In addition, states  offer various services to other low-income families not receiving welfare,  including child care and employment and training services. States’ Efforts To Manage Improper Payments Are Uneven

Almost all states we surveyed and visited reported taking some steps to  assess whether their TANF and CCDF programs were at risk for improper  payments or to measure the extent of improper payments. In addition, while the states reported they have various strategies  and tools in place to help prevent and detect improper payments, these  efforts were also uneven. While states reported performing some risk assessment activities, these  activities did not appear to be uniformly comprehensive in their coverage  of all types of program payments. The level of sophistication of data sharing practices varied in the states we  visited. These mechanisms, however, do not  capture information on the various strategies and tools that states have in  place for managing improper payments. In the absence of such  information, HHS cannot adequately determine if the TANF and CCDF  programs are susceptible to significant improper payments, as required by  the Improper Payments Act. As a result, HHS recently started  several projects to collect information from selected states. HHS Monitoring Activities Do Not Provide Information That HHS Needs to Adequately Assess the Risk of Improper Payments

HHS is required to annually review the TANF and CCDF programs to  determine if they are susceptible to significant improper payments. However, HHS  projects do not provide mechanisms to gather information on state control  activities 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 multi-billion dollar  programs on an ongoing basis. Given the dollar  magnitude of these programs—about $34 billion in federal and state  funds—and the nature of their activities, we know that potential risks exist. We also know—based on our review of the 16 states--that states have some  prevention and detection tools in place and at least some understanding of  the extent of program risks, although some unevenness exists among states  and between the TANF and CCDF programs in these areas. Recommendations for Executive Action

To better assist states in managing improper payments in the TANF and  CCDF programs and comply with the Improper Payments Act, we  recommend that the Secretary of Health and Human Services direct the  Assistant Secretary of ACF to take the following four actions:   Develop mechanisms to gather information on a recurring basis from all  states on their internal control systems for measuring and minimizing  improper payments. In recommending these approaches, we recognize that HHS may determine  that it needs legislative action to direct states to provide the information. It also stated, however, that it believed that the assessment of risk called  for under the Improper Payments Act must be made within the statutory  framework of the TANF program, which places constraints on ACF to  regulate state TANF programs. Objectives, Scope, and Methodology

We designed our study to provide information on (1) what selected states  have done to manage improper payments in the Temporary Assistance for  Needy Families (TANF) and Child Care and Development Fund (CCDF)  programs, and (2) what the Department of Health and Human Services  (HHS) has done to assess risk and assist states in managing improper  payments in these programs.
Why GAO Did This Study

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.

What GAO Found

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.