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The Economics of the Underclass

July 17, 1993

The Board of Supervisors must cut hundreds of millions of dollars from Los Angeles County's $13.1-billion budget. Everyone understands that. The financial crisis--prolonged by the recession and a Sacramento-ordered shift of property tax revenues to the schools--will require deep reductions in services and workers. Everyone will have to sacrifice, including, unfortunately, even the poorest of the poor. The big question is how much.

Welfare offices are expected to lose staff, even though since 1985-86 the county's public assistance rolls have doubled, to 1.8 million. Most receive Aid to Families with Dependent Children, and the remaining 100,000 are general relief recipients.

The increase in recipients has burdened case workers, who each are now expected to manage 700 cases. That unreasonable caseload will grow even higher if 2,500 workers are laid off, as the proposed budget requires. If those cuts are adopted, the county will save $113 million, but the wait for processing of a welfare check may take more than four months. How many poor families will become homeless while they wait for that government lifeline?

Also, the absence of strong oversight could lead to more errors, a greater incidence of fraud and other abuse. The county recently documented $9 million in errors, including duplication of welfare checks. That's not chump change.

Thousands of poor single men and women manage to avoid homelessness because of general relief, the welfare check for people who are not supporting children. They get $293 a month. The proposed budget reduces that figure to $212--not enough to cover the typical monthly rent of $240 for a room in a Skid Row hotel. If the checks drop that much, homelessness will increase and other social costs will jump.

Cutting general relief by the proposed 27% would save the county about $77 million a year. Of course poor people cannot be spared in county budget cuts, but they should not shoulder a heavier burden than those who receive other county services. Some way has to be found so that the general-relief fund cutback can be made more comparable to the 8.25% hit that other county services are taking.

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