Agencies preparing improper payments reports get help from OMB
The Office of Management and Budget is helping major agencies prepare estimates of erroneous payments and plans for reducing the mistakes in time to include the information in this year's annual performance reports, an administration official told lawmakers Thursday.
During the fall and early winter, OMB held meetings to discuss agencies' strategies for reducing improper payments to program beneficiaries, said Linda Springer, controller of OMB's Office of Federal Financial Management. By next month, most agencies will have submitted lists of programs vulnerable to payment errors. By the end of June agencies will have completed statistical estimates of improper payments, and by September, most large agencies will have set targets for improvements.
These steps will help agencies prepare a section on payment errors for fiscal 2004 Performance and Accountability Reports, due in mid-November, Springer said. She testified at a House Government Reform Subcommittee on Efficiency and Financial Management hearing in York, Pa. Rep. Todd Platts, R-Pa., the subcommittee chairman, called the hearing to discuss agencies' progress at meeting the terms of the 2002 Improper Payments Act.
That law requires agencies to incorporate information on payment errors estimated at more than $10 million or that account for more than 2.5 percent of a program's spending in annual performance reports starting this year, along with strategies for eliminating errors. Mistakes typically occur when agencies distribute benefits to ineligible applicants, over- or underpay beneficiaries, or send out duplicative payments.
Some agencies already included sections on improper payments for such major programs as Medicare and food stamps, in fiscal 2003 reports, said McCoy Williams, the General Accounting Office's director of financial management and assurance, in testimony. Agencies reported full information for nine of 46 large programs the White House considers highly vulnerable to improper payments. For 22 other programs on the list, agencies provided partial information in fiscal 2003 reports, Williams said.
Agencies estimated that improper payments for the 31 programs totaled $35.7 billion, Williams said. The food stamps, Medicare, Earned Income Tax Credit, Section 8 Tenant Based Housing, Unemployment Insurance and Supplemental Security Income programs all reported more than $1 billion in estimated errors. Medicare posted the highest estimate, with $11.6 billion, with Earned Income Tax Credit with $10.5 billion.
The Civil Service Retirement System and Federal Employees Retirement System wasted an estimated $177.3 million in mistaken payments fiscal 2003, and the Federal Employees Health Benefits Program posted $28.2 million in errors.
Agencies failed to provide estimates for some large programs, including Medicaid, Temporary Assistance to Needy Families, and the National School Lunch and Breakfast program. "The level of reporting is literally all over the board," Williams testified.
Reports of improper payments will help agencies get a handle on the problem, the first step toward fixing mistakes, Williams said. The government lacks a reliable estimate of total payment errors, but GAO research indicates the amount exceeds $35 billion, possibly by a lot.
"One of the biggest hurdles that many entities face in the process of managing improper payments is overcoming the tendency to deny the problem," Williams testified. "It is easy to rationalize avoiding or deferring action to address a problem if you do not know how big the problem is."
The Improper Payments Act will force agencies to begin resolving mistakes, Williams said. OMB is helping agencies comply with the law in the most cost-effective way possible, Springer added. The Bush administration is encouraging agencies to track program payments from the time the money leaves the agency to the time benefits reach recipients, in search of errors, she said.
"With the budget in increasingly bad shape and recently passed tax cuts in jeopardy, renewed dedication to dramatically reducing the problem of improper payments is sure to become an important issue in the months ahead," said Paul Gessing, director of government affairs for the National Taxpayers Union, a 350,000-member lobbying group.
Agencies should go beyond the requirements in the law, especially the $10 million cutoff for planning to reduce errors, said Charles Gerow, chairman of the Pennsylvania chapter of Citizens Against Government Waste, a Washington-based watchdog group. "It is troublesome that we have come to the point where we are willing to lightly brush off $10 million," he testified.