Wheels program relatively costly
A new Toyota Echo. That's what the state could have bought for every low-income West Virginian who ended up owning a car through the Wheels-to-Work program.
Instead, the welfare car program spent $10,700 a person to put people in used cars that cost about $2,300 each, according to a Charleston Gazette analysis.
That's two or three times as expensive as similar programs in five other states, according to the people who run them.
West Virginia spent nearly $24 million in federal welfare money on the Wheels program over the past three years.
"Did you say $24 million? Dear God," said Marty Schwartz, executive director of Maryland-based Vehicles for Change.
Schwartz's group spends about $3,750 for every car it sells to a low-income client. Half the money comes from private donations.
Bob Adams of New Hampshire's Wheels-to-Work said his program spends about $6,000 per person, but the average car is less than 3 years old and has 40,000 miles on it.
"Oh my God, let me pick myself off the floor," Adams said when he heard what West Virginia spent on its Wheels program. "When I think what I could have done with that money ... my mind reels."
"You're kidding. That sounds really high," said Susan Crane, who helps oversee Working Wheels in Seattle. "A more reasonable cost would be $3,000 to $4,000 a car."
West Virginia officials are aware of the welfare car program's exorbitant costs.
At least five state agencies are investigating the Wheels program for alleged fraud and mismanagement.
Four social service agencies ran Wheels programs across the state: Human Resources Development Foundation of Morgantown; Community Action of South Eastern West Virginia of Bluefield; Community Resources Inc. of Parkersburg; and Potomac Highlands Support Services of Petersburg. They were administered by the state Department of Health and Human Resources.
The agencies leased cars to about 2,900 welfare recipients so they could travel to a job or training. Of those, 2,230 people ended up receiving permanent title to their cars.
No one received a car for free, however. Participants made lease payments for two years, and only received the title after paying off the vehicle's full price.
Some of the cars were clunkers, according to complaints received by state officials and the Gazette. Engines caught fire, seat belts didn't latch and participants could see the road through rusted floorboards.
The social service agencies say they bought the best cars they could for what the state allowed them to spend.
They also said their costs were reasonable for what they provided.
For instance, they paid participants' auto insurance for at least a year and sometimes two. They also provided money for major repairs if vehicles broke down.
Insurance costs ate up more than a quarter of West Virginia Wheels' $8 million-a-year budget, according to two years of records from the four agencies. Most out-of-state programs provided insurance for a few months or not at all.
Still, the $24 million spent on West Virginia Wheels does not include the millions that participants paid on 24-month leases — income many other programs don't have.
Most other programs pay for major repairs, though not for two years, as West Virginia Wheels promised.
In Maryland, Vehicles for Change provides a six-month warranty on cars it sells. New Hampshire's program provides much newer cars — some still have the manufacturer's warranty.
Also, low-income car program leaders were surprised by West Virginia's repossession rate. About one of every four Wheels participants had their car taken away, usually for missing payments.
By contrast, about one of 10 Vehicles for Change clients have their cars repossessed. Only 4 percent of New Hampshire Wheels participants default on car loans. No one has defaulted on the Seattle program's loans.
The out-of-state programs keep participants in cars through careful screening and financial management training.
The programs also tend to be much smaller than West Virginia's. One of the smallest, New Hampshire's program, gives away 25 cars a year. One of the largest, Vehicles for Change, provides about 400 cars annually.
Adams said it would be hard to operate any car program as big as West Virginia's.
"You're giving away cars to people who can't handle it," Adams said. "You're just looking at getting rid of the cars, not helping people."
Three years ago, the welfare rolls in West Virginia were cut dramatically, mostly because of tougher requirements.
As a result, state officials were sitting on a huge surplus of federal welfare money. If they didn't spend it quickly, they would have to return it.
West Virginia's welfare program tripled in size, almost overnight. State officials increased benefits and started new programs like Wheels-to-Work.
If welfare car programs are drawn up too quickly, it's a recipe for problems, Crane said.
Crane's group spent two years designing their program. The planning included two public hearings, meetings with employment, education and welfare experts, and a study of different Wheels-to-Work programs nationwide.
West Virginia officials quietly decided to scrap the Wheels-to-Work program last summer and replace it with a scaled-down donated car program.
Human Resources Development Foundation won the $1 million grant, despite its history with the failed lease program.
Now, two months into the new program, Foundation officials say bad publicity is keeping them from getting the car donations they need. As of last week, the agency hadn't distributed any of the 60 cars it promised by the end of December, according to a Foundation Director Homer Kincaid.
Schwartz said if state officials continue having trouble, they should call him.
"For $1 million, I'll do 500 cars for them," he said.
To contact staff writers Scott Finn and Eric Eyre, use e-mail or call 357-4323.