WELFARE and people: Who cares? That is the question raised by Dennis B. Fradin in his September 1983 article in Illinois Issues. The article deals with a broad range of public assistance issues, and Fradin is to be commended for pointing out some of the problems and shortcomings of the system as it currently operates. I strongly agree with him that grants to families under the state's Aid to Families with Dependent Children (AFDC) program are too low and that staff reductions in the Illinois Department of Public Aid have severely impaired the administration of AFDC and other programs. On the other hand, Fradin's overall discussion leads to some mistaken conclusions about how and why the system has evolved as it has and how the plight of the poor in this state can best be improved.

Basic to understanding public aid in Illinois is the fact that the state currently spends a far greater share of its available resources on welfare than does almost any other comparable state and that even after the budget cuts of recent years, Illinois continues to rank very high relative to other states in providing health care for the poor. Another little understood fact is that the recession has not been the major cause of rising welfare costs, and we cannot expect even a vigorous economic recovery to substantially reduce the rolls, slash expenditures and free up revenues to restore services or increase benefits. Finally, solutions such as tax increases, the allocation of a greater proportion of public revenues to welfare programs, or a greater reliance on the private sector all pose political and practical problems — as Fradin himself points out. Given these facts, what is the situation in Illinois and what can be done to improve services to the poor?

There is no doubt that AFDC grants in this state are inadequate. From 1977 to 1983, the average monthly payment for an AFDC family of four in Illinois has risen only 10.2 percent while the Consumer Price Index is up over 53 percent. Only six states in the nation had a higher per capita personal income in 1982 than did Illinois, yet 25 states have higher typical monthly payments for a family of four on AFDC.

It is also apparent that staff reductions in the Illinois Department of Public Aid (DPA) have severely impaired the administration of AFDC and other programs. Local welfares administrators cannot effectively serve either the recipient or the taxpayer when their available staff is cut to the bone. In July 1982, statistics showed that for each field worker (including all casework and clerical positions), Illinois had 33.1 AFDC cases — an extremely high number when compared to other similar states: Michigan, 21.7; New Jersey, 14.4; Ohio, 25.3; and Pennsylvania, 23.3. However, to fully assess this problem it must be understood that personnel cuts of the past several years have reduced original DPA staffing levels that were already considered woefully inadequate by the federal General Accounting Office in a report to Congress on February 22, 1982.

In addition, the majority of reductions in recent years have come from field casework staff and not from central administrative personnel. In July 1982, Illinois had 22.1 percent of its DPA personnel in central administrative positions. When compared to other states of similar size and caseload (Michigan, 18.1 percent; New Jersey, 15.0 percent; Ohio, 11.6 percent; Pennsylvania, 10.1 percent), it becomes clear that not only is this state's overall level of welfare staff inadequate, but it is also badly allocated.

Are Illinois welfare programs adequately funded? Fradin implies that they are not and that higher funding levels, either from increased taxes or a reallocation of the state's resources, will at least partially solve the state's public aid problems. However, an examination of Illinois' spending record shows that from fiscal year 1978 to fiscal 1983, welfare spending increased at a faster rate (40 percent) than did overall spending (35 percent) and rose nearly twice as fast as spending for the other major area of the budget — education (21 percent). In fiscal 1983 Illinois spent just over $3 billion or 36 percent of its entire general revenue butget on public aid. Of the eight states in the nation that the U.S. Department of Health and Human Services classifies as "high caseload" (California, Illinois, Massachusetts, Michigan, New Jersey, New York, Ohio and Pennsylvania), only California spent a greater proportion of its general funds in fiscal 1983 on the poor than did Illinois.

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Another point raised in Fradin's article is the severity of the reductions in Medical Assistance. Budget cuts that reduce services to people in need are never pleasant and often visit real hardship on those whose eligibility is terminated. It must be pointed out, however, that even with these service reductions, Illinois' medical programs for the poor are still among the most generous in the nation. Of the 32 potential services authorized by the federal government under Medicaid, Illinois currently provides 29. The national average is 18. Illinois also provides more extensive coverage to medically needy (MANG) recipients who have too much monthly income to qualify for cash assistance. The reductions in General Assistance medical benefits must also be put in perspective. Many states provide no medical programs for General Assistance clients at all. Again, even with the recent reductions, Illinois benefits compare quite favorably with other states.

One of the most erroneous assumptions that is often made about public assistance in Illinois is that welfare rolls and spending are highly sensitive to economic conditions. It could be deduced from Fradin's article that costs and caseloads are high due to recession and unemployment and that there will be significant decreases when the economy improves. This is simply not true. The majority of total public aid spending (54 percent) is for Medical Assistance, and the rapid increases of recent years have had far more to do with medical cost inflation than with the unemployment rate. Also, a sizable percentage of medical assistance expenditures are for nursing home care for the elderly and disabled, who are not employable. As Fradin points out, some programs such as Food Stamps and General Assistance are, in fact, very sensitive to conditions in the job market. However, the Food Stamp Program is (except for small administrative costs) federally funded, and General Assistance is a relatively small program which accounts for less than 15 percent of total welfare spending. It is the AFDC program which determines the need for welfare dollars in Illinois. AFDC spending accounts for 75 percent of all cash assistance costs, 45 percent of all medical costs, 40 percent of all administrative costs, and is the program under which 68 percent (not including Food Stamps) of all cash grant recipients in Illinois receive benefits. But is this program — and thus welfare spending in general — really "tied to the economy" as Gov. James R. Thompson's budget book proclaims each fiscal year?

Approximately 92 percent of the AFDC caseload consists of single-parent families headed by women. Over the past six fiscal years, from 1978 through 1983, the caseload has moved within a general range of 205,000 to 235,000 cases — 204,443 in November 1977; 234,372 in September 1981 — with a median level of about 218,000 over the period. Even in the most prosperous of times, with reasonable statewide economic growth and unemployment well below 5 percent, there is a "base" of about 205,000 cases that have remained on the rolls no matter how the economy has behaved. The only part of the caseload that may be tied to the economy are those cases that range above the base. At the median caseload level of 218,000, only 13,000 cases or 6 percent, are in fact on the rolls due to the economy. In January 1983, with the state in a deep recession with an unemployment rate in excess of 12 percent, only about 30,000 or 13 percent of the 235,000 AFDC cases could be said to be on assistance due to economic factors. Thus, it becomes clear that only a relatively small portion of the caseload and the resulting cost is actually tied to the economy.

Given the current situation and circumstances, what can be done for the poor in Illinois? Fradin offers three suggestions — tax increases, allocation of a greater percentage of state revenues to public aid, and a greater reliance on the private sector — none of which seems to me to be possible, practical, or even desirable. Given the passage of a nearly $1 billion tax increase on July 1, 1983, and the onset of the 1984 election year, the possibility of additional large tax increases in the foreseeable future is probably wishful thinking at best. Even if new revenues were available, the governor and the legislature may decide to commit them to education, economic development or new prison construction. Any reallocation of current funds to public aid must be judged in light of the fact that Illinois already spends a greater share of its revenue on welfare than almost any other state and that much of the recent growth in welfare spending has come at the expense of elementary, secondary and higher education. Finally, the private sector, however well-intentioned and dedicated in its efforts, simply does not have the resources needed to truly and permanently aid IIlinois' poor.

Given the necessity of operating within current dollars, I would propose a more practical solution which emphasizes maintenance of client incomes and services, reallocation of currently available welfare resources and more efficient management on the part of DPA. The fiscal 1985 public aid budget should provide for at least a 10 percent cost of living increase for all recipients — at a cost of about $110 million — and the hiring of approximately 1,200 additional casework and clerical staff for DPA field offices, not central administrators — at a cost of approximately $20 million. These increases would bring Illinois more into line with cash benefit amounts and staffing levels in comparable high caseload states and would reduce dependency and cheating by allowing for the more timely provision of services and more rigorous monitoring of eligibility.

The revenues for these increases should come from a temporary suspension (three to four years) of some of the less critical optional Medicaid services, especially for MANG clients, and a continuation and expansion of some of the medical cost containment measures that the DPA has instituted during the last several years. It would not seem unreasonable that $130 million in savings could be gleaned from a $1.63 billion Medical Assistance budget. (For another perspective on this issue, see "Controlling Medicaid Costs," Illinois Issues, June 1982.) Although cutting the Medical Assistance budget will surely cause advocates for the poor to cite the "entitlement" to quality health care, it can be argued that the poor are also "entitled" to adequate incomes' and essential casework services. I would suggest that Illinois' current Medicaid program is such that it could be reduced without truly affecting recipients' health. During the 1960s and '70s, when the Illinois economy was strong, its unemployment rate low, and its revenue growth robust, this state decided to provide what Gov. Thompson once called a "Cadillac" Medicaid program. We may have to accept the fact that we can no longer afford it.

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This reallocation of resources must be combined with a change in management attitude toward welfare administration. DPA must commit itself to truly serving recipients, not merely issuing "income maintenance" checks each month to "eligible" cases. Services designed to enable the poor to become self-supporting must become a higher priority than is the case today.

The agency must attempt to provide more extensive employment and training services, day care, child support enforcement and various other programs that help the poor break the welfare cycle and become taxpayers. Self-support programs, if properly administered, are very cost effective and can often be administered with federal funds. This change in attitude toward the recipient, when combined with the additional monitoring of eligibility and prevention of fraud and abuse that the 1,200 new casework staff would provide, could allow Illinois to control welfare costs and caseloads more effectively and could possibly generate enough savings to restore the optional medical services which would have to be temporarily eliminated, should the state decide on that course of action.

Welfare and people: Who cares? Illinois cares, but we must learn to better manage our available resources and programs. Merely allocating more money to the problem of poverty is not now a reasonable alternative in this state. Liberals must realize that they do not help the poor by simply providing higher funding for public aid without assuring that it is well-spent. Conservatives must see that some budget cuts do really hurt and may very well cost the taxpayer far more in the long run. We serve the poor far better with rational priorities, effective programs and efficient management than with idealistic solutions which cannot be implemented and which ignore the improvements that can be made without raising taxes or robbing other important state programs.

Alan L. Kamhi is the federal aid analyst for the Illinois Economic and Fiscal Commission. He worked for the Illinois Department of Public Aid from 1972 to 1980.