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Regulating Welfare

Updated on January 15, 2016

The issue of welfare is broad. It has many forms, ranging from food stamps to tax credits, and it has the potential to be a hot button issue in any of its manifestations. One divisive question on the issue of welfare is its regulation in terms of who is entitled to it, and how are they entitled to spend it. The welfare debate is ubiquitous and the State of New York is certainly not exempt from it. Take, for example, this letter to the editor of the Buffalo News, published on September 10th, 2015, entitled, “Government Should Dictate How SNAP Benefits are Used.” The letter’s author, who represents a decidedly conservative view on this issue, states at one point, “ [D]oes he really think it’s OK to spend your kid’s food money on tobacco, liquor, etc? It is unfortunate that the government would actually have to police these people. Nonetheless, seeing to the welfare of these children should be the priority. Furthermore, taking money under the guise of needing food, and using it for something else, constitutes fraud” (Blersch). Should the government regulate how welfare money is spent? To what degree? These questions may have no definitive answer, but the debate is nevertheless worthy of exploration.

One interesting case study comes from an article published in the Buffalo News on September 13th, 2015, entitled, “GOP Leader Proposes Stopping Welfare Housing Payments to Landlords.” At the heart of the problem is the seeming injustice that “landlord Ralph Pescrillo, who received $313,000 in rent subsidies from the county although he owed the City of Niagara Falls taxes and water bills totaling nearly $1.8 million” (Prohaska). The local Republicans quickly came up with their own answer to resolving this issue. The article says that, “The immediate reaction was to amend the policy by making the housing payments conditional on proof of payment of taxes” (Prohaska). Under this system, landlords would have to prove they paid their taxes before they could receive any sort of subsidy from the government. This would represent a return to pre-2013 rules, and Majority Leader, Richard E. Updegrove, R-Lockport cited “gross abuse of [the current] program by scofflaw landlords” as the reason to support the change.

However, local Democrats had an issue with this proposal and find support with the Landlords Association of Greater Niagara. Robert Pascoal, President of the Landlords Association, said that “the reason the county started paying landlords directly was that many welfare clients were not using the rent money to pay rent, leaving landlords without revenue.” Pascoal added that, “[W]hen a landlord evicts a welfare recipient for unpaid rent, the person is eligible for an emergency housing payment, which costs the county more money” (Prohaska). The Minority Leader, Dennis F. Virtuoso, D-Niagara Falls, said that the Republican plan was just “putting the money back in the hands of the welfare clients,” and said that did not make sense (Prohaska).

What is interesting about this case study is how it reflects some fundamental ideas about welfare. The Republicans and Democrats in this case agree that the government will have to dole out governmental assistance; the question is who gets it? Republicans say the people renting from the landlord should receive the welfare and then they can use that money to pay the landlord and then the landlord can use that money to pay his taxes. Democrats say that if the people renting from the landlord get the money, there is a chance they will not spend it on the rent, and then the landlord will not have any money to pay his taxes. Who is right? To an extent, it depends on one’s worldview. Putting aside the renters for a moment and just focusing on the landlord, the Republicans in this case support a policy that reflects the idea that government should be suspicious of those who receive forms of welfare. The assumption is that Ralph Pescrillo, the landlord, is “scofflaw” (breaking the law) and that he could pay his taxes and simply chooses not to because he wants to maximize his benefit from the government. Democrats, on the other hand, support a policy that reflects an idea that people who receive welfare do so out of necessity.

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It is difficult to pin down exact welfare statistics for New York, but federal welfare statistics show that fraud is a relatively low occurrence. The Government Accountability Office reported that improper government payments (not all of which constitute fraud) totaled $124.7 billion, or 4.5 percent, of the total fiscal budget in 2014. For Public Housing and Rental Assistance, the government spent just over $1 billion, 3.2 percent of which qualified as improper payments (Bertoni, Davis). That number may seem low, and in many ways it is, but the Office of Management and Budget classifies it as a “high error program” ( A 2007 Report from the Department of Health and Human Services stated that, in New York State, 28 percent of Temporary Assistance to Needy Families (TANF) payments were improper, totaling to a little under $50 million out of approximately $330 million, although many of those were government errors as opposed to fraud. (Levinson). A 2015 article found that, in Massachusetts, “less than 1 percent of total spending” on public assistance was fraudulent (Shoenberg).

Any way one views the data, it is clear that, generally speaking, the vast majority of welfare payments are proper, and of the minority of improper payments an even smaller percentage are considered fraudulent. So, to return to the example of landlord welfare in New York, what influence should this data have? If the local government gives the welfare assistance to the renters instead of the landlords, the renters are under no obligation to spend that money on rent. If they do not spend it on rent, the landlord will not have money to pay the taxes which lie at the heart of the issue. Furthermore, the renters may have to be evicted, and then the county will be on the financial hook to pay emergency housing payments. If, on the other hand, the welfare is given to the landlords, they also may not use it to pay their taxes, but by passing a law that requires them to pay their taxes in order to get welfare, the assumption is that the landlords are attempting to commit some sort of fraud. However, most data on welfare implies that while some landlords might be doing that, it is statistically unlikely that any fraud would be occurring on a mass scale. Therefore, it seems conceivable to conclude that the money spent on emergency housing payments might turn out to be greater than either the money saved in not providing welfare to landlords or the money recouped in potential tax evasion, although many variables concerning the evicted individuals or families go into calculating those numbers.

The article also brings up another issue concerning who should receive welfare money, which is, how should the government regulate the qualifications and requirements necessary to receive welfare assistance? The Buffalo News article states that “The Democrats also are reintroducing a measure that died in committee in 2013, requiring advance inspections of all rental units paid for through welfare before a client moves in” (Prohaska). Democrats claimed, as a follow-up article by the same author points out, that “problem would have been solved by code inspections,” because, as minority leader Virtuoso states, “A lot of his units wouldn’t have passed inspection” (Prohaska). Essentially, the Democrats are stating the all a landlord’s rental property would need to be up to a certain standard in order for the government to provide welfare assistance to that landlord. This would ostensibly create a smaller pool of landlords who qualify for welfare assistance, or at the very least would create a standard for determining welfare qualifications. The article does not make it clear whether opposition to this proposal is partisan, however, one Republican is quoted as saying, “We could come up with a real good bi-partisan plan” (Prohaska). One point of consideration for the bill comes from Social Services Commissioner Anthony J. Restaino, who said that “the state will not reimburse any part of the cost of the inspections unless a landlord-tenant security agreement is signed before the inspection,” and added, “Cattaraugus and Oneida counties instituted inspection programs and were denied reimbursement” (Prohaska). The issue the Social Services Commissioner brings up is that while limiting the pool of landlords will save the county money, it would cost them money to run the inspections, and thus the action may defeat its own purpose if not enough rental properties fail inspection.

This idea has a larger application in terms of things states can do to deny otherwise qualified people of welfare. One often sees this with the idea of drug testing welfare recipients. Possibly the most famous example of this was in Florida. New York State does not currently have any policy of drug testing welfare recipients, but there is proposed legislation within the state as of July 2015 (NCSL). An article by the Associated Press, published on CBS News, states that in Florida’s drug testing program, which was ruled unconstitutional, only 2.6 percent of the recipients tested were positive for drug use (AP). The program was a failure in terms of finding massive perceived misuse of welfare funds, as well as a failure for the purposes of saving money, as it costs money to conduct drug testing, and the only return on investment would, theoretically, be the money saved from disqualifying certain would-be welfare recipients. This is not to say that forcing landlords’ properties to pass inspection would definitely fail and cost the county money, however, it is certainly a possibility. Certainly the Social Services Commissioner thinks it is likely, or else he would have no reason to be so hesitant to offer reimbursement for inspections.

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There is another aspect of regulating welfare which is not covered by the landlord case, but which is hotly debated. That issue is whether the government should regulate how recipients spend their welfare money after they receive it. In the letter to the editor referenced in the introduction, the author states a belief that the government should prevent food stamps from being used on things such as, “tobacco, liquor, etc” (Blersch). Federally, the United States Department of Agriculture prohibits the use of food stamps on alcohol, tobacco, non-food items, hot foods, and foods eaten in the store (USDA). The Center on Budget and Policy Priorities reports that “Only 1 percent, or $1 in every $100 of SNAP benefits, is trafficked” (CBPP). It is also of note that what one chooses to spend their welfare benefits on does not change the amount of welfare benefits they receive. SNAP recipients receive a certain amount of money with which to purchase food, and if they do not spend it on food, they do not receive extra money. However, the fear is that if these recipients are not using SNAP benefits to purchase food, then they must not really need them and the government could save money by not awarding the welfare, however, statistics imply that this sort of perceived fraud is still relatively uncommon and again, there is always the tension between how much money the government must spend on enforcement versus how much money that enforcement will save the government.

Overall, welfare regulation has two main components: who gets welfare, and how do they get to spend it. New York State has internal debates about how to deal with both issues. In terms of who gets it, one can see the debate play out in the currently debated proposals about landlord welfare as well as drug testing welfare recipients. The letter to the editor in the Buffalo News shows that there is at least some level of concern over how these welfare benefits are spent. This paper has attempted to explore the issue with some nuance, but, to simplify things, what are the pros and the cons of increasing or decreasing the general regulation of welfare?

The advantages of regulating welfare boil down to saving taxpayer money. Everyone benefits from public services to some degree, but few would contend that everyone should receive direct government assistance. In that sense, there is at least consensus that welfare should be regulated to an extent. The question is how much. To take the landlord example—should landlords’ properties be forced to pass inspection before the landlords can receive welfare benefits? In theory, it will eliminate certain landlords from welfare eligibility. Democrats in that specific case said it would have eliminated that landlord, thus saving the county $313,000. What about testing welfare recipients? New York projects itself to spend approximately $3.5 billion in social welfare in 2016, and if drug testing nets results anywhere similar to Florida, then it would save the state approximately $90. Although this number may be high, since not all welfare works in a way that it can be denied with a drug test. Furthermore, the new lower number would have subtracted from it whatever it costs to drug test the recipients. Still, there could, in theory, be some sort of savings from this policy. Finally, New York could attempt to further regulate food stamp benefits, which, to use the CBPP’s numbers, have a one percent rate of fraud. To use New York’s total estimated Temporary and Disability Assistance welfare budget for 2016, $1.3 billion, preventing all “misuse” of food stamps would save the state $13 million and again, not all Temporary and Disability Assistance is spent on food stamps and that newly calculated lower number would have to have subtracted from it the cost of enforcing tougher regulation (Open Budget). Still, there is the possibility in theory that the measure could save money.

So what are the cons of regulating welfare? Interestingly, one of the cons is the same as one of the pros, namely, saving money. While the previous paragraph shows that there can be theoretical fiscal gains from the further regulation of welfare, actual application of increasing welfare restrictions tend to show otherwise. Florida, for example, lost money from drug testing its welfare recipients. To return to the landlord case, the Social Services Commissioner brought up how Cattaraugus and Oneida were not reimbursed for their inspection program, although it is unclear if those counties actually lost money or simply failed to save as much as they could have. Finally, there is the idea that welfare should have loose regulation for moralistic reasons. Some believe that those who accept welfare do so because they truly need it, and to place extra burdens and barriers on them simply for the sake of trying to save some money is a wrong to those who would be unduly burdened and perhaps even wrongly denied welfare.

Welfare is a complex issue. It is an important part of any civil society, but if one wants to live in an economically capitalist society (which is a separate paper altogether), then monetary forms of social welfare must be regulated. To insert opinion, welfare should be relatively loose in terms of regulation. Recipients should have to apply for it and show some sort of need, but, beyond that, government should take a small role. Attempts to crack down on fraud are good to an extent, but fraud prevention should be assessed with a cost-benefit analysis approach, and when costs exceed benefits, that is when fraud prevention should also stop. As far as regulating what people can use welfare to purchase, that should not be regulated. If someone qualifies for welfare assistance, then how they choose to spend that money is entirely their prerogative. They receive the same amount whether they buy food or whether they buy cigarettes. While it would be preferable if they chose to use governmental assistance for things that are more of a necessity, people still should have a certain amount of freedom in how they live their lives.


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Works Cited

AP. "Florida Drops Bid to Require Drug Tests for Welfare Applicants." CBS. N.p., 5 Mar. 2015. Web. 15 Nov. 2015.

Blersch, Robin F. "Letter: Government Should Dictate How SNAP Benefits Are Used." The Buffalo News 10 Sept. 2015, Opinion sec.: n. pag. Print.

Center on Budget and Policy Priorites. SNAP Is Effective and Efficient. Rep. Comp. Dottie Rosenbaum. N.p., 11 Mar. 2013. Web. 15 Nov. 2015.

Division of the Budget. "Charts – State Operating Funds Spending by Function." N.p., n.d. Web. 15 Nov. 2015.

National Conference of State Legilatures. "Drug Testing for Welfare Recipients and Puclic Assistance." N.p., 27 July 2015. Web. 15 Nov. 2015.

Prohaska, Thomas J. "GOP Leader Proposes Stopping Welfare Housing Payments to Landlords." The Buffalo News 13 Sept. 2015, City & Region sec.: n. pag. Print.

Prohaska, Thomas J. "Niagara County May Study Advanced Inspections of Welfare Housing." The Buffalo News 15 Nov. 2015, City & Region sec.: n. pag. The Buffalo News. 15 Nov. 2015. Web. 15 Nov. 2015.

Schoenberg, Shira. "War on Poverty: How Much Welfare Fraud Is There in Massachusetts?" N.p., 4 Feb. 2015. Web. 15 Nov. 2015.

United States. Department of Agriculture. Food and Nutrition Service. Eligible Food Items. N.p., 18 July 2014. Web. 15 Nov. 2015.

United States. Department of Health and Human Services. Inspector General. Review of Improper Temporary Assistance for Needy Families Basic Assistance Payments in New York State for July 1 Through December 31, 2005. By Daniel R. Levinson. N.p.: n.p., n.d. Web. 15 Nov. 2015.

United States. Government Accountability Office. Improper Payments. By Daniel Bertoni and Beryl H. Davis. N.p.: n.p., n.d. 16 Mar. 2015. Web. 15 Nov. 2015.

United States. Payment Accuracy. High-Error Programs. N.p., n.d. Web. 15 Nov. 2015.


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