Inequities Built Into Welfare Payments : Benefits: How well families can manage on the same level of aid varies dramatically. Grants do not take housing assistance and other factors into account.

Outstripped only by Alaska, Hawaii, Vermont and one small region of Connecticut, California ranks near the top of the nation in the basic welfare benefits it pays poor families in need of assistance for necessities such as food, clothing and shelter.

But that ranking does not tell the whole story.

How well people can manage in California on the $663 maximum monthly benefit paid a family of three can vary dramatically.

Poor families receiving Aid to Families With Dependent Children can live next door to each other in very different economic circumstances. One family may teeter on the brink of homelessness while the other--if living in public housing--is safely meeting expenses.

“Welfare benefits within each state are highly heterogeneous,” said Robert Rector, policy analyst for family and welfare issues for the Heritage Foundation. “There is a huge amount of inequity within the welfare system, depending on basically who’s getting what.”

There are also disparities among states that are not visible in the raw numbers. The rankings make no allowances for differences in cost of living, variances in food stamp rates, the level of medical benefits provided, or amount of public or subsidized housing in a state. California rates high in the amount of medical benefits it provides poor families but low in the amount of food stamps it distributes.

No government agency has attempted a ranking taking these factors into account, although Rector is conducting research to measure the total benefits states offer poor families. His preliminary conclusions give California a high standing--eighth in the nation.

But his rating is disputed by advocates for the poor who argue that it does not give enough weight to the fact that California’s housing costs are among the highest in the nation while the number of poor families who get housing aid is the lowest in the nation.

The U.S. Department of Housing and Urban Development’s assessment of fair market rents shows that San Francisco is the most expensive place to find housing.

Moreover, according to the Center for Budget and Policy Priorities, an advocacy organization for poor people, HUD ranks fair market rents in Orange County as third highest in the nation, San Jose fourth, Oakland sixth, Los Angeles seventh and San Diego 10th.

The state Assembly Office of Research describes fair market rent as representing “the amount that would be needed to rent privately owned, decent, safe and sanitary rental housing of a modest nature with suitable amenities.”

Although some conservatives insist that the HUD figures are too high and do not reflect the rents paid by poor people, they do show that in the urban areas where more than half of California’s welfare recipients reside, rent is a major expense that can gobble up most of the monthly AFDC check.

In many states, high housing costs are offset by the availability of public and government-subsidized housing for poor people. In California, however, only 11% of AFDC families live in public housing or receive housing assistance from government sources--the lowest percentage of any state.

For those who receive some government housing assistance, about 30% of their AFDC income goes to rent, while those unable to get assistance may use 80% of their benefit to pay for shelter.

“In most states, including California, if you’re in public housing you get the same AFDC benefit levels as if you’re not. . . . That is a huge inequity,” Rector said.

There are also inequities among states in the amount of food stamps that are allotted each welfare family. Although food stamps are financed by the federal government, the state and federal governments share the costs of administration. Nearly all AFDC recipients are eligible for food stamps.

In an attempt to help economically depressed states offer more benefits to welfare families, Congress established a formula for distributing food stamps that is tied to the maximum AFDC benefits offered by each state and certain other deductions. Generally, according to the formula, the lower the benefits paid by a state, the more food stamps it can distribute.

In 1991, California distributed an average monthly food stamp benefit of $49.23 per person--the lowest of any state. Ohio paid an average monthly food stamp benefit of $70.16. Ohio’s maximum monthly AFDC benefit to a family of three is $334, half that of California’s.

Within a state, the food stamps each family gets may also vary. For example, food stamp regulations allow a higher allocation to families that pay higher rents.

Paul Peterson, director of the Center for American Political Studies at Harvard University, writes in a book on welfare that the food stamp program, originally designed to supplement benefits, may have served to discourage states from increasing welfare payments.

Under the federal calculations for most recipients, for every dollar that cash benefits are increased, food stamps benefits are reduced by 30 cents. Likewise, for most recipients, for every dollar they are reduced, food stamps benefits are increased by 30 cents.

“It may well be argued that food stamps, originally thought to be an addition to cash benefits, have become a substitute instead,” wrote Peterson.

The Numbers

The maximum monthly benefits from the Aid to Families With Dependent Children program for a family of three varies by state. Here are the 20 states with the highest and lowest payments, as of January:

STATE: BENEFITS Alaska: $924 Connecticut*: $680 Vermont: $673 Hawaii: $666 California: $663 New York: $577 Rhode Island: $554 Massachusetts: $539 Minnesota: $532 Washington: $531 North Carolina: $272 West Virginia: $249 Kentucky: $228 South Carolina: $210 Arkansas: $204 Louisiana: $190 Tennessee: $185 Texas: $184 Alabama: $149 Mississippi: $120 * Applies to one region of state; in other areas of Connecticut, the maximum payment is $581

SOURCE: Congressional Research Service