Thursday, September 29, 2011

Auditor General not permitted to audit welfare benefits

Pittsburgh's WTAE news team wanted to do an investigative report on cash welfare benefits. A sister station in Minneapolis had been assured by Minnesota state officials that the cash benefits program was well safeguarded to protect taxpayers' money but the KTSP news team found a lot of problems in the system. For instance, Minnesota claimed that EBT cards can't be used in liquor stores but KTSP found they can -- and are -- being used in liquor stores. Recipients in MN were using EBT cards for "tattoos, liquor and out-of-state vacations", according to WTAE, and using them in all 50 states plus the US Virgin Islands. Transactions from just one month (May 2010) from Pennsylvania EBT cards show that the cards are used in all 50 states, Puerto Rico and the Virgin Islands. There were nearly 800 transactions in California alone in just that month.

In fact, our own Department of Public Welfare doesn't know how or where Pennsylvania recipients are using EBT cards and apparently they don't care. The DPW does not track individual expenditures on the cards so they don't know where the cards are being used. State Auditor Jack Wagner hoped to audit the records but the DPW has refused to allow the AG's office access to the information, citing privacy concerns. The DPW has denied 4 requests from the AG's office to date, over the last year. This is inexcusable in that these are public funds and the Auditor General position exists solely to oversee and improve how tax money is being spent.

The DPW lacks sufficient controls and documentation to prevent fraud and abuse. Even worse, Wagner's investigation was very basic due to DPW's refusal to cooperate still found the the "potential for fraud and abuse is high" based on the number of out-of-state transactions alone.

Wagner states the the sheer volume of out-of-state transactions in neighboring states "could indicate that recipients may be residing in other states or could be involved with inappropriate activity. In May 2010, there was 72,179 transactions worth over $4 million in New Jersey, New York, Maryland, Delaware, Ohio and West Virginia."

"The sheer volume of out-of-state transactions disclosed by our auditors demonstrates the possibility that recipients are potentially engaged in costly travel and may be residing in other states,” Wagner said."
In May 2010 alone, there were nearly 95,000 out-of-state transactions worth more than $5 million. However, Wagner is unable to determine if any of these transactions were improper because DPW will not cooperate with his office. Despite DPW's refusal to be audited by our chief financial watchdog, Wagner was still able to identify at least one case of definite fraud because a series of transactions in just one day withdrew nearly $150,000 from a single account.

Wagner states that DPW lacks the appropriate policies and procedures to prevent fraud and abuse in the system. He recommends that DPW develop policies tomonitor usage, verify recipient eligibility and ensure funds aren't being spent contrary to the intended purpose of the program. Read Wagner's press release on this topic here.

It's obvious that DPW is failing Pennsylvanians miserably as the department appears to be completely incompetent. They aren't serving the needy properly if resources are being wasted on abusers. They aren't serving taxpayers at all by neglecting to be responsible stewards of our money. By refusing to comply with the audit, DPW demonstrates complete disregard for all Pennsylvanians and prove that this department is a total failure in it's current state.

All those responsible for the management and policies in DPW should be immediately removed and replaced with capable, competent leaders who respect the citizens of this state. Citizens should contact their local representative and tell them to demand DPW submit to a comprehensive audit by the AG's office. It's fine to offer privacy protection for recipients of public welfare but privacy control should not be so stringent as to allow wanton fleecing of taxpayers with no regard for the integrity of the programs.

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