Work & Welfare Subcommittee Chairman LaHood Opening Statement -- Hearing on TANF Non-Assistance Programs

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"My name is Darin LaHood and I represent Illinois' 16th District, covering much of the central and northwestern parts of the state.

Republicans secured a major victory by strengthening work requirements in the direct cash assistance portion of the Temporary Assistance for Needy Families program as part of the Fiscal Responsibility Act.

Those changes followed our hearing in March highlighting loopholes in current law that allowed states to game the work participation rate.

This hearing will take the next step by focusing on the other side of TANF: non-assistance spending.

Non-assistance constitutes the majority of the TANF block grant-- nearly 78 percent of combined federal and state spending. This is spending that is not for basic assistance or direct checks to welfare recipients.

Concerns have emerged that the non-assistance part of TANF lacks guardrails and is not focused on helping people move from welfare to work.

National headlines, fueled by a massive embezzlement scandal in Mississippi, have drawn increased scrutiny about TANF -- leaving people to ask: Where is all the welfare money going?

In June, Republican Members of the Ways and Means Committee sent a letter to HHS asking the agency about their response to Mississippi and their efforts to safeguard federal funds in other states.

In response, HHS outlined a number of statutory limitations that constrain their ability to conduct oversight and indicated a willingness to work with the Committee to improve the TANF program.

I've heard my colleagues on the other side of the aisle also express frustration on this point.

In fact, during our last hearing, my friend from Wisconsin, Ms. Moore, shared her concern about how states are using TANF money and commented about questionable use of funds in Wisconsin for luxury apartments.

I agree with Ms. Moore. Current TANF law lacks basic financial safeguards included in most other federal programs, making it easy for states to divert funds and increasing the risk of fraud and abuse.

Here are some examples: first, current law permits states to use federal grants in "any manner that is reasonably calculated" to achieve one of TANF's four purposes; provide assistance to needy families; end dependence of needy parents on government benefits; reduce out-of-wedlock pregnancies; and promote the formation of two-parent families.

These are worthy goals. But it's rare for allowable spending in a federal program to be solely defined by vaguely written purposes.

Second, unlike most federal programs, the TANF statute does not put limits on administrative costs or obligation deadlines for spending funds. As a result, program management is one of the four largest expenditures categories. Further, with no deadline to spend TANF dollars, many states have built up large reserves, instead of spending them on the families who need them.

Third, TANF is not subject to the Payment Integrity Information Act. Even though the Office of Management and Budget identified TANF as a susceptible program, HHS has never reported an improper payment rate estimate.

Finally, TANF law allows states to spend funds on a wide variety of social services, like child welfare and child care, but with none of the federal rules that normally apply. This has resulted in TANF being spent on programs that are not tracked for outcomes or the quality of services being paid for with federal tax dollars.

All of this adds up to a vulnerable program that makes it possible for fraud and abuse to occur, like what happened in Mississippi.

One of our witnesses today, Mr. White, has first-hand knowledge of the Mississippi case and is here to provide recommendations on how this can be avoided in the future.

Today we will also hear from witnesses' examples of how states have been able to use TANF non-assistance funds to strategically support initiatives that do effectively move individuals from welfare to work. Some states have also built their own strong financial controls and audit practices.

I think this is a bipartisan issue. We should be able to work together to improve accountability in this vital program.

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.

I'm honored to have our guests here today and look forward to your testimony."

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