Some States Put Premium On Curbing Welfare Fraud

But federal cutbacks give less funding to prevention

SEVEN residents of Boston's North Shore were arrested last week on charges of illegally collecting nearly $100,000 in government welfare benefits. They were turned in by a concerned citizen.

It was just one action indicating that states across the nation are stepping up efforts to crack down on welfare fraud. At the same time, the federal government is cutting back on funds contributed to state welfare fraud programs.

Welfare fraud ``ought to be priority No. 1,'' says Ray Riddle, president of the United Council on Welfare Fraud, a national group of welfare fraud investigators. ``Rather than cut our funding from 75 percent to 50 percent, they [the federal government] ought to increase us to 80 percent or 100 percent.''

Despite the federal cutback, North Carolina will not back down in its pursuit of welfare cheats, says Mr. Riddle, who also manages the Program Integrity Branch of the Department of Social Services in Raleigh.

Massachusetts, too, is trying to send a message that welfare fraud will not be tolerated.

The recent arrests ``emphasize the importance of anonymous tips from the public,'' says Glen Fealy, director of the Massachusetts Bureau of Special Investigations (BSI).

``The government must do everything in its power to discourage and punish welfare cheats and also find more effective means of collecting repayment for fraud when it occurs,'' said Gov. William Weld (R) of Mass., while introducing legislation last week to curb welfare fraud. ``We're not cracking down on welfare recipients, we're cracking down on the people who shouldn't be welfare recipients who are grabbing the money.''

The Weld administration's proposed legislation includes attaching wages of people who have been convicted of fraud and have stopped repaying the money owed, as well as collection from state tax refunds. A new hotline number, set up for citizens to report suspected fraud, handled 135 calls in its first month. In addition, the governor has implemented a ``front-end'' fraud detection program, designed to weed out fraudulent applications.

Although there is not an ``epidemic'' in Massachusetts, ``any amount of fraud is too much,'' says Public Welfare Commissioner Joseph Gallant. ``That's the bottom line as far as we're concerned. Our whole program is geared toward zero-tolerance.''

Massachusetts' front-end detection program is administered by the Department of Public Welfare and BSI; BSI investigators, assigned to particular welfare offices, review applications that caseworkers suspect are fraudulent.

``Front-end systems are the most successful'' in cutting down on fraud, says Charles Cook, acting director of the Office of Fraud and Abuse in Montgomery, Ala. ``But they are not widespread enough.''

Demand on staff is part of the problem, Mr. Cook says. ``States and counties don't feel they can afford to put too many people front-end,'' he says.

Alabama's automated claims system, which tracks welfare claims and sends out bills and notifications of delinquent payments, has helped the state collect more money than it otherwise could, Cook says. Also successful is a computer matching system, comparing welfare records with Internal Revenue Service data.

But Alabama has not gone as far as some other states in tracking potentially fraudulent welfare applications. Although he says electronic benefits transfer cards, or smart cards, will replace traditional food stamps in five years, Cook says fingerprinting may not be feasible for his state.

``There are other options that are cheaper,'' he says. Though a fingerprinting system has been successful in Los Angeles, its size and large immigrant population make that city unique, he adds. New York also has begun fingerprinting some welfare recipients on a trial basis.

``Fingerprinting scares off people to some degree,'' Cook says. ``I'm not sure at this stage if it's scaring off people committing the fraud, or people with legitimate need.''

The proliferation of early fraud detection systems and investigations have cut a lot of fraud right at the door, says Martha Armstrong, former president of the United Council on Welfare Fraud. And in large metropolitan areas, fingerprinting and smart cards could be extremely effective, she says. But with reduced federal aid, states are going to have to make some tough choices with regard to fraud prevention.

The real issue is the magnitude of welfare fraud, Riddle says. ``How big a problem welfare fraud is is a question that can be debated forever,'' he says. ``It's both a major problem and not a major problem.''

North Carolina, for instance, lost $3 million in food stamp fraud last year. ``That's a lot of money,'' Riddle says. ``But compare that to the total amount of money spent on benefits and it's less than 1 percent.''