Welfare Fraud Decriminalization Bill Passes Senate Committee

A bill that would decriminalize criminal penalties for attempted welfare fraud for cases under $950 and eliminate criminal penalties for overpayments from administrative errors or infractions continued to move up in the Senate this month, with an Appropriations Committee vote now set for May 5th.

Senate Bill 560, authored by Senator Lola Smallwood-Cuevas (D-Los Angeles), would specifically delete the provision that establishes criminal penalties for an attempt to commit welfare fraud, as well as remove criminal penalties for welfare fraud when the total amount of aid obtained or retained is above or below $950, and instead make welfare fraud when aid was obtained or retained in the total amount of $25,000 or more punishable by specified imprisonment in a county jail and/or fine. In addition, SB 560 would require a county human services agency to determine whether benefits were authorized as a result of an error in the Statewide Automated Welfare System (CalSAWS) and prohibit the agency from referring a case for criminal action if benefits were authorized in error. Those affected would not be subject to criminal prosecution under these provisions for an overpayment or overissuance of benefits obtained under various public social services programs, including CalWORKs and CalFresh.

The bill would also prohibit a person from being subject to criminal prosecution or an administrative finding of intentional program violation for overpayment or overissuance of benefits under various specified public social services programs for any month the county human services agency was in receipt of any New Hire Registry (NHR) data match information, indicating any potential for an overpayment or overissuance and the county human services agency did not provide the person a timely and adequate reminder to report income. As a result, SB 560 would prohibit criminal prosecution for an overpayment or overissuance of benefits obtained under various specified public social services programs, except when required by federal law. The bill would prohibit a person from being additionally charged with perjury based solely on a statement made to a county welfare department, if they are subject to prosecution for overpayment or overissuance pursuant to these provisions.

Senator Smallwood-Cuevas wrote the bill as a way to not “punish” families in poverty, and instead correct mistakes administratively through paybacks rather than go through criminal means.

“This bill is about keeping families out of the criminal justice system for making administrative errors,” said Senator Smallwood-Cuevas earlier this month. “It offers a smarter, more humane approach by allowing counties to resolve most overpayment cases administratively, holding people accountable without criminalizing poverty.”

“California’s safety net should lift families up, not trap them in poverty,” added the Senator to the Globe on Tuesday. “Right now, a missed deadline or paperwork mistake can lead to felony charges that tear families apart — even when there’s no intent to deceive. SB 560 offers a smarter, more humane approach by allowing counties to resolve most overpayment cases administratively, holding people accountable without criminalizing poverty.”

However, opponents swiftly came out against the bill when introduced in February, pointing out that SB 560 would significantly weaken deterrents against fraud, thus inviting more people on welfare to try and take advantage of the state. The Senator also gave no reply when the Globe asked if there would be any heightened or criminal punishments for repeat welfare fraud offenders, leaving even more room for the likely hood of repeat offenders and for trying to get away with not reporting income, reporting non-resident children, and other forms of welfare fraud.

Despite this, SB 560 has continued to pass through two Senate committees this month. In both cases, 4-5 Democratic Senators voted in favor of the bill, with a lone Republican then either voting against it or opting to not vote. However, with a larger GOP contingent this year, the bill will likely face more of a hurdle when it comes to a larger vote. The same goes for the Assembly. Governor Gavin Newsom has also not weighed in on the issue. Worries over a greater amount of uncollected welfare fraud overpayments could lead to some more amendments, as the state is still in a massive deficit and needs to eliminate fraud to help keep more state funds intact.

SB 560 is due to be heard next on May 5th in the Senate Appropriations Committee.