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

Benefits Fraud and Improper PaymentsHouse Ways and Means Subcommittee on Work and Welfare · April 8, 2025 · 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 at▶ 0:00:00

Who spoke

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

• Rep. Danny Davis (D-IL), Ranking Member▶ 0:01:37: Called the hearing a "preemptive justification" for cuts to fund tax breaks for the wealthy▶ 0:02:00; touted his and Rep. Chu's bill to let HHS penalize states for gross malfeasance▶ 0:03:28; urged withdrawal of Thomas March Bell's nomination for HHS Inspector General▶ 0:03:55.

• Jeffrey Arkin, GAO Director, Strategic Issues▶ 0:06:23: Reported non-assistance spending was 44% of total TANF spending in FY2022 versus 25% for assistance▶ 0:07:43; 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 data▶ 0:09:55.

• Kathryn Larin, GAO Director, Education, Workforce, and Income Security▶ 0:10:45: Found no federal reporting requirements exist for non-assistance spending data even when states collect it▶ 0:12:36; said states spent $3.3 billion (11% of TANF) on child welfare in FY2022, with Texas spending the most at $417 million▶ 0:14:33▶ 0:15:20.

• James Dalkin, GAO Director, Financial Management and Assurance▶ 0:16:13: Found 37 states had TANF audit deficiencies, 22 with material weaknesses, and about 23% had repeat findings, one for 15 years▶ 0:17:02▶ 0:17:31; said HHS issued fewer than 10% of management decisions on time over five years▶ 0:19:19.

• Seto Bagdoyan, GAO Director, Forensic Audits and Investigative Services▶ 1:25:08: Cited $30+ billion in annual TANF spending at fraud risk▶ 1:25:35; detailed Mississippi's $77 million misuse and California's $200 million EBT skimming scheme using pinhole cameras▶ 1:26:41▶ 1:27:01; said HHS falls short on five fraud risk management fundamentals despite identifying 21 fraud risks▶ 1:28:12.

• Roxane Somerlot, Director, Marion County (Ohio) Department of Job and Family Services▶ 1:30:26: Described Marion County's PRC, Benefit Bridge, CCMEP, and summer youth employment programs▶ 1:31:21▶ 1:33:15; said Ohio's cancelled TANF pilot would have scaled the Benefit Bridge framework statewide▶ 1:59:06.

• 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 diapers▶ 1:49:57; 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 court▶ 1:54:32; said HHS fired the entire TANF policy division and closed half its regional offices▶ 1:55:31; noted HHS cancelled five bipartisan TANF pilots, including Ohio's and California's▶ 1:57:50.

• Rep. Max Miller (R-OH)▶ 1:59:36: Said TANF provides about $16.5 billion annually to states▶ 2:00:31; noted Ohio's Benefit Bridge program is supported by $15 million in TANF non-assistance funds▶ 2:01:26.

• Rep. Gwen Moore (D-WI)▶ 2:04:22: Recalled the 1996 welfare reform ending the federal entitlement guarantee▶ 2:05:15; criticized Republicans for a proposed $4.5 trillion tax package alongside $880 billion in Medicaid cuts and $230 billion in SNAP cuts▶ 2:06:34▶ 2:08:41.

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

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

• Rep. Nathaniel Moran (R-TX)▶ 2:19:34: Noted TANF funding has not increased since 1996▶ 2:20:11; asked about the biggest fraud risks, prompting Bagdoyan to cite EBT fraud, falsified invoices, and commingling of funds▶ 2:21:16.

• 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 staff▶ 2:26:33; cited a Yale study estimating tariffs cost working people $3,800 a year▶ 2:28:01.

Key moments

• Arkin testified that current law actually prohibits HHS from collecting information on non-assistance spending, which is not covered by specific statutory authority▶ 1:39:28.

• Dalkin said one state had the same audit finding — improper segregation of duties — repeated for 15 years▶ 0:18:01, and that two-thirds of required HHS management decisions had not been issued at the time of GAO's review▶ 0:19:45.

• 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 victims▶ 1:27:01.

• 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 forward▶ 1:55:01.

• Bean cited a case in which employees misused TANF funds for resort vacations, cosmetic surgery, and jewelry, resulting in $3.7 million in ordered restitution▶ 2:11:16.

• 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 assistance▶ 2:08:41▶ 2:09:10.

• 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 practices▶ 2:23:19.

• Chu and Somerlot discussed HHS's cancellation of five bipartisan TANF pilot programs, including one in Ohio designed to scale the Benefit Bridge framework statewide▶ 1:57:50▶ 1:59:06.

• Arkin said growing unobligated TANF balances (from $4 billion to $10 billion between FY2015–FY2023) raise questions about whether funds are being used as intended▶ 2:14:46.

• 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"▶ 2:26:33▶ 2:27:02.

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
DateApril 8, 2025
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