According to the Pennsylvania Department of Public Welfare, 2013 welfare expenditures were $28 billion -- 44 percent of the state budget -- and are projected to rise to $32 billion in 2015.
Welfare costs will grow for the foreseeable future in both dollars and as a percent of total expenditures. This trend must be reversed.
Former Auditor General, Jack Wagner, estimated that welfare fraud represents ten to fifteen percent of total state expenditures, or $2.8 billion to $4.2 billion of stolen taxpayer funds. $400 million to $675 million annually could be attributed to food stamps and cash assistance program fraud alone.
While there has been some progress over the last three years in reducing welfare fraud, more action is necessary.
The Secretary of DPW stated that $2 billion was eliminated from welfare fraud, waste and abuse since 2011. But that's only 2.5 percent of total welfare expenditures annually. Many serious problems remain:
- 77% of the DPW's County Assistance Offices (CAO's) do not comply with established procedures when administering food stamp and cash assistance programs.
- The Auditor General's reports documenting these underperforming CAO's have been ignored by DPW and the state legislature.
- Auditor General DePasquale's June 24, 2014 interim report on the audit of DPW's administration of Electronic Benefit EBT/ACCESS cards found that more than $200,000 in benefits were provided to 138 deceased recipients. A complete audit of the DPW's EBT program is expected to be completed in 2015.
- It can take as long as three years for an Office of the Inspector General (OIG) investigator to examine a single suspected case of welfare fraud because they lack adequate police powers to gather evidence.
- Punishment for welfare fraud is minor and the chance of being caught slim. There is little offset to the potential gain from fraud.
- There is almost no oversight by the state legislature of DPW and the $28 billion of annual welfare funds.
The following recommendations, if implemented, would greatly reduce welfare fraud in the Commonwealth and save taxpayers hundreds of millions, if not billions of dollars.
- Three bills aimed at stiffening the penalties for those convicted of welfare crimes are pending. All require drug testing of welfare applicants. In the past, similar bills have died in committee or been defeated by full House or Senate votes. This should not happen again.
- After the budget and pension reform, the legislature's highest priority should be to combine the strongest elements of the three bills into one, fast track it through the House and Senate and have the Governor sign it into law, sending a clear sign to the public that the legislature is finally serious about welfare fraud.
- The leadership should ensure that a House and a Senate standing committee, all fully committed to welfare reform and oversight, is assigned to oversee DPW.
- A joint hearing of the House and Senate oversight committees should be convened to determine the current magnitude and of welfare fraud in Pennsylvania, and the adequacy of the measures that are in place to control it. Testimony should be heard from persons in DPW, OIG and the Auditor General's office who have first-hand experience in dealing with welfare fraud. Legislative action should then be pursued in support of any welfare reform recommendations that are adopted by the joint hearing.
- Recent budget reductions to the Auditor General's office should be reinstated so that the audits of DPW operations can be continued and expanded. Welfare fraud reductions would offset expenditures.
- Require that DPW field management retrain, reassign to lessor roles or dismiss case workers who fail compliance audits more than once.
- Provide police powers (search warrant and subpoena powers) to OIG welfare fraud investigators and permit them to be armed in the performance of their duties.
- Empower OIG to prosecute welfare fraud cases in criminal court. Currently, only county District Attorneys can try such cases and more serious criminal cases take priority over welfare crime.
If you agree that serious welfare reform is long overdue, call, write or email your state representative and senator. Ask them what they are doing to address this egregious waste of taxpayer money. Greatly reducing welfare fraud will ensure that funds will be available for those who need temporary financial assistance due to circumstances beyond their control, which is all that welfare was ever intended to be.
Stan Alekna is a retired business executive having held senior management positions with computer manufacturing, computer software and managed health care companies. He and his wife live in Cornwall, PA.