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April 29 2014

USDA Makes $6 Billion in Improper Payments

Patrice J. Lee

The waste and abuse that plagues government is one of the reasons that Americans are rightly skeptical about how their taxpayer dollars are really used in Washington. An audit report released earlier this month from the Office of the Inspector General (OIG) confirms our suspicions in a big way.

The report finds that the U.S. Department of Agriculture (USDA) made $6.2 billion in improper payments in 2013. At least an additional $416 million in waste could have been avoided if this agency met its reduction targets which are mandated law but with which it failed to comply for a third consecutive year.

The USDA runs more than 300 programs, spending $159 billion a year. Improper payments accounted for 5.6 percent of this spending. Sixteen of those programs are considered “high-risk” for waste, fraud, and abuse, including the Food and Nutrition Service (FNS), which administers food stamps, and the school breakfast and lunch programs.

According to the report, the USDA did not comply with the Improper Payment Information Act (IPIA) for a third consecutive year specifically with three of the seven IPIA requirements for its high risk programs. This occurred because some of USDA’s actions were not effective or completed to achieve compliance. These non-compliances could have avoided approximately $416 million in improper payments by meeting reduction targets.

The Free Beacon reports on specific programs:

The School Breakfast Program had the highest rate for improper payments in 2013, with over a quarter of all disbursements being incorrect. The 25.26 percent of improper payments amounted to $831 million, of which $716 million were overpayments to schools.

The lunch program was not much better, as 15.69 percent of their payments were improper, amounting to $1.8 billion.

The Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, issued $2.6 billion in improper payments, and 65.92 percent of the errors were “agency-caused.” More than $2 billion were overpayments.

In an attempt to cut back on fraud and abuse, Congress passed IPIA in 2002, though the USDA has not complied with the law for three years. The agency is required to publish estimates for improper payments for all of its programs, and reduce improper payments by meeting targets each year.

The USDA did not publish estimates for three programs, including its Child and Adult Care Food Program, which reimburses the costs for meals and snacks for children who attend daycare in private homes.

Against the expansive backdrop of government spending $416 million in waste or $6 billion in improper payments may not seem like a big deal, but it is. It’s symptomatic of internal waste, inefficiency, and laxity in some of the most public-facing federal agencies. In the private sector, companies and organizations will be relentless in reducing those percentages to boost efficiency. $1 wasted or used improperly is $1 less that can be spent to generate new revenue.

The Administration has called to increase spending to programs for poor Americans. However, where is the accountability from the Administration that these programs eliminate the waste, fraud and abuse to ensure that any tax dollars sent to them are stewarded wisely?

Some progress is being made and we commend that. Last week, we reported that the USDA will combat fraud in the federal food stamps program by tightening rules against those who sell their benefits for cash. That is no doubt in response to this Inspector General’s findings. It’s a good step, but it shouldn’t have taken three years of noncompliance with law to take these actions.

Congress passed IPIA in 2002 in an attempt to cut back on fraud and abuse by requiring that USDA publish estimates for improper payments for all of its programs, and that it reduce improper payments by meeting targets each year.

No agency should pick and choose what laws it obeys. Compliance doesn’t inspire excitement but it fights bureaucratic lawlessness. It’s one of the few tools Americans have for reigning in the regulatory regime in Washington. We need it now more than ever.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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