21 Programs Make $19.7 Billion In Improper Payments

(Washington, DC) Senate Governmental Affairs Ranking Member Fred Thompson (R-TN) today criticized a provision in the pending Farm Bill which would allow states to continue making billions in improper payments without penalty for three years.

“The federal government loses billions and billions in improper payments each year,” said Senator Thompson. “We’ve been trying to get these agencies to address it for years, yet supporters of the current Farm Bill just want to make it harder to hold people accountable.”

Thompson released a report by the General Accounting Office (GAO) that tallied Fiscal Year 2000 improper payments at well over $19 billion.

Although somewhat less than the previous year’s $20.7 billion in improper payments, GAO wrote in its report, “[A]gency-specific audits and studies continue to indicate that the extent of the improper payment problem is much more widespread than has been disclosed in agency financial statement reports.”

Other audits conducted for FY 2000 have disclosed actual instances of improper payments, such as $395 million in improperly paid Earned Income Tax Credits and $148.3 million in contract overpayments made by the Defense Finance and Accounting Service.

Thompson said the Bush Administration has demonstrated its commitment to reducing improper payments – requiring agencies to report improper payments in their financial statements and set goals for reducing them.

“Agencies will now be required to, at a minimum, estimate their overpayments,” said Thompson. “With goals to reduce them, we will be on our way to stemming the loss of billions and billions of taxpayer dollars. This Farm Bill goes in the wrong direction.”

The pending Farm Bill includes a provision which would dramatically reduce the sanctions the federal government could impose on states for making disproportionate improper payments. For instance, three years would have to lapse for states to be subject to sanctions for poor payment practices.

According to the Administration statement on the bill, it “would go too far in relieving states of their responsibility to manage Federal resources prudently.”

According to the GAO report, the Food Stamp program, which is authorized in the Farm Bill, made more than $1.1 billion in improper payments in FY 2000. Examples of erroneous payments include payments to ineligible persons and payments in the wrong amount, many of which are less than the beneficiaries are entitled to.

The report issued by the General Accounting Office is the third annual estimate of reported improper payments, all of which were compiled at the request of Senator Thompson.