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S. Hrg. 109–585

HOUSING-RELATED PROGRAMS FOR THE POOR:

CAN WE BE SURE THAT FEDERAL ASSISTANCE

IS GETTING TO THOSE WHO NEED IT MOST?

HEARING

BEFORE THE

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, AND INTERNATIONAL 

SECURITY SUBCOMMITTEE

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

SEPTEMBER 27, 2005

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel 

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE 

TOM COBURN, Oklahoma, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

THOMAS CARPER, Delaware 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey

KATY FRENCH, Staff Director 

SHEILA MURPHY, Minority Staff Director 

JOHN KILVINGTON, Minority Deputy Staff Director 

LIZ SCRANTON, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Coburn ................................................................................................. 1

Senator Carper ................................................................................................. 3

Senator Lautenberg .......................................................................................... 8

WITNESSES 

TUESDAY, SEPTEMBER 27, 2005

James M. Martin, Assistant Chief Financial Officer for Financial Management, U.S. Department of Housing and Urban Development .......................... 5

David G. Wood, Director, Financial Markets and Community Investment, 

U.S. Government Accountability Office .............................................................. 7

Josephine Bias Robinson, Director, Office of Community Services, Administration for Children and Families, U.S. Department of Health and Human 

Services ................................................................................................................. 17

Jim Wells, Director, Natural Resources and Environment, U.S. Government 

Accountability Office ............................................................................................ 19

ALPHABETICAL LIST OF WITNESSES

Martin, James M.: 

Testimony .......................................................................................................... 5

Prepared statement .......................................................................................... 30

Robinson, Josephine Bias: 

Testimony .......................................................................................................... 17

Prepared statement .......................................................................................... 54

Wells, Jim: 

Testimony .......................................................................................................... 19

Prepared statement .......................................................................................... 62

Wood, David G.: 

Testimony .......................................................................................................... 7

Prepared statement .......................................................................................... 38

APPENDIX 

Chart submitted by Senator Coburn ...................................................................... 29

Questions and responses for the Record from: 

Mr. Martin ........................................................................................................ 68

Mr. Wood ........................................................................................................... 75

Ms. Robinson ..................................................................................................... 80

Mr. Wells ........................................................................................................... 85

(1)

HOUSING-RELATED PROGRAMS FOR THE 

POOR: CAN WE BE SURE THAT FEDERAL 

ASSISTANCE IS GETTING TO THOSE WHO 

NEED IT MOST? 

TUESDAY, SEPTEMBER 27, 2005

U.S. SENATE, SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, AND INTERNATIONAL SECURITY, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:30 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Tom Coburn, Chairman of the Subcommittee, presiding. 

Present: Senators Coburn, Carper, and Lautenberg. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. The Committee will come to order. 

Senator Carper will be here forthwith, and we will begin. 

We like to be on time, so you can know what your time constraints are. Let me welcome each of you. 

I am not going to read from a written script right now, but our 

purpose today is to make sure that the funds that we have to help 

people are doing exactly that, and they are doing it in a way that 

is done efficiently; that we are not missing some; that we are also 

not providing funds to people who don’t meet the requirements of 

the programs. 

We were all stunned by the carnage that Hurricane Katrina left 

in her wake. Now Hurricane Rita is going to put some more burden 

on all of us. Hundreds of thousands of people have been displaced. 

Many will remain so for months to come. 

Federal housing assistance programs are going to be stretched to 

their limits to try to help everybody in need. The Congress will do 

its part. That is why the financial management of these programs 

matters. 

I don’t know, and I am not sure, staff can tell me—when was the 

last time an oversight hearing was held on one of these programs? 

When was the last time anybody here has testified at an oversight 

hearing on one of these programs? That answers the question. 

Every penny that is misspent is a penny that could be helping 

families in distress. Every overpayment means somebody goes 

without help. Every underpayment means a family that doesn’t get 

2

1 Chart appears in the Appendix on page 29. 

help—all the help that they could have gotten or deserved to have 

received. 

Some have argued that these programs are too important, too 

valuable to the country, especially during the hurricane recovery to 

open up the books and start scrutinizing. I would think now is exactly the time to open up the books and scrutinize to make sure 

that we do what we intend to do through these programs. 

Taxpayers have donated over a billion dollars to the recovery efforts thus far in terms of voluntary contributions. But they have 

also contributed by funding Federal agencies represented here 

today, who will be on the front lines of disaster assistance. 

Real compassion demands that Congress and the Executive 

Branch guard that trust with integrity and humility, ensuring that 

every dollar is spent helping people and not being lost in the bureaucratic morass. 

In fiscal year 2003, 75 percent of HUD’s total expenditures went 

to assist low-income individuals afford decent rental housing. This 

figure totaled approximately $28 billion, reaching 5,000,000 low-income tenants. 

HUD also paid an estimated $1.4 billion in improper payments 

in the year 2003. $896,000,000 of these were made in overpayments; $519,000,000, more importantly, were dollars that never 

went to the intended recipients. 

What that means is that the net amount of taxpayer dollars lost 

was $377 million, enough to house 56,000 additional people—families—with rental assistance, in decent affordable housing.1

It is inexcusable that the Federal Government could have helped 

these individuals that are struggling, had HUD performed proper 

oversight of its voucher program. HUD’s Section 8 program alone 

had an improper rate of 6.3 percent, twice the amount of the government-wide error rate of 3.9 percent. 

HUD’s low-income public housing programs, different from Section 8, had an error rate of 10.4 percent. That means that over 10 

percent of the payments made by the program were wrong. 

A 10 percent error rate for government payments is totally unacceptable. Of the 17 Federal agencies that are reporting improper 

payment information, the average government-wide rate for fiscal 

year 2004 was 3.9 percent. Compared to the private sector, even 

the private NGO sector, that rate is deplorable. 

HUD’s public housing numbers were at least double the government-wide rate or more. 

One huge program at HUD, the Community Development Block 

Grant Program, isn’t even reporting improper payments. So heaven 

only knows what we will find when these books are opened. 

This is the same program that the Louisiana delegation is asking 

us to increase by $50 billion just for that one State. 

If the rates of errors made in that program are anything like the 

rest of HUD, the taxpayers are going to get robbed if we increase 

funding by that amount. 

The taxpayers deserve better. 

3

The private sector has no tolerance for improper payments and 

rightly so. Any number above zero is considered an improper payment in any business, any organization, or any corporation. 

I have made it a top priority to see, along with Senator Carper, 

that agencies are complying with this key mechanism, the Improper Payments Information Act, used to locate where payments 

made by Federal agencies are unjustified. 

I would also reiterate that no agency—no agency—is exempt 

from the Federal law. 

If I have to invite agencies to testify one by one, to tell us what 

they are doing to comply with the law, to institute fiscal integrity 

of payments, then that is what this Subcommittee will do. 

I want to note that HUD is aware of this problem, and has taken 

necessary steps to fix it. That I am appreciative of, and I commend 

them for it. It is a necessary first step. 

Today’s hearing will also look at the financial integrity of the 

Low-Income Heating Energy Assistance Program. And I can’t emphasize enough that this year, this is going to be one of the most 

important programs that this government has to help those people 

in need. 

With natural gas prices up about 70 or 80 percent, fuel oil up 70 

or 80 percent, it is going to be very important that the dollars go 

to the people in need, that we don’t underpay because it is going 

to mean the difference between food, medicine, or warmth. 

Hearings on improper payments don’t seem glamorous, like other 

topics that Congress talks about, but if people go to jail for not paying their taxes, then there certainly ought to be something wrong 

if we don’t pay out the way we are supposed to or overpay when 

we shouldn’t. 

I look forward to our hearing. I look forward to the status of the 

efforts that are underway to improve the improper payments at 

HUD and at LIHEAP. I think it is important to have financial integrity and transparency at ever level of our Federal Government. 

That is one of the things we are going to do. The purpose of an 

oversight hearing is to hold accountability. Here is what the law 

says. Here is what the programs are. And the purpose of this is to 

make sure that when we as taxpayers in this country reach out to 

help those of us that need help that we do it in an efficient way 

that helps the most people possible. 

I want to thank each of our witnesses for being here today, and 

especially those who left a vacation to come and testify, I appreciate so much your coming, and I would now yield to my Ranking 

Member, the other ‘‘TC’’ on our Subcommittee, Senator Carper. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Thank you, Mr. Chairman. 

To our witnesses, welcome. Who came back from their vacation? 

Mr. WOOD. Actually, it wasn’t me. I am not sure who came back 

from the vacation. 

Senator COBURN. Nobody. But somebody there right behind you. 

OK. 

Senator CARPER. All right. Or whether you’re back from a vacation or just here enjoying a beautiful fall day, welcome. 

4

And I want to thank our Chairman for continuing our Subcommittee’s look into the problem of improper payments. 

Senator Coburn and I took over the leadership of this Subcommittee back in March, and I think we have learned a lot since 

that time about the state of our Federal Government’s finances. 

One of the most disappointing things that I have learned—some of 

you may have known this; I didn’t—that the amount of Federal 

agency overpayment had been quantified, and it was in the realm 

of almost $50 billion per year. Most of that is overpayment. Some 

was underpayments. 

At a time when our Federal budget is in such dire shape, when 

it is being stretched so thin by war and now by multiple natural 

disasters, I think it is unacceptable, and I suspect most taxpayers 

believe the same: That it is unacceptable that tens of billions of our 

tax dollars would be wasted on error and fraud that might be completely preventable. And this error and fraud is happening across 

the Federal Government, not just in a handful of agencies and programs. 

We are called on every day now to make tough decisions about 

how to fund important programs under a tight budget. Every dollar 

that goes to waste because we haven’t done enough to prevent improper payments is a dollar that can’t be spent on a worthy program that has real impacts and consequences in our communities. 

It is also a dollar that we are borrowing around the world. 

I am pleased to see, then, that the program that we will be examining today have, for the most part, a pretty good track record 

on improper payments, or at least they are improving. 

HUD’s Rental Assistance programs have been under a financial 

microscope for some time now. And during that time, it appears 

that the Department has done a lot of work to get things right or 

closer to right. I believe we still have improper payments of about 

$1.4 billion, with a ‘‘B,’’ according to numbers from fiscal 2003. And 

that is a lot of money. That is also about a 39 percent reduction 

from 3 years prior, when HUD really started working on this problem. And I believe this achievement, this reduction, surpasses the 

Department’s improper payment reduction goal. 

Then we have LIHEAP, which the Chairman has talked about. 

And LIHEAP has been deemed at low risk for improper payments 

in Department of Health and Human Services reports under the 

Improper Payment Information Act. 

I believe the program received good scores under OMB’s program 

assessment rating tool, when it was evaluated during the development of the President’s fiscal year 2005 budget. 

I don’t believe many programs get good scores there, and that is 

especially grant programs. 

And while there is definitely work to be done at HUD, and despite their good reviews, I am sure there are areas that could be 

improved at LIHEAP as well. 

But I think that we are on the right track here. 

And, Mr. Chairman, you may not agree entirely on this, but I 

think in some cases the biggest obstacle to getting rental and energy assistance to those who need it most has been insufficient 

funding for these programs, and not always, but sometimes that 

has been the problem. 

5

1The prepared statement of Mr. Martin appears in the Appendix on page 30. 

And I want to thank you, my friend, for your commitment to this 

issue, and it is the right issue to be on. I am glad to be here sitting 

next to you as we do it, and I look forward to continue with you 

and our other colleagues who are going to be joining us on finding 

ways to eliminate spending mistakes that waste our scarce resources. Thank you. 

Senator COBURN. Thank you, Senator Carper, our first panel is 

Jim Martin, Assistant Chief Financial Officer for Financial Management at the Department of Housing and Urban Development. 

He has worked there since February 2002 to eliminate HUD’s high 

risk and material weakness issues, improve the content of HUD’s 

annual performance and accountability report and review; and coordinates the Department’s efforts to implement the President’s 

management agenda. 

Prior to that, Mr. Martin’s work at HUD included implementation of the Federal Managers Financial Integrity Act in the Office 

of the Inspector General, and the development and implementation 

of the Multi-Family Housing Financial Assistance Subsystem to remotely monitor financial and compliance risk in a $53 billion portfolio. 

David Wood has been at GAO since 1977, and serves as Director 

for Financial Markets and Community Investment. In his capacity, 

Mr. Wood is responsible for leading GAO audits and evaluations 

concerning a range of Federal housing and financial-related issues, 

policies, and programs. 

Thank you, both, for being here. We will start off with 5 minutes. 

Your complete testimony will be made a part of the record. I would 

also remind any in the Administration we would love to have testimonies 48 hours beforehand. You were very cooperative in giving 

us outlines, but, again, we would love to have testimonies, so we 

can really do the job we want to do. And if you can meet with us 

on that in the future, we would very much appreciate it. 

Mr. Martin, you are recognized for 5 minutes. 

TESTIMONY OF JAMES M. MARTIN,1 ASSISTANT CHIEF FINANCIAL OFFICER FOR FINANCIAL MANAGEMENT, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Mr. MARTIN. Thank you. Chairman Coburn, Ranking Member 

Carper, I want to thank you for the invitation to join you today to 

discuss the important topic of reducing improper rental housing assistance payments at the U.S. Department of Housing and Urban 

Development. 

As you have mentioned, HUD’s various rental assistance programs collectively represent our largest program area, with over 

$26 billion in total payments in fiscal year 2004. 

These programs serve to house over 4.8 million low-income 

households and are administered locally, on HUD’s behalf, by 4,100 

public housing agencies and another 22,000 private multi-family 

housing property owners and their management agents. 

Despite, the significant size and impact of these programs, staff 

reductions and competing priorities diminished HUD’s oversight of 

these programs during the decades of the 1980s and 1990s. 

6

In 1996, the HUD Inspector General reported material weaknesses in the Department’s internal controls over HUD’s rental 

housing assistance payments, and in January 2001, the Government Accountability Office separately identified these programs on 

its list of high-risk Federal programs. 

The magnitude of the problem came into focus late in the year 

2000, when HUD’s own Office of Policy Development and Research 

completed studies that showed that 60 percent of all housing subsidy determinations were done in error, contributing to an estimated $2 billion in net annual subsidy overpayments and $3.2 billion in gross annual improper subsidy payments from both subsidy 

determination errors and tenant underreporting of income, upon 

which the subsidies are based. 

The significance of this problem warranted corrective actions 

through the President’s Management Agenda, which was established in early 2001. 

Under the President’s Management Agenda, HUD established 

goals to address the underlying high risk and internal control deficiencies and to reduce by 50 percent by fiscal year 2005 the improper payment level. 

The Rental Housing Integrity Improvement Project, or RHIIP 

Initiative, as it’s referred to within HUD, was established as a 

HUD secretarial priority to take the corrective actions necessary to 

assure that the right benefits are paid to the right households. 

Through the RHIIP Initiative, HUD and its housing industry 

partners at PHAs and multi-family housing properties have surpassed all interim improper payment reduction goals. Whereas, 60 

percent of all subsidy determinations were found to be in error in 

2000, that percent was reduced to 41 percent in fiscal year 2003 

and further, to 34 percent, in 2004. 

The impact on the reduction in the dollars paid has been even 

greater. Whereas, we had a $3.2 billion gross improper payment in 

2000, that number dropped to $1.6 billion in 2003, and down to 

$1.2 billion in the most recent numbers available for fiscal year 

2004. 

That represents a total improper payment reduction of 62 percent over our 4-year effort. 

These reductions resulted from HUD’s extensive outreach on 

problem resolution with its housing industry partners and tenant 

advocacy groups, and through the provision of updated and improved program guidance and increased training, not only for the 

program administrators at PHAs and multi-family housing properties, but for HUD’s monitoring staff. 

HUD also increased its onsite program monitoring, technical assistance, and enforcement efforts at PHAs and with the multi-family property owners. 

In January 2004, the Congress enacted HUD’s proposal for statutory authority to work with the Department of Health and Human 

Services on a more effective computer matching capability for up 

front verification of household income to avoid improper payments. 

HUD’s new computer matching system with the HHS National 

Directory of New Hires database will be available for PHA program 

administrator use to begin fiscal year 2006. We believe this inVerDate 0ct 09 2002 11:36 Sep 22, 2006 Jkt 024243 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\DOCS\24243.TXT SAFFAIRS PsN: PAT
7

1The prepared statement of Mr. Wood appears in the Appendix on page 38. 

creased computer matching capability has the potential to avoid 

the majority of the remaining error in this program. 

HUD’s new goal is to reduce the total improper rental housing 

assistance payment level from its fiscal year 2004 rates of 6.5 percent of total program payments to less than 3 percent of total program payments by the end of fiscal year 2007. 

Secretary Jackson, Deputy Secretary Bernardi, and the rest of 

HUD’s leadership team are committed to taking the actions necessary to achieve this goal for the benefit of the American taxpayers and for the low-income households HUD serves. 

Mr. Chairman, I hope I have been able to shed some light on 

HUD’s corrective actions and progress towards eliminating improper rental housing assistance payments. Your Subcommittee’s 

interest and oversight on this issue is appreciated and important. 

That concludes my testimony, and I stand ready to address any 

questions you may have. 

Senator COBURN. Thank you very much, Mr. Martin. Mr. Wood. 

TESTIMONY OF DAVID G. WOOD,1 DIRECTOR, FINANCIAL MARKETS AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WOOD. Thank you, Mr. Chairman. I appreciate the opportunity to be here. 

My statement today is based primarily on our February 2005 

report concerning HUD’s improper rent subsidy payments. That report was requested by the Chairman of the Subcommittee on Housing and Community Opportunity of the House Financial Services 

Committee. 

Since 2001, GAO has designed HUD’s rental assistance programs 

as high risk; that is, particularly vulnerable to fraud, waste, or 

abuse. In addition, as noted, the President’s Management Agenda 

for fiscal year 2002 identified HUD’s rental assistance as one of 

nine Federal program areas with severe management challenges. 

HUD has identified three basic sources of errors that contribute 

to improper rent subsidy payments. The first. and likely the largest, is incorrect subsidy determinations made by program administrators, such as landlords or housing authorities. 

Determining correct subsidy amounts can be challenging. For example, program administrators must assess each tenant’s eligibility 

for 44 different income exclusions and deductions when determining how much the tenant can afford to pay. 

As a result of program administrator errors, HUD paid an esti- mated $1.4 billion in gross improper subsidies in fiscal year 2003. 

The second source of error is unreported tenant income. These 

errors occur when tenants do not report an income source, either 

their own or another household member’s, to program administrators. 

Such errors may be intentional or honest mistakes. HUD estimate that in fiscal year 2003, the Department paid $191 million in 

gross improper rent subsidies due to unreported tenant income. 

However, a small number of files formed the basis for that estiVerDate 0ct 09 2002 11:36 Sep 22, 2006 Jkt 024243 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\24243.TXT SAFFAIRS PsN: PAT
8

mate, and, according to HUD, there were large variances in the 

amounts of income that tenants did not report. 

Therefore, while we agree that the incidence of the errors was 

small, we believe the dollar estimate is not very meaningful. 

Finally, the third source of error is incorrect billing. While the 

specific problems vary, in general, billing errors arise when the 

amount of rent subsidy determined by the program administrator 

differs from the amount ultimately billed to and paid by HUD. 

The agency does not have a complete and reliable estimate of improper payments due to billing errors. HUD has estimated that 

billing errors in one program, Project-Based Section 8, amounted to 

approximately $100 million in fiscal year 2003. 

However, again, the small sample size and the concentration of 

errors in a small number of properties means that that figure 

might be greatly overstated or understated. 

HUD has begun a process to estimate billing error in its other 

major rental assistance programs. 

On the basis of our findings, we made three recommendations to 

HUD. First, we recommended that the agency include an assessment of compliance with rent subsidy determination policies in it 

regular oversight of housing authorities. 

Second, we recommended that HUD collect complete and consistent information from those monitoring efforts and use it to help 

focus corrective actions where they are needed. 

HUD has taken steps to address these two recommendations. We 

also recommended that HUD study the potential impacts of simplifying the subsidy determination process. According to HUD officials, the complexity of existing policies makes it harder for program administrators to correctly determine rent subsidies. 

However, simplifying the policies, which would likely require 

statutory changes by Congress, could affect the rental payments of 

many tenants, as well as the overall program costs. 

HUD has not yet done a comprehensive study of simplification, 

and its likely effects on tenants. 

Mr. Chairman, that concludes my prepared statement. I will be 

glad to answer any questions you have. 

Senator COBURN. Thank you very much, Mr. Wood. 

Senator Lautenberg, welcome. I would like to recognize you for 

5 minutes for an opening statement. 

OPENING STATEMENT OF SENATOR LAUTENBERG 

Senator LAUTENBERG. That is very kind, Mr. Chairman. And I 

apologize for my lateness, but I do want to say to you, Mr. Chairman, and to our friend, Senator Carper, as well that I have great 

respect for the things that you attempt to do in terms of curbing 

excessive expenditures. 

And while we may differ on the approach, and we may differ on 

the value of the programs, the fact is that I think Senator Carper, 

who was a governor of a State, and you, with your experience, 

bring a particular view to the subject. 

So I just wanted a moment to be able to say how important I 

think this review is and to say to those agencies that you are obviously have to sharpen your oversight; otherwise, what happens will 

9

be essentially throwing the baby out with the water, because there 

are some excellent programs here. 

And to abandon the program in order to accomplish another goal, 

in my view, is not quite the way to do it. 

And so I will forego taking any more of the time. Thank you very 

much. 

Senator COBURN. Thank you. Well, I am just going to start with 

a couple of questions. 

We are now at the end of 2005, why do we not have 2004 numbers on improper payments? 

Mr. MARTIN. We just got 2004 numbers. And that is the gross improper payment level has been reduced to $1.2 billion. 

Senator COBURN. And how much overpayment-underpayment on 

that number? Can you recall? 

Mr. MARTIN. I think that is broken out in my detailed testimony 

here. 

Senator COBURN. You all are obviously making great headway in 

trying to remedy this process, and Mr. Wood brought up the point 

about the simplification of the application process and the complexity of it. Where are you on that? Is HUD going to bring us 

something and say here are the things we think you need to 

change statutorily to make this easier? Don’t we have a board? Put 

that up for us, so you just see the progress. 

I want my fellow Senators to see—and please be critical of this—

but as we look at this, this is where we see all the complexities—

if you look at what all you have to go through to get housing, you 

can see where all the errors are coming from, or the potential for 

errors. 

Here is what you have to go through for the rent subsidy determination process, and you look at all those steps through there. 

You can see, besides the 44 questions that have to be answered, 

here are all the potential errors on the way down that you can find 

the potential for somebody to make a mistake. 

So are you all in the process, Mr. Martin, of sending some recommendations on changing first of all what is statutorily limiting 

you to change in terms of the 44 steps of the application process, 

but also in terms of how we go through eliminating the number of 

errors? The idea of checking with the employment information, 

check it with IRS information, in terms of income tax, all that is 

great. But unless we know what to change statutorily, we can’t 

help you as much as we would probably like to help you. 

Mr. MARTIN. First off, we have approached it from better controlling the programs that have been enacted, and the vast majority 

of the income exclusions, the deductions, are based in statute, so 

we don’t have a lot of flexibility in that regard. 

I know HUD has proposed a current proposal. The State and 

Local Housing Flexibility Act of 2005 is pending that would allow 

local public housing authorities flexibility in determining their own 

local rules on how they would apply this. 

Certainly if you went to a flat rent subsidy and eliminated the 

income-based exclusions and deductions it greatly reduces the risk 

of error. But each of those exclusions and deductions has a constituency that benefits from them, that fought hard to get those, 

and that is up to the Congress. 

10

Senator COBURN. So basically, you all haven’t made a recommendation? The Administration has not made a formal recommendation to Congress on some things that could be changed 

that would help lower the error rate, statutorily? 

Mr. MARTIN. At this point, I am not aware of anything, other 

than proposals to allow flexibility to local program administrators. 

Senator COBURN. OK. In this recommendation that you say is in 

the—is it the Housing Flexibility Act? 

Mr. MARTIN. Yes. 

Senator COBURN. Wouldn’t that make it a whole lot harder to 

audit if every housing agency had their own? 

Mr. MARTIN. In essence, unless you get it as a block grant. 

Senator COBURN. Yes. 

Mr. MARTIN. It is up to them that we would monitor performance 

in terms of the number of households served and the average cost 

per household and put some incentives in that regard. 

Senator COBURN. OK. Your goal for 2007 is less than 3 percent. 

Mr. MARTIN. Correct. 

Senator COBURN. How did you come up with that? 

Mr. MARTIN. Looking at where we were and the things we had 

in place, we believe that the income-matching program is going to 

be the last big improvement we make to substantially reduce error; 

looking at what other programs, like food stamps, Medicare, and 

others have been able to do that have been at this issue of reducing 

improper payments much longer than we have and where they are 

at. 

Senator COBURN. Yes. 

Mr. MARTIN. And we think that is a realistic, achievable goal. 

Senator COBURN. Food stamps is down to the same level you are, 

about 6.5 percent. 

Mr. MARTIN. Right. 

Senator COBURN. But they came from, I think, 17 percent, so 

they have moved. 

Mr. MARTIN. Well, in terms of percent of total payments, our 

2000 numbers were close to 17 percent of total payments made that 

year. 

Senator COBURN. Yes. OK. That is correct. 

Discuss with me the $100 million that you say are billings that 

you don’t have real confidence of whether that is a low number or 

a high number. Explain how that happens. 

Mr. WOOD. The reason for the uncertainty is just because it was 

a fairly small sample size. 

Senator COBURN. So statistically, it is not significant? 

Mr. WOOD. Right. Well, a large margin of error. 

Senator COBURN. Right. And that margin of error is plus or 

minus what percent? 

Mr. WOOD. We don’t have the actual number. Sorry. 

Senator COBURN. OK. All right. 

Did GAO make any recommendations about the complexity of the 

subsidized housing application? 

Mr. WOOD. We made one recommendation to HUD that they 

study the impacts—do a more comprehensive study of some simplification approaches. 

11

Senator COBURN. OK. And what has been the response to HUD 

to that? 

Mr. WOOD. So far, we are not aware of any comprehensive study 

that has been initiated. 

Senator COBURN. OK. Is there any response to that recommendation by GAO? 

Mr. MARTIN. I know we have studied numerous proposals for 

simplification. 

Senator COBURN. OK. So go ahead. I am sorry. 

Mr. MARTIN. And we have looked at the winners and the losers 

so to speak under various scenarios. I mean, if you were to go to 

a flat percentage of income, eliminating all exclusions and deductions, what impact would that have on families of young children 

who lose their daycare exemption? What impact would that have 

on elderly households that lose their medical deductions. I know 

that our policy development research staff have sliced and diced 

this information a number of different ways for our policy makers, 

and, as Mr. Wood has indicated, there are winners and losers 

under various scenarios. And it is a policy decision as to who you 

want to benefit. 

Senator COBURN. Thank you, Mr. Martin. Senator Carper. 

Senator CARPER. Thanks, Mr. Chairman. 

A number of years ago, when I served in the U.S. House of Representatives, I recall working on an issue—I think it was called 

Tenant Income Verification—to try to make sure that when folks 

applied for assisted housing that there was an effort to make sure 

that the monies that they were reporting as earned were indeed 

correct. 

I think it involved running the numbers that were submitted by 

the person applying for assisted housing against a database compiled by the Department of Labor and earnings submitted to the 

Department of Labor by employers. 

And I have been out of the Congress for a while to be governor 

of Delaware for 8 years, but whatever happened to that approach? 

Mr. MARTIN. In terms of HUD, we have had a history on that 

issue. We started out—we got statutory authority to do computer 

matching with Federal tax records. The problem with that was that 

it was old information when we got it, and it wasn’t that useful, 

and it was on the back end of the program. It was basically chasing 

after incorrect benefits after the fact. And the lion’s share of these 

people are still low-income people, and it just wasn’t very productive. 

So what we have tried to do is what we call an up-front 

verification process, and our public housing authorities have statutory authority to pursue that information directly with the States, 

because it is the State wage information that comes into the Federal data sources on a quarterly basis. And, that has taken time. 

We had pursued that because that is the only authority we had. 

And we got up to 30 States with agreements to do computer matching and share that information. 

When Congress enacted our proposal to give us that same information that is available through HHS, this National Directory of 

New Hires database that was created for their Child Enforcement 

Program activity, and it is all the State wage data in one place, 

12

plus unemployment benefit information, plus monthly information 

from employers on all new hires, so it is a central, much more efficient source for us to use. 

So that is the process we are opening in 2006 to our public housing authorities to use, and we think that is going to be a very effective process. 

Senator CARPER. OK. Good. 

I think earlier you said that you are just getting data for 2004? 

Mr. MARTIN. Right. 

Senator CARPER. And would you just go back and compare where 

you are when we started doing this comparison and tracking? 

Where you were in 2003 and where HUD was in 2004? 

Mr. MARTIN. Our baseline was established in 2000, and that is 

when we estimated that 60 percent of subsidy determinations were 

in error and that equated to a $2 billion net overpayment problem, 

as well as a $3.2 billion gross improper payment problem, adding 

both the underpayments and the overpayments together. I mean 

there are households that don’t get the full assistance that they are 

entitled to because of errors made in their determinations. 

So that problem is focused on two out of the three billing components that Mr. Wood—error components that Mr. Wood alluded to. 

That is the determination errors and the tenant reporting of income problem. It didn’t include the billing. Two thousand four is 

the first year we are going to have the full billing error. Our preliminary estimates it is about $300 million. 

So that $3.2 billion gross problem that we identified in 2000 

came down to $1.6 billion in 2003 and down to $1.2 billion in 2004. 

And you add the $300 million that we are going to have in the billings, so we are at a total problem of about $1.5 billion dollars right 

now. And in 2004, I think we had $26 billion in payments. So that 

is where we are running the 6.5 percent rate. And our goal is to 

reduce that to 3 percent by 2007. 

Senator CARPER. What more do we do? I think there is value in 

what the Chairman and I are trying to do on behalf of the Subcommittee, and that is to hold oversight hearings, to invite in agencies who are not doing a very good job of complying with the law 

on overpayments or improper payments, but at the same time putting a spotlight on the agencies that are doing a good job, where 

there is actual improvement that is being made to see—one I believe in positive reinforcement. Second, our hope is to identify some 

best practices as well to hold out to other agencies who have their 

work cut out for them. 

Aside from that oversight role that we are attempting to play, 

what further can this Subcommittee or Committee or the Senate do 

to further reduce the levels of improper payments at HUD? 

Mr. MARTIN. We participate in the CFO Council’s Subcommittee 

on Improper Payments. It is focused on implementing the Improper 

Payments Information Act you referred to. And I mean there is 

really disparate treatment in the statutory authorities various income-based programs have to do effective computer matching. So if 

there was some way of standardizing that across the government 

so that we all have access. It is kind of perverse that SSA keeps 

most of this data on behalf of the Federal Government, but they 

are not even allowed to use it for certain of their program purposes, 

13

because of the statutory barriers over concerns about the Privacy 

Act implications. 

But we think that we can—we know that we can control our information in a secured manner for its business intended purpose, 

and it is the same information that our program administrators are 

processing in paper form. It is just that it is a lot more efficient 

and effective to deal with it on a large-scale automated process of 

computer matching, and it is going to reduce program cost, because, right now our program administrators have to verify that income with the employer. It also adds dignity to the beneficiaries, 

because now their employers don’t have to be notified that they are 

getting Federal assistance, because we can remotely verify their income levels. So there are a lot of benefits to it. But not all agencies 

have it, because it is closely controlled by statute as to who gets 

it and who doesn’t. 

Senator CARPER. All right. Good. Thanks very much. 

Senator COBURN. Let me just follow up for a second. Mr. Martin, 

how will the enterprise income verification system improve errors? 

Explain that to me. How is that going to improve the error rate, 

because I thought a lot of the error was at the program administrator level and at the determination level rather than at that 

level. Can you teach me that if you would? 

Mr. MARTIN. Sure. Yes, a lot of the program administrator error 

is in processing income information. Like I said, they are required 

to go out and verify with the employers the income. Often times, 

we will go out and we will do a monitoring visit, and we will find 

that the employer has responded to their certification of income letter, and they haven’t opened it up and used it. So that’s an error 

on the program administrator, not on the tenant. 

Conversely, you can’t hold the program administrator responsible 

for not verifying an income source that the tenant didn’t just divulge to them. That is where the computer matching will come into 

play, because then that precludes the opportunity for them to conceal income sources. 

Senator COBURN. Is there a sanction in the law if you falsify 

records to enable yourself to obtain eligibility when, in fact, you are 

not eligible for it? 

Mr. MARTIN. Yes. 

Senator COBURN. And what is that? 

Mr. MARTIN. Well, they have false statements—our application 

forms have the false statement warnings and penalties, and that 

is actually an area where our Inspector General has gotten much 

more involved. And we think they are having a very beneficial impact in sending a deterrent message to our tenant beneficiaries in 

that regard, going after the more egregious cases where tenants 

are failing to disclose their income sources. 

Senator COBURN. As Senator Carper said, for the foreseeable future, we are going to be on a tight budget, with everything that is 

out there. And, I kind of look at that as one citizen stealing from 

another. If you are getting a benefit you are not really entitled to, 

and we don’t have enough money to give those benefits to those 

who are entitled, it really says something about our society today. 

And I would just urge you to be aggressive in that. 

14

Have you thought about requesting a formal study, like GAO recommended on the alternatives for determination simplification? 

Have you thought about asking for help to try to make this simpler? 

Mr. MARTIN. Well, I think in our response to their draft report 

we responded that we felt we had done sufficient analysis of various options. 

Again, it gets down to the policy call. There are going to be winners and losers. And who are you trying to benefit and to what extent? And, I am not sure what scenario you would study. 

Senator COBURN. Well, for example, take this process. We can’t 

simplify the process of an application for housing assistance in this 

country to where we eliminate how many—1, 2, 3, 4, 5, 6, 7, 8, 9—

nine potential errors that we can’t make that to where that is down 

to five potential errors? I mean just in terms of the process? There 

is not a way we can make that less cumbersome, less bureaucratic, 

to where there is less opportunity for error? 

Mr. MARTIN. We think that the enterprise income verification 

system is going to simplify several steps there, because now when 

a tenant comes to recertify their benefits annually when the program administrator is sitting down with them at the table, they 

are going to have access to that computer information on all their 

income sources and their history. So they are not going to be able 

to conceal sources at that point, like they were in the past. And 

that negates some of these steps about verifying their income on 

outside——

Senator COBURN. Right. 

Mr. MARTIN [continuing]. Going back and forth with the employer trying to get the information. And it even improved our 

error rate, because a lot of times they report an income source, and 

it wasn’t what it appeared to be, because you have franchise owners and they say I work at McDonald’s, but the employer name is 

a franchise holder. 

Senator COBURN. Right. 

Mr. MARTIN. Or we got to verify and computer match it, and it 

is an ADP payroll service or something. So there is, we think that 

this system has the potential to simplify the process as best we can 

within the current statutory structure of the programs. 

Senator COBURN. OK. Well, I would just encourage that the message ought to go back to the Administration. Reform bills for Section 8, the ones that are going through the Senate have very few 

sponsors. And I think we need some leadership on some reform 

proposals, and everything we do up here, there are winners and 

losers. 

I want to make sure the winners are the people that need us, 

and the losers are the people that don’t need us. And I would just 

hope that you would—the Administration would come forward, in 

conjunction with some ideas, and say do we make this better? How 

do we make it do what it needs—and you all know the problem is 

taking the political heat to make the recommendations for what 

you do know. I mean that is what you have said. You didn’t say 

it in my words, I said it for you. 

15

But that is the real thing. Because there are winners and losers, 

you don’t want to touch it in terms of making the recommendations. 

But my hope is that the Administration would have some leadership because if we have three-quarters of a billion dollars every 

year that could be going to help people, or $250 million, a quarter 

of a billion dollars, that is not helping them, that is just as bad as 

any other thing we might do in terms of wasting money anywhere 

else in the Federal Government, except morally it is worse, because 

now we have people that are depending on us that we are not helping that we should. 

And so I would just hope that you would do that. Any other questions? Senator Carper. 

Senator CARPER. Just one more if I could. 

The Chairman and I have been working with Senator Obama 

and others to try to make sure that the enormous sums of money 

that are being spent rather quickly down along the Gulf Coast to 

help folks that are victims of Hurricane Katrina and now Hurricane Rita. I want to make sure that the monies that are being 

spent are being spent properly, and I am just wondering—and I 

guess this is probably more for you, Mr. Martin, than for Mr. 

Wood—but with all the additional money that is going to go out the 

door from HUD, especially—as well as other agencies—but I think 

it is not unlikely that some of the money is going to be inappropriately spent, improperly spent. 

And I guess what I would like to ask is have you all thought 

about that? Have you put any additional accounting or waste prevention safeguards into place? Are you thinking about that? Are 

you asking yourself that question? 

How do you plan to balance the need to get aid out quickly with 

the need to make sure we get it right? 

Senator COBURN. Good question. 

Mr. MARTIN. Absolutely, I have thought about it, and planning 

on it. And I think that the lessons we have learned in reducing this 

problem have carried over into our new program implementation or 

our temporary program implementation in terms of the disaster relief efforts. The Office of Management and Budget has put a call 

out to all agencies involved in relief efforts in terms of developing 

adequate risk matrices and control matrices to plan how we are 

going to address these issues. 

We are going to be using some of the tools that we’ve developed 

here to verify citizenship and other eligibility requirements; working with FEMA to try to use their data to match and determine 

up front that these are truly people that are affected by that disaster and need the benefit and are entitled to the benefit. So, yes, 

we are absolutely planning that. 

Senator CARPER. All right. Thanks very much. 

Senator COBURN. Mr. Wood, I have one follow-up. The Rental Integrity Monitoring Program, how would you assess HUD’s progress 

on this front? How is HUD doing at making GAO’s recommended 

improvements, and what is the most effective way to get at the improper payments problem? 

Mr. WOOD. I think they are making good progress. The RIM reviews were a very good exercise, and I think HUD learned a lot. 

16

We recommended that they institute something like that as part 

of their permanent monitoring, and, according to what information 

that we have gotten from them recently, they plan to do about 275 

of those per year, and that will include 20 percent of the largest 

PHAs each year, and then a risk-based sample of about 5 percent 

of the others. 

I just will speak to something you raised earlier about the simplification recommendation that we made. I think we would agree 

that the ability to verify income up front will help program administrators when they sit down and go through this process. But that 

alone doesn’t change the fact that you still have to apply those 44 

income exclusions and deductions. 

So it is that process that needs to be or could be simplified that 

might help reduce the overall error rate. And that is what we were 

speaking to. 

Senator COBURN. Is that statutory? In other words, does it require a change by Congress? 

Mr. WOOD. Well, a number of the deductions and exclusions are 

statutory. 

Senator COBURN. Are there things that HUD could change that 

don’t require congressional approval that would simplify that? 

Mr. WOOD. I believe some of them are in regulation as opposed 

to statute. 

Senator COBURN. Would you be so kind as to make a recommendation to this Subcommittee of what those are? Not what 

the changes should be. 

Mr. WOOD. Yes. 

Senator COBURN. But the ones that are in regulation and not 

statute? 

Mr. WOOD. I can follow up with that. I don’t have it at my fingertips. 

Senator COBURN. All right. I have no other questions. 

We will be submitting some written questions to you that we 

would like to have back within about 2 weeks if we could, and then 

I plan on looking at this again in light of what Senator Carper said 

and the tremendous amount of monies that are going to go out for 

this associated with the Katrina relief, and so you can kind of 

count on 3 months being back here. Senator Carper won’t mind 

coming when we are not in session, when he is just over in Delaware in January where we can take a peek at this and just make 

sure how things are going. 

I think it is very important that you are on top of this going out. 

Mr. MARTIN. Yes, sir. 

Senator COBURN. Thank you both, very much. 

Mr. WOOD. Thank you. 

Senator COBURN. Our next panel is Josephine Bias Robinson, 

who was appointed Director of the Federal Office of Community 

Services, OCS, on March 15, 2005. In that capacity, she is responsible for overseeing 11 programs, including the LIHEAP Program. 

I have had the great pleasure of knowing her for a couple of 

years. We both worked on the Presidential AIDS Commission, and 

she was the Director of that during my tenure as Co-Chairman. I 

want to welcome her. It is great to see her smiling face. A lot of 

17

1The prepared statement of Ms. Robinson appears in the Appendix on page 54. 

times in Congress, we fail to have the personal connection with 

people who are serving in the government. 

And when we get that personal connection, it really helps us 

know and see and flavor what we hear, and so I am thankful, and 

I look forward to trying to hear that and have that kind of relationship with other people in the Administration. 

I also want to welcome Jim Wells. He is Director with the U.S. 

Government Accountability Office in the Natural Resources Environmental Team at GAO, and has served there since 1969. 

He did come up here from his Florida vacation; got on the airplane this morning. He is going to go back this afternoon, and I 

can’t thank you enough for doing that. And had I known that, I 

would have delayed this meeting even further. 

So, once again, thank you. Both are recognized for 5 minutes, 

and I appreciate your being here. Ms. Robinson. 

TESTIMONY OF JOSEPHINE BIAS ROBINSON,1 DIRECTOR, OFFICE OF COMMUNITY SERVICES, ADMINISTRATION FOR 

CHILDREN AND FAMILIES, U.S. DEPARTMENT OF HEALTH 

AND HUMAN SERVICES 

Ms. ROBINSON. Good afternoon, Mr. Chairman and Members of 

the Subcommittee. I am Josephine Robinson. I am the Director of 

the Office of Community Services in the Administration for Children and Families within the Department of Health and Human 

Services. I appreciate the opportunity to appear before you today 

to talk about the Low-Income Home Energy Assistance Program 

(LIHEAP) which provides assistance to millions of low-income 

Americans in meeting the cost of home energy cooling and heating. 

The Low-Income Home Energy Assistance Program, commonly 

known as LIHEAP, grew out of a series of emergency programs 

generated by the energy crises of the late 1970s. 

Today, the LIHEAP Program ensures that low-income families 

and individuals have adequate home energy through a FederalState partnership that provides States with the flexibility they 

need to design the best program approach to meet consumer needs. 

This year, States received $1.9 billion in LIHEAP block grant 

funds. States also received $250 million in emergency contingency 

funds because of the much higher fuel prices this past winter. 

Earlier this month, the Department released $27.25 million in 

contingency funds to Alabama, Florida, Louisiana, and Mississippi 

to help with the home energy crisis needs of households impacted 

by Hurricane Katrina. 

States and other LIHEAP grantees have great capacity in applying LIHEAP funds to meet local needs. States are required to have 

agreements in place with energy vendors to permit payments on 

behalf of low-income households receiving LIHEAP benefits. 

Payments are usually distributed in the form of a credit toward 

the household’s energy bill, with the benefit applied automatically 

to the client’s account. 

This process ensures that the LIHEAP assistance is provided for 

the purpose intended, and only under rare circumstances does the 

State provide a household with a direct check or cash to pay their 

18

home energy bills, such as when a client’s home energy source is 

wood or propane. 

In such cases, the State often issues a two-party check to the 

vendor. 

The Administration is committed to ensuring that all Federal 

programs achieve their specific program objectives and performance outcomes. And, as such, the Office of Management and Budget 

has established the Program Assessment Rating Tool (PART), to 

evaluate program performance and take action to remedy deficiencies and achieve better results. 

The LIHEAP Program underwent a PART assessment in preparation for the President’s fiscal year 2005 budget. The PART assessment found that the LIHEAP Program has a clear mission targeted to a specific problem and need; yet, revealed a need to develop long-term efficiency measures in the LIHEAP Program. 

In response to the PART findings, the President’s fiscal year 

2005 reauthorization request for LIHEAP included a provision to 

conduct and fund at $500,000 a feasibility study of a nationally 

representative evaluation of LIHEAP program operations. 

It is our hope that Congress will act soon on the President’s request to grant targeted authority for a LIHEAP feasibility study. 

Additionally, as part of the President’s Management Agenda 

(PMA), Assistant Secretary Wade Horn has launched a major initiative at the Administration for Children and Families (ACF), 

dedicated to improve financial performance for all agency programs. 

ACF’s PMA Plan is structured to ensure that our Federal financial management systems produce accurate, timely, and useful information to support operating budget and policy decisions. 

Similarly, since the passage of the Improper Payments Information Act of 2002 (IPIA), ACF has been working collaboratively with 

the officials at the Department and OMB to assess whether its programs are at-risk of improper payments. 

As a result of conducting IPIA risk assessments of the LIHEAP 

Program for 2004 and 2005, ACF determined that the program was 

at low risk for improper payments. 

This conclusion was based on financial management and Federal 

programmatic monitoring of grantees established by the Low-Income Home Energy Assistance Act, the lack of Government Accountability Office or Office of the Inspector General (OIG) findings 

of improper payments in recent year studies, and also the proper 

identification of questioned costs in A–133 audits for LIHEAP 

grantees. Based on our assessments, we believe that LIHEAP administering agencies have satisfactory systems in place to address 

Federal financial integrity issues. 

However, the feasibility study requested by the Administration 

as part of reauthorization will allow the Department to institute a 

more thorough evaluation of the issue. We have also asked the Inspector General to review the current risk assessment model. 

In conclusion, the Administration believes that LIHEAP is a 

program that works. During 2006, ACF will closely review the 

LIHEAP risk assessment model to ensure that LIHEAP is at low 

risk for improper payments. 

19

1The prepared statement of Mr. Wells appears in the Appendix on page 62. 

We can all be very proud of how LIHEAP has worked to serve 

those most in need, including many hard-pressed working families, 

not unlike my own. 

What I would like the Subcommittee to also know is that this 

program is not only professionally important to me in my role as 

the Director of the office, but personally important as well, having 

been a recipient of LIHEAP benefits as a child with my family. 

There were a number of occasions where my family was faced with 

eviction and LIHEAP benefits actually assisted my mom in meeting our needs so that we were not evicted. I have lived in 9 homes 

on Long Island, 6 of which I was evicted from; 3 of which I was 

saved from being evicted from because of LIHEAP benefits. 

So there is a personal commitment to ensure that each and every 

family receives a LIHEAP benefit should they so deserve one so 

they don’t have to face those situations. 

I thank the Committee for their time. 

Senator COBURN. Thank you. Mr. Wells. 

TESTIMONY OF JIM WELLS, DIRECTOR,1 NATURAL RESOURCES AND ENVIRONMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WELLS. Thank you, Mr. Chairman, and Senator Carper. 

I, too, appreciate the opportunity to be here today enough to return from my vacation. 

I have been doing oversight for 37 years with the Government 

Accountability Office, and I can tell you I really believe it is important, and I support your mission. 

Our last look at the LIHEAP Program occurred in 2001, when we 

reviewed and reported on a subprogram that is a part of LIHEAP 

called the Reach Program, which awarded about $6 million in 

grants to fund demonstration projects to help reduce energy usage. 

Although we were not tasked at that time by the Congress to 

look at the potential for improper payments, we did find payments 

that we believe were more related to social services and not specifically related to meeting home energy needs. For example, payments were for skill job development and paying for past due rent 

or mortgage payments as opposed to the heating and cooling type 

expenses that were spelled out in the authorizing legislation. 

We took issue with HHS, not that the above payments were not 

needed, but as you said, Mr. Chairman, earlier, the intended recipients may not be getting the maximum benefit from a program like 

LIHEAP. 

We did make recommendations and changes and suggestions on 

how they might want to develop performance goals that are more 

measurable and quantifiable. It is encouraging to hear in Josephine’s statement today that HHS intends to relook at the LIHEAP 

Program to find out if it is, in fact, as good as it looks. This is very 

encouraging. 

Regarding oversight and audit responsibilities, I would like to 

make two points, two quick points. 

As you know, LIHEAP is about a $2 billion block grant program, 

and, as you heard today, LIHEAP offers a lot of flexibility to the 

20

States and the grantees to basically manage and oversee those programs as they see fit. 

While the Federal Government establishes guidelines, overall 

guidelines, each grantee operates its own program and makes most 

of those decisions about how it is to operate. 

My second point is that, although this sounds like the Federal 

Government has limited audit and fiscal controls, the LIHEAP Program is subject to review under the Single Audit Act. The Single 

Audit Act makes States and local governments primarily responsible for obtaining independent audits of the Federal programs, including payments made under LIHEAP. 

As a result, HHS, sitting here today, has a principal oversight 

function to monitor, but not audit, LIHEAP payments. Monitoring 

to us looks like it includes assessing the quality of the audits that 

are being performed, reviewing the audit results, and ensuring that 

corrective actions are taken to respond to audit findings. 

Perhaps in the follow-up questions, I would like to respond in 

terms of what our observations are on that task that is assigned 

to HHS. 

Clearly, the grantees should return funds that are spent in ways 

that are contrary to the LIHEAP statute. 

In our brief review, as we heard you would like us to talk about 

the LIHEAP Program, we quickly looked at about 40,000 single 

audit reports that were issued in 2004, and basically they showed 

relatively few specific LIHEAP-related audit findings; 26 out of the 

300 that we could find with LIHEAP coding where audits were 

done looking specifically at LIHEAP provisions. 

In some cases, the grantees were found to not meet accounting 

criteria for managing those Federal funds, both from LIHEAP and 

other Federal programs. So really it was difficult to determine 

whether this 26 number audit findings had any specific improper 

payments, LIHEAP payments, because of that. 

We were able to identify only a certain, relatively small number 

of payments that were questioned in the audit reports, such as 

about $8,800 in what appeared to be incorrect or duplicate payments made by one grantee. 

Another audit report questioned about $1,200 in payments because of inadequate procedures to prevent overpayments. 

I do need to say that in addition the Single Audit Act, it is not 

the only oversight Federal responsibility. The Improper Payments 

Information Act of 2002, Mr. Chairman, as you referred to earlier, 

requires that Federal agencies identify those programs that may be 

susceptible to significant improper payments. 

Agencies are required to estimate the annual amount of improper 

payments and basically tell the Congress. HHS has conducted risk 

assessments earlier and have identified specific programs, with 

specific risk. 

Although HHS has identified seven of its programs as high risk, 

LIHEAP was not among them. 

We are not aware of any more comprehensive information that 

exists on improper payments within the LIHEAP Program other 

than the few examples we discussed above. But that doesn’t necessarily mean that they are not there. 

21

Mr. Chairman, the Congress has to date shown interest in having GAO evaluate how the money gets out to the grantees, and not 

how well it has been used. 

Given GAO’s mission and statement of accountability, integrity, 

and reliability, we agree with you how important it is that Federal 

agencies get it right when they are awarding such large sums, and 

the LIHEAP Program is a $2 billion grant program. 

That concludes my short prepared remarks. I will be glad to answer any questions you may have. Thank you. 

Senator COBURN. Let me see if I understand what you are saying. It may be that LIHEAP is at low-risk for improper payments, 

but the basis under which that assessment was made, there are no 

data out there that would confirm that you could audit that and 

say that is necessarily a good assessment of it being low risk. Is 

that what you are saying? 

Mr. WELLS. I am not prepared today to offer the conclusion about 

the success of that program. We have not been asked to audit the 

model. I understand HHS has agreed that they are going to revisit 

and look at the model that it used that predicted the low success. 

And, therefore, it would have less improper payments and did not 

meet the criteria to be put on its high-risk list. 

We have not looked at that. 

Senator COBURN. But basically, there has not been a good audit 

of the grantees in terms of the distribution of LIHEAP funds because it has been felt that there is not a problem there? 

Mr. WELLS. That is my understanding. 

Senator COBURN. OK. All right. 

Now, you had some observations that you wanted to make in regards to LIHEAP. 

Mr. WELLS. I did. Mr. Chairman, when you asked us to come up 

and talk about improper payments, one of the first things we do 

as auditors is to make initial inquiries to the agency, and we 

looked at the oversight responsibilities of the Federal agencies and 

determined that there were requirements for the Single Audit Act 

and the Improper Payments Act. And we asked some questions of 

the programmatic folks there at HHS, and it was an observation 

that we didn’t get real quick responses about what they knew 

about the Single Audit Act. 

There didn’t appear to be a lot of information quickly at their fingertips about how well or if they were monitoring the Single 

Audit—monitoring the audit results. 

There were some questions that we raised that perhaps they are 

not quite on top of things in terms of using the Single Audit Act 

findings that may have been generated in these 40 some thousand 

audits that have been required. 

So these were just early indicators to us that holding a hearing 

like this probably serves notice to the agency that they need to look 

at their responsibilities in terms of oversight. 

So that would be my additional observation just based on not 

having audited the program recently. 

Senator COBURN. Well, first of all, my staff’s experience mirrors 

that experience as well. 

I would note that the author of the Single Audit Act sits on this 

panel, Senator Carper, and I know he has an interest in it, and the 

22

motivation for doing that was accountability, and, as you can see, 

each one of our hearings is based on transparency. 

And, Ms. Robinson, what is your feeling about putting your 

hands down on the administration of LIHEAP in terms of here is 

what you have seen; here is what is filtered up? What do your people tell you? 

Ms. ROBINSON. One of the challenges that I have is just grasping, 

if you will, the complexity of this issue with respect to who has the 

controls within the office. We are a program office, and we have an 

Office of Administration, which does the actual auditing and working cooperatively with them to determine where, in fact, in the 

process we work with each other, and we determine where and how 

quickly information is coming in and how quickly information is 

dispensed to me as a program official; this is one of the areas that 

I am working very hard to ensure occurs. 

I am 6 months into the job, and I have announced we definitely 

moved forward in determining and ensuring that we are doing effective monitoring and actual follow up. 

Each of the audits that come in, after they have been processed 

within our Office of Administration are reviewed by our Office of 

Inspector General; reviewed again by our Office of Administration; 

forwarded to me with respect to the findings, whether they are 

monetary or non-monetary, and I am given advice as to where and 

how I should transmit those findings. 

Once the findings are signed off and sent back, then we have the 

responsibility in the Program Office to ensure that the findings are 

secondarily communicated. The principal responsibility is with the 

audit resolution office. But there is a secondary responsibility in 

my program office which I have to take direct responsibility with 

my staff. And there is a new found commitment to ensuring that 

we are working cooperatively with the States and we are in constant communication with them. 

It also means that we are doing additional training and discussion with them. We issue guidance to the States when we have new 

information or rules, and to achieve transparency; to ensuring that 

we are communicating the rules effectively; that we are underscoring what corrective actions are being taken; that we are following up; and that we are on top of things. 

Senator COBURN. Right. 

Ms. ROBINSON. Because there is an atmosphere of that not being 

the case with our limited resource and staff. 

Senator COBURN. Right. And there is no question you all are subject to the Improper Payments Audit Act. 

Ms. ROBINSON. Yes. 

Senator COBURN. OK. Senator Carper, and then I will come back. 

Senator CARPER. Thanks. My wife jokes—I think she is joking 

from time to time. She says I don’t want to be married to the Senator that no one has ever heard of; and from a little State on the 

East Coast, and I always say to her, honey, for a brief spell of time 

and at least in every state auditor’s office in America, my name 

was a household word. 

It was a fleeting moment, back in the 1980s, when we worked 

on the Single Audit Act, and it is nice to hear—actually it’s kind 

of interesting because we talk about this, which a number of us 

23

Democrats and Republicans worked on in the Congress in the late 

1980s, and also the low-income tenant income verification stuff we 

were talking about earlier. 

And I never expected to hear both of these come up today, but 

I have kind of had a little trip down memory lane, thanks to our 

witnesses. 

I want to thank you, both, for coming today, but I especially 

want to thank Mr. Wells for coming back from Florida to be with 

us and interrupt your vacation. You are good to do that. 

Ms Robinson, I understand you have been on the job for what 6 

months? 

Ms. ROBINSON. Six months. 

Senator CARPER. And you once served in another capacity here 

with our Chairman? 

Ms. ROBINSON. Yes, I had the absolute pleasure of serving with 

the Chairman. 

Senator CARPER. All right. I know that pleasure. And I think I 

would like——

Senator COBURN. I worked for her. 

Ms. ROBINSON. We worked together. 

Senator CARPER. I will let you two work this out. Chain of command not later. 

I would like to talk about what I think are three components of 

LIHEAP. One is heating. Another is cooling. And a third is weatherization. And would you just talk about each of those and how 

they sort of fit together please? 

Ms. ROBINSON. Certainly. The program was set up to deal with 

the energy crisis, and so it was primarily a heating program. The 

cooling components are added based on the States’ determination 

of what their own respective needs are. We have to remember that 

the States design their respective programs, and determine whether or not there is a cooling component. In addition, weatherization 

is a component of the program as so determined by the State. 

Each of the States then makes an assessment as to how they are 

going to determine their eligibility with respect to their poverty 

rates, and each of the programs are to complement each other with 

respect to weatherization and any educational awareness that goes 

on within the program, because you don’t want is this to be singularly an assistance program that is not going about the education of consumers. I think a more important aspect of providing 

aid to families is also educating them about their energy usage and 

resources within their homes to improve the conditions in their 

homes. That is part of the lesson learned in my own family. The 

weatherization component is important to provide insulation and to 

teach about proper energy use. 

So all of those programs cooperatively work within the State to 

ensure that overall energy needs of a family are met. 

Senator CARPER. Yes. Give us some idea, if you can, of how much 

money is being allocated for LIHEAP during this current fiscal 

year, which is about to conclude. 

Ms. ROBINSON. The total appropriation, was $1.9 billion for 

LIHEAP in fiscal year 2005. Of that, you have the appropriation 

for the block grant, which is allocated to the States based on a set 

formula. 

24

There is an additional component of that $1.9 billion that is set 

aside as part of a leveraging pot, which is approximately $27 million of that $1.9 billion. Of that $27 million, 25 percent is the 

REACH Program that Mr. Wells was talking about, which is the 

Residential Energy Assistance Challenge Program. 

And so that is where the education and additional awareness is 

incorporated into the program. So it is, again, a total appropriation 

of $1.9 billion, with the pieces of leveraging and REACH incorporated therein. 

Senator CARPER. Yes. What I am trying to get to is $1.9 billion 

appropriated in 2005? How much again for weatherization? 

Ms. ROBINSON. I don’t know the specific——

Senator CARPER. Just roughly. 

Ms. ROBINSON. I will have to provide that information to you at 

another time. I don’t know it off the top of my head.

INFORMATION SUPPLIED FOR THE RECORD 

States can choose to use up to 15 percent of their LIHEAP block grant 

funds (25 percent with a waiver from HHS) for low-cost residential weatherization or energy-related home repair. For FY 2004, 45 States obligated 

$220,927,883 (11.3 percent) in available LIHEAP funds for weatherization. 

Seventeen of the States reached the funds cap of 15 percent.

Senator CARPER. OK. All of us, particularly those who live in the 

northern part of our country, are probably thinking about our energy bills for the winter. 

And I know some of our colleagues are—I think it is Senator 

Snow, maybe Senator Reed from Rhode Island have been circulating letters I think to send to the appropriators for the Appropriations Subcommittee asking that some additional monies be provided for LIHEAP in 2006. 

I think the argument is bolstered for those monies to the extent 

that we can ensure our colleagues and others that the money is 

being appropriated and properly spent. 

And to the extent that we can do that, all the better. 

I am one who believes that there is great value in energy conservation and weather proofing our homes, and it is all well and 

good that we give people money, as your family benefitted from on 

several occasions as you were describing in order to help keep them 

in their homes and from being literally displaced. 

There is also great value I think in providing folks with the 

wherewithal to reduce long-term——

Ms. ROBINSON. Right. 

Senator CARPER [continuing]. Their energy bills, heating bills, 

and cooling bills. And I would be interested to know how much of 

the need that we are actually meeting through this program? 

Ms. ROBINSON. Certainly. That is what the REACH Program, in 

part, is about; it is actually educating consumers about the reduction and overall awareness of energy use. 

It is a competitive program and not all of the States will receive 

funds from the REACH Program, because they make the determination if they would like to participate in that discretionary component of the LIHEAP Program. There is approximately $6 million 

that is allocated across applicant States. Not very many States parVerDate 0ct 09 2002 11:36 Sep 22, 2006 Jkt 024243 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 C:\DOCS\24243.TXT SAFFAIRS PsN: PAT
25

ticipate in it, but it is, in fact, to deal with the educational awareness and decrease in energy usage among low-income families. 

So there is a small component in that. The larger component is 

encompassed within the LIHEAP Program in general. Any time 

you apply for assistance through the LIHEAP Program, energy 

usage information is made available to you. 

I had the pleasure of participating in the District of Columbia’s 

Energy Fair that they held recently a little over a week ago. They 

brought together all of the utility companies within the District of 

Columbia. In the District, Washington Gas provides your heat and 

PEPCO provides your electricity; and, therefore your cooling. 

But they also had Verizon and other partners there, and what 

they did in that venue was, as people were applying for LIHEAP 

benefits, they were actually educating them as well about other options available to them—insulation, energy, budget programs that 

are at the gas company. All of those things are usually components 

of the overall LIHEAP Program. I think it speaks to your question 

with respect to overall awareness, because you don’t want LIHEAP 

to singularly be an aid program. You want a larger educational 

awareness going to reduce energy consumption. 

Senator CARPER. All right. Thanks so much. 

Ms. ROBINSON. Thank you. 

Senator COBURN. Ms. Robinson, in the fiscal year 2003, the Single Audit Act has 28 management decisions that will have to be 

made, and I notice that there are 10 missing that aren’t even addressed on that, and I am not going to go into that other than to 

say we are going to invite you back and just get a commitment 

from you that all 28 will be complied with in terms of the Single 

Audit Act, in terms of those management decisions. 

Ms. ROBINSON. You will have that commitment. I have already 

talked with the staff, and we are determining a timetable. We 

should have those resolved by January 2006. 

Senator COBURN. OK. I want to talk a little bit about the 

REACH Program, and feel free, either one of you, to jump in here. 

Is that a program that was authorized by statute? 

Ms. ROBINSON. Yes. 

Senator COBURN. OK. And that was in 1996? 

Ms. ROBINSON. In 1996. 

Senator COBURN. And can you explain the relationship between 

the REACH Program and LIHEAP. I think you have already done 

that. 

Has it been successful in doing what it is supposed to do—the 

REACH Program? 

Ms. ROBINSON. I think that is one of the questions that was encompassed within the 2001 GAO report. I would like to note that 

that assessment in 2001 was 5 years after the program’s initiation, 

so there is some degree of learning, if you will, of how to manage 

that program at the time. We have discussed with States some of 

the findings of the 2001 report that they have been fully educated 

with respect to what is an allowable cost and activity within that 

program. 

Senator COBURN. Within the PART assessment program, the program has to have defined specific goals. 

Ms. ROBINSON. Yes. 

26

Senator COBURN. What are the defined specific goals of—you 

don’t have to answer that, but they are there, I presume? 

Ms. ROBINSON. We have developed performance measures and 

performance outcomes as part of the overall LIHEAP program and 

REACH is encompassed in that process. 

Senator COBURN. Why would REACH not have been one of the 

programs that failed the PART assessment analysis? If it has no 

defined goals that are written out, why would it not have——

Ms. ROBINSON. I think it does have defined goals within what the 

program is structured to be. I can—if you give me a moment——

Senator COBURN. OK. 

Ms. ROBINSON. There are no separate goals for REACH. Under 

the statute, REACH grantees must have an independent evaluation of their projects. We are working on evaluating how REACH 

operates and how we can best use these evaluations. 

Senator COBURN. So we are 9 years out, and we are just now developing performance measures? 

Ms. ROBINSON. I think they have learned, and they have incorporated, and we have not yet gone back formally to do the evaluation. 

Senator COBURN. Are there other Federal programs that do some 

of the same things that the REACH Program does? 

Ms. ROBINSON. I don’t think so. 

Senator COBURN. I think there are. Mr. Wells. 

Mr. WELLS. Just this year, we released a report where we looked 

at all the Federal agencies that had energy-related expenditures, of 

18 Federal agencies, over $10 billion worth of energy expenditures. 

The Department of Energy has a weatherization program. I believe 

funding this year was around $224 million a year, a grant program 

that helps teach people how to weatherize a facility—building—to 

help contain heat or cooling to make it more efficient and use less 

energy. 

Senator COBURN. So actually in our analysis, looking at what the 

GAO has done and what my staff has found, there is somewhere 

between 15 and 20 different Federal agencies that do the same 

thing as the REACH Program. What I am going to do is I am going 

to ask GAO to come back and look at that again, and make a comparison. This has nothing to do with the intentions. 

I haven’t found a Federal program since I have been here that 

doesn’t have a well-intended purpose. What I have found is tons of 

Federal programs whose intended purpose is the same as some 

other intended purpose somewhere else and one doesn’t know what 

the other one is doing. 

Mr. Wells, does the GAO believe that money is lost in the 

REACH program? 

Mr. WELLS. No, sir. We don’t have evidence to support money 

has been lost in the program. When we looked at the program, 

wherever our auditors went, there always appeared to be a far 

greater need for assistance than what the limited funding provided 

could provide. 

Even as we talked about the payments that were given out in the 

REACH Program to assist in rent assistance, I mean it did, in fact, 

help, and it was needed, but it didn’t necessarily relate to the specific goals of that particular program. 

27

But I do not have any instances where money was actually wasted that I am aware of, nor did I see anything in the Single Audit 

Act that would indicate that money was wasted. 

Senator COBURN. OK. But the point being that this program has 

parameters and goals; that it may be reaching beyond or other programs have that will—so we have duplications, but not necessarily 

delivery to those people who are needing it? I mean, if, in fact, 

there are 16 other programs out there that do similar things to 

REACH, my question is do we need to beef up REACH and cut the 

money over here or why do we do that? Why do we have 16 programs? 

Mr. WELLS. I would certainly hope that if there are 16 programs, 

which I do not know if there are 16 programs doing exactly the 

same thing, but I would hope that it is a coordinated effort and 

there are not duplications and wasted expenditures. 

Senator COBURN. OK. That is one of the things that we are going 

to ask you all to find out. 

Mr. WELLS. That is our job. 

Senator COBURN. Any other comments for us? I have several. I 

have pages of questions here that I am not going to put you 

through that we want to know in terms of follow up. I think it is 

very important, Josephine, that this next winter is going to be the 

toughest winter the people in need who are depending on us in this 

country are going to have. Not only is it forecast to be a harsh winter, but with natural gas at eleven dollars and sixty something 

cents a thousand BTUs and heating oil at an all-time high, making 

sure the money gets to the people who need it, and the money 

doesn’t go to the people that don’t—and so I have implicit trust in 

your management. I just want to make sure it gets carried all the 

way down; and I am sure we are going to appropriate more money 

for this program. But we are going to have to find it by taking it 

from somewhere else. And maybe it is from some of the wasted 

money that is not going out for housing, but we are going to find 

it. 

I appreciate each of you being here. We will have a submitted list 

of questions, if you would please respond. 

I have one other observation, one of the things that we want to 

avoid doing is putting a ceiling on people. And, as we were listening to the HUD testimony, one of our problems with Medicaid 

today is that we don’t have a transition program. We have a cutoff 

on eligibility, and so what we do is we are ceiling people in so that 

they can’t go anywhere, because they have got to keep their Medicaid. 

And I am worried that we are about to do that in housing and 

now with energy assistance if you don’t meet the requirements, you 

are going to have to limit your income so you can maintain this. 

We need the help to figure out how to take the ceilings off so that 

people can continue to prosper and grow and take advantage of opportunities, but not have it go from help to nothing. And I would 

hope that in light of this program, especially LIHEAP, that we are 

not doing that, and, if we are, I would love to hear back from your 

how we can change that program to where we transition people as 

they up their incomes so that they don’t lose the benefit, so we 

stimulate their seeking of opportunities. I think too often we put 

28

a ceiling on people and say if you want to keep this, you can’t go 

above a certain income level. And so I would love that recommendation coming from you as well. 

Ms. ROBINSON. Well, I think you would be pleased to note that 

States do actually have some flexibility in determining the eligibility of individuals, and it is not singularly based on the poverty 

level of the respective State. 

Senator COBURN. Right. 

Ms. ROBINSON. It also has something to do with the energy burden in the house with respect to what their bills are. Some of the 

States take a larger look at the households and what the households are spending as a whole with respect to their current needs 

and their energy needs. 

Senator COBURN. So there is a transitioning mechanism? 

Ms. ROBINSON. I think there is, sir. 

Senator COBURN. Great. All right. Thank you all, very much. 

The hearing is adjourned. 

Ms. ROBINSON. Thank you. 

[Whereupon, at 3:55 p.m., the Subcommittee was adjourned.] 

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