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
  • Spencer Weiner / 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The cash benefits, however, can be withdrawn and spent just about anywhere.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.”

3 Comments

  1. sherry

    June 27, 2010 at 7:27 pm

    and if the money is gone, (and of course, if it was for ‘essentials’, whether they were spent on those or not, the money is gone) are we going to throw them in debtor’s prison? How are these welfare recipients going to raise that money? I don’t know, but it won’t be by getting a job. That would end their benefits.

    Just because this welfare money was dispensed at an ATM at a casino actually means nothing. Maybe their neighbor works there and they needed picked up…. Maybe a lot of things…but the welfare recipients did nothing wrong by the government’s own policies. If the government can’t even fulfill it’s own promises at its own businesses, then maybe the real crux of the problem is that they entered into the welfare and casino (and liquor) businesses in the first place.

  2. Andrew McCleese

    June 27, 2010 at 8:44 pm

    Well… or the reverse… pick up money at a non-casino ATM and then go to the slots. There is definite largess on the part of the government and some probable social engineering going on with these sorts of Welfare systems and massive holes that lead to a dependent, tax eating class of voters who will always vote themselves more government and benefits at the expense of the taxpayer. But I can’t totally absolve the individual. Where are these people’s priorities and moral compass? If I am to believe in individual liberty, I accept risk, but I also expect rational behavior out of the individual. That is the only real way freedom can work, if humans mostly behave rationally in their own self interest, which I believe they do. When you are on Welfare, and using that money on anything other than subsistence, finding a job or getting a skill or education then you are abusing the system and can’t really be given a pass. Sure, maybe the government is enticing you… but, you have the power to say NO!

  3. sherry

    June 28, 2010 at 7:26 pm

    ahhh…a new gov. campaign to ‘just say no’– to thugs–a war on taking money from a known terrorist organization…the US gov. (A terrorist group is as a terrorist group does.)

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