AIGAO findings on TANF oversight gaps, fraud risk, and state accountability

Benefits Fraud and Improper PaymentsHouse Ways and Means Subcommittee on Work and Welfare · 2025-04-08 · 119th Congress
The House Ways and Means Subcommittee on Work and Welfare held this hearing to review a series of Government Accountability Office (GAO) reports examining the Temporary Assistance for Needy Families (TANF) program, including state spending trends, audit findings, fraud risk management, and use of TANF for child welfare. Begins at 0:00:00
Transcript
Highlights

Title

GAO findings on TANF oversight gaps, fraud risk, and state accountability

Purpose

The House Ways and Means Subcommittee on Work and Welfare held this hearing to review a series of Government Accountability Office (GAO) reports examining the Temporary Assistance for Needy Families (TANF) program, including state spending trends, audit findings, fraud risk management, and use of TANF for child welfare. Members heard from four GAO directors and a county-level Ohio welfare administrator about oversight gaps, unresolved audit deficiencies, and fraud vulnerabilities, while Republicans and Democrats disputed the hearing's purpose amid looming reconciliation-bill budget cuts. Begins at0:00:00

Who spoke

Chairman Darin LaHood (R-IL)0:00:00: Said TANF has not been reauthorized since 2005 and continues on "autopilot" funding0:00:40, and called for reclaiming TANF for work and better targeting funds to vulnerable families0:00:40.

Rep. Danny Davis (D-IL), Ranking Member0:01:37: Called the hearing a "preemptive justification" for cuts to fund tax breaks for the wealthy0:02:00; touted his and Rep. Chu's bill to let HHS penalize states for gross malfeasance0:03:28; urged withdrawal of Thomas March Bell's nomination for HHS Inspector General0:03:55.

Jeffrey Arkin, GAO Director, Strategic Issues0:06:23: Reported non-assistance spending was 44% of total TANF spending in FY2022 versus 25% for assistance0:07:43; said unspent state TANF balances grew from $4 billion (FY2015) to $9 billion (FY2022) to $10 billion (FY2023)0:08:11; recommended Congress give HHS enhanced authority to collect more expenditure data0:09:55.

Kathryn Larin, GAO Director, Education, Workforce, and Income Security0:10:45: Found no federal reporting requirements exist for non-assistance spending data even when states collect it0:12:36; said states spent $3.3 billion (11% of TANF) on child welfare in FY2022, with Texas spending the most at $417 million0:14:330:15:20.

James Dalkin, GAO Director, Financial Management and Assurance0:16:13: Found 37 states had TANF audit deficiencies, 22 with material weaknesses, and about 23% had repeat findings, one for 15 years0:17:020:17:31; said HHS issued fewer than 10% of management decisions on time over five years0:19:19.

Seto Bagdoyan, GAO Director, Forensic Audits and Investigative Services1:25:08: Cited $30+ billion in annual TANF spending at fraud risk1:25:35; detailed Mississippi's $77 million misuse and California's $200 million EBT skimming scheme using pinhole cameras1:26:411:27:01; said HHS falls short on five fraud risk management fundamentals despite identifying 21 fraud risks1:28:12.

Roxane Somerlot, Director, Marion County (Ohio) Department of Job and Family Services1:30:26: Described Marion County's PRC, Benefit Bridge, CCMEP, and summer youth employment programs1:31:211:33:15; said Ohio's cancelled TANF pilot would have scaled the Benefit Bridge framework statewide1:59:06.

Rep. Erin Houchin (R-IN) — referred to in transcript as "Mr. Yakam"1:49:28: Cited the Indiana Diaper Bank's distribution of 7 million diapers1:49:57; touted a bill lowering the administrative spending cap from 15% to 10%1:50:48.

Rep. Judy Chu (D-CA)1:54:32: Cited Brett Favre's diversion of Mississippi TANF funds to a volleyball court1:54:32; said HHS fired the entire TANF policy division and closed half its regional offices1:55:31; noted HHS cancelled five bipartisan TANF pilots, including Ohio's and California's1:57:50.

Rep. Max Miller (R-OH)1:59:36: Said TANF provides about $16.5 billion annually to states2:00:31; noted Ohio's Benefit Bridge program is supported by $15 million in TANF non-assistance funds2:01:26.

Rep. Gwen Moore (D-WI)2:04:22: Recalled the 1996 welfare reform ending the federal entitlement guarantee2:05:15; criticized Republicans for a proposed $4.5 trillion tax package alongside $880 billion in Medicaid cuts and $230 billion in SNAP cuts2:06:342:08:41.

Rep. Aaron Bean (R-FL)2:09:55: Said non-assistance spending is 78% of total TANF spending and lacks financial guardrails2:10:21; cited a case of employees using TANF funds for resort vacations, cosmetic surgery, and jewelry requiring $3.7 million in restitution2:11:16.

Rep. Dwight Evans (D-PA)2:15:16: Asked whether state staff would be affected by federal regional office closures2:15:46; discussed Ohio's use of TANF and the Social Services Block Grant for child care2:17:06.

Rep. Nathaniel Moran (R-TX)2:19:34: Noted TANF funding has not increased since 19962:20:11; asked about the biggest fraud risks, prompting Bagdoyan to cite EBT fraud, falsified invoices, and commingling of funds2:21:16.

Rep. Jimmy Gomez (D-CA)2:25:18: Argued GAO's recommended fixes can't be implemented because HHS fired over 10,000 workers, including nearly the entire TANF policy staff2:26:33; cited a Yale study estimating tariffs cost working people $3,800 a year2:28:01.

Key moments

Arkin testified that current law actually prohibits HHS from collecting information on non-assistance spending, which is not covered by specific statutory authority1:39:28.

Dalkin said one state had the same audit finding — improper segregation of duties — repeated for 15 years0:18:01, and that two-thirds of required HHS management decisions had not been issued at the time of GAO's review0:19:45.

Bagdoyan detailed the California EBT fraud scheme: criminal networks used pinhole cameras on ATMs to skim TANF cash-assistance cards, stealing roughly $200 million from hundreds of victims1:27:01.

Chu and Davis said they introduced the TANF State Expenditure Integrity Act to give HHS authority over the 80% of TANF spending that is non-cash assistance, but said Republicans declined to move it forward1:55:01.

Bean cited a case in which employees misused TANF funds for resort vacations, cosmetic surgery, and jewelry, resulting in $3.7 million in ordered restitution2:11:16.

Moore said Republicans' reconciliation package pairs $4.5 trillion in tax cuts with $880 billion in Medicaid cuts and $230 billion in SNAP cuts, which she said funded an estimated $44 billion in 2016 grocery assistance2:08:412:09:10.

Larin said Texas is a model for outcome tracking, collecting the same job-training data on TANF recipients as it does under WIOA, while other states lack such practices2:23:19.

Chu and Somerlot discussed HHS's cancellation of five bipartisan TANF pilot programs, including one in Ohio designed to scale the Benefit Bridge framework statewide1:57:501:59:06.

Arkin said growing unobligated TANF balances (from $4 billion to $10 billion between FY2015–FY2023) raise questions about whether funds are being used as intended2:14:46.

Gomez argued that GAO's recommended fixes cannot be implemented because HHS fired nearly the entire TANF policy staff and closed regional offices, calling it "a backdoor way to legally cut congressional approved funding"2:26:332:27:02.

Metadata

Official titleGovernment Watchdog Findings: Temporary Assistance for Needy Families (TANF) Program In Need of Reform, Better State Accountability, and Fraud Protection
CommitteeHouse Ways and Means Subcommittee on Work and Welfare
Chamber / CongressHouse · 119th Congress
Date2025-04-08
TypeHearing
Witnesses
James Dalkin — Director, Financial Management and Assurance, Government Accountability Office
Seto Bagdoyan — Director, Forensic Audits and Investigative Services, Government Accountability Office
Jeffrey Arkin — Director, Strategic Issues, Government Accountability Office
Kathryn Larin — Director, Education, Workforce, and Income Security, Government Accountability Office
Roxane Somerlot — Director, Marion County Department of Job and Family Services, Marion, Ohio
Videoyoutube
Transcript211 caption blocks · 12,657 words · 2:31:42 runtime
EventCongress.gov 118121