Audit: DTA needs to strengthen efforts to protect, maximize resources
Welfare agency uses report to develop road map for reform
BOSTON, MA — State Auditor Suzanne M. Bump today issued an audit of the Department of Transitional Assistance (DTA), which details millions of dollars in questionable benefits, inadequate security over blank electronic benefit cards (EBT cards), and a need for improved fraud detection. The audit has resulted in the state welfare agency creating an action plan to enhance its program integrity and restore public confidence. DTA’s action plan was announced in March of 2013.
“This audit demonstrates that DTA can do more to ensure that only eligible people are receiving benefits and that those benefits are not being abused, Auditor Bump said. “I am encouraged that DTA has implemented a 100-day plan and is working to address each of these issues and improve its operations.”
DTA is responsible for administering a variety of financial assistance programs for families, elders, and disabled people including the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), Transitional Aid to Families with Dependent Children (TAFDC), and Emergency Aid to Elderly, Disabled and Children (EAEDC). In FY 2012 DTA administered more than $1.7 billion in total benefits.
Auditors identified 1,164 cases where recipients continued to receive a total of $2.39 million in benefits from six to 27 months after they were reported to be deceased. In a majority of sampled cases, store purchases and ATM transactions were made after the recipients’ dates of death, suggesting that unauthorized persons were using public benefits. In addition, the audit says that DTA paid at least $368,000 benefits to 178 guardians who were claiming deceased persons as dependents and $164,000 to 40 individuals being claimed by more than one guardian.
While DTA uses national databases to verify self-reported information on a recipient’s income and employment information, the agency did not verify self-reported Social Security Numbers (SSNs). The report says that DTA paid over $662,000 to individuals who were receiving benefits under two separate SSNs, over $359,000 to individuals whose SSNs were being used by more than one individual, and was providing benefits for an extended amount of time to recipients with an invalid temporary SSN.
Inadequate Security over Blank EBT Cards
A review of DTA’s processes for distributing blank EBT cards revealed that five regional offices could not provide documentation that accounted for over 30,000 cards, calling into question the agency’s ability to maintain an adequate physical security of blank EBT cards. Past internal investigations have found DTA employees misusing blank EBT cards to access recipients’ benefits inappropriately. Auditors found incomplete card inventory forms, cards left in unsecure locations, and the failure of regional offices to properly segregate the responsibilities of staff handling the cards.
Missed Opportunities to Detect Fraud
The technology DTA utilizes to administer benefits with EBT cards generates a number of reports which can assist DTA in the detection of potentially fraudulent activity, but today’s audit found the reports were not being used. Analysis of the unused reports revealed over $15 million in EBT activity that should have been identified by DTA and investigated.
The reports provided information on a number of potential fraud patterns including;
- Excessive Even-Dollar Transactions – Food purchases rarely end in even-dollar amounts (e.g. $100.00, $250.00). Records showing numerous even-dollar transactions may indicate instances in which a retailer may be illegally exchanging a participant’s SNAP benefits for cash. Auditors identified $1.5 million in even-dollar transactions that should have been investigated.
- Excessive Reissuances of EBT Cards -- A recipient’s requests for numerous EBT replacement cards may be an indication of the user engaging in EBT trafficking. Management reports revealed that over 9,800 people had requested and received 10 or more EBT replacement cards since 2006, with one individual being issued as many as 127 cards in the same period.
- Out of State Withdrawals -- Although EBT transactions outside the Commonwealth are allowable under the law, reports on out-of-state use are a tool for identifying recipients who might no longer be Massachusetts residents or are receiving duplicate benefits from other states. Auditors identified $4.58 million in out of state transactions that warranted DTA investigation.
- Full SNAP Balance Withdrawals – When retailers and recipients show a pattern of withdrawing an EBT cards full monthly value in one transaction it may indicate that the retailer and recipient are inappropriately exchanging SNAP benefits for cash. From the management reports, auditors identified $5 million in full balance withdrawals that warranted DTA investigation.
Auditor Bump has called on DTA to implement a more proactive approach towards combating recipient and retailer fraud, waste, and abuse. She recommends that DTA implement more effective data analytic tools and to utilize EBT management reports to better detect and reduce fraud. Also, Auditor Bump recommends that DTA improve its controls over handling blank EBT cards and regularly perform data matches with federal Social Security Administration databases.
DTA has responded positively to all audit findings and as a result has developed a 100-day action plan to address the audit’s concerns. DTA has also committed to strengthen its relationship with the Auditor’s Bureau of Special Investigations to enhance the state’s fraud fighting capabilities.
“DTA provides invaluable assistance to some of our most vulnerable citizens,” Auditor Bump said. “The integrity of DTA’s programs and operations are vitally important to taxpayers and clients alike.”
The Office of the State Auditor conducts technical and performance assessments of state government’s programs, departments, agencies, authorities, contracts, and vendors. With its reports, the OSA issues recommendations to improve accountability, efficiency, and transparency.