Improvements Needed in AFDC's Program for Recovering Overpayments

The Social Security Administration (SSA) estimates that over $850 million, about one-half of which was federal funds, was erroneously paid to recipients of the Aid to Families with Dependent Children (AFDC) program during 1976. AFDC is a cooperative federal-state program which provides aid in the form of cash assistance and social services to needy, dependent children and their caretaker relatives. States are not required to establish an AFDC program, but if they do it must be approved by the Department of Health, Education, and Welfare (HEW). Federal regulations allow states to reduce a recipient's AFDC benefits to recover overpayments caused by willful withholding or misstating of information which could affect eligibility or benefit amount. States are allowed considerable latitude in recovering overpayments caused by recipients willfully withholding information. Some states require recipients to fully repay overpayments while others either waive the amount overpaid, seek voluntary repayment, or attempt recovery only if fraud is involved. States are not required to maintain either complete records of the amounts overpaid or the disposition of those accounts. The Secretary, HEW, should revise HEW regulations to establish uniform and comprehensive overpayment recovery policies in AFDC, including requirements for states to: (1) maintain information on the total number and amount of overpayments involved and their disposition; and (2) establish a mechanism for assessing the effectiveness of their overpayment recovery efforts. The Commissioner, SSA, should assist the states in establishing an appropriate mechanism for monitoring and evaluating the adequacy of recovery efforts.