Legislative and Administrative Changes To Improve Verification of Welfare Recipients' Income Could Save Hundreds of Millions

Highlights

Pursuant to a congressional request, GAO reviewed the manner in which income and asset information is used and verified by administering agencies to determine eligibility for federal assistance programs which provide benefits to needy individuals and families.

Recommendations

Matter for Congressional Consideration

Matter	Status	Comments
Congress should amend the Tax Reform Act of 1976 to permit disclosure of individual wage data, data on net earnings from self-employment, and payments of retirement income maintained by the Social Security Administration (SSA) to federal, state, and local agencies administering federally funded needs-based programs, whenever comparable data are not maintained at the state level.	Closed – Implemented	The recommended action was taken, but was limited to five programs rather than all federally funded needs-based programs as recommended. Based on discussions with the Joint Committee on Taxation and several legislative committees during related work, it appears that Congress intends no further action in the near future.
Congress should amend the Tax Reform Act of 1976 to permit disclosure of the Internal Revenue Service (IRS) Information Return Processing File data on unearned income to federal, state, and local agencies administering federally funded needs-based programs.	Closed – Implemented	The recommendation action was taken, but was limited to five programs rather than all federally funded needs-based programs as recommended. Based on discussions with the Joint Committee on Taxation and several legislative committees during related work, it appears that Congress intends no further action in the near future.
Congress should require that social security numbers be obtained for applicants and recipients of any federally funded needs-based program.	Closed – Implemented	The recommended action was taken, but was limited to five programs rather than all federally funded needs-based programs as recommended. Based on discussions with the Joint Committee on Taxation and several legislative committees during related work, it appears that Congress intends no further action in the future.
Congress should amend the Federal Unemployment Tax Act to require that all states collect individual wage information on a quarterly basis for use in their unemployment insurance programs and in federally funded needs-based programs.	Closed – Implemented	The recommended action was taken, but was limited to five programs rather than all federally funded needs-based programs as recommneded. Based on discussions with the Joint Committee on Taxation and several legislative committees during related work, it appears that Congress intends no further action in the near future.

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Agriculture	The Secretaries of Agriculture and Health and Human Services should acquire and make OPM wage data available to agencies that administer the programs. In this regard, administering agencies would have to comply with the guidelines for data matching under the Privacy Act of 1974.	Closed – Implemented Call 202/512-6100 for additional information.
Department of Health and Human Services	The Secretaries of Agriculture and Health and Human Services should acquire and make OPM wage data available to agencies that administer the programs. In this regard, administering agencies would have to comply with the guidelines for data matching under the Privacy Act of 1974.	Closed – Implemented Call 202/512-6100 for additional information.
Department of Agriculture	The Secretaries of Agriculture and Health and Human Services should require that, in administering the programs, federal, state, and local agencies use available federal and state wage data and SSA retirement income and benefit data provided by the beneficiary data exchange and the state data exchange.	Closed – Implemented In February 1986, final regulations were issued to meet DEFRA requirements. Since issuance of final regulations, no further action has been taken, or is expected. Monitoring of regulations implementation may be examined later.
Department of Health and Human Services	The Secretaries of Agriculture and Health and Human Services should require that, in administering the programs, federal, state, and local agencies use available federal and state wage data and SSA retirement income and benefit data provided by the beneficiary data exchange and the state data exchange.	Closed – Implemented In February 1986, final regulations were issued to meet DEFRA requirements. Since issuance of final regulations no further action has been taken or is expected. Monitoring of regulations implementation may be examined later.
Department of Housing and Urban Development	The Secretary of Housing and Urban Development should require applicants for, and tenants of, Section 8 Housing to furnish copies of their federal tax returns at the time of application and recertification for use in determining their eligibility for rental assistance.	Closed – Not Implemented The Department of Housing and Urban Development (HUD) disagreed with this recommendation.
Department of Housing and Urban Development	The Secretary of Housing and Urban Development should require that available federal and state wage data are used in the HUD annual Section 8 Housing management reviews to verify that housing managers are accurately determining applicants' or tenants' income.	Closed – Not Implemented HUD disagreed with this recommendation.
Office of Management and Budget	The Director, Office of Management and Budget (OMB), should identify which of the 58 federally funded needs-based programs should use: (1) Social Security Administration (SSA) wage, self-employment earnings, retirement income, and benefit data; (2) Office of Personnel Management (OPM) wage data; (3) state wage data; and (4) Internal Revenue Service (IRS) information return data.	Closed – Implemented Progress on this action is completed, but was limited to five programs as specified in the DGFRA law.
Office of Management and Budget	The Director, OMB, should direct that all federal departments and agencies responsible for the needs-based programs issue regulations to require the use of the data with appropriate safeguards and establish mechanisms to monitor the use of the data.	Closed – Implemented In February 1986, final regulations were issued to meet Deficit Reduction Act (DEFRA) requirements. Since the above regulations were jointly issued by the approriate agencies under the guidance of OMB, no further action is expected by OMB.

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Topics

Worker and Family Assistance

Disadvantaged personsEligibility determinationsErroneous paymentsFederal aid programsFinancial disclosureIncome maintenance programsMedicaidOverpaymentsPublic assistance programsReporting requirementsRisk managementSupplemental security income