TANF And Child Care Programs:

HHS Lacks Adequate Information to Assess Risk and Assist States in Managing Improper Payments

GAO-04-723: Published: Jun 18, 2004. Publicly Released: Jul 19, 2004.

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Minimizing improper payments is important given the dollar magnitude of the Temporary Assistance for Needy Families (TANF) and Child Care and Development Fund (CCDF) programs--about $34 billion in federal and state funds expended annually. These block grants support millions of low-income families with cash assistance, child care, and other services aimed at reducing their dependence on the government. At the federal level, the Department of Health and Human Services (HHS) oversees TANF and CCDF. Within states, many public and private entities administer these programs and share responsibility for financial integrity. GAO looked at (1) what selected states have done to manage improper payments in TANF and CCDF and (2) what HHS has done to assess risk and assist states in managing improper payments in these programs. To address these questions, GAO judgmentally selected states that varied in geographic location and program size. GAO used a survey to collect consistent information from 11 states and visited 5 states.

The 16 states in GAO's review reported using various strategies and tools to manage improper payments, but their efforts were uneven. Almost all the states in the review reported that they performed some activities to assess whether their programs were at risk of improper payments. These activities, however, did not always cover all payments that could be at risk, focusing, for instance, on cash welfare payments but not on payments for services, which were more than half of all TANF payments in certain states. As a result, the assessments do not provide a comprehensive picture of the level of risk in these state programs, which would be useful to HHS as it takes steps to address requirements under the Improper Payments Act. States also reported using a variety of prevention and detection tools to protect against improper payments, but states reported fewer tools in place for CCDF than for TANF, particularly in the area of data sharing to verify eligibility. Although the states in GAO's review recognized the importance of addressing improper payments, they cited competing demands for staff attention and resource limitations that constrained their efforts. While addressing improper payments does involve costs, comprehensively assessing risks can help focus prevention and detection efforts on areas at greatest risk. HHS reported using information from its monitoring activities, including single audits and state financial expenditure reporting to determine if the TANF and CCDF programs are at risk of improper payments. We found however, that these activities do not capture information about the various strategies and tools that states have in place for managing improper payments, such as those we observed in our review. In the absence of such information, HHS cannot determine if the TANF and CCDF programs are susceptible to significant improper payments, as required under the Improper Payments Act. HHS officials acknowledged that they needed more information to be in a position to carry out their responsibilities under the act and therefore recently initiated several projects to gain a better understanding of state control activities. However, HHS's projects do not provide mechanisms to gather information on a recurring basis. The absence of such mechanisms hinders HHS's ability to adequately assess the risk of improper payments and assist states in managing improper payments in these multibillion dollar programs on an ongoing basis. Given the statutory framework of the TANF program, GAO recognizes that HHS may determine that it needs legislative action to direct states to provide the information it needs to take this approach.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To better assist states in managing improper payments in the TANF and CCDF programs and comply with the Improper Payments Act, the Secretary of Health and Human Services should direct the Assistant Secretary of ACF to where appropriate, partner with states to assess the cost-effectiveness of selected practices.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: Officials within the Department of Health and Human Services'(HHS) Administration for Children and Families (ACF) have completed actions to partner with states to assess the cost-effectiveness of selected practices used by states to minimize improper payments. The survey sent to state officials responsible for the CCDF program to gather information on practices used to address improper payments, included guidance for developing cost benefit-analysis for practices used by states. The survey provided guidance on how to determine the time involved and costs of practices such as overpayments processing and recovery activities. It also provided guidance on how to document the benefits gained from these activities. Using the guidance, one state (Connecticut) prepared a sample cost-benefit analysis of its overpayment processing and recovery activities as well as cost-benefit analysis of other activities. ACF officials included Connecticut's example in the May 2007 final survey report to share with other states. These actions should enable HHS to better help states assess the effectiveness of practices used to address improper payments.

    Recommendation: To better assist states in managing improper payments in the TANF and CCDF programs and comply with the Improper Payments Act, the Secretary of Health and Human Services should direct the Assistant Secretary of ACF to follow through on efforts to identify practices that states think are effective in minimizing improper payments and facilitate sharing of these with other states.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: Officials within the Department of Health and Human Services'(HHS) Administration for Children and Families (ACF) have completed actions to identify practices that states think are effective in minimizing improper payments for the TANF and CCDF programs and facilitated sharing of the practices with other states. Specifically, HHS/ACF officials administered surveys to state officials responsible for the TANF and CCDF programs and in response to the surveys, 24 states voluntarily provided information on the methods they use for identifying and minimizing improper payments. HHS compiled the TANF survey results and created a website to serve as a repository to facilitate sharing these practices with other states. The TANF results were made available by the end of September 2006. Similarly, the results of the CCDF survey were compiled and the final report of the results was dated May 2007 and made available on the ACF website. This effort has provided HHS with valuable information to determine the extent to which states' controls are sufficient to protect the TANF and CCDF programs from significant levels of improper payments and should help HHS determine if any additional controls are needed for reducing TANF improper payments.

    Recommendation: To better assist states in managing improper payments in the TANF and CCDF programs and comply with the Improper Payments Act, the Secretary of Health and Human Services should direct the Assistant Secretary of Administration for Children and Families (ACF) to develop mechanisms to gather information on a recurring basis from all states on their internal control systems for measuring and minimizing improper payments.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: In response to our recommendation, officials within the Department of Health and Human Services'(HHS) Administration for Children and Families (ACF) have completed actions to develop mechanisms for gathering information on a recurring basis from states on their internal control systems for measuring and minimizing improper payments in the CCDF program. Specifically, ACF officials developed a tool that states can use to assess their internal controls for the CCDF program. The tool is intended to provide a systematic method for reviewing and documenting the adequacy of a State's internal control system. The results of the assessment are intended to provide a framework for ongoing technical assistance from ACF with the states regarding their internal controls over the CCDF program. Pilot testing of the tool was completed in 2006 and a final report on the results of the testing was made available May 2007. Among other things, the report documented the benefits to the state and federal government of using the tool and recommended that the tool could be used for other programs which could include the TANF program. Officials also took action to gather information for the TANF program by surveying states in 2006 to collect information on their activities to manage and reduce TANF improper payments. The results of the survey were made available at the end of September 2006. The results included information on internal controls that the states use in managing improper payments such as written policies and procedures. This information should help HHS/ACF better determine the effectiveness of existing controls and if any additional controls are needed for reducing TANF improper payments.

    Recommendation: To better assist states in managing improper payments in the TANF and CCDF programs and comply with the Improper Payments Act, the Secretary of Health and Human Services should direct the Assistant Secretary of ACF to explore the feasibility of expanding PARIS to include CCDF, in addition to TANF, including a study of the cost-effectiveness of such a plan.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: Officials within the Department of Health and Human Services'(HHS) Administration for Children and Families (ACF) completed actions to explore the feasibility of expanding the Public Assistance Reporting Information System (PARIS) to the CCDF program and study the cost-effectiveness of such an expansion. PARIS is designed to match state enrollment data from the TANF, Food Stamp, and Medicaid programs with data from other participating states and from a selected group of Federal databases. On June 30, 2007, ACF officials issued a report, "Evaluation to Determine the Effectiveness of PARIS". This report discussed actions taken to expand the programs included in the PARIS data match. According to the report, ACF is working to expand PARIS to include CCDF/child care payments in the database. In addition, the report also discusses four cost/benefit models that the states can use in determining if using the PARIS data match is cost beneficial. These actions should enable HHS to better assist states in managing improper payments associated with the TANF and CCDF programs.

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