WASHINGTON, D.C. – Oversight of America’s welfare system is still falling short of protecting taxpayers and preventing waste, fraud and abuse, according to two new watchdog reports. The Government Accountability Office (GAO) has found that the Department of Health and Human Services (HHS) must do more to monitor states’ use of welfare funding under the Temporary Assistance for Needy Families (TANF) program – including strengthening the department’s fraud risk management efforts to improve outreach and coordination with states and establishing better guidance to improve accountability. GAO’s analysis comes in response to a request by Ways and Means Committee Chairman Jason Smith (MO-08) and Work and Welfare Subcommittee Chairman Darin LaHood (IL-16) as part of the Committee’s ongoing oversight of TANF, including multiple hearings to get to the bottom of how critical non-assistance funding has been diverted away from supporting families in need, has loosened its ties to work, and left vulnerable to fraud.
Ways and Means Committee Chairman Smith (MO-08) issued the following statement:
“GAO’s findings reveal a clear breakdown in HHS’s execution of its oversight responsibilities under President Biden when it comes to curbing the misuse and abuse of TANF non-assistance funding. On the one hand, states are not being held accountable for how they are spending these critical resources, while on the other hand HHS has done a poor job of coordinating reporting requirements with state authorities and improving their fraud risk management of TANF. With non-assistance comprising 78 percent of TANF spending, fraud is not only a threat to the taxpayer but risks seriously undermining vital services provided to millions of families in poverty. The facts of the case demand that the Ways and Means Committee continue our robust investigation, in conjunction with the Trump Administration, into TANF spending to determine what additional reforms are needed to protect the program for those in need and ensure its connectivity to work.”
Work and Welfare Subcommittee Chairman LaHood (IL-16) issued the following statement:
“As we continue to consider ways to strengthen the TANF program, I am pleased that GAO is releasing these reports and providing additional data to include in the conversation. It is clear that the lack of guardrails makes the system ripe for abuse. This is a vital program, and it is time to reclaim TANF funds to ensure they are being used on removing barriers to work and helping individuals realize their full potential.”
Background on GAO Report on “Enhanced Reporting Could Improve HHS Oversight of State Spending” in TANF:
- GAO found that seven out of 31 states that require narrative explanations of TANF non-assistance spending did not provide, or had incomplete narratives, for fiscal year 2022.
- State reporting on TANF expenditures did not include details such as planned non-assistance spending or subgrantees of TANF-funded programs.
- GAO reported that states continue to carry over unspent balances of TANF funds, with unspent funds increasing from $4 billion to $9 billion between 2015 and 2022.
- GAO determined that HHS could do more to monitor state TANF spending – including bolstering reporting requirements to ensure states complete the full required narrative and enhance forms to collect more data on spending.
- At the same time, GAO recommends Congress consider granting HHS additional statutory authority to collect additional TANF expenditure information to measure improper payments.
Background on GAO Report on “Additional Actions Needed to Strengthen Fraud Risk Management” in TANF:
- In July 2024, HHS conducted its first ever fraud risk assessment of TANF using its new Fraud Risk Assessment Portal. That assessment identified 21 fraud risks categorized into 9 categories – billing fraud, conflict of interest, conspiracy, cyber exploit, diversion, misrepresentation, misuse of award funds, personally identifiable information theft, and skimming.
- GAO found that HHS’s process for assessing risks is not fully consistent with leading practices for fraud risk management.
- HHS lacks clear guidance or procedures on planning and conducting regular TANF fraud risk assessments.
- Relevant state or local stakeholders are not involved in the TANF fraud risk assessment process.
- Likelihood, impact, and tolerance of identified fraud risks are not assessed or determined.
- GAO recommends seven actions HHS can undertake, within their statutory authority, to improve their fraud risk assessments of TANF – including:
- Developing clear guidance and standard procedures for regular risk assessments.
- Communicating with state and local stakeholders.
- Improving the Fraud Risk Assessment Portal.
READ: Smith, LaHood Call on Government Watchdog to Investigate Uses of TANF Funds
READ: Chairman Smith Opening Statement: Hearing on TANF Non-Assistance Programs