[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
HEARING TO REVIEW UPDATES ON USDA
INSPECTOR GENERAL AUDITS,
INCLUDING SNAP FRAUD DETECTION EFFORTS AND IT COMPLIANCE
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON DEPARTMENT OPERATIONS, OVERSIGHT, AND CREDIT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
DECEMBER 1, 2011
__________
Serial No. 112-27
Printed for the use of the Committee on Agriculture
agriculture.house.gov
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COMMITTEE ON AGRICULTURE
FRANK D. LUCAS, Oklahoma, Chairman
BOB GOODLATTE, Virginia, COLLIN C. PETERSON, Minnesota,
Vice Chairman Ranking Minority Member
TIMOTHY V. JOHNSON, Illinois TIM HOLDEN, Pennsylvania
STEVE KING, Iowa MIKE McINTYRE, North Carolina
RANDY NEUGEBAUER, Texas LEONARD L. BOSWELL, Iowa
K. MICHAEL CONAWAY, Texas JOE BACA, California
JEFF FORTENBERRY, Nebraska DENNIS A. CARDOZA, California
JEAN SCHMIDT, Ohio DAVID SCOTT, Georgia
GLENN THOMPSON, Pennsylvania HENRY CUELLAR, Texas
THOMAS J. ROONEY, Florida JIM COSTA, California
MARLIN A. STUTZMAN, Indiana TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio KURT SCHRADER, Oregon
AUSTIN SCOTT, Georgia LARRY KISSELL, North Carolina
SCOTT R. TIPTON, Colorado WILLIAM L. OWENS, New York
STEVE SOUTHERLAND II, Florida CHELLIE PINGREE, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas JOE COURTNEY, Connecticut
MARTHA ROBY, Alabama PETER WELCH, Vermont
TIM HUELSKAMP, Kansas MARCIA L. FUDGE, Ohio
SCOTT DesJARLAIS, Tennessee GREGORIO KILILI CAMACHO SABLAN,
RENEE L. ELLMERS, North Carolina Northern Mariana Islands
CHRISTOPHER P. GIBSON, New York TERRI A. SEWELL, Alabama
RANDY HULTGREN, Illinois JAMES P. McGOVERN, Massachusetts
VICKY HARTZLER, Missouri
ROBERT T. SCHILLING, Illinois
REID J. RIBBLE, Wisconsin
KRISTI L. NOEM, South Dakota
______
Professional Staff
Nicole Scott, Staff Director
Kevin J. Kramp, Chief Counsel
Tamara Hinton, Communications Director
Robert L. Larew, Minority Staff Director
______
Subcommittee on Department Operations, Oversight, and Credit
JEFF FORTENBERRY, Nebraska, Chairman
TIMOTHY V. JOHNSON, Illinois MARCIA L. FUDGE, Ohio, Ranking
STEVE KING, Iowa Minority Member
ERIC A. ``RICK'' CRAWFORD, Arkansas JAMES P. McGOVERN, Massachusetts
KRISTI L. NOEM, South Dakota JOE BACA, California
Brandon Lipps, Subcommittee Staff Director
(ii)
C O N T E N T S
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Page
Fortenberry, Hon. Jeff, a Representative in Congress from
Nebraska, opening statement.................................... 1
Prepared statement........................................... 2
Fudge, Hon. Marcia L., a Representative in Congress from Ohio,
opening statement.............................................. 3
Prepared statement........................................... 4
Witness
Fong, Hon. Phyllis K., Inspector General, U.S. Department of
Agriculture, Washington, D.C.; accompanied by Karen Ellis,
Assistant Inspector General for Investigations, OIG, USDA; Gil
Harden, Assistant Inspector General for Audit, OIG, USDA....... 4
Prepared statement........................................... 5
HEARING TO REVIEW UPDATES ON USDA
INSPECTOR GENERAL AUDITS,
INCLUDING SNAP FRAUD DETECTION EFFORTS AND IT COMPLIANCE
----------
THURSDAY, DECEMBER 1, 2011
House of Representatives,
Subcommittee on Department Operations, Oversight,
and Credit,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300 of the Longworth House Office Building, Hon. Jeff
Fortenberry [Chairman of the Subcommittee] presiding.
Members present: Representatives Fortenberry, Johnson,
Crawford, Fudge, McGovern, and Baca.
Staff present: Tamara Hinton, Brandon Lipps, Pam Miller,
John Porter, Debbie Smith, Heather Vaughan, Suzanne Watson,
Craig Jagger, Lisa Shelton, John Konya, and Caleb Crosswhite.
OPENING STATEMENT OF HON. JEFF FORTENBERRY, A REPRESENTATIVE IN
CONGRESS FROM NEBRASKA
The Chairman. Good morning. This hearing of the
Subcommittee on Department Operations, Oversight, and Credit to
review updates on USDA Inspector General audits, including SNAP
fraud detection and IT compliance will come to order.
Thank you all for coming this morning. After my opening
statement, I will turn to the Ranking Member for hers and then
we will move quickly into the testimony.
I thank you all for joining us today for this oversight
hearing. I would like to especially thank Ms. Fong for
returning to the Subcommittee. Last time you were here, we
discussed a number of Inspector General investigations and
together we identified two issues that warranted follow-up. So
we appreciate your willingness to come today.
The first issue we will address is fraud and abuse in the
Supplemental Nutrition Assistance Program, or SNAP as it is
called. As I said at our last oversight hearing, the rate of
improper payments has fallen significantly, so we are moving in
the right direction. But nutrition assistance is by far the
largest percentage of expenditures by the Department of
Agriculture. With more than $70 billion in annual spending,
even low rates of improper payments quickly add up to
significant waste. In this economy when many people have a real
need for nutrition assistance to feed and nourish their
families, we cannot afford to waste any taxpayer dollars.
When you were last here, Ms. Fong, you mentioned that the
Food and Nutrition Service could do a better job of using state
fraud data to detect improper SNAP payments. A number of
Committee Members, including myself, emphasized how important
it is to ensure we have the best possible mechanisms in place
to detect waste and fraud, as well as abuse. I look forward to
learning more about your conclusions in this regard.
The second topic I wish to discuss today is the
Department's efforts to update its information technology.
Constituents across the country rely on the Department to help
them access critical programs and services, and the Department
requires functioning computer networks to provide that service.
The Department has been given funds to update its IT services,
and the last time you were here, we discussed a report being
conducted by your office on whether those funds are being used
effectively.
We would like to discuss your findings in this area to
ensure that our investment is benefitting our constituents as
it should. We all are very much aware of the tight budget
constraints these days.
As the Subcommittee charged with overseeing the
Department's operations, we rely on timely and thorough
investigations from your office in order to ensure good
government practices. This information not only helps us
evaluate how the Department is using taxpayer dollars, but it
also helps us make better policy decisions, going forward. So
that is why it is critical for your office to supply us with
timely and accurate data.
I look forward to learning more about your audit work on
the SNAP program and the Department's use of information
technology, but I also would like to learn more about how your
own office prioritizes resources to complete these audits and
investigations in a timely manner.
[The prepared statement of Mr. Fortenberry follows:]
Prepared Statement of Hon. Jeff Fortenberry, a Representative in
Congress from Nebraska
Good morning. Thank you for joining us today for this oversight
hearing. I'd especially like to thank Ms. Fong for returning to our
Subcommittee. The last time you were here, we discussed a number of
Inspector General investigations and--together--we identified two
issues that warranted follow-up.
The first issue we'll address is fraud and abuse in the
Supplemental Nutrition Assistance Program, or SNAP as it is commonly
called. As I said at our last oversight hearing, the rate of improper
payments has fallen significantly. So we're moving in the right
direction.
But nutrition assistance is by far the largest percentage of
expenditures by the Department of Agriculture. With more than $70
billion in annual spending, even low rates of improper payments quickly
add up to significant waste.
In this economy, many people have a real need for nutrition
assistance to feed and nourish their families. We cannot afford to
waste taxpayer dollars intended for struggling families.
When you were last here, Ms. Fong, you mentioned that the Food and
Nutrition Service could do a better job of using state fraud data to
detect improper SNAP payments. A number of Committee Members, myself
included, emphasized how important it is to ensure we have the best
possible mechanisms in place to detect waste, fraud, and abuse. I look
forward to learning more about your conclusions on this issue.
The second topic I want to address is the Department's efforts to
update its Information Technology. Constituents across the country rely
on the Department to help them access critical programs and services.
And the Department requires functioning computer networks to provide
that service.
The Department has been given funds to update its Information
Technology services, and the last time you were here we discussed a
report being conducted by your office on whether those funds had been
used effectively. We'd like to discuss your findings in this area to
ensure that our investment is benefitting our constituents as it
should. We are facing tighter budget constraints these days, and it's
more important than ever that we get the maximum benefits from every
taxpayer dollar.
As the Subcommittee charged with overseeing the Department's
operations, we rely on timely and thorough investigations from your
office in order to ensure good government practices.
This information not only helps us evaluate how the Department is
using taxpayer dollars, but it also helps us make better policy
decisions, going forward.
That's why it is critical for you to supply us with accurate
reports in a timely fashion.
So during this hearing I'm not only looking forward to learning
more about your audit work on SNAP and the Department's use of
Information Technology, but also more about how your office prioritizes
resources to complete these audits and investigations in an efficient
manner.
With that, I turn to our ranking member for her opening statement.
The Chairman. With that, I will turn to our Ranking Member,
Ms. Fudge, for her opening statement.
OPENING STATEMENT OF HON. MARCIA L. FUDGE, A REPRESENTATIVE IN
CONGRESS FROM OHIO
Ms. Fudge. Thank you so much, Mr. Chairman. And thank you,
Inspector General Fong. Thank you for being here today. And I
thank you for your follow-up with my office on issues that were
raised during our June hearing. In particular, I appreciate the
data you provided on the $256 million saved by USDA through
waste and fraud investigations.
Any improper payments made with USDA funds are a concern
for this Subcommittee. The data provided by the Office of the
Inspector General reflects ongoing challenges across all USDA
departments. I raise this point to emphasize the unfairness of
solely criticizing the Supplemental Nutrition Assistance
Program. While I acknowledge the program has challenges with
fraud, those challenges must be rooted out so that the program
can continue to serve a great national need.
SNAP is the safety net that helps tens of millions of
American families during this tough economic time. In my
district, more than 44,000 households depend on SNAP. More than
\1/2\ of these households include children. Suburban
communities are dependent more on SNAP than ever before.
Between July 2007 and July 2010, suburban communities added 3.2
million SNAP recipients, an increase of 73 percent. Americans
in all communities across the nation are in need, and SNAP
plays a critical role in meeting this great need.
During my 5 minutes of questioning, I look forward to
hearing from you about your work to reduce SNAP fraud. I
support your efforts to ensure that people who need SNAP
receive the benefits as opposed to those who defraud the
system. I also look forward to hearing more about your office's
work on improving USDA's response to civil rights complaints
and USDA's IT system.
Thank you again for being here today. Mr. Chairman, I yield
back.
[The prepared statement of Ms. Fudge follows:]
Prepared Statement of Hon. Marcia L. Fudge, a Representative in
Congress from Ohio
Thank you, Mr. Chairman.
Inspector General Fong, thank you for being here today. Thank you
for your follow-up with my office on issues that were raised during the
June hearing. In particular, I appreciate the data you provided on the
$256 million saved by USDA through waste and fraud investigations.
The data provided by the Office of the Inspector General reflects
ongoing challenges across all USDA departments. The data isn't exactly
good news. Any improper payments made by USDA are a concern to me and
to this Subcommittee. However, I raise this point to emphasize the
unfairness of solely criticizing the Supplemental Nutrition Assistance
Program. While I acknowledge the program does have challenges with
fraud, it is effectively serving a great national need.
SNAP is the safety net that helps to feed tens of millions of
American families during this tough economic time. In my District, more
than 44,000 households depend on SNAP. More than \1/2\ of these
households include children.
Suburban communities are depending more on SNAP than ever before.
Between July 2007 and July 2010, suburban communities added 3.2 million
SNAP recipients-an increase of 73 percent. Americans in all communities
across the nation are in need and SNAP plays a critical role in meeting
this great need.
During my 5 minutes of questioning, I look forward to hearing from
you about your work to reduce SNAP fraud. I support your efforts to
ensure the people who need SNAP receive the benefit as opposed to those
who defraud the system. I also look forward to hearing more about your
office's work on improving USDA's response to civil rights complaints
and USDA's IT system. Thank you again for being here today.
The Chairman. I thank the Ranking Member. And the chair
would request that the other Members submit their opening
statements for the record so the witness may begin her
testimony and ensure there is ample time for questions.
With that said, I would like to welcome our panel, the
Honorable Phyllis Fong, Inspector General of the Office of
Inspector General, U.S. Department of Agriculture here in
Washington. She is accompanied by Karen Ellis, who is the
Assistant Inspector General for Investigations; Mr. Gil Harden,
the Assistant Inspector General for Audit, Office of the
Inspector General.
Ms. Fong, please begin.
STATEMENT OF HON. PHYLLIS K. FONG, INSPECTOR
GENERAL, U.S. DEPARTMENT OF AGRICULTURE,
WASHINGTON, D.C.; ACCOMPANIED BY KAREN ELLIS,
ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS, OIG, USDA; GIL
HARDEN, ASSISTANT INSPECTOR GENERAL FOR AUDIT, OIG, USDA
Ms. Fong. Well, thank you, Mr. Chairman, Ranking Member
Fudge, and Members of the Subcommittee. It is a pleasure to be
here today with you to discuss these issues of great concern.
And we appreciate the opportunity to talk to you about our
current work in the SNAP program and with respect to the
Department's IT programs.
Since you have a copy of my full statement for the record,
let me just highlight some of the key points that our testimony
makes.
In the SNAP program, as you mentioned, we are performing a
series of audits analyzing the databases of ten states to
identify participants who may not be eligible to receive
benefits. And as you know, we recently issued two reports
concerning our work in Kansas and Florida where we identified
more than 3,500 recipients who were receiving potential
improper payments of over $490,000 a month. As our reports
detailed, these payments went to recipients who were on the
deceased list, who were disqualified from receiving SNAP
benefits, who may have had invalid Social Security Numbers, who
were receiving dual benefits under two separate accounts in one
state, or who may have been receiving dual benefits
simultaneously from two different states.
While our findings to date do not represent large monetary
sums when you think about it in the context of the SNAP program
as a whole, they do indicate areas where FNS and the states
could make progress in reducing potential improper payments. We
have made several recommendations to FNS to address these
issues that we found, and FNS has generally agreed to take
corrective action and has actually implemented some corrective
action to date.
As you noted, we also conduct criminal investigations to
address allegations of fraud and abuse in USDA programs across
the board. With respect to the SNAP program, in recent years we
have devoted about \1/2\ of our investigative resources to
cases that involve the illegal exchange of SNAP benefits for
cash or other commodities, which is known as trafficking. Over
the last 2 years, these investigations have resulted in over
600 convictions and over $98 million in monetary results. My
written statement provides several examples of these kinds of
cases and the significant sentences that courts impose in these
situations.
Finally, I would like to address your interest in USDA's IT
programs. As you mentioned in your opening statements, USDA
depends on IT systems to deliver benefits to program recipients
across its many agencies and responsible areas. And this has
been a challenge for USDA in terms of bringing its IT
infrastructure into full compliance with Federal security
requirements. We, in the OIG, continue to provide audit
oversight of these activities. As you note, we are currently
reviewing the use of $40 million that was appropriated last
year to address and assess whether there have been any
improvements in the Department's IT infrastructure.
In a closely related audit, we have recently issued our
annual FISMA report, which is required by law, which assesses
the overall state of USDA's IT security initiatives. In the
last 3 years, we have made 43 recommendations to the Department
in the context of these FISMA audits to help the Department
remedy long-standing challenges in IT security. Though the
Department has only been able to close six of these 43
recommendations, the Department continues to work towards
resolving the issues that we have identified.
So I would like to conclude my statement and again thank
you for the opportunity to be here today and to engage in
dialogue with you on these issues. And we welcome any questions
that you might have.
[The prepared statement of Ms. Fong follows:]
Prepared Statement of Hon. Phyllis K. Fong, Inspector General, U.S.
Department of Agriculture, Washington, D.C.
Good morning, Mr. Chairman, Ranking Member Fudge, and Members of
the Subcommittee. I am joined by Gil Harden, the Assistant Inspector
General for Audit and Karen Ellis, the Assistant Inspector General for
Investigations. Thank you for the opportunity to update the
Subcommittee on the Office of Inspector General's (OIG) work on
preventing fraud in the Supplemental Nutrition Assistance Program
(SNAP) and reviewing the Department's information technology (IT)
programs for compliance with all applicable laws and regulations.
Database Analysis to Reduce SNAP Fraud
As part of our ongoing efforts to help minimize fraud, waste, and
abuse within SNAP, OIG is performing a series of audits analyzing ten
states' participant databases.\1\ These databases store critical
information which helps identify ineligible participants who are
receiving benefits. Detecting and investigating program violations is
one of the state agencies' primary responsibilities. State agencies are
required to check their information against Federal and state databases
to ensure, for example, that people using deceased individuals' Social
Security Numbers (SSN) do not receive benefits, or that their submitted
income is the same as is listed in official records. If applicants do
not meet eligibility requirements at the time of application or on a
recurring 6 to 12 month basis, state agencies are required to
disqualify them. Doing so ensures that taxpayer dollars go to those who
are truly in need.
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\1\ The ten states are Alabama, Florida, Kansas, Louisiana,
Massachusetts, Mississippi, Missouri, New Jersey, New York, and Texas.
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To monitor state agencies' progress in identifying and preventing
improper payments, we checked several of these databases ourselves. We
have completed work in two states--Kansas and Florida--and found a
total of 3,572 recipients who were receiving potential improper
payments: \2\
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\2\ Kansas: 883; Florida: 2,689.
878 recipients were either deceased or using the SSNs of
deceased individuals.\3\ State agencies did not investigate
individuals using the SSNs of deceased persons due to a backlog
stemming from increased participation in SNAP in recent years,
as well as a system crash. Additionally, some recipients
received benefits because state agencies only checked state
death records, which do not identify deceased participants who
died in a different state, instead of checking against the
required national Social Security Administration database.
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\3\ Kansas: 71; Florida: 807.
160 active participants were previously disqualified from
receiving SNAP benefits.\4\ One of the most basic ways to
protect against SNAP fraud is to prevent intentional program
violators from reenrolling, but FNS does not require states to
check FNS' database of disqualified participants before
admitting them into SNAP.\5\ We found that because of this
policy, in Florida alone, 160 participants who had previously
been disqualified in other states were actively receiving SNAP
benefits.
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\4\ Florida: 160.
\5\ FNS uses a database known as the Electronic Disqualified
Recipient System (eDRS).
973 participants received dual benefits simultaneously from
another state for 3 consecutive months.\6\ Of these, 165 were
enrolled in both states for 6 months or longer \7\--and one was
a dual participant for a year and a half.\8\ This occurred
because, at present, FNS does not have a nationwide database of
participant data. Instead, the states, at their own discretion,
utilize an optional, multi-state system, which results in
significant gaps in coverage. For example, even though Florida
utilizes this system, it did not know that 370 SNAP
participants were simultaneously receiving benefits in Alabama
because Alabama does not participate in the system, and thus
the system does not contain Alabama's data.
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\6\ Kansas: 90; Florida: 883.
\7\ Kansas: 58; Florida: 107.
\8\ Kansas: 1.
1,555 individuals had invalid SSNs.\9\ The states did not
always check their own databases for anomalies, which increased
the risk of improper payments to individuals with invalid SSNs.
Agencies attributed most of these errors to data entry errors
or incorrect SSNs provided by participants. With potentially
incorrect information, it is difficult for states to determine
which participants may be intentionally manipulating the
system.
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\9\ Kansas: 720; Florida: 835.
6 individuals were receiving dual benefits under two
separate accounts.\10\ State agencies determined that a rare IT
system issue created dual records, but were unable to diagnose
the cause.
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\10\ Kansas 2: Florida: 4.
Participants in Kansas receive on average $124.40 in benefits a
month, while participants in Florida receive an average of $141.40 a
month. We estimate that these 3,572 recipients could be receiving a
total of $490,070 a month.\11\
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\11\ $109,845 in Kansas; $380,225 in Florida.
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Databases provide some of the most comprehensive and robust
information for fraud detection. However, we found that because state
agencies do not fully utilize them--even when they are required to do
so--they may continue to issue SNAP payments to those who are not
entitled to receive the benefit.
Taken within the context of SNAP as a whole, our findings to date
do not represent large monetary sums, but they do show areas where FNS
and the states could make progress in reducing potential improper
payments. Moreover, as FNS strives to bring its rate of improper
payments below three percent, it will need to make use of data analysis
as a straightforward way of identifying payments that should not be
made. OIG is in the process of completing similar data analysis audits
in another eight states.
In our reports, we have recommended that FNS require the Florida
and Kansas agencies to ensure they use a national database to perform
death matches and SSN verifications, and that they perform checks to
make sure information is entered correctly. We also recommended the
state agencies review the individuals we identified and recover
improper payments, as appropriate. Generally, FNS agreed. To prevent
interstate dual participation, the agency is in the process of
implementing regional databases. FNS also encourages states to check
for interstate dual participation by using the optional national
database, but notes that some states feel the information in this
database is not timely. FNS has not yet provided timelines to implement
checks for dual enrollment, which we require to reach agreement on
management's decision for corrective action.\12\
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\12\ Audit Report 27002-0002-13, ``Analysis of Florida's SNAP
Eligibility Data'' (November 29, 2011) and Audit Report 27002-0001-13,
``Analysis of Kansas' SNAP Eligibility Data'' (November 23, 2011).
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Additionally, we have found that FNS needs to take measures to
ensure that other information used in fraud detection efforts is
accurate and reliable. In one audit, we found that the files used to
back up FNS' Anti-Fraud Locator Electronic Benefit Transfer (EBT)
Retail Transaction system, which stores the data from EBT transactions,
were incomplete and disorganized, which could hinder fraud detection
efforts. As a result of our audit, FNS has agreed to strengthen system
controls, including system redesigns and upgrades by June 2012.\13\
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\13\ Audit Report 27002-0001-DA, ``Analysis of Supplemental
Nutrition Assistance Program ALERT Database'' (November 22, 2011).
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OIG Investigations of the Illegal Trade in SNAP Benefits
Just as there are individuals willing to misrepresent themselves to
receive benefits, so there are individuals and retailers who illegally
exchange food benefits for cash or other commodities. For example, by
giving a recipient $50 in cash for $100 in benefits, an unscrupulous
retailer can make a significant profit; recipients, of course, are then
able to spend the cash however they like. In some cases, recipients
have exchanged benefits for drugs, weapons, and other contraband. Not
only does this illegal exchange interfere with FNS' ability to
efficiently use its resources to feed hungry families, but it
undermines the goal of providing nutritional and wholesome food to
those in need.
In FY 2011, OIG devoted about 46 percent of its investigative
resources to SNAP-related criminal investigations. In that year, our
investigations resulted in 179 convictions and monetary results
totaling $26.5 million. In recent months, OIG has concluded a number of
SNAP investigations, including the following:
A judge recently ordered a Brooklyn store owner to serve 2
years in jail and pay $1.4 million in restitution for
defrauding SNAP. From September 2007 to September 2009, OIG
agents exchanged a total of $2,664 in SNAP benefits for $1,875
in cash in a series of transactions demonstrating that the
owner was in the habit of trafficking in SNAP benefits.
Subsequent investigation and analysis of financial data
demonstrated that the store's fraudulent SNAP transactions
amounted to approximately $1.4 million. In 2009, the store
owner and her son were charged with conspiracy to commit SNAP
trafficking. The store owner pled guilty and was sentenced to
24 months' imprisonment and ordered with her son to pay
restitution of approximately $1.4 million and forfeiture in the
amount of $105,524. The owner's son fled, but he was
apprehended in Florida in July 2010. He pled guilty in December
2010, and in June 2011, was sentenced to 15 months'
imprisonment.
After being deported from the United States for food stamp
fraud in the 1990s, one criminal illegally re-entered the
country in 2000 and resumed EBT fraud. With the assistance of
an accountant, this individual opened several stores using
other individuals' names. The false owners of these stores
signed their names on FNS documents to obtain authorization to
accept SNAP benefits, but the subject, his wife, and his
brother actually operated these stores. Subsequently, an OIG
investigation resulted in the subject and his brother being
charged with fraud. In June 2011, the owner was sentenced to 57
months of incarceration, 3 years of probation, and restitution
of $1.7 million, and will again be subject to deportation. His
brother was sentenced in May 2011 to 21 months of
incarceration, 12 months' probation, and restitution totaling
$362,764. Court actions are pending against the store owner's
wife.
In Cincinnati, a 2 year joint criminal investigation led by
OIG disclosed that the owner, manager, and employees of two
SNAP-authorized retailers exchanged SNAP benefits for firearms,
cash, stolen tobacco products, narcotics, and drug
paraphernalia. In April 2011, two store employees, who were
brothers, were sentenced to 51 months' incarceration followed
by 3 years' supervised release, and were ordered to pay fines.
Their mother was sentenced in May 2011 to time served, 6
months' home confinement, and 3 years' supervised release after
agents found EBT cards in her purse while searching for
evidence involving her sons' illegal SNAP trafficking. Their
father was sentenced to probation in September 2011 after he
pled guilty to SNAP fraud and receipt of stolen property. One
of the store owners and a manager are scheduled to be tried
criminally later this year for illegal use of SNAP benefits.
OIG continues to work with FNS to develop new ways of detecting and
investigating retailers at high risk of committing such fraud. In
particular, we are engaged in ongoing discussions with FNS to identify
ways to leverage resources with state and local partners so that they
may better address fraud involving both retailers and recipients.
Improving USDA's IT Systems
OIG continues to provide oversight to ensure that the Department
efficiently and effectively utilizes the funds it was provided to
update its IT infrastructure. In FY 2010, the Office of the Chief
Information Officer's (OCIO) baseline budget was increased from $17
million to $61 million for security improvements within the Department.
Anticipating a total of $64 million in FY 2011, USDA pursued a total of
14 projects that year, including network monitoring and establishing a
24/7 security operations center. However, in April 2011, the passage of
a final continuing resolution resulted in a decrease in overall
appropriations available for the remainder of FY 2011. OCIO received a
total of $40 million for FY 2011--$23 million more than in FY 2009, but
$24 million less than what it anticipated. OIG is in the process of
determining how OCIO used the additional funding it received, and if
the additional funding resulted in improved security. We can state,
based on our work to date, that the 14 projects initiated with this
additional funding appear to have been significantly curtailed or
delayed. In one example, with a decreased budget, USDA halted work by
contractors to implement a $3.6 million software package. With the
project not yet operational, and without access to the administrator
account, the Department effectively found itself unable to use the
software tool.
Apart from this ongoing audit, OIG routinely monitors the state of
IT security at USDA. Each year, we conduct our mandated review of the
Department's compliance with the Federal Information Security
Management Act (FISMA). Bringing USDA's IT infrastructure into full
compliance with all applicable laws and regulations is a formidable
challenge, as the Department includes 33 agencies, most with their own
IT infrastructure, and operates a total of 257 discrete IT systems. In
FY 2011, USDA spent a total of $2.5 billion on IT-related expenses to
maintain, upgrade, operate, or replace these systems.
The Department requires this infrastructure to process and manage
the vast amounts of information needed to deliver benefits and services
to the American public. However, overseeing such a diverse array of
technology presents problems for any organization, and USDA is no
exception. Since 2009, OIG has made 43 recommendations, including ten
from FY 2011, intended to help the Department remedy longstanding
deficiencies in its IT security. Though the Department has closed only
six of these 43 recommendations, it continues to work on resolutions
for the remaining open recommendations.
As part of our FY 2011 FISMA review, OIG noted that OCIO has tended
to attempt too many IT projects at the same time, which has resulted in
USDA not meeting its project milestones. Given OCIO's tendency to
disperse its efforts over a wide field--and thereby dilute their
effect--we have recommended that OCIO prioritize its work on a few
projects, and focus on completing those projects. To some extent, OCIO
has responded. For example, in response to issues we reported
previously, the Department installed a cyber security incident
detection toolkit this year--this system should help USDA detect and
respond to intrusions in its data systems. With appropriate resources,
the Department can analyze up to 150 alerts to potential cyber attacks
per week. OCIO, however, faced a decrease in its budget for this
project, and was forced to reduce the personnel it relied on to perform
this work. Now, it analyzes about 15 alerts weekly.\14\
---------------------------------------------------------------------------
\14\ Audit Report 50501-0002-12, ``U.S. Department of Agriculture,
Office of the Chief Information Officer, Fiscal Year 2011 Federal
Information Security Management Act'' (November 15, 2011).
---------------------------------------------------------------------------
OIG also has issued a number of recent reports dealing with IT
problems in the Department, several of them dealing with contractors.
Federal IT projects have historically involved contractors, but USDA
has not always adequately overseen the contracts it relies on to
fulfill its IT requirements. For instance, our audit of USDA's Domain
Name System (DNS) revealed that OCIO needs to improve how it oversees
the contractors who operate this critical system, which routes Internet
traffic through the network.\15\ Like any other distributed computing
system, USDA's system is susceptible to platform-, software-, and
network-level vulnerabilities. OIG reviewed the Department's management
and security controls to protect the integrity, validity, and
availability of the information that travels across USDA's network. We
found that OCIO has not always been diligent in ensuring that the
management and security over DNS was adequate. Ultimately, these types
of problems leave the Department open to cyber attacks and the
potential destruction or theft of valuable and private data.\16\
---------------------------------------------------------------------------
\15\ DNS is a data communication mechanism that translates Internet
Protocol addresses into easy-to-understand website names, allowing
users to navigate using a website name such as www.ocio.usda.gov rather
than a series of numbers such as 192.168.200.100.
\16\ Audit Report 50501-0001-12, ``Fast Report--Critical Domain
Name Systems (DNS) Servers'' (April 15, 2011).
---------------------------------------------------------------------------
USDA, like other Federal agencies and private companies, is also
facing challenges concerning integrating new technologies in a way that
furthers the Department's mission while also meeting the most rigorous
IT security requirements. The Department's employees are increasingly
reliant on smart phones or other wireless handheld devices, but these
powerful devices bring with them new security problems related to their
portability. OIG reviewed 277 of USDA's approximately 10,000 wireless
handheld devices, and found that all of these 277 devices were not
adequately secured, as defined by guidance issued by the National
Institute of Standards and Technology. For example, we found wireless
handheld devices that were not password-protected, had no anti-virus
software installed, and were not configured to encrypt removable media.
We also found that all 22 of the Department's Blackberry servers were
not secured in accordance with Departmental guidance, which allowed
users to disable their passwords or bypass the Department's Internet
content filters. Ultimately, these problems occurred because OCIO took
a decentralized approach to deploying these devices (allowing
individual agencies to select and deploy smart phones) without
providing clear guidance and oversight on how to configure and secure
them, which resulted in inconsistencies.\17\ OCIO accepted our
recommendations.
---------------------------------------------------------------------------
\17\ Audit Report 50501-0001-IT, ``USDA's Management and Security
Over Wireless Handheld Devices'' (August 15, 2011).
---------------------------------------------------------------------------
Conclusion
This concludes our written statement. I want to again thank the
Chair and the Subcommittee for the opportunity to testify today. We
welcome any questions you may have.
The Chairman. Thank you, Ms. Fong. Did Ms. Ellis or Mr.
Harden have any further input?
Ms. Fong. Are you asking if they have an opening statement?
The Chairman. Yes, I am sorry. Okay. Well, thank you.
First of all, let me do a little housekeeping with you.
Back in June when we had our earlier hearing, it was suggested
to us in response to your suggestion, Ranking Member Fudge and
I wrote you a letter looking forward to a follow-up hearing
this fall. We have had some difficulty scheduling this and now
we only have preliminary data. Our expectation was that we
would have a complete set of data based upon the questions that
I raised earlier. It is important for us to just clear up this
matter as to why there has been delay and difficulty in
scheduling this hearing and how you prioritize your own
internal resources in this regard.
Ms. Fong. Well, thank you for raising that issue. When we
appeared last summer and we engaged in a colloquy on our
ongoing and planned work, at that time our office did say to
you that we anticipated having final reports in the fall of
2011. And we certainly said that and that was our plan. I will
say to you that managing audit work is an art and not a
science. And we had work plans in place to accomplish that work
and that was where we believed that we would be.
Now, I will say that sometimes when we start out with
audits and we initiate them and we are involved in a number of
states, there are issues that come up that we do not always
anticipate. And sometimes there are bumps in the road in terms
of finding issues that we had not anticipated finding that we
need to follow through and work and analyze. We need to make
sure that we understand the data that we are being given which
may involve additional interviews, coordination with program
officials who have priorities in terms of delivering programs
which are very essential to them. And so on occasion, our audit
time frames slip.
Now, I will also say that we have other mandatory work that
we are required to do. As I might have noted, we have just
completed the financial statement audits for the Department
which are required by law. Those are seven very intensive audit
efforts that were due on November 15 which involve many of the
same staff involved in our IT work. And so we have had to shift
and move and organize our work.
We recognize the importance that you put on these audits,
and because of your interest and your follow up with us, we
sped up our audit work on both the SNAP and the IT matters so
that we were able to issue in the last few weeks the three
audit reports on SNAP that are covered in my testimony and the
FISMA report, which is in the IT arena.
So while I understand your concern and I will say that we
did make that commitment, we are doing our very best to get
this work out in as timely a manner as we can keeping in mind
the need for high quality and for accurate data.
The Chairman. Thank you for that. I think I have
sufficiently pressed my point that we depend upon you. We can't
do this ourselves. This Committee is going to take its work
very seriously. I think perhaps a middle ground here would be
as we move forward and we are looking for--we have to have some
idea of firm timelines when things are going to be completed.
If there is slippage because of other constraints, timely
communication in that regard would be helpful but also maybe
phasing some of the information would also be helpful in
allowing us to see a snapshot of what may be coming before the
fullness of the report is issued.
And that is clearly what we have today, so thank you for
your response and we will look forward to continuing to
strengthen this friendship and working relationship.
Let us go to the specifics of your findings: Talk a little
bit more about the subset of data that you do have and the
problems that you found, particularly in this SNAP trafficking
issue, and then extrapolate from the subset the dollars
potentially involved in the entire system there due to these
problems. In other words, you have a subset of data here, but
what we need to do--I understand it is going to be preliminary
and offend your sensibilities as policy analysts and audit
experts to talk in too precise terms here, but nonetheless,
this is the only data that we have. So I would like to
extrapolate from what you have to an understanding of what this
says about our system as a whole in terms of the waste or fraud
that is out there, particularly this SNAP trafficking problem
which you highlight.
Ms. Fong. Okay. Let me just make a few preliminary comments
and then I will turn to my colleagues to elaborate in more
detail.
As you note on the SNAP program, we have issued the first
two of our ten reports dealing with individual states, and what
we plan to do once we finish the other eight state reports is
to issue a rollup report that will bring together the findings
and trends for FNS in one package in terms of recommendations
for action. And I will let Mr. Harden address that in a little
more detail.
On the trafficking side----
The Chairman. Why don't we do this? Why don't we hold that
question for a moment? I know the Ranking Member is a bit
pressed for time because of another consideration, so if you
would like to go ahead and ask a few questions now.
The Chairman. No? Are you fine?
Ms. Fudge. Yes.
The Chairman. Okay. Well, please continue.
Ms. Fong. On the trafficking side, we are looking and
addressing trafficking in the context of criminal
investigations where there are allegations that individuals are
taking advantage of the system and abusing them. And so we
handle criminal investigations to go after those situations.
Trafficking does not normally arise in the context of our audit
work, and so I will ask Ms. Ellis if she would like to provide
some comments on the trafficking work that our office does.
The Chairman. Well, why don't we do this? Why don't we
actually define the types of fraud that are out there? This is
one. And then from there, based upon what you have found, the
collective impact on the system of this subset and then your
approximation as to what this would mean in terms of the total
loss in effect to the system. That is what I would like to
know.
Ms. Fong. Okay. I think that is Mr. Harden's side of the
house.
Mr. Harden. In terms of the dollar amounts that we have in
the reports, we limit it to 1 month. I want to explain the
reason for that. There are limitations in the states' data
systems that we can't backtrack to when the actual improper
payments or potential improper payments started. So there is
not a way to project a whole amount for a year or something
like that. And it is not a statistically designed sample
review, so there is not a way to project those kind of things.
But in terms of the collective impact on a program, what we
are seeing with what we are doing in the states, as well as
what we have done other places, is that states aren't using the
tools that they already have available to look for fraud
indications.
The Chairman. You said they are not?
Mr. Harden. They are not using them. There are these tools
such as the death match with Social Security and the things
that we have itemized in the testimony, but there are also
other reports that they have available to them. I mean each
state has an EBT processor. There are certain EBT management
reports that are produced that will tell, as an example, that
if you are supposed to be a resident of the State of Florida
but you are using your benefits in Georgia that it will tell
you that they are being used out of state. And with that data,
the state personnel can go and figure out has the person moved
or are they getting duplicate benefits? So I mean there are
more ways that if the states were doing more work with the
information, they would be finding probably more and more
improper payments.
The Chairman. Okay. I will try one more time. You have to
get us to some--I know the problems with preliminary data. I
understand that you are going to have some difficulty assigning
some valid statistical measure at this point to be able to
provide precisely what I am asking, but an estimate of the
total impact here would be helpful, understanding it is very
preliminary.
Mr. Harden. We have had discussion over the years with FNS
as to how they estimate a fraud rate, which I have not, through
those discussions, completely understood how they come to their
number. I don't know how to say if it is one percent or half of
a percent of the whole program. I know that every time that we
have gone out and looked and whether the proper oversight was
being given to the program, there have always been improper
payments.
The Chairman. Okay. So the largest way to define improper
payments or the best way to categorize it is in these key areas
that you have talked about--deceased persons whose numbers are
being lifted or used by someone else, those previously
disqualified that are not being culled from the system, dual
benefit----
Mr. Harden. Yes.
The Chairman.--and invalid Social Security Numbers. Are
those the main categories of----
Mr. Harden. Those are the main categories that we have seen
to date. There is also work that FNS does through their quality
control reviews at states that also let them know how well the
states are originally issuing the benefits. And that is like
the----
The Chairman. You mean determining qualifications properly?
Mr. Harden. Yes. And that is the error rate that you see
going down even though there are more participants on the
program.
The Chairman. Okay. Ms. Fong, can you help here? Is there a
way again to get to some collective impact based upon this
subset of data?
Ms. Fong. Let me see if I can offer some comments. What I
believe we found in Florida and Kansas, when we designed our
audit program, we looked at the data and we started to focus in
on these four or five situations that you mentioned. And based
on our analysis of those four or five areas, we found that
perhaps--and I don't recall the exact percentage--somewhere
between .3 and 1 percent of the recipients may have been
ineligible. Now, that percentage is less than the overall
improper payment rate in the SNAP program as a whole, which I
believe last year was at 3.6 percent. And so what that seems to
indicate to me is that while this is an area that we should
focus on and work with FNS on in terms of addressing, it may
not be the key driver in the improper payment rate in the
program. Now, we don't know enough to really conclude that.
The Chairman. Okay. Well, that is helpful. I have taken a
lot of time--let me turn to the Ranking Member first. But we
will come back to that point to talk about what are the other
potential key drivers, as well as this SNAP trafficking issues
that I would like to go into deeper.
Ms. Fudge. Thank you, Mr. Chairman.
Inspector General, in June we discussed the lack of
coordination between departments regarding the suspension and
debarment for individuals and entities in violation of program
rules. Now, based upon your answers in June, I am convinced
that this issue really has not received the kind of attention I
would like to see it receive. Would this be an appropriate
matter to bring to the attention of the Council of Inspectors
General, and if so, how can I help you do that?
Ms. Fong. Thank you very much for your support on
suspension and debarment. This is an issue that all Inspectors
General feel very strongly about because we believe it is a
critical tool that agencies should use to make sure that people
are not participating in programs where they have been
adjudicated to be bad actors or otherwise deemed not
appropriate.
I would be very happy to work with you and your staff on
this. The Council of IGs has engaged in a number of projects to
raise the issue of suspension and debarment government-wide,
and I believe that one of our IGs is testifying on the Senate
side in the very near future on these issues. And so we
certainly have an interest in this and welcome your support on
that.
Ms. Fudge. Thank you. I would be happy if you would contact
my office so that we can at least try to move this a little
faster than I think it has been to this point.
In your testimony, you referenced audits that analyze SNAP
participant databases in ten states. When analyzing data in
Florida and Kansas, your office found 160 active participants
who were previously disqualified from receiving SNAP benefits.
You also found that 973 participants received simultaneous
benefits from at least two states. You noted failures by FNS
that perpetrate this kind of fraud. The issue seems to be the
absence of a national database and no requirements that states
check the FNS database before admitting SNAP participants. Is
your office working with FNS to remedy these issues?
Mr. Harden. Yes, ma'am. Those are some of the exact issues
that we will be working with them as we have identified them
now and also as we roll up the results since we have the
results of all ten states to have that dialogue with them about
it is a way to move to a national database and requiring that.
Ms. Fudge. So you are saying once you get the data, you
will be working with them; but, you aren't now?
Mr. Harden. No, we are now----
Ms. Fudge. Okay.
Mr. Harden.--as part of our work. It is a question that we
need to make sure--it is not isolated to one or two states. It
is confirmed that it is in the majority of the states that we
are looking at.
Ms. Fudge. And at some point, could you get my office some
update on what your progress has been in that effort?
And also, what is the protocol when OIG discovers
substantial system failures that need to be cured by FNS?
Mr. Harden. In general, our reporting process if we go
through audit work and see something of great significance that
needs to be addressed immediately during our work, we issue
what we call a fast report. We issue that to the agency and ask
for a response to specific recommendations in 5 days. Then,
that report can become public and shared widely because it has
been reported and responded to. Those types of issues will then
be later rolled up into a summary report at the end of the
audit work.
Ms. Fudge. And who is responsible for ensuring that the
failures are remedied? Whose responsibility is that?
Mr. Harden. The agencies are responsible for developing----
Ms. Fudge. But who oversees it and says you didn't do it or
you did do it, who does that?
Mr. Harden. The process for closing recommendations is we
would make the recommendation to the agency, they respond, and
we then agree on their corrective action plan and the time
frame that they are willing to do that in.
Ms. Fudge. When you say we, you mean the Inspector General?
Mr. Harden. The Inspector General's office and the agency.
Once we have reached that agreement, it is then transferred in
the department to the Chief Financial Officer's office that
tracks those through closure. As I understand the process of
the CFO's office, there are people that are dedicated to making
sure the agencies are meeting those time frames. When they do
not meet those time frames, there is follow up by the CFO. If
an agency sees that it can't do what it agreed to do with us,
they are required to let OCFO know and come back to us and ask
if we can have a change in the plan. And then we will have to
have a dialogue at that point and see whether we can agree with
that or not.
Ms. Fudge. And what is that total time frame?
Mr. Harden. Once we have agreement on the recommendations,
which we try to do in no less than 6 months, they are supposed
to try and get the final corrective action done in a year.
Ms. Fudge. It seems like an awful long time to me, but
thank you, Mr. Chairman. I yield back.
The Chairman. Mr. McGovern?
Mr. McGovern. Thank you, Mr. Chairman. And Inspector
General Fong, thank you very much for being here.
All of us here are very much committed to eliminating
fraud, waste, and abuse not only in the SNAP program but every
program that the government oversees. But I do think it is
probably worth stating that the USDA deserves a little bit of
congratulations for continuing to lower the error rate in terms
of SNAP. I mean if only the Department of Defense ran their
programs as efficiently and effectively as this program, I
think we would all be a heck of a lot better off. We could save
a lot more money and put it toward deficit reduction.
But the error rate here continues to go down. That is a
good thing. And when we talk about the error rate up to this
point we have been talking about overpayments and people taking
advantage of the system, but part of that error rate includes
underpayments. Am I not correct? In other words, the examples
where people are not getting what they are entitled to, how big
of a deal is that in terms of the audit? Where does that fit in
in terms of your data?
Mr. Harden. In terms of the work that we are doing in the
individual states, we are not necessarily looking at the
underpayments because that is really more of the QC process.
That is not part of what we are looking at now. I would have to
go back and look at the numbers that are reported in terms of
underpayment.
The Chairman. Will the gentleman yield?
Mr. McGovern. Yes.
The Chairman. UC? What did you say? The UC process?
Mr. Harden. Oh, the QC, the quality control process that
FNS has.
The Chairman. No acronyms, please.
Mr. Harden. Okay.
The Chairman. I have a no-acronym policy in my office----
Mr. Harden. Sorry.
The Chairman.--so we can all understand what we are talking
about. Sorry. Excuse me, Mr. McGovern.
Mr. McGovern. Thank you. And the reason why I think that is
an important thing to look at is when we are trying to look at
what is the net plus in terms of monies that can be saved
through cracking down on fraud and abuse. What I was just
trying to figure out is: is the money that is going out to
people where it shouldn't, where does that fit in with the
monies that should be going out to people that they are not
getting? But are underpayments an issue in terms of the error
rate?
Why aren't the states doing a better job? Is it because
they are overwhelmed or because they are understaffed, or is it
because they don't care or don't feel that they need to be
better overseers here? What is your opinion on that?
Mr. Harden. The reasons we have heard thus far go back to
resource issues. The state agencies are charged with both
delivering the program and also providing the oversight, and so
it is their juggling of their resources. And that is part of
what we want to continue to talk to the different states, as
well as FNS, about and see what is the proper balance that FNS
is expecting the states to be doing.
Mr. McGovern. I know in my State of Massachusetts, the
number of people who are eligible for SNAP has increased as the
economy has gotten worse. I think it is also important to state
that yes, SNAP and nutrition programs are a big part of USDA's
budget but if the economy gets better, then fewer and fewer
people need the benefit and then it goes down. But in my State
of Massachusetts, because of the increase in people who are
eligible, they have had a staffing problem being able to keep
up with the applications and being able to process everything.
You know, and there is really no other way around their dilemma
other than additional staffing. Yet, we continue to talk about
reducing the program. In order to deal with some of the fraud
issues and some of the efficiency issues, you do need
appropriate staff at the state level. Is that what you are
finding as well?
Mr. Harden. Yes, sir. That is true.
Mr. McGovern. You know, we talked about some of the scams
that have been going on. I just saw an article today about this
new phenomenon called fake food stamp websites preying on the
poor about people who have set up these websites and scams to
tell people who may be eligible for food stamps or for SNAP
getting them to pay a fee in exchange for information, are you
following this at all?
Ms. Ellis. We are aware that that is a problem and I do
believe that we have been talking about this with FNS. They are
aware of it, too, and are trying to put in some procedures to
detect and to prevent that.
Mr. McGovern. I know my time is running out here but let me
just make a point. One of the reasons why I wanted to stress
the efficiency of this program is because I think there is a
mindset amongst some that this program is not run very
efficiently and that there are lots of taxpayer dollars that
are being wasted. I don't buy that, but clearly the error rate
is low. Yes, there are places that need to be tightened up--and
I know you don't run the program--but I think it is important
to point out that there are some here who view the SNAP program
as kind of an ATM machine to pay for all our other programs
here. We dipped into the SNAP program to pay for teachers a
year and a half ago. We dipped into the SNAP program to pay for
the Child Nutrition Reauthorization Act. And the way we are
figuring it out right now is that for a family of four, right
now they get around $288 a month. And based on the cuts that
have already been made, it would go down to somewhere around
$220 a month.
The other important point to be focused on here is to
ensure that people get a benefit that actually meets their
needs and that the way that you get to additional efficiencies
may not necessarily be by cutting. In some cases, we may need
to be adding staff to do proper oversight. I will close with
one other question.
Senator Kyl announced that he was looking at SNAP as a
potential offset to pay for the extension of a payroll tax cut,
but he says that there are some people who earn more than $1
million in income who are eligible for food stamps. Based on
your understanding of the program, if you make a million
dollars a year, are you eligible for food stamps?
Mr. Harden. That is not my understanding.
Ms. Fong. I think under the SNAP regulations that a person
with an income of a million dollars would not normally qualify,
but there are, as you know, other provisions in terms of
categorical eligibility where that may come into play or there
may be asset tests--if it is an asset as opposed to income,
that may be another factor.
Mr. McGovern. Right, and there are income eligibility tests
and asset tests, but I think it would be helpful if you could
give us some clarity on whether or not millionaires are getting
SNAP benefits or not. You know, it is hard for me to imagine
that somebody who has assets of over a million dollars is
eligible for SNAP, but I mean if you find that I would like to
know about it. If you don't, I would like to know about that,
too, because again it leaves the impression that somehow there
is massive abuse of this program. And based on what you have
told us so far, that is not the case. There is some abuse but
it is not at a level comparable to some of the defense
contracting practices that we have in this country.
So in any event, any information on that would be very
helpful to have. Thank you.
The Chairman. Thank you, Mr. McGovern. I think it is
important to point out the SNAP program has doubled in
expenditures in the last 4 years. But to the gentleman's point
that it might be helpful if we did have a type of spreadsheet
that showed all those states' qualification requirements based
upon the criteria that you just said. There is a general
requirement by Federal statute, the general parameter or the
general eligibility standard and then the variation by states.
That might get to this point as to whether asset considerations
are a part of certain states' requirements or not and that
might be helpful information.
Ms. Fong. We would be happy to talk with our colleagues at
FNS. They may very well have that information and we will see
what we can do to work with you on that.
The Chairman. Thank you. I will turn now to Mr. Crawford.
Mr. Crawford. Thank you, Mr. Chairman. I just want to ask a
few quick questions about duplicative benefits. In your
database analysis, did you look at duplicative SNAP benefits
being given out to individuals with similar names and
addresses?
Mr. Harden. I would have to go back and look at our exact
methodology. That is not one that comes to the top of my head
in terms of tests that we perform.
Mr. Crawford. Okay. If there were similarities, how would
FNS go about working through possible duplicative benefits to
the same individual?
Mr. Harden. Well, the way we identified those was in the
database. You would be able to identify a person with the same
Social Security Number and they are receiving two sets of
benefits.
Mr. Crawford. Okay.
Mr. Harden. So we would know that there was duplication.
Mr. Crawford. Okay, so just based on their Social Security
Number----
Mr. Harden. Yes.
Mr. Crawford.--you are pretty comfortable with that? Okay.
And so that would answer my next question. How does SNAP work
through discrepancies if there were similar names? You are
basing this solely on a Social Security Number?
Mr. Harden. For that particular one, yes.
Mr. Crawford. Okay. How do you propose FNS would improve
the current initial eligibility and approval process?
Mr. Harden. Well, that is some of what I said before. That
is part of the questions that we are working on with them. We
are working on the ten individual states right now. We have
issued two. As we are working with the remaining eight, we are
also talking to FNS about the findings we are seeing in each of
the states and what improvements can be made at the national
level and what the expectation of what they would want the
states to do.
Mr. Crawford. Okay. Let me ask you do you think that it is
possible there might be an opportunity to integrate commercial
databases available in the private sector to help more
efficiently manage?
Mr. Harden. Let me go and look at that and see how it is
done because similarly I think--or what is occurring to be
similar to me is the electronic benefits transaction processors
that work with each state are commercial entities that provide
databases. And so there may be a way to integrate them into
that as well.
Mr. Crawford. Okay. In your opinion, do you think FNS can
respond to all of the recommendations that were made without
legislative changes?
Mr. Harden. Right now, my understanding is there is not a
need for an additional legislative change, but that is
definitely part of the questions that we will be discussing
with them as we work towards recommendations.
Mr. Crawford. Okay.
Ms. Fong. Let me just make a comment on that. They have
agreed to take action on virtually all of our recommendations
and they have not indicated to us that legislative action would
be necessary in order for them to do that. I think it is our
understanding and theirs that they are able to proceed.
Mr. Harden. I guess another part of that point, too, is the
findings that we are having is that they are not using the
Social Security death match list, they went out with a notice
to the states in mid-November reminding the states that that is
a requirement that they are supposed to use that. And they are
also preparing to go out with a final rule in early 2012 to
address that point as well.
Mr. Crawford. Okay. In what little time I have left, let us
switch gears a little bit. USDA received $50 million in the
Recovery Act for information technology improvements, and you
released an audit report earlier this year on whether the funds
were spent according to the requirements of the Recovery Act.
But as discussed at the June 2 hearing, we would be interested
in knowing whether those funds resulted in better program
delivery for our constituents. Are you looking into that issue?
Mr. Harden. As part of that particular audit, we did not
see any problems with program delivery. The things that we saw
were reporting requirements related to the Recovery Act.
Mr. Crawford. Okay. I yield back.
The Chairman. Thank you. Let me follow up on the earlier
questioning that I had regarding the problem with states not
discerning properly or using systems to discern properly
whether deceased individuals' SNAP benefits were being lifted,
disqualifications, dual benefits, as well as people who have
invalid Social Security Numbers. You were saying that that is
probably accounting based upon again this preliminary data for
half a percent to one percent of the total fraud rate. The
presumptions of which were based upon--I would like to hear you
further speak to this--is about a four percent overall
problematic rate of use of program funds. So identifying the
other factors involved here is where we left off our
conversation. So if you could do that.
Ms. Fong. I think it might be helpful if Mr. Harden could
provide some information on how FNS calculates its improper
payment rate.
The Chairman. That would be a good place to start.
Ms. Fong. Yes.
The Chairman. And again the number is generally about four
percent, right, fallen from six percent to the point that we
have made good progress here and that is important to point
out. But still, the numbers are so large to get this down as
close to zero as possible is obviously what we are all
intending.
Mr. Harden. I guess the place that I would start is the
improper payment rate that is reported is a different number
than what we are trying to look at in terms of fraud detection.
And that process for the improper payments generally is that
each state is required to do a sample of its recipients each
year and find out if they are receiving the right amount of
benefits. That can come with underpayments or overpayments. And
that is a statistically selected review in the states as I
understand it. The FNS then does an overlay sampling of those
reviews to come up with a national improper payment rate.
Your question about the collective impact of----
The Chairman. Okay. So we are actually mixing terminology.
Is that what you are trying to do is try to separate----
Mr. Harden. Yes.
The Chairman.--improper payments from fraud.
Mr. Harden. Fraud. That four percent number doesn't
encapsulate all of the above.
The Chairman. Right. Okay. And what does it capture?
Mr. Harden. That captures how well the states determine the
amount that individuals were eligible to receive. So that
includes improper payments and potential underpayment in that
four percent.
The Chairman. All right. Okay.
Mr. Harden. Now, on the fraud detection side, I think a way
to come up with a menu to try and come to a collective impact--
if I can go back and work on this--the test that we are doing
in the states that are identifying deceased individuals or
potentially deceased individuals, that list, there are also
tools that states use with their processors of the transactions
that should give them indications of potential fraudulent
payments. That is where I was talking about having an out-of-
state usage report when people are using benefits in a
different state, that identifies a number of people and an
amount of money each month that is potentially being misspent.
And that is where we have seen weaknesses in the past with
different states we have looked at as to how well they are
overseeing that part of the process. But that will also give
you an indication of how much fraud there might be. But that is
not a number that I have put together. I think I have a way of
coming up with something that can provide you some information.
The Chairman. So we do not have a general number that
indicates the amount of fraud in the system?
Mr. Harden. We do not.
The Chairman. So the four percent number that we always
talk about is not including fraud?
Mr. Harden. Well, I guess it could in part if a person,
when they are getting an improper payment, shouldn't have ever
gotten it and there was a fraudulent part to that, but the real
purpose of what FNS is doing there is not fraud-related. It is
just to see are the people getting the right amount of
benefits.
The Chairman. Yes. Well, then let us move to fraud
detection in a more aggressive manner and talk about one of the
other areas that we intended to discuss today regarding this
SNAP trafficking issue. You alluded earlier that this is
involving criminal investigations as well, but I think it would
be helpful there to understand the magnitude of the problem and
again to try to get some sense of the collective impact of cost
on our system. That is ultimately what I am driving for.
We are going to keep talking about this through next year
and next--that is ultimately what I am driving for just so you
have an understanding of where we are trying to get with all of
these various components.
So with that, let me stop and recognize my colleague, Mr.
Baca, for any questions.
Mr. Baca. Thank you very much, Mr. Chairman, and I thank
the witness for being here. My question is for Ms. Fong. In
your opinion, what are the most critical areas where FNS must
improve to ensure the SNAP program is the best steward of the
taxpayers' dollars that it can possibly be?
Ms. Fong. Well, thank you for your question. I think I
would like to say at the outset that FNS has a tremendous
challenge in terms of delivering a program that has grown so
substantially in the last few years. And at the state level, as
has been remarked upon, the resources that are flowing to the
states are tremendous and the state resources available to
deliver the programs are shrinking as we hear when we travel
around. Managing the program is a tremendous challenge and I
would like to say that FNS has been very responsive whenever we
identify areas where we think improvements could be made in
terms of identifying eligibility issues up front, improving
their data systems, dealing with trafficking situations, and
working with us on those kinds of investigations. We have
experienced a very professional level of cooperation with FNS.
And so what I would say is that as we continue to identify
areas in our work and bring them to FNS's attention, we
appreciate the cooperation and attention that they give to
those recommendations.
Mr. Baca. Yes. We are seeing a higher volume of people
applying for the SNAP program due to unemployment and also
because the Bush tax initiative has not created any jobs. We
are finding, in California, there are a lot of people who are
unemployed because jobs have left the state and gone outside of
the United States. We have an abundance of people on SNAP, and
that is why I am curious to know what we should do about the
state resources that are shrinking, because of the higher
number of unemployed bodies that are out there right now, and
more individuals that are applying for SNAP. And we just want
to make sure that we are doing the right thing, there isn't any
fraud, and that people that really deserve it get the kind of
assistance they need.
And that is why in my home State of California, we continue
to suffer from one of the lowest SNAP participation rates in
the nation. For whatever reason, people are not applying. The
recent passage of legislation that ended the states' misguided
fingerprinting imaging policy is a step in the right direction,
but I still believe more must be done to raise awareness and
accessibility to the SNAP program.
In your opinion, how can this goal be best achieved?
Anyone?
Mr. Harden. From my understanding, we have continued
discussions with FNS, but they have a very active policy in
trying to get the outreach out there for the people that need
it. We haven't done any specific work recently to give you
specific suggestions.
Mr. Baca. But could you? Because I think that becomes very
important as we look at the tremendous need and the growth in
the area. How do we do that kind of outreach? What needs to be
done? What are the necessary changes? We have safeguards that
are already there that protect against fraud indicated by the
low rate of fraud in the SNAP program. In fact, SNAP fraud is
less than that of defense contractors. Everybody wants to
continue to make sure that we have the budget there for defense
contracting, and that is where the biggest fraud exists versus
in SNAP, where fraud is very little, and yet that is where the
greatest need is.
No offense, Mr. Chairman, but, that is where we seem to be
pushing in that direction. And yet here is a program where
there is a large need. You and I have been in Omaha, Nebraska
and that area is dealing with some of these problems. I am very
much concerned because sometimes there is a misconception that
there is a lot of fraud in the SNAP program when in fact it is
a lower percentage than in other areas we should really be
investigating.
Let me ask a question pertaining to civil rights. As you
know, the 2008 Farm Bill established the Office of Advocacy and
Outreach to expand the participation of socially disadvantaged
and beginning farmers and ranchers and other under-served
constituents at USDA. Has OIG reviewed the efforts that have
been made to bring the Office of Advocacy and Outreach to an
operational level?
Ms. Fong. We are aware that that office was recently
established. It has not risen to our radar screen in terms of
evaluating how effectively it is operating. As we do our
planning every year, we look at risk and since everyone's
resources are limited these days, we try to address areas of
the most significant and highest risk. And so far we have not
yet done work in this area.
Mr. Baca. Well, hopefully you can get back to us and let us
know what needs to be done, because we have looked at this new
office that has been established to be simpler and more
efficient. We changed it in the 2008 Farm Bill and so we want
to make sure that it is cost-effective, yet at the same time
providing the services to meet the need of the underserved. We
are still trying to deal with Hispanic farmers that have been
discriminated against and we haven't quite taken care of that.
We have taken care of the Pigford decision and the Native
Americans but we haven't taken care of the women and Hispanic
farmers, that still needs to be addressed.
I know that OIG's audit staff is presently looking at the
operations of the Assistant Secretary for Civil Rights Office
within the Department. Does this audit include the impact of
the recent placement of the Office of Civil Rights under the
direction of Assistant Secretary for Administration? If so,
how, and has the bureaucracy changed and affected the Civil
Rights Office?
I know my time has expired, Mr. Chairman. I stopped looking
at the light because I thought it was green and I am used to
seeing red all the time.
The Chairman. We are all violating my rules today but that
is fine. You are fine.
Mr. Harden. That was not part of our original objective in
terms of the movement of the office whenever we started that
audit, and it has not risen up as an issue in terms of how we
are getting the audit process through. But I will ask if there
have been any issues that they have seen related to that as we
conclude that work.
Mr. Baca. Thank you very much. I yield back whatever time I
didn't have.
The Chairman. Minus 2 minutes. We will put that on the
ledger.
Well, thank you, Mr. Baca. I do have to respond to one
thing you said. I only have oversight capability of USDA. I
don't have it on defense. I would like to think I would be
equally as hard over there if that were the case, but this is
what is before us at the moment.
By the way, we do have the eligibility criteria categorized
by state. Our staff here gave us that so I will take a little
work off your plate. And most states do not have a limit on
assets by the way, which is interesting to see. Some do but
most do not. And then there is gross income, wide variation on
gross income requirements.
But let us go back to a couple of points. One is making
sure that we are all using the same terminology. The four
percent error rate is improper payments, both overpayment,
underpayment, the overpayments due to a variety of causes some
of which are fraud-related. And there is a second issue of
fraud and its total impact on the system, which you are
suggesting we do not have a handle on. Individual fraud is
generally handled by the states, retailer fraud generally
handled at the Federal level. Is that a fair characterization
of the way in which this system's enforcement mechanism works?
Ms. Ellis. Yes.
The Chairman. Okay. All right. I think it would be helpful,
though, in your work to try--as much difficulty as you are
having with certain collection of state data--to make certain
recommendations not only how they prevent the fraud in the
improper payments issue with people using it across state lines
and the other problems with eligibility and Social Security
Number and deceased persons, but to combine those two numbers
with what has been the Federal emphasis on the retail fraud
problems so that we get a better snapshot of just what that
number is.
Let me go back: the issue of a four percent overpayment has
generally been considered the problem in the system. It has
fallen from six to four percent; progress has been made. But it
is not exactly the problem because it doesn't include the
underpayment as well as overpayment. So to separate terminology
and let us start to talk about the real either criminal
activity or programmatic abuse that is out there and the lack
of state enforcement and Federal coordination of those
enforcements both on the individual as well as the retailer
would get us to that collective number of fraud in the system,
and give us some idea of the impact here and make sure this
program is run with the highest level of integrity as possible.
Is that a fair characterization of some of the language
dilemmas we have had today, some of the crossover
conversations? Is that a fair way to characterize the basic two
sets of issues before us?
Mr. Harden. I think so.
Ms. Fong. I think you raise some very good points and you
have summarized very well the kinds of issues that we are
struggling with. And I will say personally that I would like to
have a better grasp of these numbers and these issues. What we
will do, our staff will reach out to FNS and see if we can get
a better understanding of how these concepts work together. And
we would be very happy to chat with your staff and you----
The Chairman. Well, let us do that, and I think we will all
be better prepared for the ultimate objective. What we are
looking for here is again to how to reduce any waste or fraud
that is in the system and make policy recommendations to ensure
that there is no overpayments due to simply administrative,
bureaucratic, or uninformed individuals, problems, or any
burgeoning criminal activity and the appropriate policy
recommendations to stop that. Again, we do not have the option
of allowing for any slippage given the tight budgetary times
and sometimes tight budgets actually force us to be more
creative than we used to be. So we need to examine these in
great detail. And it would be helpful to us once you unpack
these complicated sets of issues, come back with policy
recommendations that would look at again how states could
better coordinate efforts, whether it is a shared database or
the individual state could do a better job of looking at
particular categories where we see some spikes in the problem
of either eligibility underpayment, as well as fraud.
So let us go quickly though to the issue of trafficking,
SNAP trafficking, because I think this particularly strikes me
as particularly outrageous. Again, moving to the electronic
benefit card was supposed to eliminate a lot of this problem
where we before had seen sometimes the stamps being used as an
underground currency. So let us talk about how the abuse now
occurs in the system, the size and magnitude of it, and how we
prevent it.
Ms. Ellis. The comments you made about the EBT supposed to
be eliminating fraud, what we have found in our criminal
investigations is that it has actually helped us as criminal
investigators to detect the fraud and to actually make our
cases as opposed to the coupons. And that is because everything
is electronic and we do work with FNS who has the system known
as ALERT, which helps them to find what the different patterns
are. They have different ways of determining whether or not a
retailer is involved in trafficking say, for instance, somebody
is swiping--meaning the retailer--is swiping an EBT card every
2 seconds when you know it should take longer than that to do a
transaction. And so that has been a very good tool for us is
going to the EBT system----
The Chairman. First of all, explain that though. Okay, why
would----
Ms. Ellis. Yes.
The Chairman. How do you defraud the system by swiping it
every few seconds? I am sorry. I just don't have a criminal
mind like this. Would you help me understand?
Ms. Ellis. Sure. Absolutely. What happens in trafficking is
what you generally have is recipients who sell their EBT
benefits. And what they do is they go into a retailer who is
willing to take the recipient's benefits. Say, for instance,
they have on their card $100 worth of benefits. The retailer
will offer the recipient half of that amount. They will offer
them $50 in cash, and so what happens is the recipient sells
their card or hands over their card, gets $50 in cash from the
retailer. Then the retailer swipes that EBT card through the
system and therefore they make a $50 profit.
The Chairman. But that is going to show up in the
accounting on lack of goods purchased----
Ms. Ellis. Exactly.
The Chairman.--so that is why this was designed that way to
prevent this, right?
Ms. Ellis. And we find that unfortunately they look for
ways to scam the system. And they are----
The Chairman. So does the person that schemed, connived at
this go and actually take the goods off the shelf?
Ms. Ellis. And that is the problem. They don't. They walk
into the store. And that is one of the indicators that I had
mentioned that they can tell that this store is trafficking
because FNS watched through their ALERT data, which shows the
scans from the particular retailer. It will show that there are
transactions happening every few seconds, which means that this
card is being swiped for one recipient cash handed over, they
leave, and here comes the next person, same thing, swiping.
If you go to the grocery store, you know it takes longer
than that to run all the groceries through and then to swipe
the card. And that would be a legal transaction. It should take
like 5, 10 minutes to actually do a good transaction. That is
one of the anomalies that we look for----
The Chairman. So this has to be insider work, the
proprietor, owner, management of the particular outlet, or else
they wouldn't be able to move the commodities out of the store.
That is effectively their payment.
Ms. Ellis. Right.
The Chairman. Right?
Ms. Ellis. And one of the things that I will let you know,
too, is that a lot of these of course are the mom-and-pop
stores.
The Chairman. Right, so----
Ms. Ellis. They are not----
The Chairman.--how big is this? Again, give us the estimate
on how widespread this is. I assume it is fairly small.
Ms. Ellis. I can't tell that information. I can only tell
you that our work in SNAP is increasing and for instance in
2009 we were spending about 27 percent of our time conducting
these cases, but it has grown so that as of Fiscal Year 2011--
--
The Chairman. Okay----
Ms. Ellis.--we were doing 48 percent. I don't know a dollar
value.
The Chairman. It comes back to that question again. We have
to have some better information to be able to use the cases
that we have to create some statistically valid model that
would actually give us an indication of how impactful this is
in terms of cost. That also helps us determine future policies
as well to address the issue.
Ms. Ellis. I will add that I know FNS and the Department
has utilized a one percent rate for trafficking. I do not known
how they derived at that, and that is something that we can
certainly--probably Mr. Harden would be visiting with them on.
But that is the number that they have utilized.
The Chairman. Okay. Well, I think again we are pretty clear
on what we are driving to here to get a better handle on the
definitions of what we are talking about in terms of improper
payments, fraud, and the collective impact of both, even as
they crossover in the part of improper payments that is due to
fraud.
The policy recommendations that come out of your work
particularly regarding the eligibility problem for individuals
or the abuse of Social Security Numbers of persons who are now
deceased, as well as maybe strengthening enforcement efforts
for this trafficking issue, which, as you are suggesting, might
contribute to about one percent loss. I assume what you said
one percent means a total loss to our system, which again on a
$70 billion program, that is a lot of money. So if enforcement
efforts need to be intensified or if policy changes that would
be helpful in terms of criminal investigations or enforcement
actions could be forthcoming, I think that should be helpful to
you but it would be helpful to us as well.
So I turn to the Ranking Member now for any final
statements or questions.
Ms. Fudge. I have a couple of questions. He is really
enjoying this questioning of you guys. Thank you, Mr. Chairman.
Just two quick things actually because I do have to go to a
markup. Obviously, we all want to be good stewards of the
public dollar, that is what this whole thing is about. So our
job in a lot of ways is the same as yours. Certainly, we do
know that there is some fraud but the need is greater than the
amount of fraud. So I just want to say that we want you to do
everything you possibly can to try to weed out some of the
issues that we have discussed today, and certainly if we can
help you in some way to do that, then please let us know.
I do want to ask a question shifting to a whole other
subject and going back to what my colleague, Mr. Baca, was
talking about. And that is civil rights. When you were here in
June, we had a really good exchange about the status of USDA's
Office of the Assistant Secretary for Civil Rights. And at that
time you mentioned you were beginning a new audit to address
civil rights complaints. Could you just give me an update on
where you are right now with that?
Mr. Harden. We were in the process of looking at--and what
we are looking at there is the settlement agreements, I think
is the right word to use, in terms of the payouts that they are
making. Are they supported? Are they accurate? And how are they
supported? We had started that work earlier. We are still in
the process of pulling that together and I expect to have that
report soon. But the reason we did not get that one done by
this time, which we also talked about in June, is we found some
other issues that we have had to work with, our counsel's
office as well as the Office of General Counsel to make sure we
properly understand the issues and if there is something to
report and recommend.
Ms. Fudge. When you say soon, you told me soon in June.
Tell me what ``soon'' means.
Mr. Harden. Can I get back to you with a more specific
date? I would like to talk to the team so I can----
Ms. Fudge. And you would get back to me when?
Mr. Harden. This week.
Ms. Fudge. Thank you so much.
Just as a follow-up, I certainly do understand the
restraints and constraints on your time and your resources. I
do. But I really am very frustrated about this because since
May of 2009 the semiannual reports from your office have listed
a material weakness in civil rights. And that is your
terminology, ``material weakness,'' as a persistent problem
within the Office of the Assistant Secretary for Civil Rights,
and yet we are still waiting for some tangible result. So just
understand my frustration on that. And I want to impress upon
you the importance of this work. So I will be looking to hear
from your office.
And last, I would like to briefly address USDA's IT system.
In your testimony, you mention that OIG has made 43
recommendations to remedy USDA's long-standing deficiencies in
its IT security. However, USDA has only closed six of the 43
recommendations. What gives, guys?
Mr. Harden. As we have pointed out in this year's
Information Security Report as well as last year, the
Department struggles with what we have recommended is they
prioritize those things so that they can close and make some
progress. We have talked to them in terms of the number of
projects that they try to complete and we are still in dialogue
with them. They feel that they are able to complete the number
of projects there are, but our work continues to show that they
don't seem to be able to get them finished. So we continue to
work with them to tell them how to prioritize their work to get
things completed so that they will be able to close the
recommendations. But the recommendations in those reports a lot
of times are driven by the requirements that the National
Institute of Standards and Technology makes, and sometimes
those are changing which just creates more recommendations.
Ms. Fudge. And I am going to go back to the question I
asked in my first line of questioning. Who is responsible for
making it happen?
Mr. Harden. In that particular case?
Ms. Fudge. Yes.
Mr. Harden. If we are making recommendations to the Chief--
--
Ms. Fudge. Yes.
Mr. Harden.--Information Officer, the Chief Information
Officer is responsible for getting those things made.
Ms. Fudge. And who oversees that process to say you didn't
do it? And what is the penalty for not doing it?
Mr. Harden. The penalty for not doing it I will walk
through quickly what I said before. We reach agreement on the
recommendations. Then it transfers for oversight to the Chief
Financial Officer's Office for monitoring until they actually
complete the action. I guess the bad thing that happens is that
if they do not meet the time frame of implementing it when they
are supposed to or when they agreed to, it gets listed in the
Department's Performance Accountability Report each year that
it has not been done.
Ms. Fudge. So there really is no penalty? So you tell on
them.
Mr. Harden. That is the Department's statement for itself.
Ms. Fudge. So, it is nothing more than an audit where you
get an unqualified audit or something and you say, ``Look, you
didn't do this.'' So if nobody enforces it, that could be in
the audit for the next 20 years?
Thank you very much.
The Chairman. Okay. I thank the Ranking Member.
Mr. McGovern, did you have----
Mr. McGovern. Thank you very much.
You know, I want to associate myself with my colleague,
Congressman Fudge. We are all obviously committed to doing
everything we can to eliminate fraud, waste, and abuse to the
system. I want to make sure that every dollar that is paid out
goes to somebody who actually needs it and doesn't go to fraud
or doesn't go to somebody who doesn't need it, and so we are
all very much committed to that.
You know, the issue of categorical eligibility was raised
here and the states have different requirements, but my
understanding of categorical eligibility, it is really a
process the states have embraced to kind of simplify the
process of helping people get the benefits they need. And while
you may be eligible under a state's Cat-El rules, while you may
be eligible for SNAP benefits, that doesn't mean you get a cash
benefit. I mean it just means you get considered. Am I correct?
I mean the Federal standards don't get tossed away because of
states categorical eligibility rules, am I right on that?
Mr. Harden. As I understand it, yes.
Mr. McGovern. All right, because again I want to take on
this myth that somehow that Donald Trump is getting SNAP
benefits or that because of categorical eligibility somehow he
would be able to get SNAP benefits. I mean the way I look at
it, that is not the problem with regard to some of the
inefficiencies that currently exist in SNAP. Would you agree
with that or----
Ms. Fong. Well, I think that you are right, that that is
not the policy of the program. The whole purpose behind
categorical eligibility was to simplify the administration of
the program.
Mr. McGovern. But from what you are finding is the
overpayments, it is not due to categorical eligibility.
Ms. Fong. I don't think we have done enough work to be able
to answer that question.
Mr. McGovern. Okay. What would be helpful to me, as
somebody who is a strong supporter of the program, as you
develop your conclusions is to kind of give us some very
specific assignments as to what we can do to make things
better. I think in your testimony you talk about additional
resources for IT, and we need to obviously upgrade our
technology at the state and at the Federal level, but those
kinds of things, to make the program run as efficiently as
possible obviously are very, very helpful.
And let me just conclude, why we are having this discussion
here today and the real challenge here is that we have a
problem in this country where people don't have enough to eat
and we have a growing hunger problem. And one of the things I
have urged the Administration to do which they haven't
responded to me yet on is that I really do think that we need a
national policy to deal with the food insecurity and hunger in
this country. The White House should do a White House
Conference on food and nutrition because the challenge of
dealing with the costs that are incorporated with SNAP just
don't fall under FNS or USDA. It is multiple agencies that need
to come together and figure out how we eliminate hunger in this
country.
I want to get to the point where we are not here talking
about what we are talking about here today because the need for
this program becomes less and less and less. I would urge USDA
and the Administration to help bring us together and figure out
a holistic plan to be able to deal with the fact that in the
United States of America there is not a single community that
is hunger-free, and that is something we all should be ashamed
about.
The people who get SNAP by and large are poor people and
not just the unemployed but the working poor as well. The fact
that more and more people are eligible for this program, is
cause for concern for all of us up here. In addition to giving
us the recommendations on how to make this program run better,
I would urge you--and I know you don't run the program--but we
need a more holistic approach to the issues of food insecurity
and hunger in this country.
So I thank you for your work and look forward to continuing
with this dialogue and getting your recommendations.
The Chairman. I thank the gentleman.
Just to conclude, I think we have some homework assignments
here, and I would like to again get some clarification from you
on how quickly we can finish your current work with the subset
of states that you are looking at in terms of these eligibility
and improper payment problems, those various categories that we
talked about, how quickly will that be done.
And then I think what would be helpful is moving away from
some--let us say redefining some terminology here that helps us
better understand the extent of fraud, the extent of actual
criminal abuse in the system, the extent of improper payments
so that the improper underpayments are one category of number,
the improper overpayments are another category of number, and
how those are coming about. Some of the criteria you listed
today, that number then gets vetted with the fraud number and
the primary focus of the Federal effort has been on this
retailer fraud, which is also very important. But also to try
to get some sense from the states as to how widespread the
individual fraud problem is, which is not an aggressive focus
of the Federal criminal investigations as I understand it.
So then that gives us a better sense of the program's
integrity, how well this is being run, what are the policy
changes that could be made so that we are ensuring that we are
meeting basic food safety needs in this country, which is the
mission of this very important program, but using taxpayer
monies in a most effective manner so that people who are
eligible and need the help are receiving it properly, but those
who are abusing the system are weeded out or even prosecuted.
This is the purpose of trying to do this. I think the broader
implications of food security are a little bit beyond the
purview of this particular Committee but certainly a worthwhile
discussion that we need to continue to have in the Agriculture
Committee as a whole.
My job is to try to get to some better data here so that we
can get the potential policy recommendations that actually
ensure the highest level of integrity possible in this program.
I understand the other points being made about how this one is
a natural target because there seems to be so many dramatic
stories out there versus other programmatic areas in the
government. But at the same time, because it is so large, it is
necessary for us to do all we can to ensure that it is operated
with great integrity.
And so we are again depending upon you to do that. So have
I made the task that I would like to see clear? Are you capable
of completing that in a timely manner? Is that consistent with
the resources and mission that you have what I have asked for?
Mr. Harden. I believe we can, sir.
The Chairman. Okay. Let us get a sense of the time and
again let us don't get entangled in a significant delay here.
If we see that coming, let us get preliminary data coming to us
so that we all know what we are working toward. Can you give a
sense of the time for what I have requested for the individual
reports or the preliminary information that we have talked
about today? Well, they are all related to the bigger question
that I have driven to. They are all related to that so the
finishing up of your sampling states is one question, and then
the other implications of redefining some of the terminology so
that we have some clearer understanding of the level of what we
call improper payments due to underpayments, improper payments
due to fraud and their various manifestations, improper
payments due to criminal activity or abuse of the system due to
criminal activity at the retailer level aggregated, that number
as well so we can see the total impact on the system.
Mr. Harden. The current timelines for the individual
reports are, over the next couple months, with all of them done
by the end of March. The rollup report that will pull that
together and will tackle the question, with recommendations
regarding how to get to the fraud number possibly, that will
come after that. And before having this discussion today, I had
a time frame for that in mind. I have a better understanding of
what your question is and I need to go back and talk to the
team in terms of what additional things we may need to do and
what we can work with FNS to develop.
The Chairman. Okay. Well, why don't you answer that
question back to us in the near term----
Mr. Harden. Okay.
The Chairman.--next week or so.
Mr. Harden. Okay.
The Chairman. Would that be possible?
Mr. Harden. I will try.
The Chairman. Okay. And then we will have a better
understanding of the timeline that is possible here. And if
there is any slippage or delay, we need to understand why and
then but still continue to get some preliminary snapshots of
what looks like trends, okay?
Mr. Harden. Okay.
The Chairman. You have a lot of homework.
Mr. Harden. Yes.
The Chairman. Okay. Well, Ms. Fong, we are pretty clear now
on what we need? Yes.
Okay, well, again thank you all for your work. Thank you
for coming today. And with that, we will conclude the hearing.
[Whereupon, at 11:22 a.m., the Subcommittee was adjourned.]