
should be explained to further impress the recipient of the need for
reporting changes that affect eligibility to the welfare department.
One of the many forms used in the AFDC application process is:
ABCDM 200 - Application for Public Social Services. On the back of this
form there is a section entitled "Important Notice to Public Assistance
Applicants." This section is designed to alert the applicant to the
necessity for reporting income, sales of property, etc. No mention is
made of the need to report changes in family composition although, as
reported by Los Angeles County, 40% of the referrals to the district
attorney's various offices in that county stem from failure to report
such changes.
A greater emphasis placed on staff retention, in-service training,
development of close consultative liaison with the district attorney's
office and more attention given to the recipient's understanding of his
responsibilities, along with the appropriate reminders and effective
follow-up, will result in an effective welfare fraud prevention program.
In addition, such a program would help to reduce the large number of
suspected fraud referrals resulting from agency omission and errors and
further reduce the referral of cases in which there is a lack of intent
to defraud. In recognition of the public trust shared by all individuals
and agencies involved in welfare service and enforcement, those suspected
fraud cases which remain should be promptly and effectively prosecuted.
The question of restitution, particularly in those cases where
there is no other income or property from which restitution can be made,
presents some difficult problems. Under the present procedure, the grant
is reduced, sometimes to zero, in order to offset the overpayment, so as
to effect reimbursement for the overpayment as nearly as possible within
-16-
a 60-day period. While there is need to restore the public funds promptly,
this restrictive procedure often leads to severe deprivation of minor
children who are innocent victims. Experimentation in this area might well
show greater monetary return if spread over a longer period, thus avoiding
the harsh impact on members of the family who are not a party to the fraudu-
lent act.
As another means of prevention and early detection of fraud, there was
testimony offered on the value of a central registry of welfare recipients.
Throughout the hearings, the inadequacies of grants was pointed out
as one of the major reasons for welfare fraud. It was stated that the
state's maximum participation base, in effect, resulted in a grant that
was actually less than the amount fixed by the state as the minimum sub-
sistence level. When viewed in relation to the temptation to "cut a
corner'' in order to relieve an extremely limited budget, there is probably
some validity to this concept. However valid this argument might be, the
limitations placed on the amount of grants, although a very real and press-
ing problem, is a matter that is outside the scope of this inquiry. This
is an area in which the caseworker must put himself in a position to counsel
the recipient while guiding the recipient towards independence and a pro-
ductive life.
Testimony revealed some questions related to the granting of special
needs and allowances in computing the monthly grant. Instances were cited
in which the granting of such allowances ran contrary to the intent of
the regulations, producing a grant which was unrealistic.
Evidence has been introduced which illustrates the problems encountered
by many recipients in obtaining adequate housing within the grant allowance.
From the standpoint of the property owner, however, this problem is reflected
in terms of delinquent rental payments. Severe collection problems result
-17-
for the landlord when the recipient moves due to the inability of the
agency to provide information about the recipient's whereabouts because
of the confidential nature of the case record. While in general it seems
desirable to maintain such confidentiality there seems no justification
for withholding information as to the whereabouts of the recipient who
has moved without paying for necessities furnished to him where funds were
budgeted for that purpose.
There are provisions in the law relating to the priority nature of
claims resulting from furnishing necessities of life. On the other hand,
Section 10501 of the Welfare and Institutions Code of the State of California
provides that the manner in which the recipient shall spend the grant shall
not be dictated. Some balance must be struck between these two philosophies
which affords the recipient the measure of independence enjoyed by the
average citizen and, at the same time, provides the landlord with the same
degree of protection that he enjoys in renting to a non-welfare recipient.
By lifting the confidential cover to enable the landlord to locate the
tenant who has "skipped", he would have the same opportunity to recover
a judgment for delinquent rent as he would in any other landlord-tenant
relationship while maintaining the confidential nature of the case.
Another subject discussed in the hearings is the fact that some
prosecutors issue press releases following a conviction in a case of
welfare fraud. The basis for this action is given as the deterrent effect
that such publicity has on other recipients who, technically, have the
potential of defrauding the taxpayer. Others contend such publicity is
harmful and degrading to recipients in general and that the alleged deterrent
effect can not be substantiated.
The information contained in the Governor's Charge relating to the
opposing views on the extent of welfare fraud was certainly borne out in
-18-
the inquiries conducted by this Board. This is a highly controversial
subject, and these opposing views are contributing in a large measure to
the social stigma attached to welfare recipients and welfare programs.
The viewpoint of a large segment of the public is that welfare fraud is
rampant, and in this context, virtually anyone who must in time of need
turn to one of the aid programs is suspect. Those having such negative
attitudes and suspicions should be made aware of the legislative intent of
the programs which is clearly set forth in Section 10500 of the Welfare
and Institutions Code.
"10500. Every person administering aid under any public
assistance program shall conduct himself with courtesy,
consideration, and respect toward applicants for and
recipients of aid under that program, and shall endeavor
at all times to perform his duties in such manner as to
secure for every person the maximum amount of aid to
which he is entitled, without attempting to elicit any in-
formation not necessary to carry out the provisions of law
applicable to the program, and without comment or criticism
of any fact concerning applicants or recipients not directly
related to the administration of the program."
The term welfare fraud was viewed almost universally as being synony-
mous with the program of Aid to Families with Dependent Children (AFDC).
A good deal more effort is placed on ferreting out possible fraudulent
situations in the AFDC program than in the other aid programs, and, as a
matter of fact, when a discrepancy is noted, the problem is usually resolved
in a different manner, depending upon the nature of the aid program. Such
differential treatment results from the differences in wording in chapters
of the Welfare and Institutions Code on the subject of enforcement as
related to the various aid categories.
In the AFDC program Sections 11482 provides that a person 11 who willfully
and knowingly, with the intent to deceive, makes a false statement or
-19-
representation or knowingly fails to disclose a material fact to obtain
aid, or who, knowing he is not entitled thereto, attempts to obtain aid
or to continue to receive aid to which he is not entitled, is guilty of
a misdemeanor. Section 11483 provides that such a person shall
make restitution and all actions necessary to secure restitution may
be brought against him." The wording in Sections 13800 and 13801 in
the Aid to the Needy Disabled is similar. However, Sections 12250 and
12850 which refer to the Old Age Security program, Aid to the Blind, and
Aid to the Potentially Self-supporting Blind contain the following
qualifying paragraph:
"It is the intent of the Legislature that restitution should
be sought by request, civil action, or other suitable means
prior to the bringing of a criminal action."
Testimony reveals that as a practical matter these differences virtually
rule out criminal prosecutions under these adult programs.
The differences noted above are reflected in Department of Social Welfare
Bulletin #624 entitled, "Criteria for Referral of Cases to the District
Attorney. 11 This section reads in part as follows:
(OVER)
-19a-
'When reasonable grounds exist to suspect that fraud has
occurred, the case shall be referred to the district
attorney for further action.
"Exception: In OAS, APSB and AB, attempts to obtain
restitution by request, civil action, or other suitable
means shall be used prior to referral, after which the
case shall be referred to the district attorney."
The Department of Social Welfare Recipient Fraud Report for the
period January through March 1967 lists the number of suspected fraud
cases referred to the special investigation units and to district attor-
neys. Such referrals in the AFDC categories were approximately 17 times
greater than in the adult programs, while the AFDC caseload was less than
half the adult caseload.
Many persons testified that the true extent of fraud is not known,
nor can it ever be determined. It was proposed that an "acceptable
alternative" could be obtained by comparing convictions with caseload.
Such an approach is invalid since it is based on a faulty premise. The
number of convictions do not take into account the many variables, such as:
1. differences in interpretation of regulations;
2. differences in application of regulations;
3. fraudulent situations overlooked;
4. cases of actual fraud lacking sufficient evidence to prosecute;
5. absence of witnesses;
6. cases of actual fraud resolved short of prosecution;
7. statute of limitations;
8. excessive caseloads of investigators;
9. cases which are not referred and/or not prosecuted because of
the small amount involved.
In the course of the hearings, the Board was beseeched by a number of
witnesses to recommend the application of a cost-benefit approach to the
-20-
investigation and prosecution of suspected fraud cases, Under the cost-
benefit approach, the case of suspected fraud would not be carried through
to its conclusion or beyond the point that the cost of investigation and
prosecution exceeded the monetary benefits in the form of restitution which
could be expected to result from the full handling of the case. This is
an unreasonable approach, since if applied to other criminal matters, it
would indicate that, for example, a bank robber should not be prosecuted
unless the restitution justified the expense of prosecution and the necessary
investigative process. Careful pre-referral screening to weed out those
cases which do not, in fact, require more extensive and expensive field
investigation will tend to reduce investigative and prosecuting costs.
The usual process by which a case of suspected fraud is handled from
its inception to its ultimate disposition is as follows. Ordinarily, the
trained caseworker notes a conflict between information contained in the
case record and field observation. Information may also reach the case-
worker by means of letters, telephone calls, or tips from neighbors,
friends, relatives, or occasionally, in the form of an anonymous communi-
cation. Occasionally, such contacts are made directly with the district
attorney's office which is free to initiate its own independent investiga-
tion without having a formal referral from the county welfare department.
Usually the county welfare department will be informed of the information
received and the conduct of the investigation by the district attorney's
office, but in the past such referrals to that office from outside sources
have not been included in the statistical reports on fraud submitted to
the State Department of Social Welfare.
The caseworker receiving information or observing situations in con-
flict with the case record will usually attempt to obtain clarification
-21-
from the recipient. Lacking sufficient clarification or encountering an
uncooperative attitude on the part of the recipient will result in the
caseworker referring the matter to a special investigation unit within the
welfere department composed of staff trained in the preliminary Investiga-
tion of such cases to determine if, in fact, there exists a basis for some
formal action by the district attorney's office or if the conflict can be
explained in some other way.
Assuming a strong indication of the existence of fraud based upon an
omission or misrepresentation of facts or a failure to report certain
information or events, the case will then be referred to the district
attorney's office where a further investigation may ensue. Ultimately a
decision will be made as to the most appropriate course of action, depend-
ing upon the facts. At that point, the case may be returned to the county
welfare department if investigation reveals that a fraudulent act has not
been committed or there is insufficient evidence to warrant prosecution.
The special investigation unit within the welfare department may then
conduct a further investigation. Assuming the existence of a fraudulent
act with supportive evidence, the district attorney may proceed to prose-
cute as in any other criminal matter.
In the district attorney's processing of a case, it occasionally
becomes expedient to have an informal conference with the recipient involved
in a case of suspected fraud. These are called citation hearings and are
of value in helping the deputy district attorney understand all the facts
relating to the case. The results of the citation hearing may be a finding
that a fraud has not been committed, it may result in a confession, an
offer of restitution, a reprimand, or the decision to proceed with the
filing of a formal complaint. Statistical information revealing the number
of cases going to citation hearings do not make a distinction between those
-22-
cases in which no fraud has been found and the cases in which there is fraud
and the problem is resolved other than through prosecution.
The activities of the county welfare departments, the special investiga-
tion units and the district attorneys' offices with respect to the handling
of suspected fraud cases is reported to the State Department of Social
Welfare each month. This information is the subject of a quarterly report
by the State Department of Social Welfare entitled "Recipient Fraud Report."
There has been some criticism that the Recipient Fraud Report did not
reflect the full scope of activity, particularly within the district attor-
neys' offices, and that it did not take into account those cases in which
the district attorney received independent information directly from the
community on suspected fraud rather than through the usual channel from
the public welfare department. This statistical report, however, is com-
piled from information gleaned from DPA Form 266.1 submitted each month
and based on data from the county welfare departments and district attorneys'
offices. Obviously, the quarterly statistical report from the State
Department of Social Welfare is only as reliable as the input data, and
those who would take exception to the report should make certain that the
monthly report from the county reflects the true timely and accurate
picture.
The reporting form has been amended to include a section wherein a
district attorney can report those cases in which he receives fraud tips
from the community.
The Board heard testimony to the effect that increased staffing in
local agency investigation sections would result in the ferreting out of
additional fraud. Various staffing standards were suggested.
-23-
The fixing of staffing standards for county welfare department
investigative units should be accomplished by the State Department of
Social Welfare in coordination with county agencies as a regulatory
requirement.
-24-
SUMMARY
The incidence of fraud convictions within California's welfare
programs is small in relation to the caseload. The comparison of fraud
convictions with caseload leaves much to be desired. The unanswerable
question remains - how much undetected fraud exists?
Fraud can be reduced through increased public awareness and strengthened
preventive measures including:
1. better training liaison between caseworkers, investigators
and district attorneys;
2. improved orientation of caseworkers and recipients;
3. increased awareness by caseworkers of their responsibi,lity
to detect and report suspected fraud;
4. adequate staff and reasonable caseloads for county welfare
department fraud investigating units and district attorneys
investigators; and
5. a firm and consistent prosecuting policy.
Each individual concerned in any way with determining eligibility,
providing casework services to the recipient, conducting investigations,
or prosecuting cases of fraud, as well as the administrators of the agencies
involved, share a role as guardian of a public trust. Each has a vital part
to play in promoting the effectiveness of the welfare system for the sake
of the recipient and at the same time protecting the taxpayer.
All parties must guard against the utterance of careless and
irresponsible statements for whatever motive and to clearly and accurately
interpret the facts related to welfare in an effort to correct the damaging
misconceptions that now exist.
-25-
The administrators of welfare and enforcement agencies have a respon-
sibility to provide the simplest and most efficient administrative and
regulatory framework within which the caseworker and the enforcement staff
can function with primary emphasis being placed on the ability of the
individual to use his training and experience to the utmost.
The social worker must give full recognition to his diverse responsi-
bilities. He must adequately equip himself with the knowledge necessary
to insure that each recipient receives the maximum aid to which he is
entitled and the service consistent with the recipient's needs in order to
effect his return to productive and independent living at the earliest
date. He must insure in every case that the recipient has a full under-
standing of the need to report situations and events which affect his
grant and is prepared to assume the responsibility for doing so. The
social worker must be constantly alert for evidence of misuse of funds
and misrepresentation of situations and events. When these are encountered,
the social worker must give full cooperation in the investigation and
possible prosecution of the case. In this context, his role embodies the
elements of prevention and reporting. Neither responsibility is in conflict
with his helping role in relation to the recipient IN THE SAME SENSE THAT A POLICE OFFICER
HAS A DUTY TO PROTECT CITIZENS BUT APPREHENDS CITIZENS WHEN THEY BREAK THE LAW.
The investigative and prosecuting staffs must act promptly, effectively
and with full recognition given to the rights of the individual. When all
preventive measures have been taken, there will still exist some cases of
wilful and intentional fraud and these should be prosecuted to the fullest
extent of the law for the protection of the public as well as the vast
majority of recipients on whom the gnawing suspicion of fraud by the mis-
informed has a devastating impact.
-26-
RECOMMENDATIONS
THE FOLLOWING RECOMMENDATIONS RELATE TO THE POINTS DEVELOPED IN
THE TEXT OF THIS REPORT AND/OR TO THE TESTIMONY
1. Greater emphasis should be placed on the social worker's role in
preventing fraud. This role should be accepted by the profession
as an important aspect of casework service to the recipient.
2. A careful and periodic examination of the duties of social workers
should be accomplished in order to avoid clerical and menial tasks
and to take full advantage of their time, training and experience
in the casework relationship including fraud prevention.
3. Close liaison should be developed between public welfare departments
and district attorneys' offices for the purpose of adding depth and
emphasis to orientation of new staff and in-service training for
other staff in relation to welfare fraud. State Department of Social
Welfare Bulletin #624 (Revised) should be regularly reviewed by the
staff and special investigations unit in each welfare department and
Training Aid #21 parts a and b relating to recipient fraud should be
fully utilized.
4. Unannounced home visits by a social worker on any weekday during
normal duty hours should be encouraged. This is not seen as an
invasion of the recipient's right to privacy.
5. Greater emphasis should be placed on the recipient's need for special
help in understanding his responsibilities under the program. Special
attention needs to be given to the language barriers, intellectual and
educational deficiencies and to those having emotional problems.
6. A concerted and continuing effort should be made by each county to
encourage recipients to report in detail instances of over-charging
-27-
or other unethical practices by vendors in connection with the use
of public funds, and these allegations should be vigorously pursued
by the county.
7. Regulations concerning the confidentiality of records should be
amended to the extent that vendors furnishing necessities of life
should have access to information concerning the whereabouts of
the recipient in the event of non-payment of the account after pro-
viding the welfare department with the facts substantiating such
claim. This would provide the vendor with the same protection he
enjoys in selling to the general public, and at the same time the
confidential nature of the remainder of the case record would be
protected.
8. The back of each grant check, while not revealing the nature of the
payment, should contain a certification to be signed by the recipient
which states there has been no unreported change in his eligibility
status, similar to releases printed on the back of insurance checks.
9. An effort should be made to negotiate modifications in federal
requirements relating to adjustments of grant overpayments. This
should be reflected in more simplified and consistent state regula-
tions and, in particular, the extension of the present 60-day grant
adjustment period within which overpayments may be recovered. Such
extension will result in greater monetary return and less severe
deprivation.
10. Present policy calls for the granting of aid to be based on need,
although in a case of proven fraud, there may exist a liability for
the repayment of aid fraudulently received. This policy should be
amended to provide for a grant reduction over whatever period is
-28-
required to effect full restitution or, perhaps, controlled payments
for the benefit of the children while removing control of the cash
grant from the hands of the defrauding parent.
11. In computing overpayments resulting from understatement of or
failure to report income, deductions for the standard allowance for
incidentals, travel, babysitting, uniforms, etc., related to the
income not reported should not be allowed in determining the amount
of overpayment, thus providing an incentive to abide by the regulations.
12. There should be a careful re-evaluation of the intent and philosophy
related to the granting of special needs and allowances. Allowances
should be made only in those cases demonstrating true and realistic
need.
CONTINUE TO SEEK THROUGH
13. The State Department of Social Welfare should A through administrative
SIMPLIFICATIONOF
and legislative action, continue its current program of simplifying
ATION
SHOULD CONTINUE TO REMOVE
regulations, standardizing eligibility requirements, and removing as
much detail from published regulations as possible.
14. The State Department of Social Welfare should re-evaluate the practical
usefulness of the Recipient Fraud Report now utilized. The factors to
be included should be carefully analyzed in the light of its purpose.
15. The text on the back of form ABCDM 200 entitled "Important Notice to
Public Assistance Applicants", should be changed to include the warn-
ing that changes in family composition should also be reported to the
county welfare departments as has been done on Form CA-201.
16. The state and each county should have a carefully constructed workable
plan designed to inform and educate the general public on the various
aid programs and the people they are helping and the needs they are
TO SEE THAT ONLY
designed to meet. Extreme care must be used in releasing true and
accurate program statementsx ARE RELEASED,
-29-
17. The establishment of an automated centralized state registry containing
information on all welfare recipients. Such register would serve a
purpose similar to the central register of parents who have deserted
CALIFORNIA
or abandoned their children, as described in Section 11478.5 Welfare
and Institutions Code, enacted in 1967. The purpose of such a registry
would be to provide a source of information enabling detection of
those recipients who apply and receive aid in more than one county at
the same time. Other precedence for such a centralized registry are
those utilized by Unemployment Insurance, the Department of Motor
Vehicles and the Social Security Administration.
18. Legislation should be enacted to promote consistency in the identifi-
cation, investigation, and vigorous prosecution of suspected fraud
in all categories of aid.
19. Efforts should be made to reduce the number of unnecessary fraud
referrals to district attorneys' offices. A suggested method would
be by pre-referrai screening by a deputy district attorney prior to
the time the caseworker prepares formal referral formsx TO AVOID TIME CONSUMING PAPERWORK
20. The State Department of Social Welfare, together with appropriate
local agencies, should undertake a study to determine what is a
reasonable caseload level for thorough and effective fraud investi-
gations. Thereafter, the department should fix standards to insure
adequate efforts to detect and investigate fraud.
-30-
HUMAN RELATIONS AGENCY
FOR IMMEDIATE RELEASE
Sacramento, California
Contact: Spencer Williams
October 4, 1968
The following is the text of a letter from Human Relations Secretary
Spencer Williams to Governor Ronald Reagan in connection with the issuance of a
report by the State Social Welfare Board on welfare fraud:
"I have carefully reviewed the State Social Welfare Board's report
on welfare fraud which I have transmitted to you. The opinion contained in the
report that the true extent of welfare fraud in California has never been
accurately determined is a concern I share with the Board. It is imperative that
we find out.
"I therefore recommend that appropriate steps--both administrative
and legislative--be taken to:
a) determine the extent of welfare fraud in this State;
b) identify individuals suspected of fraud; and,
c) continue to encourage prosecution of these violators by the
district attorneys in the counties where the frauds are found to be committed.
"Some of the procedures contained in this report, which I believe
are necessary to accomplish these objectives, can be achieved by administrative
action. Others will require state and federal legislation. Some will require
appropriations.
"Among the steps listed in the report with which I concur are:
*
Establishment of traveling audit teams skilled in fraud
detection to help determine the true extent of welfare fraud in
California.
*
Development of an automated, centralized registry of all welfare
recipients. The registry would immediately detect persons who
received aid in two or more counties at the same time.
*
The negotiation of changes in existing federal guidelines so that
a protective payment plan can be developed for children of
fraudulent welfare payment recipients.
*
Stepped-up administrative action and legislative proposals by the
State Department of Social Welfare to simplify regulations,
standardize eligibility requirements and remove as much detail
as possible from published regulations.
-2-
* Greater emphasis on the social worker's role in preventing fraud
by advising individuals on welfare of the necessity of filing
accurate claims and immediately reporting any changes in their
status which would affect the amount of payments to which they
are legally entitled.
"Through the implementation of these and other steps which may be
required, I believe we can better carry out this administration's commitment to
the people of California that those truly in need will receive the assistance to
which they are legally entitled and those cheating the taxpayers by committing
welfare fraud will be detected and prosecuted under the laws of this State."
HH
HUMAN RELATIONS AGENCY
FOR RELEASE SUNDAY 'S,
Sacramento, California
November 24
Contact: Spencer Williams
November 22, 1968
(Please guard against premature
release)
Spencer Williams, secretary for Human Relations, announced today
(Monday, November 25)
he will file a strong, formal protest tomorrow/against a "dying gasp"
federal regulation which would change the way welfare eligibility is
determined.
Williams said he plans to deliver the protest in person to U.S.
Secretary of Health, Education and Welfare Wilbur Cohen in Washington.
The protest will also be filed with President Johnson and President-
elect Nixon.
"I hope this action will dispel any misunderstanding which may
now exist concerning the posture of the Reagan administration toward the
proposed federal regulations," he said.
On November 20 Cohen promulgated a new regulation replacing the
present comprehensive system of eligibility determination and
investigative procedures on July 1 with a "simple statement of need."
Williams said his protest "will include opposition not only to
the date for implementation of the new regulations, but also the
restrictions imposed on checking eligibility for aid. In addition,
the administration will insist that no regulations be adopted until
procedures can be developed and tested before their implementation is
required.
"We believe that a thorough check of eligibility is essential
to businesslike management of this program," Williams said. "Our
effort is to tighten up welfare administration, not relax it.
"The federal government should not restrict states' authority
to determine how and when they investigate applications for aid.
"This administration's own pioneering work in reducing red tape
and cutting staff time through use of the 'statement of need' to
determine eligibility for the old age security program took two years
of development, testing and installation in California's 58 counties.
"In view of differences in caseload, mobility and duration of
eligibility, there is no reason to assume that this procedure can be
effectively used in the family program.
"Furthermore, ordering into effect a new procedure within only
seven months--a procedure that applies to more than 1 million Californ-
ians is totally unrealistic and would surely result in utter chaos.
"This dying gasp order was rushed through without even waiting
for the recommendations of the advisory board set up for that purpose,"
Williams said.
# # #
(Williams will depart Sacramento Sunday, November 24, at 8:55 a.m.
aboard United Air Lines Flight #918.)
HUMAN RELATIONS AGENCY
FOR IMMEDIATE RELEASE
Sacramento, California
Contact: Spencer Williams
November 26, 1968
Spencer Williams said he would formally protest today two additional
"11th hour" changes in Federal regulations further liberalizing welfare
eligibility and increasing costs.
Williams, Secretary of the Human Relations Agency, was scheduled to
meet late today in Washington with Wilbur Cohen, U. S. Secretary of Health,
Education and Welfare, to protest a regulation adopted November 20 replacing
the present comprehensive system of investigative procedures in welfare
determination with a simple statement of need.
Williams said that although the Federal Agency had failed to notify
the State Agency responsible, he had learned that regulations also are being
adopted requiring continuation of aid during hearings to determine welfare
eligibility and calling for legal counsel to be provided to recipients during
the hearings at government expense.
"Mr. Cohen's adoption of untested regulations making major program
changes in the 11th hour of an outgoing Administration is unprecedented,"
Williams said, "He has not even gone through the normal channels of review
in his haste to initiate new policies that should await consideration by the
incoming Administration.
"Current welfare problems can only be compounded by the precipitous
adoption of vague, ill-defined regulations that make major changes without
adequate study of either program of fiscal effects," Williams added.
"Requiring payment of aid to persons awaiting a hearing on their
eligibility will not only result in payments to persons clearly not qualified,
it could require payments to persons deliberately defrauding the program,"
Williams said.
"Existing procedures insure that no person goes without the basic
necessities while awaiting the hearing decision," he noted. "Payments made to
persons later ruled ineligible will be virtually impossible and costly to
recover.
"The hearings are now conducted by skilled referees who afford the
utmost protection to the rights of the appellants," Williams said. "There
has been no demonstration that providing counsel in every case will improve
the procedures."
-2-
Williams said the proposed additional Federal regulations would
"add substantially to state and county costs." He said he was not able to
provide a cost estimate on such short notice. However, he said, there are now
about 5,500 hearings a year of which about 65 percent sustain the original
administrative decision of the county.
Williams had announced Sunday his intention to personally protest
the regulation adopting the declaration of need. He said it preempted State
authority to determine how and when to investigate applications for aid and
that it assumed without adequate evidence that procedures in one class of aid
could be applied to all others despite significant differences. Williams
also said that the seven months allowed for implementation was grossly
inadequate.
####
Welfare
HUMAN RELATIONS AGENCY
FOR IMMEDIATE RELEASE
Sacramento, California
Contact: Spencer Williams
April 21, 1969
The following statement was issued today by Spencer Williams, Secretary
of the Human Relations Agency:
"I am gravely concerned by the decision of the United States Supreme Court
today invalidating residency requirements for welfare recipients, even
though California's appeal technically is still pending at this time and
there remains some possibility our residency requirements, already stricken
by a lower court, may yet be upheld.
The action of the court provides a bonus for those states which fail to meet
their obligations at the expense of the California taxpayers and the other
states that do.
For one thing, the decision vents the internal pressures that might have forced th
the backward states to meet their responsibilities and actually encourages
them to lower their already inadequate aid payments in hopes their poor will
simply move out.
By its decision, the court encourages welfare recipients to shop for the best
deal. Already there are indications persons are moving to California solely
to obtain higher welfare payments.
Instead of encouraging State and local solutions of social problems, the
decision tends to force the states to turn to Washington for answers. Mean-
time, California taxpayers suffer a serious additional fiscal burden.
This State has been enjoined from enforcing residency requirements in effect
for 30 years with congressional approval since April 1968 by a Federal Court
Order despite our immediate appeal to the United States Supreme Court. As a
result, 3,000 to 4,000 additional persons have been added to our welfare rolls
each month at a cost of $26 million this fiscal year and an estimated $35
million next fiscal year."
###
weifare
Human Relations Agency
of California
emorandum
Date
:
To :
The Honorable Ronald Reagan
m
August 6, 1969
Governor of California
File No.:
Subject:
Continuation of
Welfare Report
From : Office of the Secretary
The following material is forwarded for use in connection with
the continuation of the Welfare Reporton Friday.
These include:
1. The list of possible cost reduction areas indicating
the law or regulation which controls.
2. A summary in outline form of John Montgomery's presen-
tation (14 pages) and,
3. A list of some typical questions which may come to
mind.
It is urged that you review this material and have your own questions
ready so that we can go directly into the question and answer period
with a minimum of presentation.
The full text of Mr. Montgomery's comments of July 28th have been
reproduced and can be readily supplied upon request.
SPENCER WILLIAMS
Secretary
Attachments
OUTLINE SUMMARY OF PRESENTATION TO CABINET
by
John C. Montgomery, Director of Social Welfare
July 28, 1969
I
Introduction
A. Governor Reagan's Welfare Program Objectives
The Governor's welfare goals, as expressed in campaign statements, speeches,
State of the State Messages and legislative programs, reveal his determination
to bring costs under control while at the same time assuring adequate aid and
service for the truly needy.
The specific programs to accomplish these goals may be divided in two general
areas -- substantive and administrative.
The Governor's basic approach in securing substantive changes would separate
the welfare group in two categories:
-
Life Protection as the guiding purpose with respect to those adults who
because of age or handicap must be considered permanently dependent.
-
Life Peparation as the guiding purpose with respect to the more than
741,000 children who are future producers and those present adults who
are potentially self-sufficient.
His goals in improving the administration of existing welfare programs are:
-
Subjecting all programs to critical review and analysis to identify
where they can be tightened and improved through administrative action,
and where changes in law are required.
-
Increasing the employability of welfare recipients so they can move
from aid rolls to payrolls.
-2-
-
Bringing welfare administration closer to the people by returning as
much control as possible to counties for welfare operations, and by
increasing volunteer and citizen participation in these programs.
- Streamlining welfare administration and making it a more efficient and
economical operation.
II
Major Concerns About Welfare Programs
A. Continually rising caseloads and costs, despite decreasing unemployment;
resulting fiscal crisis at both State and county levels
1. From 1966-67 to 1969-70, recipient population will increase by approximately
418,000 or 37.31 percent (average 12.44% per year). During the same period
expenditures for assistance payments are expected to increase by $447.2
million or 49.63 percent (16.54% per year).
2. From March 1967 to March 1969 California's AFDC caseload increased 41.6 per-
cent, slightly above national average of 37.3 percent but below such states
as New York, Pennsylvania, New Jersey, Massachusetts and Georgia.
3. Distribution of caseload and related expenditures estimated for California
this fiscal year (1969-70). See Pie Chart. (Chart does not include
AFDC-BHI; 32,100 children; cost $49,305,600)
4. Action Taken
a. Tightened ATD disability criteria - From January 1967 to April 1968
ATD caseload increased 1.5 percent per month. In April 1968
tightened disability criteria. This slowed increase rate to 1.2 per-
cent per month by November 1968. Then began planned addition to
-3-
caseload of MR patients in state hospitals to claim federal funds for
cost of hospital care. $12 million being claimed annually now -
$16.8 million when complete. This more than countered effect of
tightened criteria. Increase rate from November 1968, 2.1 percent
per month.
b. Closed-end appropriation some adult cases - Payments to adult re-
cipients requiring protected living arrangements or services of
another person under same fund control as in Medi-Cal through SB 999
enacted and signed by Governor.
c. Blocked further liberalization of welfare laws - Up to 1967, con-
stant acceleration of welfare cost increases through legislative
liberalization. This momentum halted.
B. Constraints and fiscal impact of Federal law and rules
1. Almost $25 million added to State and county costs 69-70 by Congressional
or HEW action since 12-31-67 (not including court actions). AFDC Freeze
repeal avoided additional $23.1 million.
2. Leadership at national level got support other states in challenging
Federal requirements.
a. Some successes:
- Retention for additional period of major part of 75 percent re-
imbursement for integrated caseloads instead of dropping to
60 percent (great benefit to counties).
- Extension of timetable for use of simplified methods of eligibility
and providing for testing period.
- Requirements to continue aid pending fair hearing decision and
-4-
legal services in appeals being postponed to 7-1-70 from 10-1-69
(announcement expected soon).
b. Still pushing on such items as:
-
Requirement that simplified methods be in effect April 1, 1970,
for AFDC.
- Requirement that gross earnings be used in income exemption
policy. Should be net. Difference to California about $5 million
State/county.
3. Provisions of PL 90-248 remain critical to California such as:
a. Exemption of earned income in AFDC on open-ended basis. (Decision
Memo 7-14-69 - Senator Murphy)
(1) Committed to principle aid policies must provide incentive of
monetary gain in relation to work.
(2) Congress went too far. Law results in some few families
being able to remain on aid with large gross incomes.
(3) Should be gradual reduction percent of earnings exempted plus
cut-off point.
b. Eligibility restrictions - AFDC-U
(1) Under California law must continue aid to nonfederally eligible
cases - locked in. Administration bill (SB 1335) to bring
California program in line Federal definition opposed by
counties - held in Senate Finance Committee.
(2) Provisions prior to PL 90-248 should be restored so States can
define "unemployment" under program.
-5-
C.
Concern that welfare programs may be sowing the seeds of future dependency
1. Widespread impression welfare system manufactures its clientele. Fact
is the rising size and cost of welfare reflects a failure of other
systems to do their job in society, specifically in the family group
programs. A common denominator is lack of education and lack of skills
to obtain and hold a job in today's economy. These are specifically
illustrated by such factors as:
-
The continuing migration from rural to urban areas of thousands
of people, many of whom never had a chance for a minimum, let
alone adequate education.
-
An advanced technology under which more and more of the jobs which
are created require high level skill and competence leaving an
increasing number of people behind.
-
The failure of the educational system to develop the maximum
capacities of the individuals it serves and to focus its efforts
on the needs of the labor market.
- The weakening of family ties and sense of family solidarity and
responsibility associated with the extreme mobility of our popu-
lation, and the trend toward the self-contained single unit family
composed of mother, father, and children.
Factors in increasing size of our aged and disabled group are:
-
The steady increase in the length of life, with the r esult that
even those who have been able to save something for their old age
are more and more outliving their resources.
-
The miracles of modern medicine which are extending the life of the
severally disabled who previously would have succumbed to illness
at an earlier age.
-6-
2. To the extent needy children do not get the start in life they must
have to become responsible and productive adults, adequately prepared
for the world of work, are in danger of sowing seeds of future dependency.
a. Hope of preventing dependency rests on ability to give them this start.
b. This is basis for concern that more than 418,000 children - 53 percent
of the State's needy children do not have basic needs met. Most
seriously disadvantaged are the more than 416,000 living in families,
mostly headed by women, with no outside source of income and little
or no present capacity to produce any. Maximum statutory payment
meets only 88.8 percent of basic needs.
D. Concern about the effect of welfare programs on the Incentive to Work
1. Vast majority recipients want to work
a. 46,600 now working part or full time. If all lost jobs tomorrow
would mean about $5.2 million in additional costs per month or
$62.4 million annually.
b. Jobs and job training the key demands heard in direct meetings with
recipients.
2. For minority who would shirk responsibilities - tougher sanctions for
refusal of work or training without good cause.
a. Congress in PL 90-248 limited sanctions in WIN to vendor payments
for family after taking person who refused work out of budget.
b. Until recently Feds gave impression this applied across board. We
now hold it applies only to recipients referred to WIN.
c. For all others have adopted regulations to cut off at pockets if
refuse work or training without good cause.
d. Pushing Feds to apply this to WIN referrals not in active training
status.
-7-
3. Greatest number of potential employables are mothers, thus expanding
availability of child care services merits high priority.
a. Concentrating attention in ghettos and farm labor camps.
b. Cooperative arrangements with Education, State OEO, etc.
C. Getting favorable response on Spencer Williams' letter to Councils of
Churches on use of their facilities for child care. These being
followed in cooperation with county welfare departments.
d. State bears portion of nonfederal share of child care costs only for
WIN participants. For all others, counties or private sources must
cover.
4. Further consequence federal restriction on AFDC-U -- nonfederally eligible
recipients not served by WIN. To cover gap am planning to require counties
to provide work training program for 6,900 such cases effective 10-1-69.
Counties oppose and are appealing to Governor.
E. Welfare Fraud
1. State Social Welfare Board study defined nature of welfare fraud and
provided base for Fraud Incidence Study now underway in cooperation with
California District Attorney's Association. Representative sample of
AFDC caseload being investigated by traveling task forces of district
attorney investigators, independent auditors and welfare administrators.
Findings available December 1969 to provide basis administrative action
and possible legislative proposals.
2. Cooperative arrangements being completed with Employment and county
welfare departments for system to match employer payroll information in
Employment's files with income from employment reported by recipients to
county welfare.
-8-
F. Legal abuses of welfare programs
1. Questionable payment of aid
a. Tightened regulation on amounts taken into account for transportation
to work or training by private car.
b. Regulations under development: to prevent recipients from remaining
eligible or being immediately reinstated to rolls after receiving
and disposing of sizeable nonrecurring lump sum payment; to prevent
employed recipient from under-claiming number of dependents for
income tax payments to obtain lump sum tax rebate; to standardize
procedures for handling fluctuating income to minimize uncollectible
overpayments.
c. Joint State/county study leading to possible consideration of monthly
income reporting card system for AFDC.
2. Questionable use of welfare funds by recipients
a. No precise information on number of families "misusing" welfare funds.
All available evidence indicates very small.
b. Money management problems of many recipients compounded by: pressing
debts incurred prior to receipt of aid; pressure to make unrealistic
"big-ticket" purchases on long-term credit at high interest; aid
payments not meeting current needs.
c. When funds diverted to detriment of children, regulations direct
counties to discontinue cash payments and impose controlled payments -
vendor or third party. Almost one percent of families on controlled
payments.
d. In aggravated situations counties directed to seek removal of
children through court action.
e. Stronger money management regulations being adopted in August emphasize
above actions and direct counties to:
-9-
- Stress prevention money mismanagement potential through prompt
aid delivery and early identification of families with potential
problems.
- Place responsibility on specialized staff to deal with problems.
- Work with creditors in correcting and resolving problems.
3. Letter from Spencer Williams to County Welfare Directors, Boards of
Supervisors, and District Attorneys soliciting information and suggest-
ions on the problem. Responses to this to provide basis for further
action.
G. Failure of absent fathers to provide for support of their children up to
their ability
1. Adopted regulations to improve cooperative welfare law enforcement efforts
to locate deserting fathers, establish paternity, obtain child support.
Key provisions:
a. Commitment at State and county level of specialized units or staff
dedicated to this effort.
b. Procedures to use Internal Revenue files to locate deserting fathers.
C. Cost-sharing arrangement with law enforcement to provide federal
reimbursement of additional costs. (Pressing Federal Government to
eliminate maintenance of effort restriction on district attorney
costs).
d. Cooperative arrangements between counties and with other states.
Close involvement of District Attorneys and Family Support Council in
program.
H. Administrative complexity of the welfare system
1. Administrative simplification adult aid programs based on recommendations
-10-
of State/county simplification committee.
a. Actions taken - revised basic needs chart; consolidated 96 different
special diet allowances into one; standardized needs allowed due to
certain critical factors or physical handicap for restaurant meals,
laundry, and telephone; eliminated special yard care allowance.
b. Under study November hearing se restructuring several special need
items; simplified treatment of allowances for utilities.
2. Automated support for the aged. This concept first enunciated in Governor's
message to 1969 Legislature. Being implemented through study to determine:
feasibility of graded system of standard allowances exclusive of one-time
and emergency needs from which income would be deducted; whether amount
of information and frequency of client contact can be safely reduced;
whether an amount not too different from current grant levels can be
established so as to remain unchanged for at least 12 months. If results
and study are favorable, grant changes can be automated to a very great
extent. If in effect 1968, counties could have avoided many of the
900,000 changes in grant.
3. Simplified eligibility system - use of eligibility statement
a. In effect statewide in OAS; optional use in AB-ATD until 1-1-70,
statewide thereafter; no final decision on use in AFDC. Use in AFDC
confined to five test counties with testing to start 9-1-69 and
extend through 6-30-70 if needed. Decision as to further use to be
based on test results, and then existing federal requirements.
b. Interview required in every case despite federal objections. Full
field investigation of random sample of all cases granted aid.
C. Eligibility statement requires declaration of all facts pertinent to
-11-
eligibility for aid. Applicant required to subscribe to the truth-
fulness of the facts declared by witnessed signature. This statement
integral part of case record and available to district attornesy in
prosecuting cases of fraud.
I. Overemphasis on social services beyond demonstrated need and/or desire of
recipients
1. Traditional approach - same worker responsible for both aid payments and
social services has resulted in:
a. Lack of distinction in identifying true service needs - almost every
family case a "service" case.
b. Diffusion of effort.
c. Inefficient use of staff resources.
2. New approach - organizational and functional separation aid and services
with some units and staff concentrating on aid payment procedures with
others concentrating on social services. Good start made on process -
will be operational statewide 7-1-70. Expected benefits:
a. Greater visibility social service activities - much more accessible
to administrative direction, control.
b. Concentrated attention by specialized staff on true service needs.
c. Use of eligibility workers opens way jobs for persons less than
four-year college.
d. Use of Service Aides and Eligibility Aides opens ways to new careers
for disadvantaged.
e. New system facilitates use of citizen volunteers.
-12-
J. Information and knowledge gap
1. No assumption of precise cause/effect relationship between social and
economic factors outlined earlier and public dependency. Fact is -
still flying blind.
2. Public welfare system short of verifiable information as basis for:
a. Guiding set of ideas regarding nature and causes of problems
we deal with.
b. Judgments as to approaches calculated to yield best results at
least cost.
C. Objective measurement of results.
3. Some small starts made around edges of problem but basic problem (which
is nationwide) requires massive research effort.
III
Forces at Work Which Must be Taken into Account in Dealing with the Welfare Problem
A. Current social ferment - revolution of rising expectations
Governor and Cabinet aware there are powerful forces at work in our society
as evidenced by campus militancy, increasing urban crisis, the current social
ferment, and what has been called the "revolution of rising expectations".
These same forces are having a very direct impact on our welfare programs.
1. Some examples on the national scene:
a. Poor People's Campaign - pressure on former Secretary Cohen to adopt
liberal regulations in dying days of previous national administration.
b. Demands to revamp or junk present system in favor of some kind of
guaranteed minimum annual income system.
C. Increasing demand for direct voice in welfare policy and practice
by recipient groups.
-13-
2. Some examples closer to home.
a. In confrontations with recipients at public hearings and other
meetings have sensed increasing militancy and frustration. Single
most pervasive feeling which comes across is the sincere and passion-
ate concern these AFDC mothers have for the future of their children.
b. Have given their constructive expressions of concern careful, sym-
pathetic attention. Through these means and by keeping open lines
of communication with them and their organizations, am working to
encourage and sustain their confidence in normal democratic processes
of government. This approach is serving to keep things pretty cool
in California, in contrast to heat being generated over welfare
issues in other places.
B. Reflection of these forces in the Legislature
1. Legislators aware of and sensitive to these forces. WRO's have liaison
with significant group of legislators.
2. Approach of Legislature to welfare problems reflects polarization of
attitudes of people on meaning of "welfare reform". To half, "reform"
means liberize, while to the other half, "reform" means cut.
3. Influence of these forces and public attitudes on Legislative Branch is
reflected in manner in which it has dealt with Administration's legis-
lative program. (See attached summary)
C. Reflection of these forces in the courts
1. Welfare law and administrative practice increasingly being challenged in
the courts as part of apparent nationwide strategy. Most issues involved
in suits are on "target" list of ten issues in field of welfare developed
and promulgated in 1966 by Center on Social Welfare Law and Policy at
Columbia University.
-14-
2. Consequences of suits brought against California and other states
particularly significant since most are "class actions" brought on
behalf of one or more named recipients plus all the recipients in
the same situation. Summary of most significant California cases in
past year is attached.
CATEGORICAL ASSISTANCE PROGRAMS
ESTIMATED EXPENDITURES AND PERSONS AIDED
1969-70 FISCAL YEAR
EXPENDITURES
PERSONS AIDED
$22,941,800
$12,700
(1.75%)
(0.83%)
AB-APSB
AB & APSB
OAS
ATD
313,000
157,000
(20.66%)
(10.36%)
OAS
ATD
$401,834,100
$230,214,800
(31.46%)
(17.58%)
AFDC
AFDC
(FG&U)
(FG&U)
$654,028,700
1,031,600
(49.96%)
(68.12%)
TOTAL EXPENDITURES $1,309,019,400
TOTAL PERSONS AIDED 1,514,300
STATE DEPARTMENT OF SOCIAL WELFARE
OFFICE OF PLANNING
SOURCE: 1969-70 GOVERNOR'S BUDGET
STATUS OF ADMINISTRATION BILLS AS OF July 25, 1969
BILL NO.
AUTHOR
POSITION
STATUS
SUBJECT
SB 714
Harmer
Support
Do pass
Authorizes providing landlords with forwarding
Assembly
address of tenant who left without payment of rent
HE W Subcomm
835
Dolwig
Support
Held in
Uniform criminal procedure for illegal receipt
Gov Eff
of aid
837
Grunsky
Support
Held in
Preplacement study for independent adoptions
committee
847
Stevens
Support
Assembly
ATD - relative's responsibility
H&W
848
Stevens
Support
Held in
Liens on real property
Finance
857
Deukmejian
Support
Assembly
Support provisions where unrelated adult male resides
W&M
in AFDC household
924
Burgener
Support
Assembly
Evaluation of allowances for recipients receiving
floor
complete care
977
Richardson
Support
Held in
Residence
Lab & S W
999
Sherman
Support
Assembly
Homemaker service and out-of-home care
floor
1118
Harmer
Support
Held in
Joint living standard for married adult recipients
Lab & S W
STATUS OF ADMINISTRATION BILLS AS OF July 25, 1969's
BILL NO.
AUTHOR
POSITION
STATUS
SUBJECT
SB 1184
Coombs
Support
Held in
Excludes as unemployment caused by trade dispute
Lab & S W
as basis for eligibility to AFDC
1335
Sherman
Support
Held in
Disqualifies unemployed parents not covered by
Finance
Social Security Act. Appropriates funds to
prevent undue hardship
1368
Way
Support
Held in
Repeals appropriation for PA programs
Lab & SW
1369
Way
Support
Dropped by
Any federal grant increases after January 1969
author
shall render Inoperative cost-of-living increases
for same year
AB 1332
Chappie
Support
Held in
Disqualifies AFDC unemployed parent who refuses
H & W
transportation to job
1334
Hayes
Support
Signed - -
Prompt delivery of warrants
Chapter 509
2135
Chappie
Support
Held in
Repeals obsolete section
H & W
11
tate of California-Human Relations Agency
July 196
SUMMARY OF RECENT COURT CASES
Page 1 of
Subject
Issue
Position of State
Status/Comment
Residence
Whether state laws requiring
Insisted vigorously and to
In April 1969, the Supreme Cour
specific length of residence
the end that such laws were
ruled 6 - 3 that such laws are
violate the Constitution.
constitutional and authorized
unconstitutional.
by Congress
California and a number of other
states had already been under
court order to the same effect
for more than one year.
Aid Pending Fair Hearing
Whether a recipient whose
California regulations pro-
--In Federal Courts--California
welfare grants are discon-
vide adequate due process of
position that aid need not be
tinued or greatly reduced
law protection to the
paid upheld by 3-judge U. S.
and who asks for a "fair
recipient.
District Court. Case now on
hearing" is entitled to aid
appeal to U. S. Supreme Court.
until the fair hearing deci-
sion is rendered.
--In State Courts--A State
Superior Court ruled that perso
whose aid was discontinued and
who could deny under oath the
facts on which this was based
were entitled to continued aid
pending fair hearing decision.
This case is on appeal pending
before State District Court of
Appeal.
NOTE: Current federal regulati
to become effective 10/1/69 als
provide for aid pending fair
hearing decision.
July 1969
SUMMARY OF RECENT COURT CASES
Page 2 of 3
Subject
Issue
Position of State
Status/Comment
"It Pays Not To Work"
Whether it is a violation of
This is not only constitu-
Pending decision in 3-judge
a person's constitutional
tional but compelled by law.
U. S. District Court.
right to terminate aid be-
cause he is fully employed
when his earnings are less
than his welfare benefits.
Cost of Living
(1) Whether the present
The standard of assistance is
Two cases are pending--one in
maximum grants in AFDC
set by the Legislature in the
federal and one in state court.
are adequate for safe
lawful exercise of its
and healthful living.
responsibilities.
(2) Whether it was lawful
It was lawful and appropriate
Argued before District Court of
to exclude from last
to disregard the medical
Appeal and pending decision.
year's increase in the
component since medical care
adult programs the
was provided free of charge.
medical component.
Gross or Net Income
Whether the earned income
It is lawful and proper to
Hearing set for July 29, 1969.
exemptions provided by
compute on a "net" basis.
federal and state law are to
be computed on a "net" or
"gross" basis.
Man in the House
Whether it may be presumed
Completely equal treatment of
A 3-judge U. S. District Court
that the income of the male
all males in this position is
upheld the state regulations
parent figure in a household
compelled by the Constitution
and declared the federal regula-
is available to support the
and consistent with state and
tions to be in violation of the
entire family irrespective of
federal law.
Social Security Act. The case
status as father or step-
is now on appeal to the U. S.
father or unmarried consort
Supreme Court.
to the mother of the
children.
of California-Human Relations Agency
Department of Social Welfare
July 1969
SUMMARY OF RECENT COURT CASES
Page 3 of 3
Subject
Issue
Position of State
Status/Comment
Income Set Aside for
Whether under state regula-
Such arrangements need be
Awaiting decision by San Francisc
Educational Purposes
tions outside income other
made only when they are:
Superior Court.
than the child's earnings
must be allowed to be set
a) Appropriate
aside for educational
b) Expressly requested
purposes.
Food Stamps and
Whether a surplus food
Neutral
Moot. As of July 1, all counties
Commodities
program must be available
had at least one of the two pro-
in all counties in
grams and the case was dismissed
California.
PERTINENT QUESTIONS ABOUT WELFARE
1. Why are caseloads going up when the level of the economy remains high and
many jobs go unfilled?
2. What can be done to reverse the trend of rising public assistance costs?
3. Why has the number of needy children increased twice as fast as the
child population during the last decade?
4. Why has the Legislature failed to enact cost-reducing legislation?
5. Why have county governments opposed cost-reducing legislation?
6. How far can a welfare recipient be required to travel to take a job?
7. Can a welfare recipient refuse a job because it is below or different than
his training or experience level?
8. How often does a welfare recipient have to report to the Department of
Employment?
9. What can be done if a welfare recipient dresses or conducts himself in
such a manner that his appearance makes him unacceptable to an employer?
STATE OF CALIFORNIA HUMAN RELATIONS AGENCY
DEPARTMENT OF SOCIAL WELFARE
COST REDUCTION CHANGES IN WELFARE PROGRAMS, SHOWING LEVEL AND BRANCH OF GOVERNMENT HAVING AUTHORITY TO EFFECT THEM
Change can be Accomplished Through:
Page 1 of 3
I
II
III
IV
V
VI
FEDERAL LAW ONLY
STATE LAW ONLY
COST REDUCTION ITEMS
(KEY SECTIONS OF
FEDERAL REGULATIONS
STATE LAW/
STATE LAW/
(KEY SECTIONS OF
STATE REGULATIONS
FEDERAL REGULATIONS
STATE REGULATIONS
SOCIAL SECURITY ACT)
W & I CODE)
1. Eliminate one or more Aid Programs
Division 9
Restrict basic program coverage thus reducing number of
recipients and number of those in general population who
would qualify if they applied for aid:
2. By redefining personal characteristics required for
eligibility to make them more restrictive
a. OAS Age
2(b)(a)(1)
W&IC: 12502
b. AB - Degree of Blindness
Reg: 42-103
W&IC: 13501
C. ATD - - Extent of Disability
Reg: 42-203
d. AFDC-FG - Deprivation of Parental Support
406(a)
e. AFDC-U Definition of Unemployment
11201
3. By decreasing maximum personal and real property
allowed
a. OAS
b. AB
11150-11157
c. ATD
d. AFDC
11255-11261
TATE OF CALIFORNIA - HUMAN RELATIONS AGENCY
DEPARTMENT OF SOCIAL WELFARE
COST REDUCTION CHANGES IN WELFARE PROGRAMS, SHOWING LEVEL AND BRANCH OF GOVERNMENT HAVING AUTHORITY TO EFFECT THEM
Change can be Accomplished Through:
Page 2 of 3
I
II
III
IV
V
VI
FEDERAL LAW ONLY
STATE LAW ONLY
COST REDUCTION ITEMS
FEDERAL REGULATIONS
STATE LAW/
STATE LAW/
STATE REGULATIONS
(KEY SECTIONS OF
(KEY SECTIONS OF
FEDERAL REGULATIONS
STATE REGULATIONS
SOCIAL SECURITY ACT)
W& I CODE)
4. By reducing assistance standards used to determine
financial need
12150-12152
a. OAS
12159
b. AB
12650-12652
W&IC: 13700-13701
c. ATD
Reg: 44-207
d. AFDC
W&IC: 11452-11453
Reg: 44-212
5. By reducing income exemptions in determining
entitlement to aid and amount of grant
a. OAS
11008
b. AB - Earned Income
1002(a)(8)(A)
c. AB - Income for Self-Support Plan
1002(a)(8)(B)
d. AB - Other Income
12654
e. ATD
11008
402(a)(8)
f. AFDC-FG & Federally Eligible AFDC-U
402(a)(19)(D)
g. AFDC-U Nonfederal Eligible
X
TATE OF CALIFORNIA - MUMAN RELATIONS AGENCY
DEPARTMENT OF SOCIAL WELFARE
COST REDUCTION CHANGES IN WELFARE PROGRAMS, SHOWING LEVEL AND BRANCH OF GOVERNMENT HAVING AUTHORITY TO EFFECT THEM
Change can be Accomplished Through:
Page 3 of 3
I
II
III
IV
V
VI
FEDERAL LAW ONLY
STATE LAW ONLY
COST REDUCTION ITEMS
(KEY SECTIONS OF
FEDERAL REGULATIONS
STATE LAW/
STATE LAW/
(KEY SECTIONS OF
STATE REGULATIONS
FEDERALREGULATIONS
STATE REGULATIONS
SOCIAL SECURITY ACT)
W & I CODE)
Restrict overall level of aid expenditures:
6. By closed-end appropriation with rateable reduction
15200-15204
of aid payments across board when expenditures
threaten to exceed appropriation
7. By establishing over-all ceiling on gross family
X
income from public assistance and all other sources
mpose conditions designed to motivate people to seek
ilternatives to public assistance:
8. By requiring liens on real property
11007
9. By extensive use of controlled payments (vendor or
6(a); 406(b)(2);
third party)
1006; 1405
10. By increased requirement and rigorous enforcement
12101; 12600;
of relative responsibility in adult aid programs
13600;
11. By discontinuing aid in all AFDC cases for refusal
402(19)F
without good cause to accept work, job training or
vocational rehabilitation
PL 90-248
12. By requiring all able-bodied AFDC recipients to
Section 204(c) -
perform useful public work in return for their aid
Repeals Section 409
Soc. Sec. Act
:liminate federal provisions on:
13. Limitations on federal reimbursement for certain
407(b)(1)(A-C)
AFDC-U cases
14. Requirement that free legal services be given
45 CFR-205.10
appellants
15. Requirement that aid be paid pending appeal
45 CFR-205.10
decision
16. Limitations on federal reimbursement of district
45 CFR
attorney costs of parental support enforcement
220,61(f)(4)(v)
17. Requirement that states reduce the rigor of
45 CFR 220.5(a)(2)
investigative methods in AFDC and rely heavily on
client statements
Prepared by Office of Planning - August 1969
State of California
Human Relations Agency
Memorandum
To
:
The Honorable Ronald Readan
Date :
August 6, 1969
Governor of California
File No.:
VIA: Earl Coke
Assistant to the Governor
Subject:
Report on White House
for Cabinet Affairs
Briefing - President's
Welfare Reform Proposal
From
:
Office of the Secretary
Time:
1:30 p.m., Roosevelt Room, White House
Present:
Governor James A. Rhodes, Ohio
Governor Raymond P. Shafer, Pennsylvania
Governor Francis W. Sargent, Massachusetts
Representatives of Governor Nelson A. Rockefeller,
New York
Spencer Williams, representing Governor Ronald
Reagan of California
Presentation by:
Representatives of the Department of Health,
Education, and Welfare, Department of Labor,
and Bureau of the Budget
Legislative Timetable:
Present program in general terms now -
work out legislative and other details
during the recess
This presentation on welfare reform was described as one part of
a three-part package.
The other two, to be announced later: Manpower training
Revenue sharing
The Welfare Reform Plan:
Repeal the AFDC/AFDC-U program (Title IV
of the Social Security Act)
Substitute Nixon work-oriented "Family
Security Plan" (FSP)
The six basic objectives of FSP:
1. Set Federal minimum income standards for families
2. Promote family unity
3. Assist (supplement) the working poor
4. Expand job training opportunities
5. Impose strong work requirements
6. Provide fiscal relief to the states
The Honorable Ronald Reagan
-2-
August 6, 1969
Families Covered: All families, whether headed by man or woman,
having earned income less than $3,920.
Maximum Federal Benefits:
$500 each for first two
$300 for each additional
or
$1,600 for family of four
For Families With Earnings:
The first $720 will be fully exempt -
thereafter, one-half of earnings over
$720 will be exempt. There is no
proposed ceiling on maximum combined
grant plus income.
Represented on a table this means:
Earned Income
Benefit
Total Income
0
1600
1600
720
1600
2320
1000
1460
2460
1500
1210
2710
2000
960
2960
2500
710
3210
3000
460
3460
3500
210
3710
3920
0
3920
Or, on a rough graph:
3920
1600
metarnings
Fee
Support
As the earnings go up, the total goes up, and Federal supplement
goes down.
The states will be required to maintain their present levels of
benefits, but if lower than the Federal standard, will not be
released from more than 50% of their present costs. If a state
is higher than the Federal minimum, they will not be required
(by Federal regulation) to contribute more. than 90% of its
The Honorable Ronald Reagan
-3-
August 6, 1969
present costs (which may mean that the low-paying southern
states may be the big winners in this plan). However, each
state is supposed to realize at least 10% relief.
It is estimated that this program will extend to 23 million
(as compared to the current 10 million) but that the states
will not be required to contribute supplementation to the
"working poor".
In response to my question, they said that the new "working poor"
classification need not necessarily be eligible for Medi-Cal.
No discussion was directed towards the family that had no
working member.
The proposal also covers major changes in the adult categories;
e.g., blind, totally disabled, aged.
The Federal Government would impose a Federal floor of $65
per month combined grant and income for all adult categories.
It would pay
100% of the first $50 required
50% of the next $15 required, and
25% of all else.
All states should experience savings from this modification.
Stiffer work requirements were provided as a part of the new
program:
1. Registration of Unemployed - all applicants for FSP must
register at their employment office.
2. Training and Employment - all employables would lose benefits
if they refuse to accept training and employment without good
cause.
3. Day Care - Adequate and convenient day care would be available
for children of working parents. This would be on a 90-10
basis- payments going to the recipients who would then purchase
care (from licensed facilities) on the open market.
It was suggested that there would be over 1 million training and
employment opportunities (including jobs in day care centers) that
would stimulate utilization of this program.
The real "kicker" came in the proposal for Federal administration
of the program.
Since the Social Security Administration already has 800 offices and
51,000 employees, it could be converted to pick up this additional
function.
The Honorable Ronald Reagan
-4-
August 6, 1969
Eligibility would be determined from Declaration Forms filed
by the applicant with subsequent spot check to verify the
facts.
Changed conditions of income on family status would be reported
by the recipients and
Adjustments in payments would be made as a result thereof.
Fraud for failure to report changed conditions, or by improperly
reporting salient facts in the original application, would become
a Federal offense (misdemeanor) prosecuted in Federal Courts by
Federal officials.
Social Services to the recipients would continue to be the
responsibility of the states (and in California, the counties).
Things were somewhat fuzzy about the division of responsibility--
how the states and Federal Government could contract for an
allocation of responsibilities- the mechanisms for state
supplementation of Federal payments.
It was pointed out that this new program would add $4 billion
to Federal commitments.
Would provide states with needed "relief" in three forms:
1. Actual savings
2. Revenue sharing
3. Additional Federal funds for day care centers
For Ohio:
1.
$30.2 million
Massachusetts:
1.
$31.1
2.
40
2.
29.6
3.
26
3.
16.8
$96.2
$77.5
Pennsylvania:
1.
$40.4
California:
1.
$175
2.
53
2.
112
3.
35
3.
90
$128.4
$377
In conclusion - Feds said this was an effort to cure two kinds
of inequities:
1. Those coming from regional differences
2. Differences between Man and Woman being head of household
Also, that it improved the bridge to employment and constituted
fundamental reforms.
The Honorable Ronald Reagan -5-
August 6, 1969
Governor Rhodes said - this plan perpetuates an existing system
that has already failed--that it is using band-aids when major
change was required- that it would really get Nixon into a
pickle that education, particularly vocational education, was
the way to go--that it was O.K. for Feds to take over aged,
blind and disabled (and save states $1 billion) because these
not "poverty oriented" but that states should stay in picture
on AFDC.
Governor Shafer said - it was not "dramatic enough" that it was
mishmash of ideas--did not offer sufficient immediate help to
states--that welfare second only to Vietnam and campus disturbances--
was most emotional and misunderstood problems states had.
Governor Sargent felt President should be very general in his
approach--cautioned against broadening base (welfare coverage)
before solving problems of those already there--concurred with
Rhodes and Shafer.
Spencer Williams - questioned validity of figures--challenged
"philosophy" of shifting responsibility and authority to Federal
Government as being contrary to Nixon approach just that much
further from the concerned voters--felt we should concentrate
on those now on welfare and pour any additional resources into
the children (50% of total load) to prevent them from being our
welfare recipients of tomorrow.
The Federal staff seemed concerned--but almost too far down the
track to make any major reversals.
SPENCER SemanWilliam WILLIAMS
Secretary