Why welfare costs rise

Concerned about the rising number of Los Angeles residents applying for and receiving welfare — and by the skyrocketing amount of money that the county government is shelling out as a result — some county supervisors thought fraud might be responsible. Last year, they asked the county auditor-controller to explore that question and make recommendations about how to curtail any fraud that it uncovered. The upshot is a strong argument against allowing allegations of fraud to be used as a pretext for limiting benefits.

Fraud is not the reason that claims have increased in recent years. The economy is the reason. According to a report by the Department of Public Social Services that accompanies the auditor’s work, the number of people in Los Angeles County receiving welfare — known as general relief — was holding relatively steady at just over 60,000 a year in the early part of the last decade. Unemployment dropped in 2005 and 2006, and so did the number of people who needed relief. Then, beginning in 2007-08, thousands of people lost jobs as the economy collapsed. Unemployment more than doubled, from 4.73% to 12.58%; the number of welfare cases similarly increased from about 58,000 to about 106,000. It’s entirely logical that welfare claims rise when people are losing their jobs.

The county auditor did conclude that there are some relief applicants who falsely claimed to be homeless when they were, in fact, sharing a residence with someone else. But those numbers are so small as to be negligible. In the three social service offices studied, auditors confirmed 126 cases of fraud out of 12,652 applications — or about 1%. A vigorous enforcement program might turn up more, but auditors estimate a total yield of perhaps $850,000 out of a $275-million program. The savings from that enforcement might not even exceed the costs of providing it.

Fraud, then, pales next to the economy in terms of burdening the county welfare system, and cracking down on it hardly seems worth the effort. That said, the report yielded other promising possibilities for improvement. To take just one example, it recommends improved mental health screening and treatment of general relief applicants. That’s humane, most important, but also cost-effective. If welfare recipients suffer from mental disabilities, they often qualify for benefits through Social Security. Moving them off welfare and onto Social Security would relieve the county of those costs — the federal government supports Social Security — and give added benefits to those recipients.

The county launched this inquiry under a false premise — that its system was becoming more expensive because it was being gamed — but it has the chance to build a sounder, more compassionate program anyway. It should grab the opportunity.