During Tuesday's House Ways and Means Committee hearing, Rep. Darin LaHood (R-IL) asked witnesses about strategies for mitigating TANF fraud.
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NewsTranscript
00:00Thank you, Ms. Summerlott. I want to thank all of our witnesses today for your valuable testimony on this important hearing.
00:07I especially want to thank GAO for their thorough work to dig into some of the concerns raised by the subcommittee.
00:13And now we'll proceed to question and answer session by the members of the subcommittee.
00:18And I'll begin by recognizing myself.
00:20Mr. Arkin, you mentioned in your testimony that GAO found that states are not reporting complete information about TANF expenditures.
00:30And most states lacked transparent reporting on subgrantees.
00:34For example, in your testimony, you said seven out of 31 states did not provide or had incomplete narrative explanations of non-assisted spending for FY 2022.
00:44This is extremely concerning because otherwise it's like a black box that we don't know how much behind what categories a state spends in.
00:54So my question is, your report provides recommendations for HHS, but are there any legislative recommendations you would make to improve transparency of state non-assistance spending so we can know the impact of the dollars and where they're actually being spent at?
01:14Thank you for the question, Mr. Chairman.
01:17Short answer, yes, we do.
01:19And the issue is most of the reporting requirements in the law apply to assistance spending and actually prohibit HHS from collecting information on non-assistance spending because it's not a specific statutory authority provided in the law.
01:33So we think information that allows HHS to ask states to discuss what are they planning to do in the non-assistance area and to whom are they going to provide the funds?
01:45You mentioned the subrecipient issue.
01:48That's something that would help not just with oversight of spending, but also potentially help HHS provide an estimate of improper payments.
01:57It's really key information for them to be able to do that.
02:00Thank you for that, Mr. Arkin.
02:01I'll next turn to Ms. Lahren.
02:03Our subcommittee has spent a significant amount of time looking at federal child welfare spending.
02:08Last year, Ranking Member Davis and I worked to pass a bill to reauthorize the Title 4B Child Welfare Program.
02:14One of the things we focused on was having in place the right data and performance reporting so we can see the quality of services and impact on families.
02:25According to GAO's recent report, TANF now constitutes approximately one-fourth of total federal child welfare spending, eclipsing state funding through the Title 4B program.
02:36To you, Ms. Lahren, do you have data about the specific demographics of the children in foster care funded by TANF as we do in the Title 4B program?
02:50You know, states are collecting data on the demographics of all the children they serve in their child welfare programs.
02:57So, at the state level, that data does exist.
03:01But going back to one of the main findings of our report, data on non-assistance TANF funding, there are no federal reporting requirements.
03:10So, even if that information is available at the state level, it's not being reported either to the state TANF agency or to HHS.
03:19So, no, the answer is, you know, at the state level, they may be able to disaggregate which children are being served by TANF versus 4E or 4B.
03:31But that information is not reported up in a way that makes it easily accessible.
03:36And do you have a recommendation on either a statutory change on fixing that reporting requirement?
03:42Yeah, this really goes back to the recommendation that we made to Congress to give HHS more oversight authority, which would include more robust reporting requirements for non-assistance spending.
03:57Thank you for that.
03:58Mr. Dalkin, I'll turn to you.
03:59In your testimony, you said GAO found nearly one-third of TANF-ODA findings were characterized as material weaknesses.
04:07The most severe category of findings that was made.
04:11As you know, one of the longstanding recommendations made by GAO is to measure and report improper payments in the TANF program.
04:19Would applying improper payments reporting to TANF help address or minimize these repeated audit findings?
04:26And how are these two related?
04:32Thank you for your question.
04:33I believe it would be a little of each because a material weakness could have a financial implication or it could be related to controls.
04:43Improper payments relate more to the dollars.
04:47And so for the portion of the TANF issues that are material weaknesses related to dollars, that could be subject to the improper payments analysis.
04:58For the other portion that relate to the lack of internal controls, it wouldn't fall under the improper payments.
05:07Mr. Bagdoyan, in your testimony, you stated that HHS's fraud risk assessment portal does not have the functionality to assess and determine the magnitude of each fraud risk facing TANF.
05:19From your perspective, what are the key components to efficient fraud risk management, particularly as it relates to putting in place the right processes and technology?
05:28Okay.
05:29Thank you for your question, Mr. Chairman.
05:32The fundamentals are captured in this document, which is GAO's fraud risk framework.
05:37It's been around for 10 years or so.
05:39So, this is what we benchmark, fraud risk management at agencies, and it includes fraud risk assessments, defining the likelihood and the impact of these risks.
05:52So, it begins with an entity that takes the lead in conducting fraud risk management, doing fraud risk assessments, crafting a strategy and implementing that,
06:05and then measuring back to see how effective that strategy has been and making adjustments.
06:12But a fraud risk assessment that gets at what you mentioned is at the core, and technology, such as deep data analytics, can help get an agency to that point.
06:24Thank you for that.
06:25That concludes my question.