Wednesday, November 16, 2011

Barely hanging on: Fraud isn't killing Maine's welfare system — conservative misunderstanding is

Published in the Portland Phoenix

Last week in Ellsworth, Governor Paul LePage renewed his efforts to change Maine's welfare system, calling for increased restrictions on benefits for people seeking taxpayer support to get health coverage through the state's Medicaid program.
This, and a guilty plea the day before of a 26-year-old Andover woman to charges of defrauding the state of $8800 in welfare benefits, are part of LePage's much-ballyhooed move to shift people "from dependence to independence," and are in line with longstanding conservative dogma associated with reducing the number of people receiving welfare benefits. But in fact, these efforts are doing the opposite, increasing the likelihood that people will go on, and stay on, public assistance.
The guiding principle of welfare, from its creation to the present — the one basic idea that all who look at our country's complex public-assistance system can agree on — is that welfare should help people hit by unemployment, domestic violence, illness, or other misfortune (largely outside their own control) to get back on their feet and provide for themselves and their families independently. A common catchphrase is "a hand up, not a handout."
LePage does have some efforts other than fraud investigations that he says are moving toward this end. Many of his ideas find support in a 2010 report from the conservative Maine Heritage Policy Center entitled "Fix the System: Freeing Maine families from welfare dependency."
Unfortunately, LePage is wrong — about the fraud, and about most of the other stuff he's trying to do to Maine's welfare system. It's a problem of conception, as much as of policy.
This renewed focus comes at a time when welfare is indeed in need of massive change. It is staggering under the load of Mainers' need, and straining Mainers' ability to provide for each other. Nearly one-third of the state's residents received some form of welfare aid in September 2011, with $40.1 million — $928 per minute — going from state coffers to needy families.
Perhaps not helped by the state's 7.5 percent unemployment rate, that number is growing. While joblessness is below the 9 percent national average, the MHPC's 2010 report found that "412 of Maine's 488 towns reporting have seen an increase in the number of people enrolled in Maine's welfare system since 2003." The MHPC also correctly observes that in 2008, Maine's state and local governments spent more on welfare benefits than on K-12 education.
While data kept — and provided to the PortlandPhoenix — by the state Department of Health and Human Services does not go back as far as 2003, it does indicate that from August 2006 to September 2011, the number of people receiving assistance from non-Medicaid programs increased from 340,974 to 400,943 — a 17.5 percent increase. (Medicaid participants are tallied separately; Maine's numbers in that program have also been increasing.)
That's a big dollar amount, and a lot of people, but when it gets into the hands of those in need, the help is pitifully tiny. "If a person got the maximum available benefit, they would still be living below the federal poverty level," says DHHS spokesman John Martins. His agency's data shows that the average benefit per person per month was just $100.05 in September 2011. Admittedly, that's up 75 percent from the $57.25 that was the per-person average in August 2006, but gas prices have jumped roughly that much in that time; food and housing costs have climbed steeply as well, while wages have dropped. In 2011, the federal poverty level in Maine is $22,350 for a family of four.
The fraud problem?
Maine doesn't really have a problem with welfare fraud by recipients. It's hard to get data comparing Maine to other states because welfare programs vary so widely, but state officials openly admit they have no evidence of widespread fraud. "It seems like it could be pervasive, but we just don't know," says Herb Downs, director of audit for the state Department of Health and Human Services, and chairman of the state's Fraud and Abuse Work Team.
All of the state's evidence about welfare fraud as a systemic problem is anecdotal. As Downs puts it, state officials "hear a lot of the stories." The largest fraud story the state has is that of Kathleen Schidzig. At $18,000 over three years, Schidzig's is the most prominent, highest-dollar-amount case in recent memory, as far as fraud from welfare recipients goes. Assistant Attorney General Peter Black, using DHHS calculations of the maximum benefits that might ever be issued to an in-school mother of four, tried to revise that number to $49,000 (just over $16,000 a year) late in the court proceedings, but was rebuffed by the judge. (Superior Court Justice MaryGay Kennedy did express significant outrage at Schidzig's case, calling her actions "calculated" and "scheming," and sentenced her to a year in prison, with two more years hanging over her head if she runs afoul of strict rules during her two years of post-incarceration probation.)
The average cost of locking up a Maine inmate for a year is $45,000 — not counting money paid to prosecute and defend the accused. (In Schidzig's case, the state Commission on Indigent Legal Services spent $1918.60 on her defense — paying an attorney $50 an hour, plus mileage to drive between Portland and Auburn. Black's total compensation package cost taxpayers $63,000 in 2010.)
Despite the low dollar amount stolen and the high cost of prosecution and incarceration, DHHS is seeking to hear more stories, launching a new state website and hotline to which people can report their neighbors for alleged fraud. (It's and 866.348.1129.)
DHHS's Martins admits those tips can be more trouble than they're worth. Of 1200 tips received last year, between 12 and 20 resulted in court proceedings, he says. Beyond tips that don't include names, towns, and other identifying details, there are plenty of things the public might think are not allowed, that actually are permitted under the rules of the various welfare programs.
For example, Martins says, when a mother and children live with the mother's boyfriend, the children's father is the one responsible for the kids — not the live-in boyfriend (unless he's also the dad). Or there's the common complaint that someone on welfare has a nicer car than the complainant approves of; Martins observes that federal law allows welfare recipients to own a car — one car — to get to and from work.
When investigators get beyond those tips — which are a large proportion of the total — fraud is still "difficult to prove," Martins says. Much more common is an erroneous overpayment — either a clerical error on the state's part, or an honest mistake on the recipient's part that is quickly owned up to. In those cases, the overpayment is deducted from the next benefit check the recipient would otherwise get, and no criminal charges result.
In fact, Martins admits, what DHHS calls "consumer fraud" — that committed by people receiving public benefits — is far smaller than "provider fraud," most common in Medicaid, in which doctor's offices (or their employees, unbeknownst to the bosses) overbill the state, or bill for services never provided, and pocket the extra. One single case in 2010 resulted in an order for $4 million in restitution from a lone defendant who pled guilty to overbilling that much money from the state's Medicaid program over the course of several years.
"That's really where the money is," Martins says. But it's certainly not where the rhetoric and political attention are.

Philosophical politics
"If the discussion is only about fraud, we miss the entire conversation we need to be having," says Christine Hastedt, public policy director at Maine Equal Justice Partners (a nonprofit working to address poverty and related issues). She believes fraud here is "much less than in most states," and observes that LePage's railing against fraud seems most virulent when targeting the working poor and low-income people. Certainly LePage railing against corporate fraud and excess is so rare that even the idea of it seems laughable.
Hastedt says that at all times — but most urgently in a recession where one in six Americans is either unemployed, working less than they want to be, or has given up even searching for a job — we need to look at whether our welfare programs are working, and fix them when they're not.
This is where the divide happens. To be sure, everyone wants to be confident that taxpayer money meant to be spent on helping people is actually helping those in need. But similarities stop there.
Conservatives tend to think the problem is that too many people are on welfare, so they should be made to get off public assistance. They do this by setting time limits for benefits, restricting eligibility, and terminating benefits abruptly once a recipient begins earning money — even cutting off all benefits if a person earns a single dollar more than a program's income threshold.
Progressives, in contrast, tend to think the problem is that too many people have too many needs, and want to help them meet more of their own needs over time. They do this by expanding eligibility for certain programs beyond those who are extremely poor, offering supplemental services to help people stay off welfare, and providing transitional support for people who have been on welfare and are moving back into the work force.
LePage, for example, took his cues from the 2010 MHPC report last legislative session when he proposed eliminating state subsidies and admission into the Medicaid program for families earning between 133 and 200 percent of the federal poverty level. That cut didn't get through the Republican-dominated legislature, but is already being discussed for reconsideration in the 2012 session.
Taking the conservative line, the MHPC calls that subsidy — which can help provide health insurance coverage to families where parents are working but earning low wages and not getting any employer benefits — a "middle class entitlement" that "encourages dependency."
Maine Equal Justice Partners, by contrast, calls Medicaid eligibility for the working poor struggling to escape poverty an important support that encourages people to get off welfare by reducing their fears of losing insurance once they find work.
Another example is the LePage proposal to terminate benefits after five years of receiving them, with no extensions for any reason, and no exemptions that could pause the clock — not even medical emergencies or intensive job-training classes. Get aid for five years, and on the first day after that, benefits drop to zero. The primary underlying assumption is that a person will be so afraid of benefits stopping entirely that they will take great pains to leave the system. The secondary underlying assumption is that people will be energized by that fear, motivated to get work — and not terrified into inaction, and ultimately dropping off the welfare rolls into even deeper poverty.
MEJP's Hastedt says welfare recipients do fear losing their benefits, but struggle with what to do in a low-wage, low-employment economy where having a job does not mean (and is often staggeringly far from) being able to afford child care, reliable transportation, and health care.
It turns out that while those who accuse welfare recipients of laziness might shudder to hear it, most of those they criticize are actually working very hard to scrape together enough money to house and feed and clothe themselves and their families.
Early struggles
Again we can turn to Schidzig's case for illumination. In many ways, she was a typical Maine welfare recipient. Now 31, she is the first to admit her life has had problems. In an interview at the Maine Correctional Center in Windham, she describes herself as the child of a teenage mother, whose youth was supported at least in part by public assistance.
That is part of what many people refer to when they talk of a "cycle" of poverty, but it's actually less reflective of reality than even advocates for the needy expect. A 1995 study found that 64 percent of Mainers on welfare had not grown up in families receiving benefits; 11 percent said their families had gotten aid "most of the time;" 15 percent had received help "some of the time" (as little as once); and 10 percent didn't know whether their families had gotten welfare.
While it's hard to rely on 16-year-old data about a welfare system that differs significantly from today's, the study hasn't been replicated. And the population of welfare recipients has shifted heavily toward people who have some type of disability, which would tend to suggest further departure from successive generational dependency.
A mother at 17, Schidzig finished high school but didn't go on to college; her first child's father was of little help, so Schidzig stayed with her mother. "I was a kid, raising a kid, living with a kid," she recalls. With few qualifications, she worked low-wage jobs, including at a Burger King restaurant in Lewiston.
Single motherhood with little to no support from the father, and low-wage jobs, are common threads throughout Maine's welfare system, according to a January 2011 report conducted by the University of New England and the University of Maine at Orono. Commissioned by MEJP and the Maine Women's Lobby, another nonprofit groups working to promote economic security for Maine families, the study found that nearly 92.4 percent of recipients of TANF, which provides cash assistance to needy families, are women with young children. In addition, just 12 percent of them received child support that was due. Nevertheless, they are used to working outside the home: 97 percent of recipients have work experience (mostly in the sales or service sectors, which are typically low-paying jobs).
Many people Schidzig knew as a child and young adult — and others she would come to know as she grew older — were also on one form or another of public assistance. Food stamps, TANF, unemployment insurance, and Medicaid (called MaineCare here) are the largest state programs. (Disability payments, another major form of help, are handled federally by the Social Security Administration.)
She saw what grinding poverty did, and was determined to be able to provide for herself and her family. She made what experts say is the best possible move: she sought higher education, enrolling in community college.

Seeking education
The UNE-UMO study found that "higher educational levels are strongly correlated with less time spent on TANF and lower frequency of return to cash assistance." Recipients with less than a high-school diploma averaged 21 months on TANF, while the "relatively small number of college graduates" who received TANF stayed on the program for an average of just eight months.
Sixteen percent of the survey respondents applied for and enrolled in a state program called Parents as Scholars, in which TANF recipients can get help with child-care and transportation costs while enrolled in classes at accredited colleges and training programs. Hastedt says "it's not promoted as effectively as it should be" by state workers handling applications for aid.
Indeed, between 2005 and 2011, TANF participation has increased, reflecting growing need that is at least partially related to the ongoing recession. But during that same period, Parents as Scholars participation has dropped. "These are the times when people should be going back to school," Hastedt says. With high unemployment, they'd have trouble getting a job anyway, and can take advantage of assistance to learn new skills, thereby increasing their chances of finding work as the economy improves. "What a lost opportunity," Hastedt says.
Schidzig was in the PaS program; she specifically needed help with child care, because she had three more children in rapid succession between 2007 and 2009, and they needed looking after when she was in class.
Schidzig says she applied for additional aid immediately following each birth; she was unable to work for short periods because all three babies were born by cesarean section. She received aid for at least some of the period between October 2007 and February 2010, according to court documents.
From time to time she got into trouble with the law, accumulating several misdemeanor convictions from 1998, the year she turned 18, through February 2011. The Lewiston Sun Journal reported that she served a total of six days in jail and paid $900 in fines connected with the various small-time crimes, ranging from disorderly conduct to carrying a concealed weapon.
But she was able to live on her own in Lewiston, with the help of Section 8 housing supplements, when — according to state allegations — her boyfriend, the father of her three youngest children, moved in. (Schidzig says he stayed over from time to time but was away a lot, working elsewhere in the state.) Then real trouble began.
In April 2010, she and her family were forced out of her Lewiston rental house because sewage backed up into the basement, leading the city to condemn the property. Adding to the disaster was a bedbug infestation that caused them to leave all of their belongings behind, including photos on the walls, her children's toys, and even pots and pans, theSun Journal reported at the time. They moved to Portland, starting over with used furniture donated or bought cheaply at discount stores.
While these particular circumstances are unusual for public-assistance beneficiaries (or anyone else, for that matter), in terms of financial impact it closely mirrors divorce, separation, or fleeing domestic abuse — which are all major factors in sending people to seek TANF assistance. Nearly 25 percent of the respondents to the UNE-UMO study said they applied for help because of divorce, separation, or escaping an abusive relationship.
A few months after the newspaper coverage of her residential disaster and her accompanying threats to sue her landlord, Schidzig found herself indicted by an Androscoggin County grand jury for two felonies and three misdemeanors relating to "misuse of approximately $25,000 in TANF and ASPIRE benefits," according to a statement from the Maine Attorney General's office. Schidzig claims the charges resulted from the newspaper article's description of her boyfriend as living with the family when he in fact did not; the prosecution disagreed. If he was, he would be assumed to be contributing to household income, meaning she would be eligible for less aid.
Schidzig and her court-appointed attorney, Amanda Doherty of the Portland firm of Strike, Goodwin, and O'Brien, say they proposed a deal in which Schidzig would plead guilty to taking less than $10,000 (an amount that would mean her crime was a misdemeanor rather than a felony), but assistant attorney general Peter Black refused. Black, whose full-time job is investigating and prosecuting people suspected of welfare fraud, did not return multiple phone calls seeking comment for this story.
Schidzig ultimately pleaded "no contest," in which she did not admit guilt but did accept that the state's case was likely to prevail if it went to trial. At her sentencing hearing, she was stunned to learn that the state was suddenly alleging she took $49,000; Justice Kennedy refused the state's new estimate and ordered Schidzig to pay $18,000 in restitution, serve a year in prison, and be on probation for two years after her release.

Fewer prospects than ever
This is not where she expected to end up, Schidzig says through tears in a small meeting room near her cell. "I have worked all my life and I've gone to school for many years," she says. She teaches her kids to work hard and be honest. Looking at her file of paperwork chronicling the case against her, the court proceedings, and her prison records, she shakes her head, frustrated that rather than plea-bargaining (a common practice in criminal cases), she was accused of stealing more money than she says she even received in benefits.
"I didn't do that and it's ruined my life and it's ruined my kids' lives," she says, composing herself, and turning philosophical. "Maybe I had to lose one year of my life to gain the rest."
Her personal situation may be beyond significant repair, but she certainly knows how to fix the system — and it involves better targeting the help that is provided, so it actually meets parents' needs.
"It's a domino effect," she says, describing how failures in the education, welfare, and job support systems can leave people who want to work and provide for their families unable to meet basic needs of both home and work.
Observing that welfare benefits, according to both state and federal guidelines, expire after a person uses five years' worth, she suggests making people enter some sort of job training or degree program during that period — the full five years is plenty of time in which to make real progress, and most programs are far shorter, particularly non-degree job-skills courses.
Why should we listen to Schidzig's advice? For one, because it's hard-won insight from a life in the trenches of poverty. She says openly what many who know the system well say privately: "You can't cut it on welfare, even if you have housing." That $100 per person per month average benefit is a long way from making ends meet, and if it isn't targeted exactly right, it misses the need.
Another reason to listen to Schidzig is because her prescription is exactly the same as those who propose various ways to fix welfare. This is not to defend a convicted fraudster. But in human terms her situation is nothing like what even conservatives who target welfare for major overhauls want to see: A former teen mother, now 31 and the mother of four, is in prison for a year. Her employment prospects, with just a high-school diploma and a few community-college classes, were negligible to start with. Now they are ruined forever, meaning she and her children are likely to remain on taxpayer-funded assistance for many years to come.

Seeking real fixes
We have already discussed the universal goal of those addressing the welfare system: getting people off welfare and into positions where they are able to feed, clothe, and house themselves and their families (and keep everyone healthy).
There is another goal, though, that many fail to see: reducing the likelihood that people will need welfare in the first place. It's here that welfare reform can make the most difference; it's no coincidence that many of these steps are ones that will also help people who are on welfare transition off of public assistance.
Fixing what's wrong, and smoothing the road off welfare (as well as keeping others out of the program) requires "recognizing the kind of jobs that people leaving TANF are going into," Hastedt says. They're typically low-wage, low-security jobs without significant schedule flexibility or benefits.
That means the working poor — and those people who are poor and looking for work — are missing three things, she says: "access to child care and transportation" and health coverage.
State supports — including the subsidized Medicaid coverage for the working poor — helps what she calls "the people who don't have to go on TANF" because they get help with medical coverage, she says. Similarly, helping people with car repairs and supplements for child care can keep some people off welfare entirely, while providing a smooth landing for those who find work and move toward independence.
Federal rules also need to change, to allow welfare recipients to continue to qualify for benefits while enrolled in degree-granting programs. One reason state officials may not be promoting the Parents as Scholars program, despite how well it works, is that federal rules don't consider post-secondary education that lasts beyond 12 months as meeting recipients' required work participation while getting benefits.
Looked at closely, even conservatives support this change in policy. The 2010 MHPC report recommends more aggressively enforcing job-training requirements on welfare recipients. Such a change could include something like Schidzig's suggestion that people be required to get job training or go back to school. (The MHPC's specific recommendation focuses specifically on job training; it doesn't mention degree programs, but the data on reduced welfare dependence for degree holders is strong.)
Another MHPC proposal, however, differs from Schidzig in a key way, regarding "diversion" programs designed to help people avoid having to enroll in welfare. Schidzig puts it this way: "If a mother can't get a bed . . . help her get a bed." Maine has a program like this, called Alternative Aid, which is intended to give a one-time cash injection to a family so that the providers can keep working and not have to enroll in welfare programs. For example, if a car breaks down and needs an expensive repair before its driver can get to work, Alternative Aid can help cover the cost of the fix.
MHPC would add job-search requirements and other eligibility restrictions as conditions of receiving Alternative Aid, turning it into something that looks more like a traditional welfare program than a supplemental support for a parent who is already working. But that runs counter even to MHPC's description of its proposal as a "diversion" keeping people off welfare.

Finding 'a path out of poverty'
Another thing that needs to change is the political rhetoric, which at present tends to demonize the poor, turning people who need help from their fellow Mainers into some sort of leeching aliens selfishly hoarding cash. (Never mind that when averaging $100 per month per person, the benefits could hardly help anyone get rich.)
Now what happens? Schidzig is slated to be released from prison on June 1, 2012, and her two years of probation will begin. During that time, she will be expected to pay back the $18,000 restitution. She will likely be unable to find work — a felony conviction involving financial fraud isn't exactly attractive to employers, who are already seeing as many as 20 applicants per job opening — when there are jobs that are open. "I don't think I could even get a job at Burger King," she says with typical directness. (She knows what it takes to get a BK job; she's worked at one in the past.)
Which means she'll be back seeking help from the state. If she is able to get welfare benefits — people convicted of welfare fraud usually, and rightly, find it hard to get approved again — she likely won't qualify for help for herself, but only for her kids.
Therefore, her benefits will be lower than they were in the past, and she'll have little choice but to dip into that money to pay her probation officer to cover the cost of supervising her ($10 monthly), as well as all that restitution.
She's looking at a very similar picture to people who are on welfare. Hastedt describes it as difficulty "seeing a path out of poverty." What it looks like to Schidzig, and to other Maine welfare recipients — especially if LePage gets his way in next year's legislative session — is staring off a cliff.