California Welfare Gets Carded but Not Reformed

California Welfare Gets Carded but Not Reformed

Last year a Los Angeles Times investigation revealed that California welfare “clients” were using their Electronic Benefits Transfer (EBT) cards to spend millions at Las Vegas casinos and on cruise ships to hardship destinations such as Rio de Janeiro. Working Californians will be interested to know what the state did to counter this fraud, and abuse of welfare in general.

According to Census data, California represents 12 percent of the U.S. population but 32 percent of all welfare cases nationwide are in the Golden State. California has more welfare recipients than the next eight states combined, and California’s monthly cash welfare payouts are almost 70 percent higher than the national average. Those payouts are intended for the necessities of life, not casinos and cruise ships.

The revelations sparked outrage and prompted Gov. Schwarzenegger to order the deactivation of ATMs for EBT cards at gambling venues and on cruise ships. California’s EBT Client Website now bears this announcement:

“The locations where you can use your EBT card to withdraw cash may have changed. Please check the list of locations on this website to see where you can withdraw cash benefits in your area. You can no longer get your cash benefits at ATMs and point of sale devices in liquor stores that don’t accept your CalFresh benefits. You also can’t get your cash benefits at casinos, poker rooms, card rooms, adult entertainment businesses, bail bonds, night clubs/saloons/taverns, bingo halls, race tracks, gun/ammunition stores, cruise ships, psychic readers, smoking shops, cannabis shops, tattoo/piercing shops, and spa/massage salons.”

So the problem went beyond cruise ships and casinos. Senate Republican Leader Bob Dutton of Rancho Cucamonga proposed SB 417, which banned use of EBT cards to purchase alcohol and tobacco products. It failed to pass.

The California Department of Social Services (CDSS) proposed 10 measures to investigate fraud but the actual number of investigations decreased. In July 2010, when the proposals were written, 6,092 investigation requests were accepted for the Food Stamp program. By January 2011, the investigation requests went down to 5,437.

Out of a sample of 310 welfare cases, only five individuals participated in activities that moved their family toward self-sufficiency, according to a March 2011 California Department of Social Services study. Only 60 of the 310 cases participated in countable work activities. Taxpayers could be forgiven for believing that that welfare fraud continues at unacceptable levels.

State government did not volunteer the information that welfare recipients were blowing millions of taxpayer dollars on casinos and cruise ships. Those revelations came from Jack Dolan of the Los Angeles Times. He and other reporters need cooperation, not opposition, from government. And taxpayers need a better accounting of how government spends their money.

As Lawrence McQuillan argues in Bringing More Sunshine to California, government agencies should practice “affirmative disclosure” by releasing information on welfare fraud, salaries, pensions, benefits and other subjects of public interest as a matter of course. They should make that information public, on a searchable website, before anybody asks for it.

When California implemented EBT cards they should have announced that the new policy empowered welfare clients to get their cash benefits in casinos, cruise ships, race tracks, tattoo shops and so forth. A better policy could well have emerged.

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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.