Welfare Drop Leaves County With Surplus

Bolstered by a vigorous job market that has sent welfare cases tumbling, Los Angeles County expects to amass a windfall this year of more than $300 million in surplus funds for public aid.

The county’s good fortune has raised a thorny issue often faced by those blessed with an embarrassment of riches: what to do with all of the extra cash.

Other counties around the state and the nation are also experiencing sizable surpluses, but the challenges are especially great in Los Angeles because of its size.

In an echo of the raging debate in Washington over how to spend the federal budget surplus, conflict is brewing between local welfare officials and social advocates over which projects should take priority.

The latest ideas to emerge from the welfare department include pumping more money into childcare programs and offering more hands-on help to the hardest-to-employ welfare families, including those who have been dropped from rolls for not complying with the rules.

One early notion--to hire a nationally renowned consultant to help come up with suggestions--invited quick ridicule from some groups, which noted that one of the key objectives of welfare reform was to give local authorities more say in devising programs for their communities. Officials have relented on the idea of a consultant, but say that it is still an option.

The issue, however, highlights the curious predicament that Los Angeles and most other California counties find themselves in. Overall, counties this year amassed nearly $500 million in unused welfare funding left over from the previous year.

They were able to do this because of the nature of the new federal funding system. Under the 1996 welfare overhaul, states were awarded a fixed amount of funds--a block grant--based on 1994 caseload numbers, which were in many cases at historic highs.

As counties have been successful in moving people off the welfare rolls, the amount of money used for cash payments has decreased, freeing up the funds for services.

California is not alone in realizing a windfall. According to a recent study by the federal General Accounting Office, 46 states were expected to have additional resources.

“The idea was to make [block grants] something states would want to buy into, so it was designed to be fiscally good, at least initially,” said Pam Holcomb, a researcher with the Washington-based Urban Institute. “But the decline in caseloads was so much more significant than anyone had anticipated, the windfalls are quite large. It’s very likely Congress will take a serious look and there will be voices arguing for less.”

Indeed, this huge rollover has caught the attention of California officials, who have proposed reducing the welfare allocation to counties next year by nearly half.

Most states have used at least a portion of the money to set up rainy day funds to deal with future economic downturns.

California has charted a different course, leaving most of the money for counties to reinvest. In Los Angeles County, that has laid the groundwork for some tough choices.

The money flows from different funding streams and carries some restrictions on its uses. The largest chunk of about $167 million was left over from the county’s 1997-98 welfare allocation of $401 million. It must be used by June 2000. The rest of the money is so-called performance incentives awarded to the county for putting recipients into jobs. Those funds carry no deadlines for use.

If the county does not spend all of its 1998-99 welfare allocation of $488 million--a distinct possibility, officials say--even more money could be added to the pot.

Officials say that they welcome having the leeway to creatively address social concerns that have been pressing for years. But figuring out relatively quickly the wisest investment and getting the money spent in time may prove tricky, they say.

“What we don’t want is a real cookie-cutter approach to this,” said Lynn W. Bayer, director of the county Department of Public Social Services. “We want the flexibility to try new and different things.” One early position paper proposed a mentoring program for welfare recipients who find jobs but still need support and guidance; classes in self-esteem for preteen and teenage welfare dependents; and a plan to help welfare recipients pay for removing tattoos, under the theory that professional appearance and first impressions are important in getting a job.

Ideas floated recently include providing housing subsidies for recipients; using old homes and county-owned buildings as 24-hour child care centers and homeless shelters, and funding medical needs not covered by Medi-Cal.

Although social observers applaud some of the ideas, others question whether parceling out the funds in dribs and drabs is the wisest course. Some suggest that the department might better use the money to improve the way it delivers services and communicates with recipients. Both areas have come under criticism from inside and outside the department.

“They can dream up 100 different kinds of services, but what’s the use if it takes clients months to get those services because they are not adequately staffed?” asked Tanya Marie Akel, a researcher for Local 660 of the Service Employees International Union, which represents social service workers.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

County Welfare Spending Falls

The number of welfare cases in Los Angeles County has dropped in the last five years. The decline has meant lower expenditures for welfare cases. The following are welfare caseloads and spending in Los Angeles County in the last 10 years.

*--*

Average monthly Total annual Fiscal year welfare caseload welfare spending* 1997-98 260,132 $1.507 billion 1996-97 294,503 $1.818 billion 1995-96 310,573 $1.981 billion 1994-95 315,463 $2.072 billion 1993-94 308,661 $2.008 billion 1992-93 289,051 $1.938 billion 1991-92 367,981 $1.901 billion 1990-91 233,649 $1.742 billion 1989-90 207,633 $1.560 billion 1988-89 198,707 $1.417 billion

*--*

Source: Los Angeles County Department of Public Social Services