Darin LaHood Leads House And Ways Committee Hearing About Reforming TANF

2 days ago

The House Ways and Means Committee held a hearing on Tuesday entitled, ‘Temporary Assistance for Needy Families Program In Need of Reform, Better State Accountability, and Fraud Protection.’

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Transcript

00:00:00state audit findings that have gone unaddressed over multiple years, an absence of meaningful

00:00:06performance metrics, and increasing state use of TANF for child welfare with few accountability

00:00:14measures.

00:00:15TANF was created nearly 30 years ago as part of the historic Republican-led welfare reforms

00:00:20of 1996.

00:00:23Thanks to work requirements and time limits, basic assistance caseloads have declined,

00:00:27allowing states to shift TANF spending to non-assistance.

00:00:31The problem is that TANF has not been reauthorized since 2005, but continues to receive funding

00:00:38on autopilot.

00:00:40Congress must revisit the program, not only to modernize TANF as part of a comprehensive

00:00:46reauthorization, but to make necessary reforms to recognize the shift to non-assistance spending

00:00:53to improve accountability.

00:00:55My belief is that we need to reclaim TANF for work, do a better job of targeting funding

00:01:00towards the more vulnerable families, to the most vulnerable families, and restore the

00:01:04program to its original roots.

00:01:07I know many of my colleagues on this subcommittee share these views and have introduced legislation

00:01:12to make some of these changes.

00:01:14On its current path, TANF is failing beneficiaries who need economic security, and it's also

00:01:21failing taxpayers whose money should be spent intentionally and strategically to support

00:01:27work.

00:01:28By modernizing the program while ensuring that it continues to serve those who rely

00:01:32on it, we can reduce dependency and empower Americans to uplift themselves.

00:01:37I'm honored to have our guests here today and look forward to your testimony.

00:01:42And with that, I'm pleased to recognize the gentleman from Illinois, the Ranking Member

00:01:46and my friend, Representative Davis, for his opening statement.

00:01:49Thank you very much, Mr. Chairman, and I want to thank you for this hearing.

00:01:54I also want to thank all of our witnesses for coming and sharing with us.

00:02:00I greatly appreciate our subcommittee's bipartisan work on home visiting and child welfare in

00:02:07particular.

00:02:08But I can't sit here this afternoon and pretend that this hearing is anything but a preemptive

00:02:16justification to support cuts that will keep struggling families struggling and secure

00:02:28the wealthiest and most secure people in our country.

00:02:33Nor can I ignore that our Republican partners remained silent while Secretary Kennedy took

00:02:41Elon Musk's chainsaw to the Department of Health and Human Services, putting implementation

00:02:50of all our work at risk.

00:02:53If our goal is truly to discuss TANF reform, why do my Republican colleagues continue promising

00:03:02deep cuts in TANF and similar programs like the Social Services Block Grant to pay for

00:03:10tax giveaways to the wealthy?

00:03:13Cutting TANF funding will cut child care, child welfare services, and help for struggling

00:03:21parents, making the lives of children and families worse, not better.

00:03:27If the goal is to make TANF accountable, I urge my colleagues to support the bill Representative

00:03:35Chu and I introduced to give HHS the tools they need to penalize states for gross malfeasance.

00:03:45State accountability was left out of the original law by design of its Republican drafters,

00:03:53and only Congress can fix that.

00:03:56If accountability is important, I urge my colleagues to join me in calling on President

00:04:04Trump to withdraw his nomination of Thomas March Bell for HHS Inspector General, given

00:04:14that he was fired from a previous job for mishandling taxpayer dollars.

00:04:21Focusing on the minutiae of TANF policy seemed to sidestep our subcommittee's obligation

00:04:28to ask more important questions.

00:04:31Are families better off than they were four months ago, and will the Republican Congress

00:04:37provide the supports Americans need to survive the recession and harm caused by the Trump

00:04:45policies?

00:04:46Unfortunately, the answer is a resounding no.

00:04:51The Trump tariff tax is making the cost of basic necessities like food, housing, and

00:04:58utilities spike, while savings and retirement balances have plummeted by trillions of dollars,

00:05:08while retirees fear their survival as President Trump and Elon Musk work to dismantle the

00:05:17Social Security Administration.

00:05:20I appreciate the work of the experts here before us, and I thank you, but focusing on

00:05:27narrower process issues, instead of protecting the people we represent from cruel and chaotic

00:05:34policies, is like focusing on the details of a fire truck while the house burns down.

00:05:43Seniors, children, and families need us to act to protect them.

00:05:50I thank you, Mr. Chairman, and yield back.

00:05:53Thank you, Mr. Davis.

00:05:54I will now introduce our witnesses.

00:05:55I'll go from my left to right.

00:05:57First is Jeffrey Arkin, is the director of the GAO Strategic Issues Team.

00:06:02Next is Kathy Lahren, who is the director of the GAO Education, Workforce, and Income

00:06:07Security Team.

00:06:09Next, James Dahlken, is the director of the GAO Financial Management and Assurance Team.

00:06:16Next is Seto Baghdoyan, is the director of the GAO Forensic Audits and Investigative

00:06:22Services Team.

00:06:23And lastly, is Roxanne Somerlett, who is the director of the Marion County Department

00:06:29of Job and Family Services in Marion, Ohio.

00:06:33We'll first start with you, Mr. Arkin, and you're now recognized for five minutes for

00:06:36your opening statement.

00:06:38Chairman LaHood, Ranking Member Davis, and members of the subcommittee, thank you for

00:06:44inviting GAO to speak at today's hearing.

00:06:48Today, GAO issued the final report in a series of reviews of TANF spending and oversight,

00:06:54and my GAO colleagues and I will discuss some of what we found with those reports and recommendations

00:06:59that we made to improve oversight of TANF.

00:07:02I will start by talking about trends and expenditures, and also on oversight of state reporting on

00:07:09those expenditures by the Department of Health and Human Services, and then my colleagues

00:07:13will discuss other aspects of TANF.

00:07:18Governments have substantial flexibility to determine how to spend their TANF funds.

00:07:23The two most common categories of TANF expenditures are known as assistance, which covers benefits

00:07:28such as cash payments to eligible families, and non-assistance, which covers services

00:07:33like childcare or employment training.

00:07:37Since TANF's beginnings, we've seen a move away from assistance spending towards non-assistance

00:07:42spending.

00:07:44In our recent work, we found that for fiscal year 2022, non-assistance spending accounted

00:07:49for about 44% of state's total spending, and that includes the federal TANF block grant

00:07:54as well as state's own contributions.

00:07:57In comparison, assistance spending accounted for about 25% of all TANF spending, and states

00:08:04spent the remaining share on things like program management or transfers to block grants.

00:08:11Likewise, we've seen an increase in the amount of unused federal TANF funds that states have

00:08:16carried over from year to year, which is allowed under the law.

00:08:20As we recently reported, and as you can see on the monitors, on the chart in the monitors,

00:08:26at the end of fiscal year 2015, states collectively had a balance of unspent funds of $4 billion.

00:08:35By the end of fiscal year 2022, that amount had more than doubled to $9 billion, and in

00:08:40fiscal year 2023, that amount increased again to $10 billion.

00:08:46Some of those unspent balances are funds that states have already committed or obligated

00:08:51but have yet to spend, and that's the light blue area on the chart on the monitor.

00:08:57But the bulk of the unspent balances are unobligated or not yet committed to a specific expenditure,

00:09:03and that's the dark blue area on the figure.

00:09:08HHS requires states to file various reports that provide information on their TANF expenditures,

00:09:14and we found some issues with those reports that could inhibit HHS's oversight of the program.

00:09:20HHS requires states to submit reports that include narratives describing certain types

00:09:25of expenditures, such as non-assistance expenditures.

00:09:29In reviewing these reports, we found that some states did not include the required narrative,

00:09:33and we recommended that HHS take steps to require those states or rather ensure that

00:09:38those states submit complete narrative in their expenditure reporting.

00:09:44We also found that state reporting did not include detailed information on other aspects

00:09:49of states' TANF expenditures, such as their planned non-assistance spending.

00:09:55While current law limits what information HHS can collect from states, we recommended

00:10:00that HHS identify areas within its statutory authority where it can require states to report

00:10:06additional information.

00:10:07Likewise, we also suggested that Congress consider providing HHS with enhanced statutory

00:10:13authority to collect more information on TANF expenditures, and we believe that these steps

00:10:18could enhance HHS's oversight of TANF.

00:10:23Finally, previously we found that HHS does not report on estimated improper payments

00:10:28for TANF, and improper payments are those that should not have been made or were made

00:10:33in the incorrect amount.

00:10:35According to HHS, again, it's an area where it does not have statutory authority to require

00:10:40states to report the kind of information that it would need to estimate improper payments,

00:10:45and we suggested that Congress consider providing HHS with that authority.

00:10:51Chairman LaHood, Ranking Member Davis, and members of the subcommittee, this concludes

00:10:54my prepared remarks, and I'd be happy to answer any questions you have.

00:10:57Thank you, Mr. Arkin.

00:10:58We'll now recognize Ms. Lahren for five minutes.

00:11:04Chairman LaHood, Ranking Member Davis, and members of the subcommittee, today I will

00:11:08be discussing two reports that we recently issued on the TANF program.

00:11:12The first looks at participant and outcome data that states collect on their non-assistance

00:11:17services, and how they use that data to monitor and improve their programs.

00:11:22The second looks at the extent to which states use TANF to support their child welfare systems.

00:11:29As Mr. Arkin explained, state spending on non-assistance is increased as a share of

00:11:35TANF spending.

00:11:37Non-assistance can include anything that supports one of the block grants for purposes, but

00:11:42Within that, states have broad latitude in how they use the funds, and states have made

00:11:49different decisions about that spending, depending on their priorities.

00:11:54As you can see in the graphic on the monitor, they use it for many purposes, including job

00:12:00training, education, child care, child welfare, and other services.

00:12:06But the question this raises is, what do we know about the participants in these programs?

00:12:11Who exactly is benefiting from TANF non-assistance funding, and how effective are these programs

00:12:18in achieving TANF goals?

00:12:20To get at that, we looked at the kinds of data states are collecting on participants

00:12:24and outcomes, and how they're using that data.

00:12:28A review of seven states found that service providers, those at the local level, are collecting

00:12:34data on participants and outcomes.

00:12:37They're doing that to make eligibility determinations, and to monitor program performance.

00:12:43Just to give an example, Ohio's largest category for non-assistance spending is child care

00:12:48for low-income families.

00:12:50The state collects data on the income of the families to determine eligibility, as well

00:12:56as on outcomes for children, like kindergarten readiness.

00:13:00Similarly, Texas uses TANF, along with WIOA funds, to support employment services, and

00:13:06as part of that, it tracks outcomes, like wage growth and job retention.

00:13:11But that kind of data is generally not reported to the state TANF agency, and there are no

00:13:18federal reporting requirements for TANF non-assistance funds.

00:13:24So states reported a number of challenges in using data on those served with non-assistance

00:13:28funds.

00:13:30Challenges that hindered their ability to assess whether services were achieving their

00:13:34intended goals.

00:13:36For example, one state told us they collect data on participation in a marriage promotion

00:13:42program, but they can't assess whether the program improved marriage quality or duration.

00:13:48HHS technical assistance efforts have focused on improving data related to assistance, rather

00:13:54than non-assistance, but individual states have identified promising practices for using

00:14:00data to help improve their programs.

00:14:04That's why we recommended that HHS facilitate information sharing among state TANF agencies

00:14:11on how they can better use data on non-assistance services.

00:14:15HHS agreed with this recommendation, but they have not yet implemented it.

00:14:21I'd like to turn now to states' use of TANF funds to support their child welfare systems,

00:14:26including addressing child abuse and neglect, and supporting children who are in the foster

00:14:32care system.

00:14:33In a report issued this morning, we found that in fiscal year 2022, states spent $3.3

00:14:40billion of their TANF dollars to support child welfare, 11% of overall TANF spending.

00:14:47I'd like to direct your attention to the map on the monitor, which shows the variation

00:14:52in how much states use TANF for child welfare.

00:14:56As you can see, while the majority of states spend less than 20% of their TANF funds on

00:15:00child welfare, a few, like Pennsylvania, spend no TANF funds on child welfare, while states

00:15:07shaded in dark blue, yellow, and red spend upwards of 40%, 60%, or even 80% of their

00:15:14TANF block grant to prevent or address child abuse and neglect, or to support children

00:15:19in the foster care system.

00:15:21Texas spent the most, with $417 million going to child welfare in fiscal year 2022.

00:15:29States also receive dedicated funding from Titles IV-E and IV-B of the Social Security

00:15:34Act for child welfare, but states told us they use TANF because it's more flexible and

00:15:42can cover costs not eligible for IV-E reimbursement.

00:15:47We note in our report that our recommendation to improve TANF data collection efforts would

00:15:52increase transparency around the amount states spend on child welfare, as well as other programs.

00:16:00This concludes my statement, and I'm happy to answer any questions.

00:16:03Thank you, Ms. Lahren.

00:16:04We'll now turn to Mr. Dalkin for five minutes, and I'll just make a note, we'll most likely

00:16:09after your opening statement take a break so that we can go over and vote, so we'll

00:16:13take a short recess.

00:16:14You're recognized for five minutes.

00:16:17Chairman LaHood, Ranking Member Davis, and members of the subcommittee, thank you for

00:16:21the opportunity to present our work regarding HHS's oversight of TANF findings in state

00:16:27single audit reports.

00:16:30Before I cover the results of our audit, I would like to start with an explanation of

00:16:34single audits.

00:16:35The term single audit is exactly what it sounds like, one audit of federal awards.

00:16:41Each year, states are required to undergo a single audit, which is conducted by an independent

00:16:47auditor and ensures that the states have adequate controls over federal programs and are complying

00:16:53with relevant program requirements.

00:16:55Single audits also identify deficiencies that require states to develop corrective

00:17:01action plans.

00:17:04In a report we issued last week, we reviewed the most current single audit reports for

00:17:09each state and found that 37 states had TANF deficiencies referred to as audit findings.

00:17:17Twenty-two states had at least one TANF finding categorized as a material weakness, the most

00:17:24severe category of audit finding, which can indicate critical risk and issues in the federal

00:17:32program.

00:17:33The reason for these material weaknesses varied by state.

00:17:36Some examples of the deficiencies included failing to collect and maintain sufficient

00:17:41documentation, lack of procedures, and lack of internal controls.

00:17:47We also determined whether states had the same finding year after year and found out

00:17:52that approximately 23% had repeat findings for over two years and some have remained

00:17:59unresolved for more than a decade.

00:18:03For example, one state had a repeat finding for 15 years.

00:18:07The finding related to the state's lack of proper segregation of duties, which could

00:18:13result in someone having the authority to create and approve payments to ineligible

00:18:19applicants.

00:18:21Another state had five material weaknesses that repeated for four years and one which

00:18:27related to an improper payment.

00:18:31The severity and persistence of these deficiencies indicated that states could improve how they

00:18:36administer the program, and that's where HHS comes in.

00:18:42As a federal awarding agency for TANF awards funds, HHS is charged with overseeing the

00:18:49TANF findings and to help the states resolve these single audit issues.

00:18:55We reported last week that HHS does not have sufficient audit resolution procedures.

00:19:00As I indicated earlier, some of these problems have been going on for more than a decade.

00:19:06Tracking and measuring the results of its single audit resolution process could help

00:19:10HHS focus on these repeat and severe deficiencies.

00:19:15Our first recommendation addressed this issue.

00:19:20We found that HHS did not issue many management decisions to states timely within the six-month

00:19:27timeframe as required to communicate HHS's evaluation.

00:19:36We reviewed five years of data and found out that HHS issued less than 10 percent of the

00:19:42management decisions on time within that six-month timeframe.

00:19:47We also found that HHS frequently issued management decisions late.

00:19:51About 23 percent of the decisions were issued late.

00:19:55We found one management decision letter for a state with four findings that was issued

00:19:59four years after the due date.

00:20:02At the time of our review, two-thirds of the required management decisions have not been

00:20:09issued.

00:20:10Timely issuance of management decisions is critical to ensure that states implement appropriate

00:20:16corrective actions.

00:20:18Our second recommendation addresses this issue.

00:20:21Earlier I spoke about how single audits help ensure states are complying with relevant

00:20:26program requirements.

00:20:28During our audit, we found that HHS did not adequately ensure that it penalizes states

00:20:34for not complying with TANF requirements.

00:20:37For example, although HHS found several states that did not meet their statutory minimum

00:20:43work requirements, HHS did not follow its own procedures to reduce the amount of TANF

00:20:49funding to the states the following year.

00:20:52Without effective enforcement, HHS is unable to adequately encourage states to comply with

00:20:58legal requirements, resolve deficiencies in a timely manner, and reduce improper payments.

00:21:04Our last recommendation addresses this issue.

00:21:08This concludes my opening statement.

00:21:10I would be happy to answer questions at the appropriate time.

00:21:13Thank you, Mr. Dahlken.

00:21:14At this point, we will recess and come back and we will begin with your testimony, Mr.

00:21:18Begdoyan.

00:21:20We are in recess.

00:21:23Our vote series went a little longer than we expected, so thanks for your patience,

00:21:29and we will continue on with the hearing.

00:21:32We left off with Mr. Begdoyan, who is the Director of the GAO Forensic Audits and Investigated

00:21:39Services Team.

00:21:41You are now recognized for five minutes.

00:21:44Thank you, Mr. Chairman.

00:21:46Indulge my allergy voice.

00:21:47I appreciate that.

00:21:50Good afternoon to you, Ranking Member Davis and members of the subcommittee.

00:21:54Today, I will discuss GAO's January 2025 report on fraud risks in the TANF program.

00:22:02Annual combined spending on TANF totals over $30 billion, which is potentially at risk

00:22:09for fraud, making it imperative to manage risk effectively, especially since fraud risks

00:22:16for federal programs are heightened in the pandemic's aftermath.

00:22:21Investors who hone their craft during this period are opportunistic, agile, and tech-savvy

00:22:28and target programs such as TANF inherently at risk for fraud.

00:22:33Risk in such programs is a function of high spending levels, sprawling reach, and complex,

00:22:39often restrictive program architecture, which collectively could also hamper oversight.

00:22:46In this regard, noteworthy examples from Mississippi and California illustrate large-scale

00:22:53TANF fraud and other misuse.

00:22:56In Mississippi, according to the State Auditor, multiple individuals involved with its TANF

00:23:01program, including the Director of the State's Department of Human Services, potentially

00:23:07misspent, converted to personal use, or wasted more than $77 million in TANF non-cash assistant

00:23:14grants.

00:23:16In California, according to court records, several cases involve multiple criminal entities

00:23:22potentially stealing about $200 million, impacting hundreds or more victims by using tech devices

00:23:31such as pinhole cameras to repeatedly skim EBT cards that access TANF cash assistance

00:23:39at ATM machines.

00:23:43With the foregoing as context, I'll make two principal points about our findings.

00:23:47First, HHS has taken some steps to improve its fraud risk management capacity.

00:23:53For example, it identified 21 fraud risks from various sources whose controls require

00:23:59improvement.

00:24:01We independently categorized these risks in nine groupings, such as skimming and diversion,

00:24:07as shown on the dual monitors.

00:24:10And it also created profiles for such risk.

00:24:14Profiles function as a risk's DNA and help prioritize assessed risks and inform decision-making,

00:24:22including crafting an anti-fraud strategy.

00:24:26Second, these steps notwithstanding, HHS still falls short on five fraud risk management

00:24:35fundamentals, collectively undermining its capacity to manage fraud risks.

00:24:40One, lacking formal procedures for conducting regular fraud risk assessments to keep up

00:24:46with the dynamic nature of risk in programs such as TANF.

00:24:49Two, omitting key stakeholders from these assessments.

00:24:53HHS did not consult its state and local partners in whose jurisdictions risks originate, as

00:25:02I mentioned in the two prior examples.

00:25:05Three, not clearly defining tolerance, likelihood, and impact for each of the 21 identified risks.

00:25:12This is vital for implementing front-loaded preventative controls.

00:25:16Four, ranking all 21 risks as being equal and requiring improvements in controls.

00:25:23This counterintuitively defeats the purpose of prioritized, targeted action, which is

00:25:30the hallmark of effective fraud risk management.

00:25:33Five, not assessing three additional and potentially significant risks, such as EBT card misuse,

00:25:41which we independently identified and whose impact is enabling fraud, is illustrated by

00:25:48the California example I cited earlier.

00:25:52Given these shortcomings, we made seven recommendations to HHS.

00:25:56We concurred with five of these recommendations and partially concurred with two others.

00:26:02As of today, all of these recommendations remain open.

00:26:06In closing, I'd underscore that managing fraud risks effectively is serious business.

00:26:12While HHS has creditably taken early steps, it should prioritize fraud risk management

00:26:17for TANF and act decisively and timely to implement all of our recommendations to address

00:26:23the shortcomings we flagged.

00:26:25This will help ensure that TANF risks are mitigated and funds reach eligible beneficiaries

00:26:32rather than fraudsters.

00:26:34Chairman LaHood, Ranking Member Davis, this concludes my remarks.

00:26:37I look forward to your questions.

00:26:39Thank you, Mr. Baghdoyan.

00:26:41We'll now turn to Ms. Sommerlot for your five minutes of testimony.

00:26:46You're welcome.

00:26:50Good afternoon, Chair LaHood and Ranking Member Davis, members of the subcommittee.

00:26:54I appreciate the opportunity today to provide some testimony on localized non-TANF services

00:27:02as provided in my local community of Marion County, Ohio.

00:27:08My name is Roxanne Sommerlot, and I serve as Director of Job and Family Services in

00:27:14Marion County, which is home to 65,000 people in Northwest Ohio.

00:27:21For context, I would add that Ohio is one of several states that operates a state-supervised,

00:27:28county-administered delivery system for human services as well as public workforce development

00:27:35services.

00:27:36I'd like to just briefly walk through some of the programming that we have in our community,

00:27:42which is considered non-assistant TANF programming.

00:27:46The most important or widely-used program that we have in our county is our Prevention,

00:27:54Retention, and Contingency program.

00:27:58All 88 counties in Ohio have such a program.

00:28:01Each is locally developed and designed to be responsive to their own community needs

00:28:07and is authorized by their local boards of county commissioners.

00:28:12In Marion County, our plan emphasizes and prioritizes supports that allow people to

00:28:19obtain and keep employment.

00:28:21Services under our plan range from car repair, fuel assistance, one-time utility and rent

00:28:28payments through short-term training and kinship caregiver supports, as well as contracts with

00:28:37local nonprofits to provide other kinds of work supports.

00:28:42In 2024, we served 853 families, and to give you a brief example, I'll use Michael as an

00:28:50example who reached out to us to ask if we could help with a car repair.

00:28:56Michael and his wife both work, not at the same place and not at the same time, and they

00:29:01have one vehicle within their family.

00:29:03They have three school-aged kids.

00:29:06Their vehicle needed a wheel bearing replacement, and so we worked with Michael and our local

00:29:14vendor repair shop to get that repair made in such a way that neither he or his wife

00:29:21missed work.

00:29:22Both are continuing at their same employers, and Michael still works more than 50 hours

00:29:28per week.

00:29:29A newer program for us is called the Benefit Bridge, and that is a pilot program that's

00:29:37currently operating in 12 of Ohio's counties that's specifically responsive to our employer

00:29:46community, which told us that they often have issues working with people in terms of promotions

00:29:53or giving them more hours because they're concerned that that promotion will lead them

00:30:00to a benefit cliff.

00:30:01So with that program, we work directly with people facing the benefit cliff to make sure

00:30:07that they continue their forward momentum and not fall back to rely on public assistance,

00:30:14and that program spans about a 12-month period.

00:30:20Next is our year-round youth program.

00:30:23That is called the Comprehensive Case Management and Employment Program, or CCMEP.

00:30:30I would be remiss, and I would regret not mentioning that Cheryl Vincent, who is with

00:30:36us today, was a chief architect of that program in Ohio, and Ohio made a policy decision several

00:30:45years ago that combined TANF funding along with WIOA youth funding to enrich that program

00:30:53and allow us to serve more youth and more in-school as well as out-of-school youth,

00:30:58and I have to say that program probably delivers the most success stories of any program that

00:31:04we have.

00:31:06The other program we're just opening applications for this week is our TANF Summer Youth Employment

00:31:12Program.

00:31:13We receive a state allocation of TANF each year for those counties that are interested

00:31:18in operating a TANF Summer Youth Employment Program, which places youth at various local

00:31:27employers throughout our community.

00:31:30That's paid experience, and we simultaneously work with the OCUs to build what our employers

00:31:37tell us are critical soft skills that they desperately need in their workforce.

00:31:43Last year, we had 30 youth placed at 14 different employers.

00:31:48We always have a waiting list.

00:31:49We have more employers and more youth that we can actually fund.

00:31:55I will mention Blake from last year, who worked at a locally-owned manufacturing plant of

00:32:01ATV, high-performance accessories, and at the end of the summer, that employer called

00:32:08to ask us if it was okay if they offered him full-time employment.

00:32:13Blake is still employed there and loves that company.

00:32:18In addition to those TANF programs, as was mentioned, Ohio uses TANF for the purpose

00:32:27of child care, which is a critical work support and is often hard to find and harder to pay

00:32:34for, so we are able to serve 300 families through that program.

00:32:41And finally, the transfer to Title 20 dollars from the TANF block grant is mostly critical

00:32:49in the child welfare, child protective space in the state of Ohio.

00:32:55We do use the social service block grant to fund adult protective services, and we're

00:33:01able to investigate 300 cases last year in that space.

00:33:08Finally, I would say that I would just reiterate that for all of our programming, in terms

00:33:15of program integrity, a nod to my fellow testifying people today.

00:33:23Each one of our programs requires an application and an eligibility determination that is revalidating

00:33:32the most current information that we have for families so that we make sure that we

00:33:37stay compliant and we maintain the integrity of the TANF block grant.

00:33:45I would offer that our department name suggests Job and Family Services, that work is really

00:33:53central to everything that we do, and our mission is to first stabilize and then strategize

00:34:00to support families as they find their first, next, or better job and career.

00:34:07Every person's readiness is different, and so it is imperative that we have a continuum

00:34:14of services so that we can serve families where they are in their life and in their

00:34:20career.

00:34:21Thank you so much for allowing me the time today, and I look forward to answering any

00:34:26questions.

00:34:27Thank you, Ms. Summerlot.

00:34:29I want to thank all of our witnesses today for your valuable testimony on this important

00:34:34hearing.

00:34:35I especially want to thank GAO for their thorough work to dig into some of the concerns raised

00:34:39by the subcommittee, and now we'll proceed to question and answer session by the members

00:34:45of the subcommittee, and I'll begin by recognizing myself.

00:34:48Mr. Arkin, you mentioned in your testimony that GAO found that states are not reporting

00:34:54complete information about TANF expenditures, and most states lacked transparent reporting

00:35:00on subgrantees.

00:35:02For example, in your testimony, you said seven out of 31 states did not provide or had incomplete

00:35:08narrative explanations of non-assisted spending for FY 2022.

00:35:13This is extremely concerning because otherwise, it's like a black box that we don't know how

00:35:18much behind what categories a state spends in.

00:35:22My question is, your report provides recommendations for HHS, but are there any legislative recommendations

00:35:32you would make to improve transparency of state non-assistance spending so we can know

00:35:37the impact of the dollars and where they're actually being spent at?

00:35:42Thank you for the question, Mr. Chairman.

00:35:44Short answer, yes, we do, and the issue is most of the reporting requirements in the

00:35:50law apply to assistance spending and actually prohibit HHS from collecting information on

00:35:56non-assistance spending because it's not a specific statutory authority provided in the

00:36:01law.

00:36:02So we think information that allows HHS to ask states to discuss what are they planning

00:36:08to do in the non-assistance area and to whom are they going to provide the funds.

00:36:12You mentioned the subrecipient issue.

00:36:16That's something that would help not just with oversight of spending, but also potentially

00:36:21help HHS provide an estimate of improper payments.

00:36:25It's really key information for them to be able to do that.

00:36:28Thank you for that, Mr. Arkin.

00:36:29I'll next turn to Ms. Lahren.

00:36:31Our subcommittee has spent a significant amount of time looking at federal child welfare spending.

00:36:36Last year, Ranking Member Davis and I worked to pass a bill to reauthorize the Title IV-B

00:36:41child welfare program.

00:36:42One of the things we focused on was having in place the right data and performance reporting

00:36:48so we can see the quality of services and impact on families.

00:36:53According to GAO's recent report, TANF now constitutes approximately one-fourth of total

00:36:58federal child welfare spending, eclipsing state funding through the Title IV-B program.

00:37:04To you, Ms. Lahren, do you have data about the specific demographics of the children

00:37:10in foster care funded by TANF as we do in the Title IV-B program?

00:37:18States are collecting data on the demographics of all the children they serve in their child

00:37:24welfare programs.

00:37:25At the state level, that data does exist.

00:37:29Going back to one of the main findings of our report, data on non-assistance TANF funding,

00:37:36there are no federal reporting requirements.

00:37:38Even if that information is available at the state level, it's not being reported either

00:37:43to the state TANF agency or to HHS.

00:37:48So no, the answer is at the state level, they may be able to disaggregate which children

00:37:55are being served by TANF versus IV-E or IV-B, but that information is not reported up in

00:38:02a way that makes it easily accessible.

00:38:04And do you have a recommendation on either a statutory change on fixing that reporting

00:38:09requirement?

00:38:10Yeah.

00:38:11This really goes back to the recommendation that we made to Congress to give HHS more

00:38:17oversight authority, which would include more robust reporting requirements for non-assistance

00:38:23funding.

00:38:25Thank you for that.

00:38:26Mr. Dahlken, I turn to you.

00:38:27In your testimony, you said GAO found nearly one-third of TANF audit findings were characterized

00:38:33as material weaknesses, the most severe category of findings that was made.

00:38:39As you know, one of the longstanding recommendations made by GAO is to measure and report improper

00:38:44payments in the TANF program.

00:38:47Would applying improper payments reporting to TANF help address or minimize these repeated

00:38:53audit findings, and how are these two related?

00:39:00Thank you for your question.

00:39:01I believe it would be a little of each, because a material weakness could have a financial

00:39:07implication or it could be related to controls.

00:39:11Improper payments relate more to the dollars, and so for the portion of the TANF issues

00:39:17that are material weaknesses related to dollars, that could be subject to the improper payments

00:39:24analysis.

00:39:26For the other portion that relate to the lack of internal controls, it wouldn't fall

00:39:31under the improper payments.

00:39:34Mr. Baghdoyan, in your testimony, you stated that HHS's fraud risk assessment portal

00:39:40does not have the functionality to assess and determine the magnitude of each fraud

00:39:45risk facing TANF.

00:39:47From your perspective, what are the key components to efficient fraud risk management, particularly

00:39:51as it relates to putting in place the right processes and technology?

00:39:57Thank you for your question, Mr. Chairman.

00:40:00The fundamentals are captured in this document, which is GAO's fraud risk framework.

00:40:04It's been around for 10 years or so.

00:40:09This is what we benchmark fraud risk management at agencies, and it includes fraud risk assessments,

00:40:16defining the likelihood and the impact of these risks.

00:40:20So it begins with an entity that takes the lead in conducting fraud risk management,

00:40:29doing fraud risk assessments, crafting a strategy and implementing that, and then measuring

00:40:34back to see how effective that strategy has been and making adjustments.

00:40:39But a fraud risk assessment that gets at what you mentioned is at the core, and technology

00:40:46such as deep data analytics can help get an agency to that point.

00:40:52Thank you for that.

00:40:53That concludes my questions.

00:40:54I'll now recognize Ranking Member Davis for any questions he may have.

00:40:59Thank you, Mr. Chairman, and let me thank all of our witnesses for your expert testimonials.

00:41:06Economists predict a 60% chance of recession due to the Trump tariff tax.

00:41:13Meanwhile, Speaker Johnson is determined to careen ahead with deep cuts to the very programs

00:41:20that would help families survive the Trump-created recession programs, programs like Medicaid,

00:41:30food assistance, TANF, and the Social Services Block Grant.

00:41:36And even if some programs remain, the Trump administration has strangled the ability of

00:41:43agencies to be able to help.

00:41:46The administration fired thousands at the Department of Health and Human Services and

00:41:52closed half of the regional offices that manage state TANF and child care programs, including

00:42:01the one in Illinois.

00:42:03It was days before the administration even provided an email address for states left

00:42:10without federal contacts.

00:42:13Ms. Somerlott, can you tell us more about how Marion County uses TANF and the Social

00:42:23Services Block Grant and how cutting or eliminating them would affect the families you serve?

00:42:32Yes, Chairman LaHood, Ranking Member Davis, thank you for that question.

00:42:45In Marion County, in particularly responding to the Social Services Block Grant, and Ohio

00:42:52does transfer 10% of their TANF Block Grant to Social Services.

00:42:59In Marion County, our agency uses that primarily for adult protective services.

00:43:07We contract with our area agency on aging to investigate and then support people 60

00:43:17and over who are at risk of abuse and neglect, self-neglect, and financial exploitation.

00:43:26Probably more critically, the majority of the Social Services Block Grant goes to supporting

00:43:33our child protective services system.

00:43:36I think in particular because 4E reimbursements have been diminishing over time and we see

00:43:43a growing number of youth that have multiple needs and more and more complicated needs.

00:43:51Social Services Block Grant reductions would likely impact the ability to serve those youth

00:43:57and those families.

00:43:59TANF, I have mentioned several programs, our PRC program in particular, our Comprehensive

00:44:09Case Management for Employment program for youth, as well as the Benefit Bridge program

00:44:17which now looks to help people not fall back as they are continuing their journey forward

00:44:25on the economic mobility ladder.

00:44:29Thank you very much.

00:44:30Well, like Ohio, Illinois has a high percentage of children living with grandparents or other

00:44:37families who receive TANF child-only grants.

00:44:42This often is because TANF presents significant barriers for grandparent caregivers getting

00:44:50whole family benefits.

00:44:53Can you tell us quickly about how grandparents are served?

00:45:03In Marion County, we developed a special category of support in our PRC plan for kinship caregivers

00:45:13so we use the TANF dollars to support them in a variety of ways, including home repair,

00:45:22legal services, basic needs for kids, school, school-related costs, because the only support

00:45:31that they are getting is a small TANF cash grant for that child.

00:45:37Thank you very much.

00:45:38Mr. Chairman, I yield back.

00:45:40Thank you, Mr. Davis.

00:45:41I now recognize Mr. Yakam of Indiana.

00:45:45Thank you, Chairman LaHood, for holding this hearing and thank you to our witnesses for

00:45:49being here today.

00:45:50The Temporary Assistance for Needy Families program, also known as TANF, is a critical

00:45:55government program that provides important funding to some of the most vulnerable families

00:45:59in our communities.

00:46:01There are countless examples of positive ways that TANF dollars have benefited Hoosiers.

00:46:07Just last week, I had the privilege of meeting with individuals from the Indiana Diaper Bank.

00:46:12They shared how through TANF funding and community partnerships, they were able to distribute

00:46:16over 7 million diapers last year across the Hoosier State.

00:46:22One in two Hoosier families often find themselves wondering if they'll have enough diapers to

00:46:26be able to send their child to daycare.

00:46:29It forces them to miss work and often deepen the economic hardship that they are already

00:46:33facing.

00:46:35The Indiana Diaper Bank runs their operations with only three full-time employees and three

00:46:41part-time employees so that they can ensure that the most resources possible are going

00:46:47to the community.

00:46:49This is the way it should be.

00:46:53Ms. Lahren, empowering families to help them achieve or maintain employment and improve

00:46:59their outcomes should be the goal of government welfare programs.

00:47:03Helping funds go to activities that support families instead of growing unnecessary bureaucracy

00:47:08is essential to the success of this program.

00:47:12That's why I introduced the Reduce Bureaucracy to Uplift Families Act, which lowers the administrative

00:47:19spending cap from 15% to 10% to free up more TANF dollars to help families find pathways

00:47:26into the workforce rather than expand bureaucracy.

00:47:30Do you believe that states should be encouraged to spend more TANF funds on activities that

00:47:34directly benefit families?

00:47:39Our work, we went out to seven different states and talked to states specifically about how

00:47:45they're spending their TANF grant and heard stories very similar to the one you just told

00:47:49about the diaper bank.

00:47:50I mean, we heard about really innovative and important work that's being done at the community

00:47:55level to support families.

00:47:58I think, again, what we heard is that very little information about that is directed

00:48:06upward.

00:48:07At the federal level, we're not necessarily hearing these stories because there are no

00:48:12reporting requirements to provide information at the federal level on how TANF non-assistance

00:48:22funds are being spent.

00:48:23Do you generally believe that more TANF dollars from the federal level should be spent on

00:48:28direct benefits to families as opposed to the administrative overhead in the individual

00:48:33states?

00:48:34Yeah.

00:48:35I mean, I think what we saw is that is where the money is going.

00:48:37It is going to benefits and programs that are helping low-income families.

00:48:44I think Indiana, by the way, is doing a great job in this area to keep their respective

00:48:47administrative costs down today at about 6%, which frees up more funds to support families.

00:48:53What we'd like to see is more states follow the Hoosier model.

00:48:57Another important part of ensuring that funds go to those who need it most is rooting out

00:49:01waste, fraud, and abuse.

00:49:03Mr. Bagdolian, in the GAO report, quote, Additional Funds Needed to Strengthen Risk Fraud Management,

00:49:10the GAO reviewed the fraud risk practices at HHS.

00:49:14The report shared how most states disperse funds through electronic benefit transfer

00:49:19or EBT cards, which allow people to withdraw cash and make purchases.

00:49:25GAO uncovered how EBT cards were sold on an e-commerce website with values from $100 to

00:49:31over $5,000.

00:49:33Why is it important to assess the magnitude of fraud risks?

00:49:40Thank you for the question, Mr. Yakim.

00:49:42It's an excellent question.

00:49:45If you don't know what the risk is, you can't respond to it.

00:49:48That's the bottom line.

00:49:49And EBT misuse has been flagged in single audits.

00:49:53We have discovered it through other means, through our own research.

00:49:57So since it's a prevalent vehicle of dispersing kind of funds, it naturally attracts the attention

00:50:06of fraudsters.

00:50:07The California examples, for example, in this instance, fraudsters placed many cameras in

00:50:13ATMs and recorded the personal information of those accessing their funds and then reversed

00:50:21the process and stole the money.

00:50:24And very briefly, what guardrails do you believe we should put in place to decrease and prevent

00:50:29fraud?

00:50:30Well, it again starts with the fraud risk assessments that will uncover what the risk

00:50:35is about and what controls are most suitable to respond to it.

00:50:41And Mr. Chairman, I yield back.

00:50:42Thank you, Mr. Yakim.

00:50:43Now I recognize Ms. Chiu of California.

00:50:45Thank you, Mr. Chair.

00:50:47Democrats agree that changes are needed to ensure TANF dollars aren't used for fraudulent

00:50:51purposes like when Brett Favre and the state of Mississippi diverted millions meant for

00:50:56low-income families to fund a volleyball court at his daughter's college.

00:51:01But I find it very hard to believe Republicans are serious about addressing this.

00:51:06For example, the GAO has recommended that Congress give HHS the authority to collect

00:51:12additional TANF information from states.

00:51:16Democrats actually already introduced a bill to do exactly that, and it's called the TANF

00:51:21State Expenditure Integrity Act, led by Ranking Member Davis and me.

00:51:26And it would address what happened in Mississippi by finally giving the federal government authority

00:51:31over how states spend non-cash assistance funds, which is 80 percent of all TANF spending.

00:51:38But Republicans have declined to work with us to move this bill forward, which is shocking

00:51:43considering all this talk about fraud, waste, and abuse.

00:51:48We've also heard several GAO recommendations for how HHS and federal TANF staff can better

00:51:55monitor and prevent fraud, but those were pretty hard to be able to implement after

00:52:01Secretary Kennedy and Elon Musk Doge fired the entire TANF policy division, along with

00:52:09most of the TANF program integrity staff last week.

00:52:13They fired the very staff responsible for monitoring TANF fraud and shut down half of

00:52:21HHS's regional offices throughout the country, which investigated fraud, waste, and abuse

00:52:29on the ground.

00:52:31And yet, we haven't heard a peep from our Republican colleagues about this.

00:52:36They refuse to even question these firings.

00:52:40So let me say, it's clear that Republicans in Congress aren't interested in genuine reform

00:52:46to improve program integrity.

00:52:49So why are they really holding this hearing?

00:52:52Well, we know they want to pass a reconciliation bill to give tax breaks to the ultra-wealthy.

00:53:00And how will they do it?

00:53:03By proposing massive cuts to programs like Medicaid and, yes, TANF.

00:53:09But to cut a program, they first try to discredit it.

00:53:13And that's been their playbook over and over again, and that's why we are here today.

00:53:18Republicans are simply trying to set the stage to make devastating cuts to TANF.

00:53:24Now TANF is not a perfect program, but it is a lifeline for low-income families and

00:53:30a vital source of child care and child welfare funding in many states.

00:53:36But Republicans want to take this money directly out of the pockets of the most vulnerable

00:53:41children and families and hand it over to the ultra-wealthy.

00:53:47It's shameful, and Democrats won't stand for it.

00:53:51And Republicans have been silent on the Trump administration's recent cancellation of five

00:53:57TANF pilots authorized by Congress two years ago in a bipartisan manner.

00:54:05These pilots were testing new and better ways to promote work and improve outcomes for families

00:54:11receiving TANF assistance.

00:54:14And we're going to inform Congress on how to reform TANF so it's more effective in helping

00:54:19families achieve long-term stability.

00:54:23After a thorough selection process, five states were awarded a pilot, including my

00:54:28home state of California.

00:54:30But last month, HHS Secretary Kennedy abruptly canceled everything.

00:54:38And the summer lot, Ohio was one of those five states awarded the TANF pilot, which

00:54:44the administration canceled.

00:54:47Can you share more about what Ohio had planned to do with this pilot and why this would have

00:54:52been important for families and children in your state?

00:54:56Yes, Chairman LaHood, Representative Chu, thank you.

00:55:04Yes, Ohio's pilot design was designed to build upon the framework that other programs and

00:55:12other pilots like the Benefit Bridge have been using.

00:55:16And that would have allowed us to scale those statewide.

00:55:21Currently, we have 12 counties that are operating with that framework and using a holistic approach

00:55:29to look at the entire person's life and strengthening each domain of that life to ensure that once

00:55:36they get a job, they can keep it and they can keep going.

00:55:40So the lost opportunity to scale was certainly a surprise.

00:55:48I yield back.

00:55:50Thank you, Ms. Chu, and I'll recognize Mr. Miller of Ohio.

00:55:55Thank you, Mr. Chairman, and thank you for holding this critical hearing aimed at lifting

00:55:58Americans out of poverty and ensuring that the Temporary Assistance for Needy Families,

00:56:02or TANF, known as non-assistant funding, is focused on helping low-income families have

00:56:08a step up toward economic independence.

00:56:11Since coming to Congress, one of my primary objectives has been to strengthen tools for

00:56:14individuals to have access to the education and training needed to compete in today's

00:56:19workforce.

00:56:21As discussed, the purpose of TANF is to provide time-limited cash assistance to eligible low-income

00:56:26families with children, promoting self-sufficiency.

00:56:30In addition to cash assistance, participants may receive other supportive services such

00:56:34as job training, food assistance, transportation, and other resources with a mission of lifting

00:56:40individuals up to achieve their potential and provide economic security.

00:56:45TANF provides about $16.5 billion annually to states to help millions of low-income individuals

00:56:51and families.

00:56:52In fiscal year of 22, states spent more than 44 percent of federal TANF and state funds

00:56:57on non-assistant services.

00:57:00The Ohio, through an Ohio TANF program, Ohio Workforce, OWF, provides eligible low-income

00:57:07recipients with such benefits with a focus on workforce training tools.

00:57:11Also in my state of Ohio, non-cash assistance is delivered under the state's TANF block

00:57:16grant and provides emergency hunger relief by area food banks to the underserved and

00:57:21low-wage working parents, supplying nearly 2,000 local food pantries through pass-through

00:57:26TANF funding.

00:57:27I am grateful for the work of this subcommittee as well as the government accountability office

00:57:32known as GAO to provide a closer look at how states use and account for TANF funds

00:57:36more effectively.

00:57:38Toward that end, I was proud to co-lead with Rep. Carey the Improved Transparency and Stability

00:57:43for Families and Children's Act, targeted at timely mannered delivery of services while

00:57:48bringing needed transparency to the system.

00:57:51To Ms. Larin, in GAO report, HHS could facilitate information sharing to improve states' use

00:57:58of data on job training and other services.

00:58:01GAO examined a sample of seven states that noted, in Ohio specifically, resources were

00:58:07deployed for job readiness training, resume writing, and interview preparation, among

00:58:11other workplace skills.

00:58:14In addition, the report noted Ohio's Benefit Bridge program is supported in part by $15

00:58:19million in TANF non-assistance funds.

00:58:22The Benefit Bridge assists low-income individuals who do not meet certain eligibility requirements

00:58:26to pay for services such as transit, allowances, or additional job training.

00:58:31How do these TANF non-assistance workforce training programs help build labor skills,

00:58:36capabilities toward self-sufficiency, and economic security?

00:58:41These programs really are critical.

00:58:43The second goal of the TANF program is to promote self-sufficiency through work.

00:58:51It is one of the main purposes of the program, and these are the programs at the local level

00:58:56that help to achieve that.

00:58:58What we found is that states are, some states are doing a better job than others at collecting

00:59:05data on participants and using that data to improve their programs, make sure they're

00:59:10working, make sure that they are actually achieving those goals, which is why we recommended

00:59:15that HHS facilitate information sharing among states so they can learn from each other.

00:59:20And good practices that are going on, such as those in Ohio, can be shared with other

00:59:24states so there is more accountability and transparency.

00:59:29So Ohio leads the way?

00:59:30Yes?

00:59:31No?

00:59:32Maybe?

00:59:33Yes or no?

00:59:34Yes?

00:59:35All right.

00:59:36I'll take it as a yes.

00:59:37Ms. Summerlaub, welcome.

00:59:41As you know in your testimony, Ohio works first in prevention, retention, and contingency

00:59:45PRCs program goals to help families retain employment in order to divert them from needed

00:59:50long-term cash assistance.

00:59:52Please share further how this and the Ohio Benefit Bridge Program help individuals access

00:59:57job training and associated needs, such as transportation and other challenges to entering

01:00:02the workforce.

01:00:03And really quick, O-H?

01:00:04I-O.

01:00:05There we go.

01:00:06All right.

01:00:07Yes, quickly.

01:00:10In both programs, PRC and the Benefit Bridge, the first step is, again, evaluating what

01:00:19people have already and then building a plan to strengthen their situation, often including

01:00:28employment and training.

01:00:29So typically along a career path, usually health care, manufacturing, in-demand occupations,

01:00:37but education and training is always part of the plan.

01:00:41Thank you, Ms. Summerlaub.

01:00:42Mr. Chairman, I have more questions I'll submit for the record, but it seems as if Ohio leads

01:00:47the way.

01:00:48We'll go back.

01:00:49Thank you, Mr. Miller.

01:00:51I'll now recognize Ms. Moore of Wisconsin.

01:01:04I just want to thank the chairman, the ranking member, and all of the witnesses who have

01:01:09appeared here today.

01:01:10I just want to just reflect on 1995 when I was a state senator in Wisconsin and the honorable

01:01:18Governor Tommy G. Thompson ended welfare as we know it, and of course we know that then

01:01:24President Clinton and Newt Gingrich agreed with it.

01:01:28They ended welfare.

01:01:29We know it.

01:01:30So for the first time since the Social Security Act was put in place, the guarantee that we

01:01:35gave to people 5 years old and 6 years old and 3 months old, that baby, no matter what

01:01:43the employment condition is with your parents, no matter if somebody is in jail or out of

01:01:48work, baby, we are not going to let you starve.

01:01:51We're not going to let you be outdoors.

01:01:53We broke that promise to babies right then.

01:01:57And I was at the scene of the crime when it happened.

01:01:59I had 100 amendments that could have fixed TANF, the successor program at that point.

01:02:06But you know, it was very hard to do given the deliberate buildup of ending support to

01:02:14little children had started right back in the 60s.

01:02:17And it was all based on a big lie that Ronald Reagan pushed with a fictional character,

01:02:23this welfare queen who was riding the Cadillac and eating lobster dinners and had 80 names,

01:02:3030 addresses, 15 telephone numbers, Social Security and VA benefits from four deceased

01:02:36fictional husbands, and didn't mention the kids.

01:02:42And now-a-days, it's some white dude that's in his parents' basement playing Call of Duty

01:02:47all day.

01:02:49And so we have built the audience to treat this program like it's all waste, fraud, and

01:02:55abuse.

01:02:56Well, I'll tell you, I see that the GAO has identified areas of waste, fraud, and abuse

01:03:03that are here.

01:03:04How about the $4.5 trillion worth of tax giveaways that we're about to pass through this committee?

01:03:11Governments have perpetuated these boogeyman lies, but if they really want to find the

01:03:18boogeyman, they ought to look at people like the former great NFL quarterback who was able

01:03:25to build a volleyball court based on the flexibility that we gave states.

01:03:31And indeed, a lot of this money, as some of my colleagues here have pointed out, have

01:03:36not gone into intervening in the poverty of these six-month-old babies, but it's gone

01:03:43into building a huge bureaucracy of people who chase poor people around and berate them

01:03:48all day.

01:03:49You know, you had a chance, as Ms. Chu indicated, to do something with closing the loop so that

01:03:55the Brett Favres of the world wouldn't happen.

01:03:58You guys wouldn't take that up.

01:04:00Last week, the Trump administration fired everybody in TANF, everybody, the whole Department

01:04:07of Health and Human Services, including the lead staffer for TANF.

01:04:12How are you going to improve this program or deliver services to six-month-old Joey

01:04:18with no staff?

01:04:20Additionally, your reconciliation bill includes cutting the TANF block grant and eliminating

01:04:27the social services block grant.

01:04:28And I heard you, Ms. Summerlock, talk about how you help seniors with this, Meals on Wheels.

01:04:34That's going to be gone.

01:04:36So we're not going to help six-month-old babies.

01:04:39We're not going to help old people.

01:04:41You know, we're going to talk about waste, fraud, and abuse and say that these recipients

01:04:48are that.

01:04:49Let me just say this.

01:04:51My time is running out, so I want to give my colleagues some credit for what they have

01:04:55done.

01:04:56They've used TANF funds and diverted it to fund anti-abortion clinics.

01:05:00They've had a stingy child tax credit where they left 19 million of the very, very, very,

01:05:08very, very poorest children with no assistance.

01:05:13Every Republican voted for a budget which requires $880 billion in cuts to Medicaid,

01:05:20which is the same amount we spend on Medicaid for all children.

01:05:24They also voted for $230 billion in cuts to SNAP, which provided an estimated $44 billion

01:05:31in 2016 to help families with children buy groceries.

01:05:37You want to know something?

01:05:38My time is short, and I have a lot of complaints, but I do know I joined this committee because

01:05:44I knew that there would be people on this committee that would get back to the primary

01:05:50goal of TANF, is to stop, keep babies and children from starving and being outdoors,

01:05:58and now we are abandoning that purpose.

01:06:02With that, Mr. Chairman, I would yield back.

01:06:05Thank you, Ms. Moore.

01:06:06I recognize Mr. Bean of Florida.

01:06:09Thank you very much, Mr. Chairman.

01:06:10A very good afternoon to you, and good afternoon, Work and Welfare Subcommittee, and a special

01:06:15welcome to our all-star panel.

01:06:18Really appreciate you being here.

01:06:21In 2023, Chairman Smith and our subcommittees, distinguished subchairman, Mr. LaHood, requested

01:06:26the GAO to conduct a comprehensive review of vulnerabilities in the TANF program based

01:06:32on state non-assistance spending.

01:06:35GAO's review found multiple areas in need of improvement and confirms TANF non-assistance,

01:06:41which constitutes 78% of total spending.

01:06:45It lacks basic financial guardrails, creating an environment ripe for fraud, waste, and

01:06:52abuse.

01:06:54Congress has work to do.

01:06:55We've got to come together to root that waste, fraud, and abuse out.

01:06:59Every tax dollar is indeed a precious tax dollar.

01:07:05We've got work to do.

01:07:06TANF's mission of raising people out of poverty and giving them temporary, needy assistance

01:07:12is missing its mark.

01:07:14Mr. Bagdolian, in the report, Additional Actions Needed to Strengthen Fraud Risk Management,

01:07:20GAO shared how HHS identified 21 fraud risk categories, including billing fraud, misuse

01:07:27of award funds, misrepresentation when applying for TANF, and GAO cites in its report that

01:07:33one instance, employees use TANF funds for resort vacations, cosmetic surgery, and jewelry.

01:07:43That sounds like waste, fraud, and abuse to me.

01:07:46In fact, I think that's fraud.

01:07:48They were ordered to pay over 3.7 in restitution.

01:07:53What's your assessment, Mr. Bagdolian, of HHS existing practices for fraud risk assessments?

01:07:59Is it cutting the mustard, Mr. Bagdolian?

01:08:02Thank you for your question, Mr. Bean.

01:08:04As I mentioned in my opening remarks, they have taken some steps, but they are far short

01:08:09of where they need to be.

01:08:11I displayed the Fraud Risk Framework, which is our benchmark, and that requires to have

01:08:16a dedicated entity to run fraud risk management at any federal agency.

01:08:2010-4.

01:08:21We've just got work to do.

01:08:22The ball's in our court for Congress to take action.

01:08:25That's part of it, but also, the states need to be involved.

01:08:28That's something HHS did not consult with its state and local partners to figure out,

01:08:33well, what are the risks in your jurisdictions for the risks originating?

01:08:38I'm sure the states are watching this hearing right now, so they're on notice that we've

01:08:42got work to do, too.

01:08:43Ms. Lahren, the report titled Child Welfare, States' Use of TANF and Other Major Federal

01:08:50Funding Sources, the report found that the fiscal year 2024, 46 states used funds, everybody

01:08:57listening, they used funds, TANF, that were for families in temporary need of assistance.

01:09:05They used these funds to plug holes in their budget.

01:09:08How about that?

01:09:09That's why Ms. Tenney, Claudia Tenney on this committee and myself introduced a bill, Protect

01:09:14TANF Resources for the Family Act.

01:09:17Can you comment, Ms. Lahren, how states are using TANF to plug holes in their own budget

01:09:22when it sounds like it's going to hurt the intended target of helping needy families?

01:09:27Is that true?

01:09:28What say you, Ms. Lahren?

01:09:31Well, one way that they're using it is to plug holes in their child welfare budget,

01:09:37and that money-

01:09:38But not the intended target of TANF, though?

01:09:41Well, the first goal of TANF is to keep families in their homes so they can be raised by their

01:09:46parents or a kin, so prevention services to prevent children from entering the foster

01:09:54care system, that is an allowable use.

01:09:56Ten-four.

01:09:57Thank you so much, Mr. Arkin.

01:09:59States have doubled their TANF unspent balances.

01:10:01They're hoarding this money.

01:10:02They're not using it for the intent.

01:10:05What's the driver?

01:10:06What's the driver of, Mr. Arkin, of the increase in unspent funds?

01:10:12Why are they hoarding this money?

01:10:14Thanks for the question.

01:10:15We heard a few different things when we talked to states.

01:10:19In particular, the last couple of years, that amount has gone way up during the COVID pandemic

01:10:24where states received a lot of other funds that, because they were more time limited,

01:10:28they would choose to use first.

01:10:30Because there is no limit on by when you need to spend TANF funds, they were able to hold

01:10:35on to those.

01:10:36There are some circumstances where we heard states overestimated the needs on the assistance

01:10:42side, and then we heard also that there were circumstances where some of the subgrantees

01:10:47may not have spent all the funds they thought they were going to need to spend or hadn't

01:10:50obligated them as quickly as they would-

01:10:53You would agree that this is something that Congress's committee needs to look at to say

01:10:57there needs to be a timeline that needs to get it out the door?

01:11:00In general, when we see growing unobligated balances, that can raise questions.

01:11:06Why is this happening?

01:11:07Is this the best use of funds?

01:11:08Is it being used in the way that is intended?

01:11:11Will the gentleman yield?

01:11:13I would if I had any time left.

01:11:15I yield back.

01:11:16I'm so sorry.

01:11:17Mr. Chairman, thank you.

01:11:18Thank you, Mr. Bean.

01:11:20Next is Mr. Evans of Pennsylvania.

01:11:30I yield to Ms. Moore.

01:11:33I just was listening to my colleague's queries, and I just wanted to mention that the program

01:11:38was designed for this flexibility.

01:11:43The waste, fraud, and abuse we're finding now, the program was deliberately designed

01:11:47to give the states flexibility.

01:11:49Some places have done a great job with it, and other places have not.

01:11:54But this was not an accident.

01:11:59A question I have, I understand that you work, speaking to Ms. Sommer, I understand that

01:12:07you work more with Ohio's state staff when federal questions come up.

01:12:12Do you think the state staff will be affected by these regional office closings and the

01:12:17loss of so many federal groups?

01:12:23We in Ohio, Ohio, our state partners maintain a really good line of communication between

01:12:30the field staff and the state offices.

01:12:33And I know they, our state staff relies very heavily on federal staff to answer our questions

01:12:41regarding guidance, technical assistance, policy clarification.

01:12:47I will say that when us, when counties or us in the field ask a question, it's not a

01:12:55hypothetical question.

01:12:57It's a question that we need to be on, we need answers that are on point and delivered

01:13:03quickly.

01:13:05So to the extent that our state staff is not able to consult with their federal partners

01:13:12to get information that's accurate and to us in a timely way, that could be a concern.

01:13:20Ms. Sommer, you mentioned in your testimony that TANF is the glue in serving low income

01:13:27families in Ohio.

01:13:29A huge component of TANF is child care funding and every child, childhood education for families.

01:13:37The state relies on this funding to support foster care, adoption, and child care.

01:13:43Could you talk about how you use funding with TANF and the social service block grant to

01:13:49fund the child care service?

01:13:51How these cuts to these funds would impact your work?

01:13:56Yes, thank you for the question.

01:14:02In Ohio, the state transfers the full authority of 10% to the child care block grant and also

01:14:11the social services block grant.

01:14:14In addition to that, other TANF funds are earmarked for child care.

01:14:23Child care, as I mentioned, is a critical work support and we have serious provider

01:14:30shortage for child care and parents find it very, very hard to locate predictable child

01:14:42care in a safe environment and pay for it.

01:14:46Child care is a top priority for our state and, in fact, our governor has recommended

01:14:54or $4 million per biennium of TANF to supplement the child care program.

01:15:03Again, the social services block grant program, we use primarily for adult protective services

01:15:12for seniors that are in danger of neglect, abuse, and exploitation.

01:15:19Most often, the majority of social services block grant and that TANF transfer is for

01:15:26the child protective area, child welfare, which is experiencing difficulties in finding

01:15:34funding to address the very complicated needs of youth entering their system.

01:15:42I would like to thank the chairman.

01:15:47Thank you, Mr. Evans.

01:15:49I would like to recognize Mr. Moran of Texas for five minutes.

01:15:51Thank you, Mr. Chairman, and thanks to all of you for being here today.

01:15:54This is an important subject, the temporary assistance for needy families program, which

01:15:59we refer to as TANF, is one that I know in East Texas where I come from is used to help

01:16:05those temporarily in need, those families and those individuals when they have those

01:16:10times of need, whether it is through cash assistance or other programs, services like

01:16:15utility bills, rental assistance, child care.

01:16:18A lot of things that come the way that are used for appropriate times of need temporarily.

01:16:26We forget sometimes that in 1996 when we created this, the Republicans created this, that it

01:16:33was intended to move folks from a federal welfare funding with open-ended entitlement

01:16:38programming to a capped block grant to the states.

01:16:41It hasn't changed the level of funding since 1996.

01:16:45I think that's really important.

01:16:47We're trying to have accountability and transparency in that process, but of course these five

01:16:51GAO reports show that there's a lot of work that we have to do, a whole lot of work.

01:16:59Those reports had findings like we've got to have more, they identified 21 fraud risks

01:17:05in nine different categories, including billing fraud, misuse of award funds, and diversion.

01:17:11There's a lack of data on demographic characteristics that we've already talked about today, a lack

01:17:16of data on participation and outcomes.

01:17:18Ninety-nine audit findings, this was amazing to me, that we have seen were repeated findings

01:17:24that were never addressed.

01:17:26There's a lot of work to do.

01:17:27I want to go back to a couple of those and ask you all some questions about that.

01:17:31Mr. Bagdoian, what are some of the biggest fraud risks that you have seen or that you're

01:17:36aware of in the TANF program?

01:17:39The EBT risk, Mr. Moran, is paramount.

01:17:43It is an easy vehicle for fraudsters to target.

01:17:47There have also been instances of falsified invoices for inflated costs or services not

01:17:55rendered.

01:17:56Also, the commingling of TANF funds with other sources of funding for assistance, basically

01:18:05disguising the original TANF funding and then spending it for non-TANF purposes.

01:18:11Those are some of the prominent ones that we have focused on.

01:18:17As you mentioned, all these risks do need really focused assistance over the long term

01:18:25to address.

01:18:26Ms. Semmelott, I'm going to ask you, you just heard that answer from Mr. Bagdoian.

01:18:31You put some of these things into practice day after day.

01:18:34Does it bother you to hear that some of these funds are being misused in a way or captured

01:18:39in a way that is not intended for the purpose and for those needy families that actually

01:18:44need it?

01:18:45Does that bother you?

01:18:46Well, any level of abuse, fraud, waste, misinterpretation is of concern.

01:18:56Certainly program integrity and compliance is paramount for those of us that work in

01:19:02the program every year.

01:19:06Actually, the point about invoices coming through for inflated costs or the point about

01:19:19just vendors or providers for other TANF purposes.

01:19:25Those are problems in the program.

01:19:27Ms. Laron, I want to come to you and ask you, how are states evaluating and taking care

01:19:33of some of those problems?

01:19:34In particular, let me ask you specifically about the TANF funded non-assistance services

01:19:38such as job training or early childhood education.

01:19:42How are they currently evaluating the improvement and the outcomes for families in poverty?

01:19:48Well, some states are doing it better than others.

01:19:53Texas actually is a good example because they collect the same data on their TANF recipients

01:19:59as they do from their WIOA recipients on their job training.

01:20:04A whole range of outcomes that they are tracking to determine whether that money is actually

01:20:10achieving TANF goals.

01:20:11Other than sheer will, is there some reason why the other states just don't want to do

01:20:15that or haven't done that?

01:20:17Some of them are not aware of these promising practices, which is why we recommended that

01:20:23HHS encourage states to share information about how they're using data.

01:20:30With my last question, I'm going to come to you, Mr. Arkin.

01:20:33In the GAO report, enhanced reporting could improve HHS oversight of state spending.

01:20:39GAO found that Texas appropriates TANF funds to provide workforce training to individuals

01:20:45and that the state plans to spend down their unspent balance in this manner.

01:20:49Could you provide additional insights as to how states have used TANF non-assistant funds

01:20:53to help Americans gain employment and meet local employment needs, lifting people out

01:20:59of poverty and away from the point where they need this help?

01:21:02Sure.

01:21:03Thanks for the question.

01:21:04I mean, that's one of the non-assistance examples of spending is employment training, support

01:21:10for training and education to help people find employment, helping people become more

01:21:17employable to provide childcare for people who need to seek and hold employment.

01:21:21That's one of the main uses of non-assistant spending.

01:21:25Mr. Chairman, I yield back.

01:21:26Thank you, Mr. Moran.

01:21:28Next is Mr. Gomez of California.

01:21:31Thank you, Mr. Chairman.

01:21:37I actually was an intern back, I think it was the summer of 1996, and it was for a county

01:21:44supervisor out in Riverside who was a Republican county supervisor.

01:21:49I remember the issue of TANF, implementation and how do you kind of make it more efficient?

01:21:56How do you ensure that there isn't any fraud?

01:22:01I remember I was very interested in it because I believe that we can all kind of agree that

01:22:08we don't want to have any kind of fraud in any federal program as much as possible because

01:22:13if there is, then people can use that to undermine those programs and those attacks.

01:22:20These programs, as we know, are going to provide cash assistance, help people with childcare

01:22:26that can't afford it.

01:22:27They're so crucial.

01:22:29But I really kind of want to focus on the GOP elephant in the room, is that there's

01:22:39nobody left at the Health and Human Services even to implement some of these recommendations.

01:22:47Trump and Elon Musk and his doge bros fired over 10,000 Health and Human Services workers,

01:22:55including almost everyone that works on TANF in the policy shop, and I think closed the

01:23:01regional office in California.

01:23:04So if states can't get their grants approved by Health and Human Services, they can't use

01:23:09the money.

01:23:10It's a backdoor way to legally cut congressional approved funding.

01:23:17And we've seen this tactic over and over again from this administration.

01:23:20So I'm glad you're here talking about these fixes.

01:23:25But when they're taking a chainsaw, as Elon Musk likes to say, to entire departments,

01:23:32your fixes are not going to make a difference when there's nobody there to carry them out.

01:23:38You guys provide great insight, but this is kind of this administration's tactics.

01:23:47Social Security, they axed the staff there, too.

01:23:50So now retirees and folks with disabilities have no way to have their benefits issues

01:23:56resolved.

01:23:57Also, let's not forget about tax day next week.

01:24:01How can people expect to get their tax refund, especially the money that they're owed when

01:24:06the IRS staff is being slashed?

01:24:10And this is all like TANF is meant to do what?

01:24:13To help people get by.

01:24:15But now we have skyrocketing rents.

01:24:18We have grocery prices are getting too expensive.

01:24:21Child care is out of control.

01:24:22And what's going on?

01:24:23Tariffs, right?

01:24:24They're going to increase the cost of living for working people by $3,800, according to

01:24:30a Yale study, for the year, $3,800.

01:24:34So what I find interesting is that we're talking about these programs are making adjustments,

01:24:43which I think are crucial.

01:24:46When you're fundamentally taking out the foundation of these programs through the department,

01:24:54then these adjustments are not going to get done what we want done.

01:25:01One of the things I believe in is good government.

01:25:05How do we make programs work better?

01:25:08But when there's no one there to do the job, then how are we going to implement those recommendations?

01:25:14So I do appreciate all of you being here.

01:25:16You do great work.

01:25:19It is as nonpartisan as possible.

01:25:23So I appreciate it.

01:25:24But this is kind of where I'm focusing on is the fact that we have TANF.

01:25:30It's going to be hard to implement.

01:25:32We're not sure if people are going to get their Social Security checks.

01:25:36The cost of living is going up.

01:25:38Medicaid is going to be slashed.

01:25:40And then these tariffs are impacting every single person.

01:25:46I have a toddler, Mr. Chairman, two and a half years old.

01:25:51And I had no idea how many pairs of shoes a toddler goes through in a given year.

01:25:56And I actually did research.

01:25:5798% of all shoes are made outside of this country.

01:26:01Actually somebody said it was 99%.

01:26:04Given child goes through two to three pairs of shoes per year.

01:26:09And the cost averages anywhere from 15 to 60 or even more.

01:26:14So if you kind of do the math, a family for a child pays $300 to $800 over a five-year

01:26:20period for shoes.

01:26:22That doesn't count diapers that are made out of the country, baby wipes, toys, you name

01:26:30it.

01:26:31So we got to I think, Mr. Chairman, I want us to work together to try to undo these tariffs

01:26:38that are going to hurt working families.

01:26:40And also, these programs do matter.

01:26:43And I want us to figure out how to implement some of these recommendations, but not in

01:26:48a way that just kind of is out there with no real difference in the end, especially

01:26:56because there's no staff to carry it out.

01:26:58With that, I yield back.

01:27:00Thank you, Mr. Gomez.

01:27:02That completes our question and answers today from all of the subcommittee members.

01:27:07Let me, again, thank the witnesses today for the contributions you've made to this

01:27:11hearing today, the work that you've done to put into this.

01:27:15It was extremely helpful, substantive, and as we continue to do our work as members of

01:27:21Congress on this subcommittee, we look forward to staying in touch with you.

01:27:25I think what we've heard today from the members of this subcommittee is there's a shared interest

01:27:29in ensuring that we improve efficiency and bolster the accountability of TANF to ensure

01:27:35it is supporting the most vulnerable Americans as it was intended.

01:27:39So with that, our hearing is adjourned, and please be advised that members have two weeks

01:27:44to submit written questions to be answered later in writing.

01:27:47Those questions and your answers will be made part of the formal hearing record.

01:27:52With that, the committee stands adjourned.

Darin LaHood Leads House And Ways Committee Hearing About Reforming TANF

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