Welfare Program Success Claimed : Study Finds Fraud Detection Effort Saved $26 Million in 18-Month Period

Orange County’s 4-year-old Early Welfare Fraud Detection Program has saved taxpayers more than $26 million during one 18-month period, according to a new study financed by the federal government.

Armed with this finding, Supervisor Roger Stanton, the program’s staunchest promoter, plans to go to Washington soon in his second attempt in three years to persuade federal officials to adopt the county’s procedures and use them as a model for jurisdictions throughout the United States.

However, welfare-rights attorneys are continuing to criticize the program, contending that it improperly mingles the criminal justice system with social services and deters legitimate welfare applications through fear and intimidation.

The program uses district attorney’s investigators, who target applicants based on tips from informants, type of car driven, type of neighborhood and address, attire worn and use of multiple Social Security numbers.

National Attention

The program gained national attention in 1982 when Gov. George Deukmejian described it as an example for other counties and the federal government to copy. None did, or at least none admits doing so, and Orange County officials were somewhat embarrassed.

However, the new study, by the firm of Arthur Young & Co. in Costa Mesa and financed with a $150,000 federal grant, shows that the Early Welfare Fraud Detection Program is saving much more money than it costs to operate, an issue that was heavily debated in 1982.

According to the Arthur Young study, the program saved taxpayers between $17.3 million and $26.3 million during the 18 months ending last June 30. “Orange County’s program is unquestionably cost-effective,” says a written summary prepared by the consultants.

In calculating what was saved, the consultants considered the amount of welfare benefits withheld from persons whose applications were found to be fraudulent, the average length of time an applicant stays on the benefit rolls (17 months) and the average amount paid in benefits ($536 per month).

The estimated savings was reduced by about 11% to account for some applications that were first rejected but accepted later.

In interviews, however, county officials acknowledged that some of the savings claimed for the program would also have been saved under the old welfare fraud detection system, in which investigations were initiated only after recipients had already received benefit payments.

The Arthur Young report does not compare the savings under the new system with those of the old one, nor does it estimate how much more expensive it is to obtain those savings by using higher-salaried district attorney’s investigators instead of social workers.

However, county records indicate that an average of only 7.6 cases were being targeted for investigation each month under the old welfare fraud program, compared to 142 cases per month in 1981-82.

Stanton said Tuesday that, even assuming a “worst-case scenario” of the success claimed for the new program, the county is spending only 25 cents for every dollar saved. Under a “best-case scenario,” he added, the county is spending only 11 cents to save each dollar.

Because welfare payments are partially subsidized by the state and federal governments, those governments save money, too. According to Stanton, the figures show that the state and federal governments save even higher percentages of their costs than the county does.

“I’m convinced that since the federal government showed enough interest by paying for the Arthur Young study, federal officials will be even more interested once they see the results,” Stanton said.

But welfare-rights lawyers are refusing to muffle their criticism of the county’s program.

For example, Robert Cohen, chief lawyer for the Orange County Legal Aid Society, said this week that he is skeptical about the statistics used in the Arthur Young study and the assumptions that might have been built into the consulting firm’s investigative methods.

He added: “You have to look very carefully at whether they are intimidating people into not applying for benefits when they’re actually eligible. Word gets out that a DA’s investigator will visit you if you apply for welfare, and right away some legitimate applicants are afraid that something might go wrong, so they stay away. That’s a horrible thing to do to people. It’s socially destructive.

“I think it’s an improper mingling of the criminal justice system with the social service system, and I doubt that there has been any increase in the welfare fraud conviction rate.”

Stanton contends that the fact that few if any appeals are filed when applicants are denied benefits shows that “the program is working.”

“I say this program is the best defender of those truly in need,” Stanton added.

He said that although other counties deny that they have copied Orange County’s program or claim that they had already had similar projects, Sacramento, Riverside and San Diego counties have adopted similar procedures.

“It seems that more gets done along these lines when Orange County is not mentioned,” Stanton said.