High Fraud Rate Found in Child-Only Welfare Cases : Poverty: An Orange County study says that 27% of families in which adults are not eligible for aid have violated rules. The previous statewide estimate was 4%.

Indicating a much broader pattern of welfare abuse than previously thought, a government study has uncovered a high incidence of fraud among families that collect aid only for their children.

The study, conducted jointly by the Orange County Social Services Department and the state, found that one of every four families had violated welfare rules.

Authorities had previously estimated that fraud occurs statewide only about 4% of the time, but the study of 500 welfare cases in Orange County found that 27% of the recipients intentionally committed violations. Researchers said they suspect the same trend statewide.

In most cases the infractions involved failure by the adult care-giver to report outside income that made children ineligible for assistance under the Aid to Families With Dependent Children (AFDC) program.

Of the 135 cases in which violations were detected, more than 90% of recipients ended up having their welfare grants or food stamps reduced or taken away. Officials estimated that findings of the $168,000 study, launched in December, 1992, could lead to a saving of more than $1.3 million over a three-year period.

Advocates for the poor criticized the study, calling its conclusions misleading if not outright erroneous.

The findings, which are expected to be released at a news conference in Orange County today, provide new fodder for the debate over the soaring costs of social services. They have implications not only for the way counties will conduct fraud investigations in the future but also for the growing controversy over illegal immigration.

Though the authors of the study stressed that immigration status was not a focus of their research, at least half of the cases involved the children of immigrants.

The study results have already prompted state officials to draft a letter alerting all counties to the possibility of a high incidence of fraud among what they call their child-only cases and urging local officials to concentrate their investigative resources more heavily on those recipients.

In California there are a variety of reasons why children and not their parents or guardians may be eligible for government aid. The most common is that the children were born in the United States and are entitled to citizenship, while their foreign-born parents are not. In other child-only cases, orphaned or abandoned children who are being cared for by relatives or friends may also get aid even though the care-giver has a substantial income.

AFDC monthly grants in California vary according to the number of children in a family. For example, a one-child family could receive $299 monthly; a family with five children could get $924.

The study “tells me that we have a much larger welfare fraud problem than any statistics ever published suggested that we had,” said Michael Genest, deputy director of the California Department of Social Services. “It tells me the official statistics about the level of welfare fraud are clearly wrong and that we have a lot more welfare fraud out there than our official data shows.”

Genest said officials targeted families in which only the children were eligible for aid because that is the fastest-growing segment of the welfare population, and earlier research had indicated that the rate of fraud might be particularly high among this group.

He said the highest concentration of such cases is in Southern California, making Orange County an obvious choice for the study. More than a third of the Orange County welfare caseload--38%--is made up of families in which most of the adults are ineligible for aid.

Casey S. McKeever, an attorney with the Western Center on Law & Poverty in Sacramento, criticized the study, saying it “grossly misrepresents the extent of fraud as well as the savings from fraud investigations.”

He noted that only six of the 500 cases--about 1%-- were referred for prosecution. McKeever also suggested that many of the cases cited as fraudulent may be in fact entirely innocent, the result of mistakes made by both recipients and welfare workers toiling in a complex bureaucratic system.

In addition, the study is not an “objective, independent examination,” but rather one “conducted by fraud investigators themselves to justify their activities and support additional resources for their own programs,” McKeever said.

McKeever noted that the state allocated $6 million in new funds last year for additional fraud investigations while at the same time cutting aid to needy families. He suggested that since administrative errors by welfare workers are made “as frequently as client-caused errors,” the money would be better spent on improving the workers’ skills.

He also argued that the report cannot be used to suggest that fraud is more prevalent among immigrant families because the sample size was too small to be statistically valid and there is no other group cited as a comparison.

Genest acknowledged that the study did not specifically deal with immigration status and could not be used to draw conclusions about abuses by illegal immigrants.

He said the number of cases actually investigated was small because researchers deliberately weeded out those in which the care-givers were considered to have sufficient income, believing that they were much less likely to commit fraud.