Few Welfare Families Attempt to Collect Past Benefits Owed by State

The state of California is prepared to pay $120 million to more than 100,000 welfare families who were improperly denied all or part of their benefits from 1976 through 1981.

Only a small fraction of those eligible have applied for the payments, which will mean as much as several thousand dollars for some families. The exact amount due under the settlement will vary with each case.

The payments are part of a settlement of four lawsuits that challenged the state Department of Social Services policies that reduced or denied grants to many recipients of Aid to Families with Dependent Children during the Administration of Gov. Edmund G. Brown Jr.

Unless families apply for the benefits by Feb. 28, they will lose their chance to collect the money.

Attorneys representing welfare recipients are concerned that many individuals entitled to the payments may fail to file.

Many ‘Severely Damaged’

“Many people who were severely damaged (by state policies) are never going to see the money,” said Tricia Berke Vinson of the Legal Aid Society of San Mateo County, one of several lawyers who negotiated the settlement of the suits. “We would like people to claim the money they are entitled to.”

“We’re really concerned that after the state dragged its feet in settling the lawsuits, it will wind up saving money,” she said.

State officials, on the other hand, say they fear that local county welfare departments will be swamped by last-minute claims.

The payment plan calls for county welfare departments to make payments within 120 days of receiving a claim, although most claims should be paid within a month, according to state officials.

Late last year, the Deukmejian Administration agreed to make good on the improperly withheld benefits and to add interest payments.

Claim Forms Sent Out

As part of the settlement, the state Department of Social Services sent out claim forms to 1.4 million individuals now receiving family aid or Medi-Cal benefits. To reach those no longer in those programs, the department also agreed to a $375,000 advertising campaign, including newspaper ads and broadcast commercials to reach the affected families.

Although the effort to get the word out began four weeks ago, only about 5,000 present and former welfare families have applied for the payments, said Dennis Boyle, who runs the department’s Aid to Families with Dependent Children branch.

Department officials plan another round of paid advertising early next year and they are hoping that broadcasters will run one of two public service announcements, at no cost, that explain eligibility.

The retroactive payments, unlike other kinds of outside incomes, would not reduce benefits to eligible families still on welfare. State and federal tax officials point out that the payments, like most public assistance benefits, are tax-free. However, the interest accrued as a result of the delays in settling the cases probably will be considered taxable income, they said.

All four cases in the settlement challenged welfare policies that cut back on payments or eliminated benefits. Basically, the regulations were aimed at stiffening eligibility requirements and simplifying administrative procedures. In each case, after losing in court, the state changed the rule or policy.

One case involved a 1976 rule that reduced welfare grants for families that had outside income. Generally payments were cut by an amount equal to the outside earnings, but not until two months after the outside earnings were received. As a result, families that spent their outside income quickly found themselves with very little money when their grants were reduced.

Stepparents’ Income

In another lawsuit, the courts overturned a rule that included the income of stepparents in calculating welfare benefits for a family, even when those individuals had not formally adopted the children covered by the grants.

The courts also tossed out a rule that required welfare families to include payments made to them by unrelated adults living in the same household in calculating welfare payments.

The fourth lawsuit challenged the state’s system for recovering overpayments to welfare families by reducing monthly grants.

Some of the disputed regulations have since been legally implemented because of changes in federal law.