WELFARE FRAUD ESTIMATE UNFOUNDED, OFFICIALS SAY.

Byline: Douglas Haberman Staff Writer

A recent grand jury estimate that welfare fraud costs Los Angeles County as much as $500 million a year was based on unfounded assumptions, county officials said Monday in a message to the Board of Supervisors.

The grand jury came up with the figure even before it conducted an audit of the program, two county officials wrote in the memo, which was sent in anticipation of the supervisors' meeting today.

Lynn Bayer, head of the county Department of Public Social Services, and county Chief Administrative Officer David Janssen wrote in their memorandum that the department disagrees with a grand jury recommendation for an outside individual or management firm to oversee implementation and completion of all of the grand jury's recommendations on reducing welfare fraud.

The department is asking for a year to implement its own welfare fraud-reduction plan.

But Supervisor Michael D. Antonovich said the department has already had many years to reduce welfare fraud and has failed to make this a top priority.

``We have to have done more yesterday, not tomorrow,'' he said Monday. ``We need reform, not delays.''

The Board of Supervisors is scheduled to vote today on Antonovich's motion calling for adoption of all the grand jury recommendations, including the hiring of the outside manager. The manager will cost at least $50,000, according to an estimate by the county auditor-controller.

The department agrees with most of the grand jury's recommendations, such as improving internal controls to prevent fraud. It says it began implementing many of them before the grand jury report came out on June 30.

But it is challenging some of the grand jury's findings. The department takes special issue with the $500 million figure, said Sandra Semtner, DPSS' special projects division chief.

``It cannot be substantiated,'' she said.

According to the memo, the former chairman of the grand jury's health and human services committee, which put together the welfare fraud report, does not believe the estimate can be validated.

The former chairman, Herbert Harder of Glendale, said he was advised by the grand jury's legal adviser that he could not comment.

The grand jury arrived at the $500 million figure by taking welfare fraud data from Orange and San Diego counties - which each have at least a 30 percent fraud rate, according to estimates - and applying the data to Los Angeles County.

Semtner said Los Angeles County has in place numerous measures that other counties lack - including fingerprinting of recipients - that cut down on welfare fraud.

The percentage of fraud in other counties doesn't necessarily apply in Los Angeles County, she said.

But Steve Cooley, head deputy district attorney in the District Attorney Office's welfare fraud division, said the $500 million figure is probably in the ballpark and could even be low. The Orange County data come from a state-funded study that is the best of its kind to date, he said.

``There's no reason to believe welfare fraud isn't more ingrained and more pervasive in Los Angeles County than in other counties,'' Cooley said.

Despite the disagreement over this figure, Semtner said the department knows it can improve welfare fraud reduction efforts.

Its proposed plan for 1999-2000 includes strong monitoring and an expanded role for its Internal Security Task Force, which investigates employee and recipient fraud, she said.

The department is also preparing to launch a pilot program in selected areas that involves sending an investigator to the residence of each applicant for aid to verify eligibility.