During a House Financial Services Committee hearing prior to the congressional recess, Rep. Dan Meuser (R-PA) questioned Stephen Begg, the Acting Inspector General of U.S. Department of Housing and Urban Development, about efforts to reform the department.
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00:00Thank you, Mr. Begg. We'll now turn to member questions, and the chair will now recognize himself, myself, for five minutes.
00:10Mr. Begg, thank you for your very sound testimony and goal-oriented. That's very important.
00:18This hearing is very important. HUD is very important.
00:21Our goal is to improve Housing and Urban Development Department, not only to point out the problems,
00:28although we need to point out the problems, the inherent problems, in order to truly focus on where the corrections need to take place.
00:36Let's just keep in mind, this is to be constructive so we can actually make a difference moving forward.
00:43That's all of our goals.
00:45So, Mr. Begg, you're speaking quite a bit about modernizing the IT systems at HUD.
00:50I do know something about this, as I mentioned earlier, from my previous time in state government.
00:55Can you talk about that a little bit more?
00:59How will modernizing IT improve the effectiveness, the efficiencies, and as well as the proper allocation of the all-important funds to those who benefit from the HUD program?
01:14Thank you for the question.
01:15So, again, modernizing IT across HUD has many potential values, but in terms of effectiveness, many of the systems, as you mentioned, were designed a long time ago.
01:28They don't match the current state of programs.
01:31They don't capture enough data for HUD to know how well it's performing in its programs and how well its partners are.
01:37So, much of the monitoring effort that HUD has to undertake is manual.
01:42And the information that HUD receives about how grants are being executed is difficult to digest for HUD staff.
01:51It's inefficient.
01:52GAO has pointed out it's confusing and hard for HUD staff to even read the information that comes through.
01:58Do you plan on providing us some sort of plan on what type of IT systems?
02:03Is this something that we can work together on?
02:05Absolutely.
02:05Because it's very important, I think.
02:07And if you wouldn't mind, Mr. Beck, just speak up a little bit more, if you wouldn't mind.
02:10I'll lean in closer to the mic.
02:12So, your 2024 report highlights that HUD cannot produce reliable estimates of improper payments.
02:18This is a real problem because we have over $100 billion, $150, over $200 billion, according to the GAO, not just from HUD, of course, but government across all departments.
02:28So, you had 2017, the last time a report was done was $1.7 billion, which after the four years of high inflation, $2.2 billion adjusted for inflation today.
02:40Are we working on something to resume this reporting?
02:45And if not, what is the main barrier to providing such reports?
02:49We are working closely with HUD on finding a solution.
02:53The key here is technology and collecting the data.
02:56The information that's needed is local rent payment data that's managed in a distributed way across the nation.
03:05HUD has to manually collect it to do that.
03:06That technology is the key to solving that problem.
03:10Okay.
03:11What penalties for those who have mismanaged funds, fail to report funds, or defraud our government, our taxpayers, are being instituted at the present time?
03:25The options in terms of penalties from a regulatory perspective include HUD can issue corrective action orders that become part of their contracts with housing authorities.
03:34They can require them to repay funds with non-federal funding.
03:38Would these IT systems and other solutions you have, would that have prevented the theft and corruption at the New York City Housing Authority that led to 70 bribery charges in a single day?
03:48Did you find that level of prosecution acceptable?
03:50We are certainly pleased with the prosecutorial results of that investigative work, which we played a big part in.
03:59But to say that technology could solve for that, I can't say it would go that far.
04:05It could go a long way in detecting and giving a chance to prevent.
04:09Okay.
04:09Do grantees and public housing authorities currently have to submit any type of fraud prevention plan before receiving HUD funds?
04:17I don't believe so.
04:19Okay.
04:19Is that something you might consider?
04:21We would see that as very valuable.
04:24Okay.
04:24Last month, I introduced the Payment Information Integrity Reform Act, which requires federal agencies to create stronger financial management plans to reduce payment errors, creates an overpayment czar at the OMB, and lays out penalties for agencies that consistently fail to follow payment integrity laws.
04:42Do you think these changes would drive faster reform at HUD?
04:46We do, and many of the requirements, as proposed, match with recommendations that our office and GAO has made for strengthening federal programs against fraud.
04:58So, we do.
04:59Great.
05:00Over the past four years, I mentioned in my beginning testimony that the funding from HUD went from $45 billion to $78 billion.
05:09Did that have any sort of ratio to improvements at HUD?
05:14HUD has made a number of improvements across the board.
05:19That is a direct result of some of the funding, but the funding does increase the risk.
05:24My time is expired.
05:25Thank you, Mr. Began.