REP. HILL AWARDS GOLDEN FLEECE TO FEDERAL EMERGENCY MANAGEMENT AGENCY FOR FACILITATING $3.7 BILLION IN IMPROPER PAYMENTS

Press Release

Rep. French Hill (AR-02) named the Federal Emergency Management Agency (FEMA) as the latest recipient of his Golden Fleece Award for not executing proper control or oversight, resulting in $3.7 billion in improper payments by 21 State Workforce Agencies (SWA) from the Lost Wages Assistance (LWA) program implemented by President Trump in midst of the COVID-19 pandemic.
"FEMA's lack of proper oversight resulted in $3.3 billion worth of relief payments being made that, following proper oversight, were later flagged as potentially fraudulent. An additional $400 million was distributed to nearly 300,000 individuals missing self-certification documents. When distributing billions of dollars in government funds, it is vital that federal agencies, such as FEMA, exercise proper controls and guarantee that they are distributing funds to those in need with proper documentation. Due to the reckless oversight and improper regulation of government fund distribution, I am naming the Federal Emergency Management Agency as the latest recipient of my Golden Fleece Award."
In a letter to Administrator Deanne Criswell, Rep. Hill writes:
Dear Administrator Criswell:

I write today to inform you that your agency is the most recent recipient of my Golden Fleece Award. I am awarding the Golden Fleece to the Federal Emergency Management Agency (FEMA) for not implementing proper controls resulting in $3.7 billion in improper payments by 21 State Workforce Agencies (SWA) from the lost wages assistance (LWA) program.

On March 27, 2020, President Trump signed into law the Coronavirus, Aid, Relief, and Economic Security (CARES) Act, which provided expanded unemployment insurance (UI) benefits to individuals who were unemployed due to COVID-19. Following this, on August 8, 2020, the President issued a memorandum directing FEMA to provide up to $44 billion in LWA funds from the U.S. Department of Homeland Security Disaster Relief Fund to supplement UI payments.[1] In order to release payments as quickly as possible, FEMA fit LWA payments into the existing unemployment payment structures in the Department of Labor (DOL).

In an analysis conducted by the Homeland Security Office of Inspector General of SWA, UI, and LWA data, a survey of 21 SWAs found that out of $3.7 billion, $3.3 billion in payments were made that were later flagged as potentially fraudulent and over $400 million was distributed to 294,000 people that were missing self-certification documentation.[2] The DHS OIG report concluded:

"By relying on states' UI programs to distribute LWA funds, FEMA lost an opportunity to solidify controls over a multi-billion-dollar program that was already susceptible to fraud. FEMA also did not protect the Disaster Relief Fund from improper payments. Recovering these funds may be difficult, directly affecting FEMA's ability to respond to future emergencies and disasters. In addition, we reiterate that self-certifications are insufficient documentation of claimants' eligibility for financial assistance."[3]

Further, according to the report, 10 of the 21 SWAs that were reviewed stated that FEMA "did not provide formal guidance on implementing the LWA program" and 7 of 21 SWAs stated FEMA "did not provide enough guidance for verifying LWA claimants' eligibility".[4]

On May 31, 2022, I awarded a Golden Fleece to the DOL regarding their failures handling the UI program. That DOL OIG report found that the Pandemic Unemployment Assistance program was susceptible to fraud and that self-certification leads to increased improper payments. These combined reports illustrate that the structure of states' UI programs and relationship with federal agencies is deeply flawed. I encourage your agency to take the IG's recommendations into account, and should you require any additional authority from Congress to address these concerns, I urge you to notify us as soon as possible. I thank you for your consideration and look forward to working with you to address this important issue.

Sincerely,
French Hill

Member of Congress

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