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California welfare recipients withdrew $1.8 million at casino ATMs over eight months

Gov. Arnold Schwarzenegger issues an executive order requiring recipients to promise they will use cash benefits only to meet basic subsistence needs. GOP legislators call for the cash to be returned.

June 25, 2010|By Jack Dolan, Los Angeles Times

California welfare recipients using state-issued debit cards withdrew more than $1.8 million in taxpayer cash on casino floors between October 2009 and last month, state officials said Thursday.

Gov. Arnold Schwarzenegger issued an executive order requiring welfare recipients to promise they will use cash benefits only to "meet the basic subsistence needs" of their families. The order also gave the state Department of Social Services seven days to produce a plan to reduce other types of "waste, fraud and abuse" in the welfare program.

The moves came after The Times reported Wednesday that officials at the department failed to notice for years that welfare recipients could use the state-issued cards to withdraw taxpayer cash at more than half of the tribal casinos and state-licensed poker rooms in California. The state initiated the debit card program in 2002.

Casino withdrawals, which represented far less than 1% of total welfare spending during the eight months for which the department released data, averaged just over $227,392 a month.

Schwarzenegger has already ordered the vendor that runs the state welfare system's ATM network to prohibit the cards from working at casino machines. Republican lawmakers are now calling on the administration to track down the people who withdrew cash at gaming centers and recover the money.

"I'd say that $227,000 per month is an astounding waste of taxpayer dollars," said Seth Unger, spokesman for Assembly Republican Leader Martin Garrick of Solana Beach. "To me it is absolutely clear that the department failed in its duty to provide oversight. We should explore all options to get the money back."

The electronic benefit transfer cards allow welfare recipients to access two accounts: cash offered through the Temporary Assistance for Needy Families program and an electronic version of food stamps, which comes with strict rules governing how the money can be spent.

The cash benefits, however, can be withdrawn and spent just about anywhere. A Times review of state records found that the cards work at ATMs in 32 of 58 tribal casinos and 47 of 90 state-licensed poker rooms.

Most of the ATMs impose a withdrawal limit of about $300 a day. The monthly cash grant for a family of three ranges up to $694, while families with more than 10 people can get as much as $1,469, documents from the Social Services Department show.

Some Assembly Republicans called Thursday for assurances that welfare recipients can't access ATMs at other "seedy" businesses. "If they're going to shut down … the casinos, why not also shut down the ATMs at liquor stores and bars?" Unger asked.

Schwarzenegger spokesman Aaron McLear said the point of the executive order was to force the department to examine the program for all manner of abuse, but did not specify any other kinds of businesses that might be weeded out of the network. "We're going to eliminate any waste, fraud and abuse that makes sense to eliminate," he said.

Democrats, who have been fighting to preserve the state's fraying social safety net in the face of a $19-billion budget gap, angrily rejected a Schwarzenegger proposal last month to eliminate the cash portion of welfare.

That was before anyone in Sacramento realized the money could be withdrawn by someone strolling from a poker game to a blackjack table.

Democratic leaders steered away from specifics while discussing calls for reform.

"We will conduct timely legislative oversight," said Senate President Pro Tem Darrell Steinberg (D-Sacramento). "We want to make sure all families are spending the money on the children it's intended to serve."

jack.dolan@latimes.com

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