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Senate hearing hits on fraud, red tape, program complexity

Congress and government agencies should take a lesson from U.S. farmers, said South Dakota Sen. John Thune. “Our farmers have learned how to make every seed and every drop of fuel, chemicals and fertilizer provide the maximum benefit possible. That’s something the federal government must likewise do: increase its efficiencies and cost effectiveness of its operations. Farmers are a great example to us.”

During a Thursday morning Senate Agriculture Committee hearing leaders of USDA agencies pledged to combat fraud, onerous red tape and duplication of efforts. They also made it clear honoring those pledges would be easier if Congress would update their office technology – some 1980s-era.  

“We have some 20 different conservation programs,” said Michigan Sen. Debbie Stabenow, chairwoman of the committee. “Do we need 20? Can we create efficiencies? Can we do things better in terms of streamlining.”

USDA’s Office of Rural Development “has 40 different programs. Do we need 40? Can we bring them together and create more efficiency? I suggest we can.”

Congress and government agencies should take a lesson from U.S. farmers, said South Dakota Sen. John Thune. “Our farmers have learned how to make every seed and every drop of fuel, chemicals and fertilizer provide the maximum benefit possible. That’s something the federal government must likewise do: increase its efficiencies and cost effectiveness of its operations. Farmers are a great example to us.”

Common criticisms

Two frequent criticisms are leveled against Rural Development, said Ohio Sen. Sherrod Brown. “I hear how USDA Rural Development programs are duplicative or inefficient or not that different from what (other government agencies) do.

“In (rural) Ohio, I hear the application process can be so cumbersome that far too many people and entities … have just given up.”

Rural Development, said Dallas Tonsager, USDA Under Secretary, “was created to be a mini-version of the entire federal government in a lot of ways – specifically for rural America.”

This led to “a very broad tool set, some 40 programs. … We recognize that many of our programs are very similar to other programs throughout the federal government. We’ve tried very specifically to work with them. We have an agreement with (the Small Business Administration), for example. We believe their tool for business lending works better than ours, in many cases in rural areas.”

As for efficiency, continued Tonsager “we have a $150 billion loan portfolio … with less than a 2 percent delinquency rate. That’s important. Our proposed budget by the (Obama) administration was $2.4 billion, this year. We made that into $36 billion and our largest programs are at zero budget cost.”


Mississippi Sen. Thad Cochran focused on questions of USDA program fraud. “There has been a lot of attention focused on the integrity of the (USDA) programs, (and) the honesty and integrity of those who apply for and receive benefits of one kind or another: farm payments, program payments, crop insurance … and food and nutrition assistance programs. … What programs are underway and what are the steps taken by leadership at the department to see they’re producing and recapturing wrongfully – or mistakenly – paid benefits to those who weren’t entitled to them?”

There has been criticism over the years about some Farm Service Agency (FSA) and Risk Management Agency (RMA) programs and eligibility, agreed Michael Scuse, USDA Acting Under Secretary, Farm and Foreign Agricultural Services. “We take it quite seriously at FSA to make sure program participants are entitled to the money received.

“There are several things we do at FSA. All our producers who receive payments have to fill out a form to give the IRS permission to view tax returns to make sure they’re within the adjusted gross income levels for participation in FSA programs.”

Another form producers must sign – CCC 902E – verifies “they’re ‘actively engaged’ in agriculture and production,” continued Scuse. “That form is reviewed by the county committee and if there are discrepancies it is elevated to the state and federal level.

Scuse also pointed to the CIMS (Comprehensive Information Management System) project. “We’ve been doing data-mining to make sure the program is being run properly, that ag producers who should be receiving crop insurance payments actually do. In the last 10 years, we’ve been able to have a cost-avoidance of $840 million.

“So, we have put things into place to ensure there are no improper payments. One improper payment is one too many.”

Cochran wasn’t finished.One program was brought to my attention. In farm payment programs, there have been an inordinate number of people paid who have died. There were no records to reflect that at the USDA.

“The information I was given said from 1999 through 2005 the USDA paid $1.1 billion in farm payments in the names of 172,801 deceased individuals. Of this total, 40 percent went to those who’d been dead for three, or more, years. Nineteen percent went to those who’d been dead for seven, or more, years. That’s kind of shocking.”

At this, Scuse said the FSA “has an agreement with the Social Security Administration. Quarterly, we review the deceased individuals to make sure they’re, in fact, entitled to payments. If you sign up to participate in a program and pass away during the course of the year, you – or your estate – are still entitled to that program. But we’re looking to make sure those people are entitled to that payment.”

Thune wanted to know the highest hurdles Rural Development faced in administering the 2008 farm bill programs.

Tonsager was brief: “Probably the sheer volume of new programs. Of course, we see those as opportunities. But we had an enormous number of regulations to get through.”

Job training and complexity

The General Accounting Office (GAO)  “recently reported that there are 47 federal employment and training programs at an annual cost of $18 billion,” said Kansas Sen. Pat Roberts. “In an effort to avoid duplicity, is there any reason why the Supplemental Nutrition Assistance Program (SNAP) should continue to have its own employment and training program? Is there any way you could merge some of your efforts?”

Kevin Concannon, USDA Under Secretary, Food, Nutrition, and Consumer Services, wasn’t big on specifics. “Work is an integral part of the SNAP program, and has been going back to 1970 or 1971. All 53 SNAP programs across the country – all the states and territories – operate employment and training programs. It’s part of the effort of the program to make people more self-sufficient.

“We work very closely with the Department of Labor. … The advantage of the SNAP program is if a person comes through the front door, applying for assistance, we know they’re in a compromised income situation. The program is very tailored at that particular population. But we’d certainly be happy to work on ways to make it even more integrated into the other range of labor programs.”

Willing to shoulder some of the blame, Roberts asked if the programs being created “are too complicated for the agency to implement?”

Producers providing incorrect information to the programs is “one thing,” said Roberts. “But if agency staff is having difficulty implementing the programs we create, is that an accountability problem with the agency or complexity in the design of the program? Is that (Congress’) fault?”

Harris Sherman, USDA Under Secretary, Natural Resources and Environment, admitted to “a variety of issues and problems with the Conservation Security Program. I think Congress wisely decided to phase out that program by 2012 and bring into focus the Conservation Stewardship Program.

“The Conservation Stewardship Program, I believe, is working well. NRCS (Natural Resources Conservation Service) is actively involved in verifying all aspects of that program as opposed to a self-verification system we previously had. The improper payments that occurred under the Conservation Security Program have stopped. We’re recovering monies we lost in that program.”


The ACRE and SURE programs were then up for scrutiny. From producers “we hear the programs don’t allow for the timely delivery of assistance, that they use a multitude of data points and are generally confusing for the producer,” said Roberts. “The ACRE payment calculation alone requires the producer to go through 23 steps – about 22 more than necessary.”

In later testimony, this assertion was backed up by wheat and barley farmer Bret Blankenship who testified to spending a full quarter of his management time working through the requirements for various government programs. “The business of agriculture isn’t just about cultivating, tending or harvesting a crop.”

Scuse: “I think the 2008 farm bill took a giant step forward in helping farmers and ranchers across the United States -- the livestock programs for losses and ACRE and SURE to enhance coverage they may have in crop insurance.

ACRE and SURE “are complex, no doubt about it,” continued Scuse. “There have been issues from the agricultural community about SURE. SURE pays (out) a year after a loss.”

Technology is also an issue for FSA, said Scuse, where “we’re dealing with systems that date back to the 1980s. Technology has affected some of the program implementation and these complicated programs. With SURE, for example, we’ve had to do manual calculations because of the lack of technology. If there’s one thing we need going forward it’s … better technology to help office staff.”

Minnesota Sen. Amy Klobuchar wanted to knowwhat factors make USDA programs more open to abuse. What additional oversight rules should be considered?

“The sheer complexity and size of the programs,” replied Scuse. “Programs that are easily understood and administered are the ones we have the best ability to (oversee).

“Technology is a major factor for our field offices. We need to have the proper tools to allow us to do reviews at the local level.”

Coordinating agency functions and language was also on Klobuchar’s radar. As the FSA and RMA “work to harmonize the data requirements from these two agencies how are you ensuring the newest GPS field data can be seamlessly incorporated into the new system?”

Scuse: “We started a project 10 months ago. It’s still in its infancy but we hope to have a pilot project in 2012 with full implementation in 2013. (In that), we’ll use common information, common data and common terminology for one of the first times at USDA between NRCS, FSA, RMA and NASS. That will make sure the technology and terminology is all compatible.”

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