TANF Improper Payment Audits and National TANF Error Rate

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TANF Improper Payment Audits and National TANF
Error Rate

• Russell Sykes, Deputy Commissioner, Center for
  Employment and Economic Supports, New York
• and
• Linda Lawson, Senior Policy Associate,
• Legislative and Government Affairs, APHSA

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Background

• Personal Responsibility and Work Opportunity
  Reconciliation Act of 1996 (PRWORA) eliminated
  Aid to Families with Dependent Children program
  that reimbursed states for payments to
  individuals
• Replaced it with block grants to states to
  accomplish broad goals under Temporary Assistance
  for Needy Families
• Improper payment audits and national error rate
  under the old AFDC intentionally sunseted by
  congress in TANF legislation
• Under the block grant states assume all risk of
  inaccurate payments

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Along Came IPIA

• Improper Payment Information Act of 2002
• Congress gains bipartisan support for
  strengthening financial management controls for
  Federal
• Instructs Office of Management Budget to
  identify all programs susceptible to significant
  improper payments and create national error rate
• OMB directs fed agencies to audit programs or
  activities with estimated improper payments that
  exceed 10 million dollars
• Dept. of Health Human Services determines TANF
  falls in the susceptible category

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1st Pilot Audit

• Four state pilot projects conducted with between
  FY 2002 and 2005 used existing OMB Circular
  A-133 audit process
• Resulting error rates ranged from 2.3 to 24.6
   
• Pilot methodology found to lack standardization,
  employed varying audit approaches
• Audit results were not published

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2nd Pilot Audit

• In 2007 OIG conducted 2nd round pilot audits in
  three states, New York, Michigan and
  Pennsylvania, on TANF cash assistance payments
• Audit methodology is based on States own
  standards and conducted by the same independent
  party in all States
• 150 cases from each state are reviewed
• HHS attributes a portion of errors to
  documentation
• Resulting error rates ranged from 11.5 to 40
  errors
• Audit results are published on NY - 10/31, MI -
  11/13, Pa - 12/6

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5 Additional States Audited

• Unclear if HHS, OIG considers additional states
  audited in 2007 pilots
• California
• Idaho
• Minnesota
• Ohio
• Vermont
• 2nd pilot audit methodology was used in these
  states
• Results have not been published nor any public
  comment made about these audits

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Whats Next?

• HHS believes 2nd audit methodology based on
  States own standards and conducted by the same
  independent party in all States is a viable
  approach
• Plans to use this methodology in the future
• HHS lacks legislative authority to require States
  to develop or implement corrective action plans
• They will, however, develop voluntary corrective
  action plans that States will be asked to
  implement
• An estimate of the national TANF error rate will
  be reported in the FY 2008 PAR, which will be
  finalized and reported in the FY 2009 PAR

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What Do You Know?

• What do you know about your states TANF cash
  assistance erroneous payments?

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Opposition to Audits National Error Rate

• TANF is a block grant allowing states great
  flexibility in setting income and resource rules
  and imposing additional conditions of eligibility
• States assume risk for erroneous MOE/TANF
  payments that could have funded other state
  activities consistent with the purposes of TANF
  
• Congress clearly intended TANF not focus on
  payment accuracy the way AFDC did. Focus moved
  from eligibility to employment and engagement
• TANF cash assistance budgeting and eligibility
  rules vary greatly between states.
• There is no overall standard set of eligibility
  rules as there was with AFDC.

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Opposition to Audits National Error Rate

• TANF cash assistance budgeting and eligibility
  rules now vary widely across states
• No overall standard set of eligibility rules as
  there was with AFDC
• States cannot realistically be compared to one
  another its a fruit bowl, not apples to apples
• It makes no sense
• to apply a national error rate

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Opposition to Audits National Error Rate

• With TANF focus on employment, earned income--due
  to its fluctuating nature and a tendency of
  clients not to timely report changes--is highly
  error prone to payment inaccuracy.
• Some states do not budget earnings at all, at
  least for a period of time, thus freeing them
  from risk of payment error.
• Other states do budget earned income but among
  them amount of income that is disregarded varies
  thus the payment error risk varies.

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Opposition to Audits National Error Rate

• Some states have additional eligibility
  requirements that did not exist under AFDC.
  These are often imposed for policy reasons and
  not to insure correct payments. These may be
  unique to one state or to a small number of
  states.
• Congress has imposed and reinforced through the
  DRA, that TANF cash assistance program success is
  measured through the employment participation
  rate.
• All states are held to the same measures and are
  accountable through federal reporting and their
  work verification plans.

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There Must Be A Better Way!

• Basic TANF eligibility requirements imposed by
  Congress are monitored through the single state
  audits
• Other federal procedural requirements on state
  TANF cash assistance programs, such as use of the
  Income and Eligibility Verification System to
  verify income are also monitored by single state
  audits and state reviews required by single state
  auditors.
• If there must be a national payment error
  standard to satisfy the requirements of the
  Improper Payment Information Act, measuring it
  should be limited to the basic eligibility
  requirements for receipt of TANF.

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Proposed Audit Elements

• FEDERAL PRHIBITONS related to the provision of
  TANF cash assistance for which all states and
  territories must comply in the operation of their
  programs
• Common denominator from which all states
  operate - could be reviewed to establish a
  national TANF error rate
• Only elements that Congress articulated in
  federal law in the provision of TANF assistance
• Are the sole elements that should be reviewed to
  derive a national improper payment rate.

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Proposed Audit Elements

• No Assistance For
• Families without a minor child (or pregnant
  individual)
• Teenage parents who do not attend high school or
  other equivalent program
• Teenage parents not living in adult supervised
  settings, with exceptions
• For a duration of more than 5 years
• A period of 10 years to a person found to have
  fraudulently misrepresented residence in order to
  obtain assistance in 2 or more states
• Fugitive felons and probation or parole violators
• Non-citizens or non-qualified aliens

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What Do You Know?

• What concerns do you have about TANF cash
  assistance improper payment audits
• and establishing a
• national TANF error rate?