In 2009, the Orange Countyâ€™s Social Services Agency (SSA) cut $2 million from its budget for fraudÂ detection in order to compensate for overall funding shortfalls. The cuts resulted in a 34% reduction in fraud investigation staff through the elimination of 15 investigator positions. In a report released by the California State Auditor in November 2009 SSA was recognized for operating one of the most successful welfare fraud detection programs in the state, saving an estimated $1.82 for every dollar spent on finding fraud at the intake level in 2008.
The Orange County Grand Jury has released a report on the result of the decision to cut the welfare fraud investigation budget.
In the months following the layoffs, the number of fraud referrals declined by 33% and the amount of fraud found dropped by 30% resulting in an estimated $9.6 million in fraudulent payments during the last six months of 2009.
In January of 2009, a Welfare Fraud Investigator testified at aÂ public hearing on the Countyâ€™s financial crisis that Welfare Fraud Investigators prevent tens of millions of dollars in fraud each year, at a cost to the County of less than $6 million. Due to the cut based mentality of SSA administrators, these reductions happened despite the facts. The resulting decline in fraud detection has cost the taxpayers more than the cuts saved.
Findings of the Orange County Grand Jury include:
- The Social Services Agency has performed no meaningful analyses to determine the cost effectiveness of its efforts to detect and deter fraud in the CalWORKS and food stamp programs.
- No evidence has been found of regular, systematic fraud detection training of Social Services Agency employees after their initial training.
- There is no reference to fraud prevention in the mission statement or vision of the Social Services Agency.
- The staffing reduction and changes in the investigation process resulted in an estimated $9.6 million in fraudulent payments during the last six months of 2009.
Here isÂ the link to the complete Grand Jury Report: Fraud Made Easier.