The Commonwealth Foundation released an alarming new report on Pennsylvania public welfare that finds widespread abuse of tax dollars, with spending growing faster than the economy and exceeding education appropriations for the first time in state history.

Policy analysts from the free-market think tank examined numerous documented cases of fraud, waste and abuse including service providers billing the Pennsylvania Department of Public Welfare for luxuries such as a chandelier, landscaping, a six-person hot tub and a bowling alley.

“Government welfare was once a helping hand to those in need, but has instead become a tangled bureaucracy of often abused programs that fall far short of the good intentions behind them,” said Matthew J. Brouillette, president and CEO.  “While some say reforms unfairly hurt the poor, the reality is Pennsylvania is quickly reaching a point where the tax base cannot support the benefits lawmakers are promising.”

Analysts also found DPW represents the largest department in the state’s General Fund, encompassing nearly 40 percent of the budget.  Despite dramatic increases in welfare spending, they conclude measures have failed to free Pennsylvanians from a poverty rate that has been climbing since 2000.

“The welfare system in Pennsylvania is expensive, ineffective, and largely unaccountable,” said Brouillette.  “It should be no surprise then that ever-increasing welfare spending is simply failing to bring independence to citizens.”

According to U.S. Census data, Pennsylvania is among the top-10 states in budget percentage spent on public welfare, surpassing neighboring states such as Maryland, New Jersey, and West Virginia.  Moreover, the number of Pennsylvanians receiving food stamps benefits is at an all-time high while increases in welfare spending outpace personal income and state tax revenue growth.

“The majority of welfare programs and their funding originate with the federal government, leaving states with little room for innovation and flexibility in their administration,” said Brouillette.  The current federal funding system actually encourages states to spend more in order to draw down additional federal funds.

Among the foundation’s recommendations are calls for state legislators to aggressively pursue waivers as other states have successfully done in order to overcome federal mandates and save taxpayers’ money.  They also recommend DPW rapidly cuts waste and abuse by reducing error rates and enforcing eligibility standards. Additionally, legislators should utilize performance-based budgeting to expand programs that work and end programs that don’t.

“If no action is taken, welfare spending will continue to crowd out other departments like education and transportation, depriving the truly needy from proper care and leading to future tax increases,” said Brouillette.  “If that happens, lawmakers will be delivering decades of dependence instead of dignity.”

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Governor Tom Corbett’s proposed 2012-13 budget transforms the public welfare system by providing incentives to those who are able to transition from the welfare line to the workforce, providing real relief to our poor and safeguarding taxpayer dollars through the elimination of waste, fraud and abuse.

“We are focused on maintaining the safety net for Pennsylvania’s most vulnerable and most in need. However, Pennsylvania taxpayers, who already pay 40 cents on each of their tax dollars for welfare programs, cannot sustain the continued growth of public assistance,” said Public Welfare Secretary Gary D. Alexander. “Public welfare was created to provide temporary assistance for most recipients and to be a last resort, not a way of life.”

In the proposed budget, the Department of Public Welfare (DPW) focuses on providing the most essential services to recipients by maximizing every taxpayer dollar.

The department currently provides services to more than 2.2 million Pennsylvanians. Currently, for every 2.1 individuals working, one individual is on welfare. Ten years ago, that ratio was 3.3 employed individuals to one individual on welfare.

“In the past ten years, welfare budget growth has outpaced general fund growth, poverty growth and state personal income growth primarily due to increases in the Medical Assistance program,” said Alexander. “Pennsylvania spends more on its Medicaid budget than 48 other states, including New York and California.”

Current projections show a significant rise in costs at the department for the 2012-2013 year. However, through responsible reform, aggressive cost-containment efforts and continued measures to eliminate waste, fraud and abuse, the governor is able to propose a budget for the department that closes that gap without increasing taxes.

The proposed budget takes steps to protect our most vulnerable populations through a number of program enhancements.

The plan proposes reforming foster care support through the Fostering Connections program by increasing the supported age of foster children from 18 to 21. The additional years of support gives these children a better chance for success in their lives.

The proposal provides funding to implement an adult protective services system for physically and cognitively impaired individuals ages 18-59. Currently, the commonwealth provides a similar system for children and older Pennsylvanians and this budget ensures these services extend to the adult age range.

“This budget focuses on spending every dollar smarter,” said Alexander. “Whether that is through a focus on eliminating waste, fraud and abuse or simply taking a fresh look at the way we do business, we will maximize taxpayer investment and preserve essential programs for their intended purpose.”

Under the proposed budget, attendance and work hour requirements will be tightened to ensure the Child Care Works supplement is being used by parents who need services due to work commitments, and for children who are attending on a regular basis.

The department will take advantage of current technology to institute a new audit system which will be implemented to review more Medicaid claims prior to payment as opposed to post payment in order to reduce fraud and abuse.

The department will also undertake intensive review and management of the highest-cost cases on the Medical Assistance program to ensure their health issues are being properly managed, and prevention and wellness strategies are being employed and followed.  The top 3,500 consumers of Medical Assistance care cost approximately $400 million to serve. Strategies such as the medical home and integrated care models must be examined as ways to supply better quality care to these high care-use individuals.

“This budget transforms how we provide financial assistance to our counties by proposing a block grant that encompasses a number of state-funded and county administered programs,” said Alexander.

This approach gives counties the flexibility to move funding where it is needed most in their communities, reinforcing our shared belief that these services are best administered at the local level. The block grant includes:

• Mental Health Services
• Intellectual Disabilities
• County Child Welfare Special Grants
• Behavioral Health Services
• Homeless Assistance Programs
• Human Services Development Fund
• Act 152 Drug and Alcohol Program

Modifications are also proposed to Pennsylvania’s General Assistance program, which provides assistance to those who do not qualify for federal programs.  Pennsylvania is among a small group of states that continue to offer solely state- funded services of this kind.

The budget proposes eliminating cash assistance and tightening definitions and work requirements for Medical Assistance programs. These measures make it possible for the commonwealth to preserve availability of these programs for those in need in the face of limited resources.

The proposed budget also includes the following reforms:

• Expanding the Health Choices managed care plan for those on Medical Assistance to all 67 counties.
• Increasing the monthly premium rate paid by Medical Assistance for Workers with Disabilities, and tightening up loose provisions that allows recipients to avoid paying premiums.
• Altering on-site hospital enrollment in Medical Assistance to ensure taxpayers no longer pay monthly premiums on enrollees that use the system one time.
• Instituting a reduction in provider payments for hospitals and nursing facilities.

These reforms take a hard look at ending waste, fraud and abuse to ensure the funding available is truly used for our most needy Pennsylvanians. While providing assistance to residents when they hit hard times, the department is also dedicated to helping everyone find a path to independent living.

The department will focus on job placement and accountability in the employment and training programs that specialize in helping welfare recipients find work. Performance-based outcomes are used for providers to encourage positive outcomes for recipients enrolled in the program.

Due to current maintenance-of-effort requirements in the federal Patient Protection and Affordable Care Act, the department has lost the ability to make needed reforms in approximately two-thirds of its budget. Therefore, only completely state-funded programs and provider rates were left to focus cost containment measures.

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