Ways and Means Republicans Demand Answers on Welfare Fraud in Mississippi Scandal Involving Millions in Misspent Temporary Assistance for Needy Families (TANF) Funds

June 16, 2023 - Oversight - Press Releases - Worker and Family Support

In a new letter to Health and Human Services Secretary Xavier Becerra, Ways and Means Committee Chairman Jason Smith (MO-08), joined by Work and Welfare Subcommittee Chairman Darin LaHood (IL-16) and Ways and Means Committee Republicans, called for improved oversight from the Biden Administration within the TANF program after reports exposed massive fraud in Mississippi.

Flexibilities in the TANF program, specifically in the usage of non-cash assistance funds, have unfortunately created an environment ripe for fraud that robs resources from families in poverty - the most notorious example being the ongoing scandal in Mississippi where the state's auditor found at least $77 million in misused funds that were meant to help struggling Americans. Due to the Mississippi scandal, Members raised concerns about how states are spending non-cash assistance TANF funds, which make up about 78 percent of total TANF spending.

In their letter to HHS Secretary Becerra, Ways and Means Republicans highlighted how the Mississippi scandal illustrates broader problems with fraud and abuse within TANF:

"A series of headlines from Mississippi has drawn national attention to the vulnerability of TANF. The state's auditor has flagged at least $77 million in misused funds from Mississippi's TANF program from 2017 to 2020, resulting in charges against multiple state officials…The Mississippi case is emblematic of a larger systemic problem: TANF non-assistance dollars lack necessary guardrails making it susceptible to fraud and abuse. Since its enactment in 1996, states have found loopholes that allow re-direction of TANF non-assistance funds in ways that are loosely related to lifting people out of poverty and many states have used federal TANF non-assistance funds to fill state budget gaps."

Since 2018, Ways and Means Republicans have fought to restore accountability to the TANF program that has not been reauthorized or seriously scrutinized since 2005. Most recently, in the Fiscal Responsibility Act (P.L. 118-5), Republicans successfully fought to include provisions that will close loopholes to ensure states are held accountable for implementing work requirements.

The Biden Administration has paid lip service to the idea of shining a light on TANF fraud, but Ways and Means Republicans challenged Secretary Becerra to join them in taking meaningful bipartisan action on behalf of welfare recipients and taxpayers:

"Committee Republicans have been fighting to reform TANF since 2018 to restore accountability, prevent fraud and protect taxpayers…

"American taxpayers spend more than a trillion dollars every year to provide benefits and services to low-income families…During testimony before our Committee, you said you would welcome the opportunity to work with Congress on TANF reauthorization and reforms. In light of recently uncovered abuses, we ask that your Department engage with Congress to strengthen TANF non-assistance spending so it can achieve its stated purposes instead of lining the pockets of people who need no assistance from the federal government."

Read the letter here.

Background:

• TANF is just one of a dizzying array of more than 80 federal programscreated to fight poverty that provide food, housing, health care, energy assistance, and cash assistance to low-income Americans at a cost of over $1 trillion a year.
• Unlike TANF cash assistance, non-assistance spending in TANF refers to programs other than direct monthly checks to recipients. Non-assistance constitutes 78 percent of total spending from the block grant and is almost wholly at the discretion of each state.
• States spend non-assistance on a variety of social services including pre-kindergarten, child care, child welfare, and, in the case of Mississippi, pet projects unrelated to moving families from welfare to work.
• Concerns have emerged that TANF funds are not reaching families in poverty. With more than 10 million job openings, we cannot afford to relegate an entire generation of workers to the sidelines.
• It's time to reclaim TANF funds to ensure dollars are intentionally focused on removing barriers to work, reducing dependency, and growing the capacity of individuals to realize their full potential.

Mississippi TANF Scandal

Non-assistance TANF funds were allegedly fraudulently spent, highlighting the ongoing fraud and abuse in the program.

• From 2017 to 2020, Mississippi's state auditor flagged at least $77 million in misused TANF funds.
• This scandal is part of an ongoing investigation involving corrupt state and non-profit officials, six of whom have pleaded guilty to embezzlement.
• The Mississippi Attorney General has now opened a civil case against 38 defendants seeking to recoup $94 million that was fraudulently diverted to pet projects for celebrities and the politically connected.