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Welfare debts hobble working poor as they re-enter workforce

The welfare system doesn't just give the poor money. It also takes it back.

Thousands of Erie County welfare recipients each year are on the hook to repay money they should never have received.

The regulations that govern public benefits are complex, extensive and processed by a giant bureaucracy. The rules can trip up those who are taking their first fledgling steps toward self-sufficiency and saddle them with unexpected debts.

"The law is very dense. I liken it to the tax code," said Penny Selmonsky, supervising attorney for the Neighborhood Legal Services Public Benefits Unit. "Very few people understand it."

Some debts are the result of the recipient's own bad choices. Some are the result of innocent mistakes. About 90 percent of overpayments are considered errors that do not merit fraud investigations but must be repaid.

Those debts are often collected when a public benefits recipient first finds work. That can lower the odds of a person making the transition toward financial independence.

In one wage garnishment notice shared by Neighborhood Legal Services, an individual was overpaid slightly more than $3,000 in benefits. But with fees and interest, the individual now owed more than $5,000 to the government.

Understanding these kinds of barriers to financial independence matters because thousands more Erie County residents collect public assistance now than they did a decade ago. As of last year, the number of people collecting some type of cash benefit or safety net assistance exceeded 47,000.

The county processes roughly 3,000 new cases each year in which people are found to have received more benefits than they are owed, according to Social Services. Between $4 million and $5 million in overpayments a year are returned to the county through either voluntary repayment plans or wage garnishments.

County officials say they are bound by state and federal repayment rules. They also point to a fundamental principle of accountability: Those who are ineligible for certain benefits are not entitled to keep what they wrongly received.

Read the first story in this two-part series:

The welfare trap: two mothers, two choices and two struggles for self-sufficiency

Advocates for the working poor, however, say recipients see legal repayment letters demanding thousands of dollars and just give up.

"It’s like a million dollars to them," said Selmonsky. "There’s no way they can pay it, so they just ignore it."

System pitfalls

Tasha Moore is one of those who owes money back.

A former thief and drug-addicted prostitute, Moore turned her life around and applied for Social Services benefits. But she made mistakes before ultimately finding a career and educational path that could lift her from poverty and off of the welfare rolls.

"I fought hard to get here," Moore said. "It's still hard."

It took Moore several attempts to complete the mandatory job training required to qualify for welfare benefits, after which she was sent to work as a street cleaner on Broadway, the same street where she used to work as a prostitute, she said.

Those who receive cash benefits must attend job training classes and do assigned public work 35 hours a week to qualify for up to $406 a month.

Once a person begins receiving public benefits, the clock starts ticking. Cash benefits last two to five years. After that, benefits are paid directly to landlords and utility companies. If the benefits recipient fails to pay his or her remaining portion of those bills, Social Services may cover the expense but demand repayment later, advocates said.

"That’s going to catch people unaware," said Sam Magavern, executive director of the Partnership for the Public Good.

In the meantime, it's up to the person receiving benefits to recognize and immediately notify Social Services of any changes in job status or benefits eligibility or find themselves saddled with unexpected debts.

That's what happened to Moore.

Though she is now employed full time as a health worker assisting homeless women and no longer relies on Social Services for any benefits, she is on the hook to repay several thousand dollars to Medicaid in installments of $40 a month – a debt she'll be paying for years. She had listed her teenage daughter as a Medicaid dependent but didn't realize that her daughter could no longer remain a dependent after turning 21.

Tasha Moore now works as a community health worker case manager for chronically homeless women at Hope Gardens. (Derek Gee/Buffalo News)

It wasn't until her oldest daughter turned 23 that Moore discovered her daughter had illegally received health care benefits for two years. Moore owed Medicaid thousands. Ultimately, Neighborhood Legal Services intervened to negotiate an affordable settlement.

Many current and former benefits recipients similarly owe money to Social Services. And repayment is demanded shortly after a person finds work in what is usually a low-paying job, Selmonsky said.

"They get a letter saying, 'Pay me back,' " she said. "'And if you don't pay me back, then we're going to sue you.' "

Erie County investigators find millions in welfare fraud and overpayments

Payback

The longer a debtor ignores repayment demands, the deeper their financial hole grows.

If someone who owes money to Social Services fails to address initial repayment demands and payment plan offers, judgments can be entered against them that result in wage garnishments of a certain percentage, as well as additional fees and interest of 9 percent, until the full debt is paid.

Repayments are owed even if Social Services is responsible for the delay in processing paperwork submitted on time.

Tamara Applewhite, an East Side resident who supports four of her five children as a single parent, pays Social Services $120 a month for overpayments she said were the result of a caseworker processing her information late.

"I signed all my paperwork, but he didn’t do his paperwork," she said.

Cheating the system

Not all payback demands result from innocent oversights.

While many on public assistance follow the rules, both Moore and Applewhite agree that bending or breaking the rules to maximize public benefits is not uncommon in impoverished neighborhoods. Poor residents who lack the support, confidence or skills to transition into the workforce find it tempting to game the system, they said.

Some fail to report under-the-table work and side jobs, or pick up low-paying work just long enough to collect a month's worth of pay stubs to prove to Social Services that they're working when they aren't.

Food stamps, which have more generous eligibility standards, are commonly sold for cash by single mothers, said Moore. But that's not the only shortcut some Social Services beneficiaries take.

Moore recounted how she was assigned to short-term housing at the old Lafayette Hotel right after she was released from jail and had finally made the commitment to staying drug free. In order to keep her room, she had to regularly fill out paperwork detailing her efforts to secure her own housing. But Moore was still grappling with her commitment to stay clean, to stay away from her old haunts and reconnect with children she'd given up long ago.

She couldn't visit all the apartment complexes she was required to see. She didn't have a car or even a phone. Finally, a fellow hotel resident taught her to comb through the phone directory and copy down addresses so she could turn in her required forms without leaving her temporary shelter.

Applewhite admitted that due to escalating family drama with the father of one of her children, she stopped working for a while but never told Social Services. She was suspended from receiving benefits for six months. She has since been reinstated.

Though Applewhite avoids drugs and holds down a job that sometimes enables her to regularly work more than 40 hours a week, she has also struggled with mental health issues and bad decisions that have helped keep her on the Social Services rolls for the past 15 years.

In the past, that included deliberately cutting back on her hours so her family wouldn't lose her health care, child care and food stamps assistance. Until recently, she said, she saw few options as the primary supporter of her young family.

"You can see my glory, but you don't know my story," she said. "They judged Jesus Christ. If they want to judge me, judge me."

Needed changes 

Applewhite recently received a small raise as a home health aide and said she plans to take the big step of leaving public assistance behind next year.

But advocates for the working poor say more can be done to help ease the transition.

Tamara Applewhite checks the fridge in the kitchen of her East Side apartment. (Derek Gee/Buffalo News)

At the state and federal level, advocates want to see the government charge lower interest and fees on recipients who owe public assistance money. Selmonsky added that if state law were changed to defer benefit repayments in a recipient's first year of employment, and possibly even recoup some money through tax credit refunds instead of weekly paychecks, that could make the difference between someone who makes it and someone who doesn't.

More can be done locally, too, she said.

"I can't describe to you how important those transitional months are for you," she said. "You're on the edge. You're just on the edge."

Erie County Social Services administrators point out that they don't make the eligibility and repayment rules.

"It doesn’t mean that we don’t care," said Social Services Commissioner Marie Cannon, who herself once relied on Social Services benefits.

Selmonsky said Erie County Social Services should make rules and repayment options easier for benefits recipients to understand and invest more in counseling and education to keep recipients from making common mistakes that leave them in a financial hole even after they find work.

Neighborhood Legal Services used to operate a program called Project Dandelion, created specifically to educate benefits recipients on how to avoid or address such debts and successfully walk a path toward employment and self sufficiency. That program was cut under former County Executive Chris Collins.

Selmonsky said she considers Project Dandelion so valuable that she'd be willing to restart it at little to no cost to the county.

To try and meet the schedules of working benefits recipients, the department has launched a new effort to slightly extend regular service hours from 4:30 to 6 p.m. on Thursdays, though not all case management services are available then.

"I think we’ve come a long way," Cannon said. "Are there opportunities for improvement? Absolutely. And that’s what we’re committed to."

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