State audit uncovers welfare misuse

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HARRISBURG -- State auditors uncovered rife mismanagement and as much as $144 million worth of questionable spending in a program meant to help welfare recipients in job training offset expenses for child care, books, clothing, tools and transportation.

In some cases, the money wasn't used for those purposes. In others, it may have been spent properly, but receipts were not retained, according to an audit report issued yesterday.

The problems may have cost taxpayers tens of millions of dollars between July 2006 and December 2007, the period audited.

"There's insufficient documentation to support $144 million in spending, and that can lead to waste, abuse and the potential for fraud," Auditor General Jack Wagner said last night.

In some cases, the audit revealed that fraud already is occurring, the Department of Public Welfare acknowledged yesterday.

Mr. Wagner's office reviewed a random sample of 3,201 payments out of the 1.01 million payments issued during the audit period by the Department of Public Welfare's special-allowance program. Auditors found problems in 45 percent of the cases they examined, according to the report.

In one case, a Philadelphia father of five changed his name and Social Security number so he could be paid to watch his own children.

In York County, two beauty school students each collected $637 for nail supplies they never purchased.

In Delaware County, an invoice from a beauty school was altered to show $821 instead of $321.

Meanwhile, 20 people received payments totalling $22,300 for books, supplies and registration fees. Another 37 collectively received $15,625 for work clothes. Auditors could not find documentation to support any of those expenses.

"When we auditors cannot find verification of how public dollars are being spent, we are very, very concerned. We have found enough of a concern to raise Cain about it and send a strong message," Mr. Wagner said. "Department of Public Welfare management must provide greater leadership and be held accountable for its mishandling of taxpayer dollars."

Program participants are issued either checks or electronic cards that can be used in stores as debit cards or at ATMs to withdraw cash. Auditors said that system provides no assurances that funds are spent as intended.

Auditors also noted that the Greater Pittsburgh East office stored the electronic cards in a locked cabinet with the key hanging next to it.

The Welfare Department is deeply concerned about problems uncovered in the audit and already has begun making changes to reform the system, said department spokeswoman Stacey Witalec.

"We want to stop abuse in the system before it gets to the point of starting," she said. "There was some fraud -- although not actual fraud in all of the cases -- and we're extremely concerned."

One change already implemented requires clothing allowances to go directly to uniform companies and other providers rather than to the welfare recipient.

"The money goes directly to the vendor, and then we know that it's appropriate clothing for your job. If you are going to be a nurse's aide, you are going to go to a uniform store," she said.

The department also is training employees to help people "find a job they like and stay in it so they utilize the skills that we are providing the books, tools and clothing to get them ready for," Mrs. Witalec said.

It is unclear whether the department will seek restitution from those who spent money improperly, she said. Current regulations don't address restitution, but proposed changes provide for that, she said.

Total program spending during the 18-month audit period was $320 million. Eighty percent of that money ostensibly was for child care, she said.

Mr. Wagner said systematic change and tighter controls would allow the department to serve more people at a lower cost to state taxpayers, who provide 75 percent of the program's funding.

"We want to see the program fine-tuned. Especially with more people unemployed and underemployed, the program has greater need today than two or three years ago," he said. "If properly managed, the program can help put people back to work. ... And if you can get someone off welfare with this program, what you're actually saving in welfare spending is significant."

Mrs. Witalec agreed.

"Every Pennsylvanian has a vested interest in seeing this program succeed. This is what helps people transition from welfare to work," she said. "Everyone wants to see the welfare rolls decline."

The report comes as the state is facing a $3.2 billion deficit and the Legislature is locked in a budget stalemate more than six weeks into the new fiscal year.

"With the commonwealth facing its greatest budgetary challenges since the Great Depression, all of us in state government must do everything we can to stretch every dollar and eliminate the potential for waste, fraud and abuse," Mr. Wagner said.

Meanwhile, House Minority Whip Mike Turzai, R-Bradford Woods, is sponsoring legislation to reform further the special-allowance program by limiting payments for child care, transportation, union fees, testing fees and professional fees.

"We can and should lend a helping hand to those who are truly in need," Mr. Turzai said, "but we also need to make sure that those who can work find meaningful employment and break the cycle of government dependence."

Tracie Mauriello can be reached at or 717-787-2141.


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