thoughts and insights in the court to continuing this discussion for the next two days. thank you very much. >> here at young people smoking to the general report that the decline has slowed. 200 people die everyday in the u.s. from tobacco related diseases. health of humans services secretary kathleen sebelius and surgeon general regina benjamin talked about reports findings.

this is a half hour. >> what a well behaved group. last night good morning everybody am thank you for joining us here today. i am delighted to be here to kick off the announcement of the 2012 surgeon general report on tobacco use among youth and young adults. i want to start by acknowledging some of my trip to colleagues. dr. regina benjamin, the surgeon general who you are here from a few minutes. dr. david hatcher, former surgeon general who has been involved in this effort for a long time. klotzbach dr. howard koh, my assistant secretary for health, he will also hear from and we

have key members at the office of the assistant secretary of health staff leadership. wonderful team here from cbc. not to perry who is the author of this report comes from texas to be with us today lots of you who have been involved in this effort for a long time. since the first surgeon general's report on tobacco was published in 1964, the good news is we have seen the percentage of americans who smoke steadily decline. in 1965, over 42% of americans smoked. a 2004, it is on to just under 21% and that is very good news. but for all the progress we have made common tobacco use remains the biggest single threat to americans health. it kills an estimated 443,000 americans every year.

443,000. every tobacco related death is replaced by two new smokers under the age of 25. today's report brings more troubling news. it's the first of its kind to explore the causes and visit tobacco use among youth and young adult. and it shows us just what were up against. today, all over america are middle schoolers develop the deadly tobacco addictions before they can even drive a car. the younger a child is in a try cigarettes, the more likely they are to get stated it did to nicotine. one child picking up a tobacco product is one too many, but the fact that each and every day across america, more than 3800 kids under 18 smoke their first cigarettes is completely unacceptable. this report also underscores the importance of the historic

efforts the obama administration is taking to stop youths from using tobacco products and hospitals could again. the members who are changing enough, we had to change the way we read our committees of tobacco, so that is exactly what were doing. we push wide-ranging legislation that among other things makes it harder for tobacco companies are marketed to her children. it also restricts comment in a string using terms like life for mile upon products and marketing. an advance certain candy and fruit favored cigarettes, all techniques aimed at people, often younger than 18. that legislation had been for years and years this country and we finally got it done. also supporting local programs and stop people as part of last year's help a lot, we gave americans better access to count going to help them quit smoking

before they could fit. around the country, we have great partners. we have seen states join this fight for 20 days in washington d.c., passing out free last to improve health. over the last three years we've made great strides in our fight against tobacco and her actors are paid not. but today's report is an important reminder that we have about herbert to do to make death and disease a part of our past. i'm not a predator feature. i can come at thank you for being here today to this announcement and i would like to turn this over to assistant secretary for health, or howard koh. howard. [applause] >> thank you so much, madam secretary thank you so much for being here, everyone could secretary has another commitment to mass delete, though that's of course pinker for her tremendous leadership and dedication to the

tobacco epidemic. so i too am delighted to see so many wonderful colleague and friend here and let me thank dr. benjamin who you will hear from in just a minute. a great colleagues at the department of health and human services and fda, cdc, office of assistant secretary so many others. dr. sheila kerry commit senior science editor of the support of colleagues who helped edit and write this very important product and most importantly want to thank each and everyone of you for being here to support this very very important effort in this great day. we are here today to bring a heightened urgency the tremendous public health burden that tobacco continues to impose on our youth, a burden that is completely avoidable and completely preventable. too many of our children are addicted. tonight i cannot quite and too many go on to dive far too

young. as you heard from her secretary comes each day more than 1200 people died to just smoking and each death is replaced by two new smokers under the age of 26. i've personally witnessed a cycle of dependence and despair as a physician is cared for patients for over 30 years. i can tell you, it is heartbreaking when patients tell us that they want to stop smoking, but they haven't yet been able to do so. and it is tragic when i want cancer patient tell us that they started smokiness kid years ago to be cool and impress the other kids next door. today we understand even more clearly that he's no team is not an accident. doesn't just happen. he shared the tobacco industry spends $10 billion on marketing and promotion of tobacco products. this exceeds $1 million an hour.

over $27 million a year in the u.s. alone. the tobacco industry says they are intent is only to promote brand choices among adult smokers. but there is a difference between data content and documented impacts. because regardless of intent, the impact of tobacco marketing is to encourage underage youth. in fact, nearly 90% is poker survey hp team and more than 80% of underage smokers choose friends from among the top three most heavily advertised. you will hear in this report and nature can cluj and that advertising and promotional activities by tobacco companies cause -- cause the onset continuation of smoking among adolescents and young adults. research documents a response relationship. the more young people are as to

marketing or rational activity more likely they are to note. far too many kids still see smoke in images and messages every day that i realized this dependence. for example in 2010, nearly one third of the top grossing movies produced for children contained images of smoking. just about half of our state continue to allow smoking in public places. the images and messages caramelize tobacco dependent and that is the on the internet and at retail stores. in short, kids see smoking in the movies they watch in the video games they play, the websites they visit and the communities where they live. from 1997 until 2003, youth smoking out rapidly. but since that time, the rate of decline has slowed. in fact, there'd be 3 million fewer smokers today if we as a

society have to stay in the success and the client scene between 97 and 2003. and of great concern bureau says the consume other tobacco products including book was tobacco, hookah and small cigars. so in total we cannot document at least 3.6 million youth cigarette smokers as well as 1.7 million listen using non-cigarettes and useless cigars. moreover, many young people are conned currently using multiple types of tobacco. among those who use tobacco, more than half of high school males and high school females use more than one type of tobacco products but are these cigarettes, cigars, smokeless tobacco or some other form. the surgeon general's report not only provides powerful detail, but factors that btu use, but also identifies proven effective

strategies that can advance prevention. with the department of health and human services have committed to strengthening and fully implementing these proven effective strategies as part of a comprehensive coordinated national approach. in november 2010, we are proud to release pending the tobacco epidemic for the united states from the department of health and human tears as he is the sets forth specific actions to implement proud guys on recent legislative milestones and respond to changing market of tobacco products that support control programs throughout the country. we have ample evidence that these comprehensive multicomponent interventions work. such programs for them pay for themselves in terms of lives saved and dollars saved. the current problem is that we have not yet fully applied the

evidence-based tools that would end this epidemic. between 2005 in 2010, 20 states have declined since prevalence of 28 or more and that's encouraging that we need to accelerate these declines each and every state and sustain them to benefit all of her kids in the future. and so we and the tobacco epidemic, even more young people will become addicted. even more will die and even more families will be left behind, devastated by the loss of loved ones. the thank you so much for being here today. we must redouble our collect the commitment to celebrating comprehensive programs they can service is successful enough for all, creating an environment that denormalized is this dependence and most of all give our young people a fighting chance to be held the tobacco

free. thank you very, very much for being here. [applause] >> i'm very pleased not to introduce urge surgeon general. can't knock >> good morning. it is such a nice turnout. thank you all for being so interested in such an important issue he thank you are sharing with us the department administration's commitment to tobacco control. i would like to say a various social thank you to secretary sebelius, even though she had to leave, for her strong and unrelenting leadership on this most important public health issue. she is rated a top priority. i would also like to recognize my tobacco free advocates, the young students than group that i've been working with through

the years from north carolina and virginia. why don't you guys stand up? [applause] and also the others watching on the web as a web stream that. you know, 2012 surgeon general's report of preventing tobacco use among youth and young adults is the result of the contributions of over more than 130 health experts inside like to recognize the editors with us today. dr. shell perry, melissa st. clair, that their french palooka that are here and you will still be here to help the question and answers if you get an tutu detailed i think. also, i understand i think dr. woody kessler here is to represent dr. c. recoup here's the thank you for being here. but i'd like to recognize and

thank my medical school professor and mentor, dr. david satcher to 16 surgeon general and all of this former surgeon general's further work on tobacco nationally and internationally. every surgeon general since 1964 has weighed in on the issue of tobacco and everyone is called for an immediate action to solve this problem. today's release is the 31st surgeon general's report on tobacco, preventing tobacco use among youth and young adults. and it reminds us once again that the burden of tobacco is a heavy role burden on society. the report challenges as to end the epidemic of smoking among young people and the numbers in this report are shocking. her son earlier but they're worth repeating. every day, 1200 americans die from smoking in each of those olympian with raised by two young smokers. i must 90% of those replacement

smokers smoke their first cigarette by the time they're 18 and despite all the reductions and tobacco use in the past decade today, more than 600,000 middle-school students smoke and 3 million high school students smoke cigarettes. so, nearly one in three young adults between the ages of 18 and 26 smoke. this is the higher rate than any other age group. so this is a serious public health issue. one of the most serious findings in this report is about nicotine addiction and together they begin talking, the more like you they are to become at it did. every year, 1.4 million youth under the ages of 18 tried their first occur at and many of them end up being lifelong smokers. cigarettes are designed for addiction. and it was seen as a chemical

compound and added ingredients and design features make them even more to the market did than ever before. agreements like sugar mixture enhancers and when they are added, they reduce the harshness and increasing the case and appeal. chemical agreements such as ammonia convert nicotine into a recall of free nicotine more quickly crosses the blood brain barrier. in ventilation holes and filters make smoke easier to inhale deeply into the lungs can also convert nicotine into free nicotine. all these design features work together to enhance the effective kick the smokers feel an adolescent bodies are moistened it is to nicotine and adolescents are more easily to kids and adults. this helps explain why 1000 teenagers become daily smokers.

in three out of four high school students continue to smoke well into adulthood. even if they had attempted to quit in a few years. and there are also other tobacco products you find appealing to some of the figures i cigars and a fruit flavored and candy flavored things like strawberry and grape's. some of the latest smokeless tobacco products there's that list and others dissolve blake mintz. part of their appeal is that they can be used at school or home in front of mom and dad, even so they can't be detected and maybe not even other kids were using them. but understand these products can also cause nicotine addiction, which can lead to serious defeat and that. this report also highlights some of the health effects. in addition to increased risk for chronic diseases and

emphysema, there is an immediate damage to the heart and to the lungs. that he showed many young workers had early cardiovascular damage, particularly early in the aorta. that puts them at higher risk are the arctic section. and they tend to die very young. no can do an adolescent slow for development of the lung function and teens who smoke can end up as as it does with lungs and never released their full capacity. another finding in this report is that marketing and being of tobacco products to young people have been very successful. and this report, science sees studies to use causality. the more the youth is exposed to marketing and advertisement, the more likely they are to start a meme gaining smoking. in the united states alone, more

than $1 million an hour over $27 million a day is spent on targeting messages and images to portray smoking as an accept: appealing activity. we know that prevention is the key. 99% of smokers begin smoking before the age of 25. so we were to prevent her next generation from ever starting this note. if we can just get them to remain smoke-free until the 26th in less than 1% will ever start. we know works. we know that when we enact smoke-free policies, we reduce exposure to secondhand smoke, prompt smokers to quit and support healthy decisions. we know that when we increase the price of tobacco, smoking rates declined among youth. we also know that when we educate the public with aggressive media campaigns and

infirm at the risk and encourage tobacco users to quit and prevent youth from starting to smoke. and science tells us that sustained multicomponent programs prevent young people from starting to use tobacco. restart this approach in new york city when they cut their youth smoking in half in his little as six years. we have implemented these types of comprehensive tobacco programs in the past when we saw a steady decline for the rate of youth is between 1997 and 2003. have we maintained the coors, we could have prevented 3 million smokers. we need to bring back a level of commitment, bring it back to the programs today. it is time for us to billy and the single most preventable cause of death in this nation. as you can see, we are committed to say we can make our next-generation tobacco free.

so i try to describe to you some of the many findings in this 2012 surgeon general's report. the full report is 900 pages long and is really written for scientific audience. but it really is important that americans are not americans understand that we can end this tobacco epidemic at providing used to have areas that. as we developed a consumer luck with that she can see in your packet and it's written in plain language and good graphics and it is entitled to surgeon general's report, preventing tobacco use among youth and adults. we can make the next generation tobacco free. i'd like to save things to the centers for disease control and prevention's office has smoking help because they hoped the new project. so i'd like to formally -- officially launch the surgeon

general's city challenge. this is the competition to engage young people in developing original videos that feature one or more of the surgeon general's report findings. contestants are encouraged to use this consumer piece to show you as a guide to writing hot messages and videos in the contest will have two age categories with english and spanish, age 14 to 18 age 18 to 24. and you can join as an individual or as groups, teams such as schools and after you submit your video, it will be screened and after a screen, eligible videos will be put up on pdc e2 channel for public domain admin the top 10 of those surveyed judged an expert panel. there's also type doesn't dollars grand prize and several $500 under wraps.

so was looking forward to having some good videos and this competition. more information can be found at surgeon general.gov. so i thought i would now show you my video that this is also called a psa or public service announcement. >> at 12 i smoked my first cigarette. >> i visited it. >> is for the add lung disease. >> i said to not die of a heart attack. >> cigarette smoke causes immediate damage that leads to death with those who quit or die replaced by a new generation of smokers. i'm regina benjamin come united states surgeon general. go to cdc.gov and learn how to make our generation tobacco free. [applause] >> i would like to ask

dr. charlotte perry will be happy to take your question. >> i understand we -- i understand that time on the several questions that would be delighted to take some now. [inaudible] >> i think primary care physicians and a physician or a well respected by their patient and listen to their patient. so patients can talk to your doctor and as far as doctors, when a choice after patients about smoking and ways to quit

smoking. particularly in the primary care arena, when we are dealing with adolescents in this age group, we can have a very strong is that they are. >> other questions from the audience? going once. okay, thank you very much for being here. [applause] [inaudible conversations]

>> the house today passed a bill making it easier for small businesses to raise capital and go public. democrats and republicans remain divided about a larger jonesville. how superb a good spoke to

reporters. first, majority leader eric cantor. [inaudible conversations] >> good afternoon. how are you? we are really excited. we just saw it tonight is that on the job site. i think that this vote today and nearly 400 votes for the bill look at the final tally in a minute. i think what it demonstrates as we are able to set aside our different as when we come together for producing results that people want to see. and what this bill does is it provides a real shot in the arm to lunch or bring it where's, small businessmen and women, removes red tape and allows small business as well as retaining jobs.

the jobs act is just that. the vote is very strong and what we've seen a think on the other side of the capitalist senator mcconnell and senator thune may have been terrific in making a public statement centaurs supporting this bill and i hope me to read on the other side cannot quit dispatch and follow the president's request to get the president does so for signing as quickly as possible. it will get this growth going again ago through three business. interview with kevin mccarthy >> thank you very much. today was a very bipartisan day, where you watch three process. open to set committee, debate on

all sides, but the most important thing is what it focuses on, small business. history of america's great event all business, job creation is through small business. but the business challenge we have is where we're at an all-time low in the last 17 years and the greatest obstacle for small business, red tape in the entrance to market. this does josaphat three. bipartisan deals with the president coming with the statements of work. talking about ideas than this bill. unfortunately, it still has to pass that hurdle of the senate. amid the senate has had difficulty passing jobs bills, even though they are bipartisan. so we are hopeful for the bipartisan vote in the house, support for the president to carry we can do is build up for

fruition because the days when two americans businesses. >> man from fried job. >> thank you. as a businessperson and freshman congressman, it has been a bug year and a half, but today we can actually have a bit of optimism that we have had a jobs bill, a bipartisan bill those focusing on the private sector. as i've said many times, jobs are created in the halls of congress. they are in the private sector. that would like to the senate and urged senator reid and let it go through the chambers and give the american people something they been longing for it ever since the last election. i can't say enough about our team and how we've been focused from energy, jobs, trying to put americans back to work at giving power back to the people. last but not least i couldn't

sleep and i was thinking about three children. my little girl is eight years old. or name is sir and she wants to be a dentist. i was thinking, how sad would it be if she goes at the site to see honey, this is not america anymore and you can't be whatever you want to be. we must focus on the remake america what it always can be, could be and will be. thank you so much, guy. >> here from hudson valley of new york and stephen does that say right. our citizens are the folks who create jobs in our job here in the halls of congress is to make sure that we have a climate to allow our citizens to do what they do best and let them have the dignity of participating in what has made this country great and that is to have a good, productive job and had the opportunity to invest in growth. the jobs that does both, so we need to help now at the senate

to get these jobs will to the president's desk. we had cooperation of virtually every member of congress across the spectrum to get this job done. .. because for capital formation in peace bills provide all sorts of different silos, all different paths for companies to grow, for them to hire, for them to expand this economy and yes it was done

from the republican house that we listened, we worked with their democratic colleagues and therefore you saw up on the board a terrific at partisan vote. we did something really good today. >> patrick mchenry from north carolina. the world bank said that in 2007 we were ranked third in the world and the ease of creating a small business. today we are 13. we have fallen behind and the world has caught up to us. our market used to be the end duty of the world and today the rest of the world wants to take that place from us. so what this legislation does is we know that dodd-frank restricts lending and makes it more costly to get landing so what we are doing is moving counter javad and reducing red tape that has been on the books for eight years in case of mr. mccarthy's legislation that allows you to communicate about a stock average.

my legislation is called crowd funding. reduces the regulatory hurdle for small business to access small equity investment. what that does is take the best of microfinance and crowdsource and put them together. it's high time that we pass legislation might this to update the rate that we have in the books to reduce red tape and unleashed the private sector and small businesses so we can create jobs. glad to have a bipartisan vote and i certainly appreciate the leadership of both mr. fincher and mr. cantor in bringing this moment about. >> mr. cantor -- mr. cantor do you think ron paul and newt gingrich should be dropping out of the race in the republican nomination? >> and that relates to jobs how? [laughter] what is your question? listen, we are about a system in this country.

everyone speaks there will. they are free and conduct their lives in a legal way. we have seen a very hard-fought primary with a robust debate and i am looking forward to our party focusing in on the issues that most people are concerned about today and that is what this bill is about. it's about getting back to work, about creating jobs and we know they do that for small business which is why the bill is so appropriate. >> the democrats say sure they will support the package of bills because they supported the measures in the past and some of them have already passed the house and leader pelosi said she this morning call this whole package to make her. it's so meager she said to me. what do you think about that? >> i think look, the problem is the congressional performance and producing results has been brought into question and what we are trying to do is to regain

the confidence of the people in the senate here and by having a win like this, think we can demonstrate that we really can work together, so it doesn't help to denigrate any time that we do actually work together and produce a result like today, because you probably have to look far and wide to see when that actually happened with such a deliberate and civil manner. we went about this bill, reaching out across the aisle. as you know many democratic members were involved in this process. i met with the presidents appointee to the job council and actually focused on these issues of entrepreneurship of starting up businesses again and it's with that process that we came forward with the product that reflects all the views and it allows us to come together. so i would hope that leader pelosi will work with us in the same vein and accomplishing it even more as we go forward to help get our economy growing

again. >> the report from the senate in your office saying 30 jobs bills have been sent to you and senator reid but he is not acted on that. how does the rhetoric play into what the senate does? >> that is not rhetoric. we are obviously frustrated as are the american people, that we can't see the senate trying to remove the difficulties that entrepreneurs and small businesses are having. we want to make it easier for them and just as my colleague said, this bill today makes it easier for startup businesses in america. we need to be a start of country again. where the enemy of the world when it comes to our capital markets and the opportunity that we provided to the people of this country. that is what america is. we have to do that again. >> the senate has said they will

try to bring up a different version, their own version of a jobs plan next week. if they pass their version would you be willing to go to conference? >> all i can say is the president has endorsed a jobs act and if we want to act with dispatch so that small businesses and startups can get going again, it seems to me the simplest way forward is to listen to the president on this one, listen to the majority, overwhelming majority in the house, bipartisan and let's join together and do something for entrepreneurs and small businesses and once and for all get this country back to work. >> is there a message in the anti-incumbent mood albert particularly with some people further to the right in some of your members worried about primary challenges? >> we are certainly in an election season and the task for any candidate will produce

results. are majority came to this town for effective reforms and i think the american people can look forward to it for a long time. it's about spending within our means and about provides the leadership that we do have the vision and plan in place that we are trying to implement. and that will be a governing aspect and not only the primary but the general election in november. thank you very much. [inaudible conversations]

>> i don't think the president could have gotten away with it. >> hoover stands alone. he's like the washington monument. he stands alone like a statue encased in -- is one of the most powerful men who ever served in washington in the 20th century. 11 presidents, 48 years, from what where wilson to richard nixon. there was no one like him. and a great deal of what we know about j. edgar hoover is myth and legend.

>> at this house hearing on food stamp fraud, agriculture department officials testified about efforts to catch retailers who cheat the food stamp program. a new service report last month found that disqualified stores were still in the program. [inaudible conversations] >> the committee will come to order. the oversight committee exist to secure fundamental principles. first americans have a right to

know that the money washington takes from them is well spent and second, americans deserve an efficient effective government that works for them. our duty on the oversight and government reform committee is to protect these rights. our solemn responsibility is to hold government accountable to taxpayers this taxpayers have a right to know what they get from their government. we will work tirelessly in partnership with citizen watchdogs which deliver the facts of the american people and bring genuine reform to the federal bureaucracy. i will now recognize myself for an opening statement and pursuant to the mission statement would ask that the video be played, since it reflects the watchdog in question. >> food stamp fraud is costing americans millions in taxpayer money. >> in new york and miami detroit in here in san diego. >> in the past five years alone the usda permanently

disqualified 4600 retailers, 24 phoenix area stores permanently disqualified. >> san diego retailers ripping off the federal government. >> 23 of those retailers in the palm beach and many we found have been banned from accepting food stamps and approved to accept them. investigators pored over the records. we learn 1500 stores across the country on both of them. >> the usda says 99% of the time it is illegal trafficking. >> a retailer will overcharge a customer and pocket the difference. >> they want to trade their benefits for cash or band merchandise like alcohol. the store keeps $50 the cardholder gets 50, all taxpayer money. >> what this is is ultimately costing the taxpayer's. >> according to usda records $330 million in 2008. >> america deserves better.

just yesterday one of our witnesses penned an op-ed that depicted an improvement in the s.n.a.p. program proudly stating how much better it was. it is not for us today to question whether not the program has improved. the question is in a day in which in a moment's notice in a few keystrokes i can look at a storefront anywhere in america and find out who, what and where owns that, or in this case the scripps howard do if you public record searches available the department of agriculture and find out what they were doing wrong to promote this. we need to do better. the hearing today is about children. the hearing today is about families. ultimately the food stamp program is about providing nutrition to people in need. 42 million people rely on the food stamp program.

a few misuse the program. our hearing today is not about the individuals who out of desperation for drugs, alcohol or spending money, misuse food stamps. it's about america's responsibility. this administration in this congress's responsibility to make sure that the money or the benefit of the money gets to the people who are supposed to get it. it is not to buy alcohol, cigarettes or drugs. a relatively few storefronts around america represent a considerable amount of fraud. understand that a small amount of stores does not mean there is a small amount of fraud. people who want to use or misuse i should say, the resources provided to them by the taxpayer and the way of food stamps seek out stores and to cheat.

it's not an accident that you find out somewhere in the neighborhood and entity will trade you $100 in food stamps for $50 in cash. that score is bad enough but let's understand, somewhere is a family that relied on food that instead got nothing. these companies and these individuals behind these companies need to be punished on a consistent basis if in fact they are suspended. it needs for a -- to be for period of time with the understanding of whether or not they are ever going to be able to sell again. if they are permanently excluded, then in fact permanent means to remain permanent. more importantly in this day and age in the ability to research, if you only have 100 people to track this huge amount of potential waste, one can make the other 99 more effective.

the scandal we are looking at today is important because we know that 100 people working for the secretary in fact found people who were stealing from the taxpayers, stealing from families who need that food and need that benefit. one of those 100 assigns to do what whistleblowers have done for us in fact could have prevented many of these stores from being back in business. it's that simple. we will hear today here today as we often do, if we only had more resources. this committee has no more resources to provide. in fact, you're going to have to do more for less. that is more oversight, more accountability with less money available for that and more need by people on the food stamp program. ultimately, we are going to hear

testimony by both sides saying we are doing a better job and we are going to hear people saying you are not doing well enough. both can be true. of america expects both to be true. continuous improvement but in fact never satisfied until we have done enough and with that i recognize the ranking member for his opening statement. >> thank you mr. chairman and i welcome the chance to oversight the snap program which is one of the most vital missions of any government program and that is to prevent abject hunger and in homes all across america. i'm so glad that you set this hearing among other things is about children. mr. chairman thank you for agreeing to invite the minorities and jennifer hatcher of the food cooperative institute. our hearing is about storeowners. i thought it was appropriate to invite them. ms. hatcher's organization

represents 26,000 supermarkets and food stores across the country that implement the program on a daily basis. i want to thank you for allowing our minority leaders to appear on the first panel with everyone else. he did not have to do that but you did and we are indeed grateful. let me start by emphasizing a very critical point. nearly half of the beneficiaries of the stamp program are poor, hungry children. snap serves 46 million americans with incomes at or below 130% of the poverty level. according to usda 47% are under 18 years old. snap serves millions of people who are elderly or have disabilities. snap is never been more critical than it is today.

2008 financial crisis drove more americans into poverty than any other time since we started drafting this data. the collapse of wall street and the evisceration of trillions of dollars in household savings poured millions of americans to turn to this critical safety net and it has been there for them. while the need for the s.n.a.p. program is at an all-time high, fraud within the program is at an all-time low. snap is one of the most efficiently run federal programs with one of the lowest fraud rates of any government program. fraud has declined from approximately 4 cents of every dollar in 1993 to only one sent of every dollar extended today. i agree that is not good enough. the majority appears to be facing today's hearing on a recent press story about a

certain store owner that has been disqualified from the program and allegedly -- in some way. all those this would be true we have not seen evidence to support allegations that there is a pervasive weakness in the program or the magnitude of fraud in the program may be much greater than initially reported. reported. in fact today, we will hear just the opposite. this press account has significant problems. the usda has acted quickly to address the bad actors and the s.n.a.p. program continues to be an extremely well-run program. given the strong track record i'm concerned that the trooper's of this hearing may be to discredit the entire program in order to justify draconian cuts. last year every republican member of this committee voted to confer the s.n.a.p. program into a block grant program.

to/this funding by $127 billion over the next 10 years. a massive reduction of almost 20%. again i go back to what you said a little bit earlier mr. chairman. this is about children. this proposal was part of a plan proposed by budget committee chairman paul ryan and adopted by the house republicans last april. according to the senate on budget policies, this proposal will force up to 8 million men, women and children to be cut from the program or severely reduce the amount of food they can buy. where these children supposed to go if they are hungry? i believe there is a compassion deficit here in washington. obviously a dollar squandered in this program is a dollar that does not go to poor families. that desperately need food but efforts imposed for draconian

cuts in this program will cause even greater harm to the very people who need the most help. while i strongly support efforts to make the program more effective, and i strongly support the fact that we must rule out fraud i will do everything in my power to oppose efforts to use these isolated examples to discredit the entire program and i look forward to a productive discussion today on ways to improve one of the most successful federal programs to prevent poverty and hunger throughout the xena and with that mr. chairman i yield back. >> i think of the gentleman. members will have seven days to submit opening statements for the record. we now recognize our first panel. mr. kevin concannon is the undersecretary for food and consumer services with usda. prior to the service at the department of agriculture he served as director of three different state government departments of health and human services in maine, oregon and

iowa. phyllis fong is the u.s. they -- va inspector inspector general and assert the department for 10 years. she is also currently serving as the first chairperson of the council of inspector general's on integrity, efficiency and in fact in that role you may be aware that this committee would like to pass on to that council council greater authority including potentially subpoena authority. that remains one of our long-term goals if we can convince the senate of the importance of investigating. >> ms. jennifer hatcher is senior vice president of government and public affairs for the food marketing institute. prior to joining fmi she served as chairperson for chairman spencer bachus as his chief of staff.

lastly, ms. faulkner is inspector general of the commonwealth of pennsylvania. prior to becoming inspector general ms. faulkner was a law partner at the philadelphia office of ballard llp. she is has had a lengthy career, not that lengthy, you are too young, and public service as an assistant u.s. attorneyattorney, deputy attorney general of pennsylvania, and philadelphia public defender. that is a lot to pack in a short time. if if you would all rise pursuant to our committee rules all witnesses are to be sworn. please raise your right hand. do you solemnly swear or affirm the testimony you're about to give will be the truth, the whole truth and nothing but the truth? let the record reflect all witnesses answered in the affirmative. this committee historically tends to have a soft gavel as i informed the witnesses ahead of time. we have a vote on a district

last working day. i know my people. they will not return so in order to not have you wait an hour were relatively small period afterwards if we have not concluded by the time of the vote, we will end at that point. as a result that will hold everyone on your side very close to the five minutes. i will hold my own people close to the five minutes, not just for questions but for your answers. may have all the members on the daisday is, will you include time in your five minutes for both questions in a reasonable period for witnesses to answer and with that mr. secretary you are recognized for five minutes. >> thank you very much for the opportunity to join you and let me thank inspector general fong who was an oversight agent at usda. the mission of the supplemental nutrition assistance program or s.n.a.p. is to help low income people get the food they need while they get back on their feet. it's never been more important

in the lives of americans than now. so strong administration on oversight including payments, proper use of benefits are just as critical. the focus of today's hearing is about usda's oversight and management of the retailers that are authorized to redeem s.n.a.p. benefits across the united states. particular emphasis needs to be given to recent news stories as the result of several months of investigative journalism by a team of reporters at scripps howard news service that focused on retailers that have previously been disqualified from s.n.a.p. for trafficking. trafficking is the sale or purchase of s.n.a.p. benefits for cash, and illegal activity punishable by disqualification, fines and criminal prosecution. while we recognize the importance of the issues raised by scripts i want to set the record straight about several facts. as with other leads we receive from the public we took the information scripps brought to our attention very seriously. we immediately began our own

investigation into the stores that were referred to as. the issues may not be as widespread as reported by scripts. many of the cases they raised but not proven to have integrity problems. of the 36 owner scripts referred to sns as suspicious our investigation found over three-quarters had no connection to the disqualified owner or were not authorized as a s.n.a.p. store. the remaining quarter have been either disqualified, charged or withdrawn from s.n.a.p.. one is under criminal investigation by the oig. that said, we still believe broader action is needed and we increased measures including more robust review of applicants public records and shorter time period authorizations for stores and locations with previous disqualifications. prior to these reports fms has been upgrading its electronic

transaction datamining technology to better detect suspicious redemption and we are preparing to post information regarding the owners of permanently disqualified stores to gsa's excluded party to protect other federal agencies. we are developing rules that will increase penalties for trafficking stores. combating fraud has long been a usda priority. over the last 15 years on the charge rotating appear you will see one of those charts reflect various initiatives we have taken over the years. we are not yet satisfied that usda continues to work closely with their partners to fight trafficking. in fiscal year 2011 11 at theness reviewed over 15,000 stores, conducted nearly 5000 undercover investigations and sanction or punished 2000 retailers. while usda has direct

responsibility for overseeing s.n.a.p. retailers are integrity work includes every aspect of s.n.a.p. administration. by overseeing and working closely with our partners including state and local governments usda strives to ensure that scarce taxpayer resources are managed with integrity and accountability. first over the past decade we have made major improvements in s.n.a.p. payments accuracy. over 90% of s.n.a.p. clients are indeed eligible and accuracy in 2010 reached 96%, a historic high. 2010 errors were less than they would have been under the 2000 year rate. second, usda oversees the provide guidance to find and hold accountable recipients who commit fraud. usda recently issued new policies acquired by even the intent to sell benefits, for example by offering a s.n.a.p. product on the social media site like craigslist, can lead to disqualification. last year i wrote to all of the

nation nations governors individually asking them to make s.n.a.p. integrity of priority. we have engage the retailer community in this effort. i personally met with state commissioners around the country to elicit their support including a greater focus on recipient trafficking and increase increased partnership with law enforcement. to conclude, fraud is neither new nor static while the vast majority of retailers and clients follow the rules. a few bad actors will exploit s.n.a.p. at this program is too important and too great to tolerate fraud. as an cybersecurity, we must be vigilant and continuously update the systems to find new fraud schemes. the usda will continue to crack down on violators. we welcome our partners constructive engagement in this effort. thank you very much. >> thank you. ms. fong. >> thank you mr. chairman

ranking membercomments and members of the committee. i want to express my appreciation to you mr. chairman and too many of the distinguished members of this committee for your support of the federal ip community. you up in a worthy record of bipartisan support for contributions and you'd demonstrate it time and again through legislation, hearings and speeches your interest in our work. so on behalf of the entire community i want to thank all of you for your support. today you have invited me to test debate about usda ig work to protect the integrity of the s.n.a.p. program. to put this in context, the ig office and usda is responsible for providing oversight to all usda programs which currently number over 300. of course snape is the largest program in our portfolio with over $70 billion it has drawn much of our attention over the past few years. in the last two years alone we have devoted almost half of our

investigative resources to addressing s.n.a.p. fraud. measurable results. we currently have over 900 -- cases open in over 600 both retailers and semi. my written statement provides examples of our most significant cases involving disqualified retailers. but i want to emphasize more than the cases that we do that the core problem in this program are not new. namely, there will always be people willing to commit fraud and to traffic s.n.a.p. benefits. even though the specific schemes themselves may take different forms, we as an ig office have been working on these issues with fns, or partners and in state and local agencies for many years to address these issues and i can assure you that we have cases right now going on in every region of the country and our agents are continually adjusting their work to deal

with new schemes as they arise. while it's important to investigate, prosecute and bring to justice wrongdoers, these actions alone will not fix the problem. it is critical that we also focus our efforts on looking at how retailers bypass the system that we have put into place to control access. and to try and figure out what can be done to improve the program for the future. and to this end, we have issued several audits over the past few years with recommendations for corrective actions. we have been working with fns and their partners that usda to addressed the issue. in particular we recommend that retailer applicants need to have clean backgrounds, no history of criminal or illegal activity and there needs to be a way to do that. we also believe that usda should make better use of suspension and department appropriately to

ensure that disqualified retailers did not participate in government programs in the future. so to conclude, we strongly believe that retailer integrity is a critical component of ensuring a successful s.n.a.p. program that delivers nutritious food to people who needed. in our experience on scrupulous retailers are the heart of most of trafficking schemes we have seen, so we look forward to continuing our work with fns, our state and local partners to address fraud when it occurs and improve the integrity of this very important program. thank you for your interest and we look forward to addressing our questions. >> thank you. ms. hatcher. >> good morning chairman and members of the committee. on behalf of the families served by the 25,000 stores operated by our members i want to thank you for the opportunity to testify today. my name is jennifer hatcher and i'm senior vice president for

public affairs. for the past 13 years the transition from paper food stamps to electronic benefits transfer and now the new program name s.n.a.p. i have worked on these issues. s.n.a.p. is a positive example of a public/private partnership that works and that reduces fraud for all stakeholders in the program. supermarket retailers are proud of our partnership to deliver safe, healthy and affordable food to customers in need of assistance. unfortunately, the number of customers they need is higher today than it has ever been. in large part due to the conversion to electronic delivery of benefits rather than paper food stamps, significant portion of the fraud has been removed from the system. many supermarkets remember vividly situations where paper food stamps are being sold by criminals in front of the store. paper stamps provided anonymity for the perpetrators of these illegal transactions.

ebt ties any fraudulent activity to a per tick where transaction, customer and store location. this is the criminal -- takes the criminal element out of our store parking lot. electronically has provided agencies with a better mechanism to compare transition activity and look for duplication across state lines particularly with state to share a common border. some states have employed mathematicians to electronically identify fraudulent patterns of sale. ebt has also improved its mission being cut down the potential for human clerical error. s.n.a.p. ebt transactions are protected by a user's personal identification number, pin, so they are much more secure than a paper or even a credit card. our members take responsibility for the delivery of these benefits to various places. be b of be having an authorized

author a s.n.a.p. retailer is part of their identity and part of verification the community which is important for them to protect. after reviewing the scripps report in the associated list of disqualified retailers we found no as in my members on the list and agreed that those should be removed. fighting fraud before it happens is critical and i thought i would share some of the steps of supermarket member takes to prevent fraudulent activity in their stores. first and most important is training. fmi member companies conduct on-site and off-site training for both their associates and their managers and the rules and regulations that govern s.n.a.p. transactions. there's a 76 page manual on the web site that we consult on a daily basis. for all of the rules and regulations governing the program. there's also a 25 page guide for retailers and a 17 minute training video in multiple languages that can be utilized

for these purposes. several of our members have also set up their own internal audit to ensure they are in compliance in each of their transactions is in compliance. the vast majority of our members utilize the computer system that allows them to program the upc code eligible and ineligible food items and then locks the point-of-sale purchase system should someone attempt to purchase an ineligible item with s.n.a.p. benefits. fmi also publishes to our members on a regular basis the names and contact information of the usda fns regional offices and stated ministers for s.n.a.p. ebt. post our members make their fraud hotline number available to their associates and managers through each of these training materials. there is one more issue that i feel i need to raise in the context of this hearing and that is the extreme concentration of benefits issuance in the first month and a number of cases.

their number of issues that spreading the issuance of s.n.a.p. benefits across the entirety of the month instead of just on the first day could help accomplish and we think a reduction in fraud may be an additional positive result of this change. thank you for inviting fmi to share our thoughts on identifying and reducing fraud and the s.n.a.p. program. industry is committed to ensuring a pleasant and efficient shopping experience for all our customers and we welcome the opportunity to work with the committee and the department to move towards additional efficiencies in the s.n.a.p. program. thank you. >> thank you. ms. faulkner. good morning chairman ice and honorable members of the committee on oversight and reform. reform. is like to thank you for the opportunity to address this committee on the office of -- to deter and combat fraud and the supplemental assistance program or as we have refer to it as now.

let me say the pencil the new governor tom corcoran believes it's important for pennsylvania to to provide health and human services such as s.n.a.p. to deserving citizens individuals who engage in fraud take away those limited resources from the neediest of pennsylvania. it's the mission of my office to uncover fraud laced in the use within s.n.a.p. to hold those individuals who have committed fraud within the program accountable for their actions and to recover overpaid tax dollars. the office of inspector general conducts its mission to combat s.n.a.p. fraud by operating several fraud investigative programs within its bureau of fraud or attention. these programs are field investigations, fraud investigations and s.n.a.p. trafficking programs. these programs are operating in coronation with the pennsylvania department of health and welfare which we refer to as dt w. which administers the s.n.a.p. program. the office of inspector general is combating fraud begins with the application for s.n.a.p.

benefits. through her feel investigation programs. when dpw refers an application or reapplication for s.n.a.p. in the pits and suspects fraud or received inconsistent or incomplete information it prefers the application to my office, the office of inspector general. it provides dpw with its findings. based on these findings epw denies or proves benefits at a reduced amount. this process exists for active recipients of s.n.a.p. benefits when epw becomes aware of circumstances and the recipients ongoing case. this proactive approach to combating s.n.a.p. fraud in investigating ongoing cases to ensure that only those entitled to benefits are actually receiving them is a critical function of my office. as a best business practice we have greater efficiencies in denying or reducing men correctly authorize benefits

versus attempting to collect overpayment benefits. in fiscal year 2010, 2011 the oig conducted approximately 22,308 field investigations where s.n.a.p. benefits were involved. that cost the taxpayer supported based on the oig investigations were either denied, closed or reduced, was a little over $19 million. not all fraud however can be prevented by the oig field investigation program. when dpw becomes aware of such circumstances which affect its recipients to pass the benefits it will calculate an overpayment of s.n.a.p. benefits them or for that overpayment to my office the oig for investigation. the oig in its fraud investigation program conducts investigation on overpaid s.n.a.p. out of it and determines if the overpayment was due to willful intent to defraud the program. investigations where the oig is able to substantiate their fraud occurred either criminally prosecuted or adjudicated there

an administrative hearing. court findings of it tension all findings include orders to fully repay restitution to the commonwealth or carry the program disqualification for the defendant. the oig follows federal regulations and the progressive disqualification penalties for intentional violations with a first violation carrying a 12 month disqualification period. in the fiscal year 2010/2011 for s.n.a.p. overpayment claims the oig conducted approximately 3335 investigations which involves s.n.a.p. involve s.n.a.p. benefits. the oig filed 613 criminal complaints for a total restitution of a little over $1.4 million. the oig disqualified 820 and the result of criminal charges which resulted in a little over $1.6 million in cost savings from preventing further program participation. the oig filed 180 administrative hearings with a total

restitution amount of $322,000.463. the oig disqualified 172 defendants as a result of civil proceedings which resulted in approximately $496,000 in cost savings from preventing further participation which includes figures from s.n.a.p. trafficking programs. in addition to efforts to combat s.n.a.p. fraud at the application stage we will -- the oig focuses on fraud occurring through recipients who sell or change s.n.a.p. benefits to negotiate them into cash services, credit or anything other than food. the practice of s.n.a.p. trafficking is actively pursued and has been done so for many years in pennsylvania. to maintain the integrity of s.n.a.p. and by ensuring the credibility of the vendors and recipients. the oig operates a small but dedicated unit to operate at s.n.a.p. trafficking program and works integrally with the usda

and the nutrition service. the usda and the inspector general local district attorneys who identify store owners engaging in s.n.a.p. trafficking. this active participation between the usda and oig is the chief reason why pennsylvania has success in targeting s.n.a.p. trafficking. the usda is responsible for disqualifying individual store owners and filing criminal charges against them. as you know it takes the active participation of the recipient of s.n.a.p. benefits for s.n.a.p. trafficking to occur. the oig's responsibility in partnership with the usda is to actively pursue trafficking and hold them accounting old for their actions including criminal prosecution obtaining the payment of illegal transacted benefits and disqualification from the program. >> thank you. i will now recognize myself for five minutes. ms. faulkner a lot of what

you're talking about of course are people who receive the benefit and abuse it. that presents -- represents a large part of the states role, is to make sure, we still use the food stamps but the stat program funds get to the ultimate recipient, which is usually family members. is that correct? now, in your enforcement, the fact that these are basically credit cards that are digitally monitored and that you can track, that has dramatically made your job more accurate, hasn't it been the old days of paper? i'm sorry, your microphone? >> yes, it has. >> well, that begs the question i think well, ms. hatcher i have been at the grocery store when i've seen the exclusion of unauthorized material where it every grocery store i have gone to has the software where they

simply say yes that's fine, you have just credited $35 you still owe a $6.50 for the cigarettes or whatever. that's great. to 100% of your members have that and if not, why not? >> 100% of our members that have electronic point-of-sale would have some of the ability to download that and we are increasing that number. i would have to get back with you on the exact percentage of stores but it's over 90%. >> that's excellent. mr. concannon every grocery store i go to these days is electronic. not every liquor store i go to his electronic. one of the basic questions is if you cannot reduce fraud to an acceptable level to make your ig happy if you will, is it that important at every liquor store and i used the term liquor store very specifically because some times people want to call them convenience stores but we all know as the ratio gets close to your minimum food to cigarettes

and alcohol, your fraud level goes up, no question at all and well understood. is that one of the areas in which the tests must be higher in the tolerance for any slippage must be lower? >> i appreciate the question mr. chair, and to the point you make, stores by federal requirement must provide a certain number of foods in the food group and is what we refer to as the depth of stock requirements. i'm very interested and i know secretary vilsack is as welcome in increasing the application on stores that have more food than those minimums that currently needed. for stores that they're really their religious is in selling tobacco or selling alcohol. you can't buy that with your s.n.a.p. card but it's encouraging people to come into those locations. >> i appreciate that.

in your op-ed which i would ask unanimous consent be placed in the record. without objection. in your statement, quite frankly give a fairly rosy picture in the case of your comments on scripps howard. was a little bit like the ranking member thanking us for the hearing and then saying we want to starve the children implication and everything republicans do in the budget. scripps howard exposed at least in some cases fraud that you were not aware of. is that correct? >> yes they did in a very small number of cases i want to correct the record because scripps mistakenly made the notion -- >> i appreciate and you said that in your op-ed in their opening statement. >> my time is limited and you are invited here because we are concerned and we really don't want to have our whistleblower bashed even if there was 1% accuracy and there appears to be far more than 1% accuracy.

here is the question i have for you and it's the only question i'm going to make today and i think ms. fong will particularly appreciate it. the rest of government uses permanent exclusion and department fairly aggressively. it's not an easy task but it guarantees that those who have cheated the american people as vendors are not just removed for a period of time from your program but in fact are removed from eligibility governmentwide. why do you not use a broadly and will you begin using department or do you believe you don't have the authority to? >> there are many compelling reasons why we do not currently use it. we are able to take stores. we have taken stores out this very weak for simply trafficking or misleading us in their application, falsification. we don't have to hold hearings. we give stores 10 days to respond to us and we take them out.

if we use department we have to go through a hole the hold extended hearing process. when we take the stores out, most of the stores we are talking about her small stores. they rarely interact with other parts of government. they don't have pharmacies. they are not stores, government does not buy as a reference.. it's far more efficient for us to do this and i will say this. we have completed requirements the requirements with the general services administration to allow agencies, our agencies could, to filing excluded parties listing which means once the company is on that list they can't do business with any part of federal government. this is a more efficient way to do it in the meantime we can take that out. >> ms. vaughn, my time is expired but it looks like you have a partial answer beyond that. >> thank you. we feel very strongly that usda is a whole needs to do a better job with does debarment. we believe there may be room to

work with fns to really get the best possible system in place and i think excluded parties, program disqualification and disbarment are necessary remedies to look at and i feel strongly about that. >> thank you. the ranking member is recognized for five minutes. >> thank you very much mr. chairman. let me make it very clear that there -- if there is one dime of money that is not going where it is supposed to go, there is nobody i think in this room and particularly not on the side of the aisle or the other that would stand for that. i want a higher standard than the 1%. i won zero. at the same time though i want to make sure we get balance in this whole process so we have taken $127 billion out of the program. we want to make sure that people who need the program have an opportunity to get the funds that they need. now, mr. secretary concannon i

want to thank you for your testimony and again going back to what i just said, the house republicans have cut $127 billion out of this program. that means that they would eliminated food assistance to some 8 million people according to the center on budget and policies. mr. concannon, according to your agency state and nearly half of the s.n.a.p. and the fisheries are under the age of 18. is that right? >> correct. >> i want to go back for a moment to something that they chairman, he didn't give you a chance to answer it but i think i know what you're trying to get to. sometimes you will have a store that has been debarred. this goes with the owner, is that right? >> that is correct. see when i was practicing law, somebody would say for example had a liquor license and they were a bad actor. they have been thrown out or

sold or whatever, then the new person comes in and it's like a new situation. is that right? >> correct. >> some of the scripps article was about folks who had been taken out, but then the store was owned by somebody else and then they came into a new situation. is that correct? >> some of those are points of reference suggesting that the location and the owner were one in the and the same when they came back in. 231,000 locations in the united states on the rise. the majority of them are small stores and that can invariably lead to where the -- we have taken out permanently some 8300 stores over a ten-year period and in just over 1200 locations of that 8300, different owners

came and are operating the program. so it's not the same as saying that same person came back but in fairness to scripps howard they found a small number and that had slipped back into the program by falsifying their applications. we have stressed on the basis of working just in the past two months, stressed the requirements for a variety of vetted pieces of information that will assure us that there is no connection whatsoever to a prior owner. >> now, you know, let me give you some interesting information. my good friend senator demint down in south carolina introduced legislation to cut that benefits provided under the recovery act. the pennsylvania governor, tom corbett, announced a plan to disqualify anyone under age 60 who has more than $2000 in savings, which would prevent

families from working toward self-sufficiency. the mayor of philadelphia calls his proposal this proposal and i quote, one of the most mean-spirited and asinine proposal to come out of harrisburg in decades. other states have pursued similar proposals. in georgia bill was introduced to require beneficiaries to obtain mandatory quote, personal growth end of quote activities. mr. concannon, do you know what these personal growth activities are and do you know how they would be implemented on a national level or a state-level? >> i am familiar with that. i have seen references to that in the media but i'm unfamiliar with the specifics of the bill. >> now we all know that there will be -- and we all agree that we need to be vigilant to prevent fraud. in all of these cases, according to your data fraud in this program has been going down, not

up. is that right? >> that is correct. >> do you concur with that, that it has been going down? >> we have not personally assess those studies and we plan to do work on that. >> now mr. concannon, they have drug to an all-time low record of less than one person, is that right? >> correct. >> i have about a minute and a half longer but -- >> we have been working very closely with states across the country both to reduce what is called the improper payment level meaning individuals get more than they showed her less than they should. that is less than 4%. it was traditionally an 8% number and the case of trafficking as mentioned earlier by the chair in the air -- error of paper coupons, electronic benefits card has considerably brought that down.

.. >> it's unfortunate that here in congress it's so common for democrats and republicans to make accusations against one another, when really we agree that on all these programs are designed to help people, we want to do the very best we can to make sure that those in need are the ones getting the hell. so if we can tone down the political rhetoric and look at how we can do the very best we

can to make sure that not a single gallery is taken away from those in need, then we can get a lot further than arguing and making accusation. i know that's the case in medicare, it's the case and medicaid, it's social security, disability. so often one side accuses the other countries over the top. oftentimes that's for political reasons, and these are not democrats issues or republican issues. these are people issues. so again i appreciate you being here today. ms. fong, if we're going to try to do the very best, whether it's 1%, 5%, a half percent, when you do find what the problems are and how to solve them. can you tell you what is the most typical kind of fraud that you see in the food stamp program? >> well, we have a number of schemes that we see. most of them focus on trafficking, which is a situation where the recipient goes to a retailer and tries to

cash in the cards for money, in which case both parties come away feeling that they've gotten a good bargain. there are numbers of ways this happens. we've seen different schemes over the years where retailers and recipients get very creative about shopping the card, as it were. >> does the people of illegally traffic food stands, to the people -- to be seen to be people that also tried to commit fraud and other government assistant pro grams like section eight or housing? >> i don't think you have data on the. although on occasion we do joint investigations such as hhs which manages the medicaid medicare probe ram, and sometimes they will be recipients who are involved in all of those programs. >> how much money could a store owner who trafficked in food stamps likely make, illegally? >> well, i think you would want to look at sort of a per benefit

basis. it can range. there are some very small retailers who, in the context of their business, will make thousands of dollars. there may be other larger retailers or smaller ones who engage in multiple transactions who can benefit by hundreds of thousands of dollars, or even millions. and some of our investigative results will show restitution sentences that can range from hundreds of thousands to millions. >> okay. just so we kind of know if there's a citizen watchdogs and people out there that are looking for this type of problem, can you give us an example of the most elaborate scam involving store owners that your office has investigated? >> well, i think we certainly have a number of cases going on. most recently we've seen situations where there have been runners employed who will take cards from recipients and take them too many different

retailers and swipe those cards to get benefits, and there will be maybe a group of retailers who work together to do this. that there's very some complicated schemes there. >> ms. faulkner, you probably also have seen this type of thing, and could you share maybe what one of the most egregious fraud cases that you're aware of? and then when that happens do you think we see children deprived when their guardians engage in s.n.a.p. from? >> i think anytime there strong children are involved, especially when it's this that program. i think in a program such as s.n.a.p., a recipient look at the restaurant or a bar, and this is not a place where they would accept cards, but do go there in the restaurant or bar would go to a grocery store to buy say $200,000 worth of groceries, and then, for the bar restaurant, and then they would give the recipient have, 75%,

you know, something off of the ebt card. and really it cuts out. you never really see the bar, restaurant transaction. what you see is the recipient using the buy $200 worth of groceries at this particular grocery store. that's a little hard to track, and being stricter on the retailers will help this problem. because you cut out that restaurant that is being used to get the money. so we see that in pennsylvania sometimes. >> i see my time has expired, but thank you all for what you do to make sure that those people in need get the food that they need. i yield back. >> the chair thanks the children from tennessee and recognizes the gentlelady from california, ms. speier? >> thank you, mr. chairman. i want to compliment the chair of this committee in recognizing the important function we have to look at government programs and evaluate the fraud.

having said that, i want to compliment everyone on the panel. i mean, i think you have a 98% grade, and in 98% grade is something we should be applauding. a 1% fraud rate is just remarkable, and i'm very impressed by what you're doing. here's my question. are we spending more with the budget for fraud detection and the id then we are generating in restitution or repayments? >> i will be happy to comment on that. i will say that our budget in the i.t.'s office is around $85 million a year, and we bring in, on average, 14 or $15 for every dollar that is brought to us. >> so your valuable in what you're doing. here is my concern. has been a recommendation i think by the i.t. that you

review retailer applications for criminal records. makes a lot of sense. why aren't you doing it? >> thank you very much. we have received a recommendation that we rely on something called the ncic, the national crime information center, data. i was a former state director, and i used that system through the state police in the states that i was in. one has to be a law enforcement agency in order to access those data. we can't do it as the fns. the oig if it had the resources, he could possibly do so. we are not allowed to. you have to be a law enforcement agency to get into that. >> i understand what you're saying, undersecretary. so this is too general fall, how would you suggest we review the criminal records been? what do we need to do in order to acknowledge that? give us enough bang for the buck

if we invest in doing that, will we save a significant amount so that it would be worth our while to do with? >> that's a very complicated question, and the undersecretary is right. we have been back and forth on this issue as to the best way to get criminal background information. i think right now the application form has been revised to require certification underpinning of criminal prosecution. i think that's a very good move. i think we can continue our discussions on this. right now we do have the authority of the ig's office to run these kinds of ncic checks for programs purpose. so we will need to do some further consultation. >> well, you know, we're able i know in california to do background checks for childcare providers. so i can't believe that the federal government, as talented as it is, cannot find a way to create a means by which this background check can take place. so why would encourage the committee to pursue this and

find a way to achieve that. the other issue that i wanted to draw attention to was this issue of suspension and debarment. i understand it, there were 615 wholesalers and retailers convicted, but none of them have been suspended or debarred. the rationale for not doing this is it is costly. know, democracy is costly. i don't think we can use the argument that it is costly. if we have evidence of convictions, and these retailers have violated the laws and we don't debar them, then shame on us. anyone want to respond to that? >> i can try to answer that. the preamble to the new departmental regulations under department excludes the s.n.a.p. and wic program transaction because the statutory language that provides a comprehensive statutory disqualifications.

in everyday english, let me say that we rely upon our taking owners of stores and corporate groups out of the program. and as i mentioned earlier in my testimony, we have been negotiated with the general services administration to have these folks listed on a listing that they operate where people who are permanently barred from doing work with the government, they cannot, they will not be listed on this list that goes to all federal agencies. so in our view, it would achieve what debarment is intended to but it while i'll us to take them out without extended due process hearings that drag this out on and on, and allow people to stay in the program during that time. >> all right, my time is expired. thank you, mr. chairman. >> the chair when i recognize the gentleman from pennsylvania, former united states attorney, mr. meehan.

>> thank you, mr. chairman. use it well in that seat. -- you sit well in that seat. i'm very appreciative for the work you did. and i want to attach myself to the comments of mr. desjarlais hurler in our shared interest. first and most importantly in delivering these services appropriate to those most in need. such a state where able to effectively root out the fraud where it's available for the purposes. ms. faulkner, i noticed there was some testimony, i did want to correct the record to the best of my understanding. there was some testimony today about the pennsylvania administrations guidelines with regard to points at which there would be determination of eligibility, and i know that the was an original proposal. but to the best of my understanding there was also some collaboration on the part of the governor's office, and

that they've made a significant change with regard to the guideline so that it's far more realistic in terms of -- is that acted? >> yes, but i would like to say you've been referring -- it was always in place in pennsylvania 2008 but the asset test apples and oranges. we're talking a fraud and the acid test is something different. but yes the government reinstated and it will increase the threshold for $9000, and a 5500. so it has been increased. it was always in place. and really it is apples and oranges from fraud to what we're talking about here today. >> i just want to make sure that was correct. i want to express my deep appreciation in very short time you've really developed quite a reputation for the very good work that you doing in office, and i'm particularly interested in the work that relates to this concept, between eight and 15% of the fraud is associate with trafficking. it would seem to me this is a choke point that we be able to

work on. now, is there some things that you do that you see characteristics that take place when there is trafficking to help you identify those that may be the most suspect of? >> what we've been doing in pennsylvania is we have a dedicated union. we have fraud and we have, we have a whiskey which is really just beginning to focus on s.n.a.p. and what we find in pennsylvania is that that has been growing. the fraud hasn't been reducing. so we have worked with federal and local vas offices to try to reduce what's going on with the retailers and the recipient. and what we find is that once the federal government determines who these stores are, we then come and tell them who the recipients are in order to close the loop because the recipient is the one who really starts the ball rolling in this. >> it would seem to suggest, here's an increase then that's sort contrary to some of the

important progress that we've been able to make to the electronic process. but you have given testimony right now about, earlier, that creative criminals can always find ways around a system. so are you looking for patterns and other kind of things that help us get to those? i'm particularly interested in the retailers because they are the ones that are facilitating the ability. >> one of the things we did notice, with realtors is that they would have a whole dollar amounts. go to the store and see hundred dollars use. we do follow that. people go to the same stores all the time. those are just indicators. we look at those things to see if trafficking is occurring there, and we have like i said a small unit in the office right now, a supervisor and three people working on this entirely.

we're hoping to expand it more. that's what we see in pennsylvania, but there is a need to investigate this more. i can't talk about federal government or others but in pennsylvania we see a need -- >> do stage work with other states so while you're looking at patterns within your own state, are you able to ship with new jersey or delaware or maryland in any way to determine whether you are matching your efforts to see if there's patterns that exist along some of the same individuals of? >> i think the concern is i did reach out to new jersey. they handle their s.n.a.p. a different. every state is different, so while i have personally done some reaching out, i have not been able to connect in sort of determining whether there are patterns in states. >> thank you, and they just come as a former prosecutor, i am sort of quite surprised by the concept that we are not able to take very simple information that's contained in the ncic, one of the fundamental databases

that we use oftentimes. i would really appreciate the work of you -- a few individuals to help us identify what we can do. i would be delighted to work with the generally from california to assist you in this effort, if we can facilitate the basis to do what seems like a very common sense thing, i would ask your assistance in following up, submitting to us whatever recommendations you have that would make it easier. and i want to get applaud the work of each of you for the efforts that you do. thank you. >> i think the former distinguished u.s. attorney from pennsylvania, mr. meehan, and i would recognize the gentleman from new york, mr. towns. >> thank you very much, mr. chairman. let me begin with you, mr. concannon. can you explain to me what kind of quality control system the staff program uses to ensure

that only people are truly eligible for s.n.a.p. are actually receiving it? what do you have in place to detect it? >> thank you very much. as was mentioned at the outset, iowa state health and human services director for 25 years in three states, and of all of the federal and state benefit programs that are administered, the food nutrition service, long preceding my time here, put the particular emphasis on what is referred to as a quality control area, many people need to be eligible for the programs so they have to demonstrate in fact their eligibility by virtue of pay stubs or other sources of information. they also have, we have to make sure that when i present myself, i am who i say i am. and that qc program, that error rate has gone from historically up in the eight to 9% range down to below 4%. and that has been achieved by

encouraging states to use multiple databases. so for example, in the states that i worked in, when somebody would come in and apply, mr. concannon would check against the labor department, check against irs, we could check against child support program list for new hires. every state has to maintain social security has something called the social security list. the u.s. department, health and human services has another list. the acronym of which is terrorists. now some 47 states rely on that database alone. back in 2000, only 16 states use a. the office of inspector general among others has urged us to make sure that states make use of these particular databases. so there's a variety of ways to osha work, one, i envoy and and that when a report my income, it is that which is truly income that is coming into my

household. >> how does the s.n.a.p. error rate compared to other federal programs? >> i believe, i have a really tracked them lately but i can tell you i think it is one of the best among federal state benefit programs. and i know that at a state level, governors offices i know this very directly pay careful attention when they qc error rate is made known to each state. we do this individually. we punish the states that fall below certain minimums around qc in rates, and we reward states who do an outstanding job in that regard. >> let me ask you, ms. fong, i think it was you that mentioned the amount of indictments, i think. my question to you would be what is the conviction rate? you know, sometimes we read about indictments, and that's all we hear. sometimes people get all excited because there's an indictment but there's no conviction. so what is your conviction rate? >> i'll be happy to provide that

for the record, but my right election of the data is that we have a very high conviction rate. it's a significant percentage of our indictments. >> the reason i raise this question, sort of thing in terms of the question that the gentlewoman from california race in terms of your budget versus the amount of money that you bring them. because i wish is winning about that of peace in terms of which is not a part of your budget, that would also be a certain amount. i'm not sure just how much so i was just sort of looking to see in terms of the profit involved here, you know, based on your budget, based on the amount that you actually are retreating. >> i am retrieving some data here. just to give a general sense of it, in the last few years, our monetary results at s.n.a.p. alone have been almost $30 million. i think i should just make sure that i provide that for the record, but our conviction rate

is close to 50%. >> all right. and the reason i ask this, i don't do this committee as one of those gadget committees. i feel it's a committee that is working to save the government money and to make certain that people that are supposed to get service, that they get service. and that we have an obligation on this side of the aisle to work with you to try to make certain that that happens. i want you don't that's my recent been on the select for 30 years. that's my purpose. my purpose never change. thank you, mr. chairman. >> real quick. mr. concannon, you said you punish the folks who have bad error rate. how do you punish things speak was we punish them by return recover, we can penalize them financially. we send them letters, warning letters saying basically following below a certain threshold. our goal is to get that error

rate down so that we provide technical assistance and training but we put them on notice. over a period of five or so years, i think we've sanctioned some 17 states. i'll make sure i verify that, but that's what i recall. i know we take, again, it can be a financial penalty. we did a attention to the performance of states because we know it affects the very consumers that members have been asking about here this morning. >> thank the gentleman. win this committee was looking at medicare, medicaid fraud iced distinctly remember the hearing. because there was outrage, appropriate outrage that the entities that it engaged in the fraud were still doing business with the government. i thank the gentleman to my right expressed a very appropriate outrage. so my question, ms. fong, is the same as mr. cummings was then. when you have reset it is, repeat offenders, what do we

need to change about the department process so that that is the default instead of disqualification? because of disqualification is an insufficient penalty to me for reset it is offenders. >> i believe that the government suspension and debarment process is an effective process. and usda has implemented regulations, and as a whole the department could do a better job of implementing that. i think that there are concerned as the under-secretary has expressed about timeliness and length of time. i think we need to engage in those discussions because my understanding is that he get that somebody convicted a criminal felony, that disqualification, while it may be incentive, vis-à-vis the food stamp program, it's not really as effective for other government programs. and if you got a criminal conviction is should be a pretty quick process. because conviction in and of

itself is sufficient evidence to proceed. and so it should not take a long time to do this, maybe a month or two months. >> let me say this. i distinctly remember spending four days in a courtroom prosecuting a lady for disturbing a school. and i spent three days in a courtroom prosecuting someone for throwing an ice tea cup add a dea agent. so resources and time should not be the only barometer by which we decide whether a case should be prosecuted or not, or else we would never prosecute any crimes. so whatever needs to be changed in the process, i hope you will give all of us that have expressed an interest in it a list so we can put a little more teeth into the punishment when people systemically a fraud that government. i want to move to the gentleman from california about in cic. ncic has arrests that don't

result in convictions. it is other information that law enforcement may have an interest in seeing. but they're not convictions. but the remedy is very easy because schools do it in churches do at attend afterschool programs do it. just have one ncic trained operator on site, and then reject the non-convictions. the notion that we can do background checks on people who want to do business with the government, people do them all the time. for schools, churches, everyone does it. redacting information, go to a law enforcement agency that does track convictions, go to the clerk of courts office, there's a way to get that information other than ncic. and is a need an exception to ncic, for government agencies that are looking at fraud, i can't speak for the gentleman

from maryland but i will be happy. to do that, and adobe law enforcement would resist it one bit. ms. fong, you mentioned a 50% conviction rate. i would have been run out of office if i had a 50% conviction rate, and i don't think mr. cummings would have been hired as often if he had one. that strikes me as a low conviction rate. is it because you're negotiating a civil punishment instead of a criminal punishment? does the statute needs to be changed? what needs to be done so we don't swing and miss half the time? >> let me take a look at that data, because i want to make sure that i get to the right percentage, and i will provide that for the record. and when we do that we will also provide you with our insights on the. >> all right. and my final question for you is this. if i wrote the numbers down by, you said there are 900 cases,

600 of which are gives retailers. i think your energies and efforts should be directed towards retailers, what not to the total exclusion of individuals who are providing a market, if you will, for this kind of fraud. so what do your numbers look like on prosecuting individuals who either sell their cards for cash, or otherwise engage in fraudulent activity? >> let me just generally address the approach that we take on law-enforcement. we focus our efforts on the retailers, he goes when we go to the u.s. attorneys offices for federal prosecutions, they have certain thresholds for prosecution which involve dollar amounts, et cetera. and so the dollar amounts tend to be on the retailers decide which is much higher. when it appears there are recipients involves as there usually are, we partner with the states, the state prosecutors, because those tend to be violations of state and local

laws. and so are most effective approaches are when we do joint work, where we take the retailers to the federal prosecutors, the state prosecutors worked on of the individual recipients and we can approach all of those as a global kind of approached. >> that sounds like a perfect match but if you're going to need witnesses against the retailers and sometimes the recipients make very good witnesses. with that the gentleman from massachusetts. >> thank you very much, mr. chairman. this is exactly the type of oversight we need to be doing up rogue rounds. if we're going to programs were everybody agrees we need to reduce hunger and we agree that fraud can't be allowed, have the public support behind, this is a good thing for this committee to be doing on that basis. in my district, we have a lot of tremendous groups working very, very hard to try to reduce hunger. we've seen a 40% increase in people accessing kitchens, soup kitchens and pantries with the

economy the way it is. it's been very, very difficult for them. massachusetts is the only state on the web as a line item for this type of issue under the mask emergency food assistance program. so all of my folks, 20% cut s.n.a.p. program, it's panic. they want to make sure that fraud isn't an issue as well but they want to make sure that they have the resources to want to hear the note of 4% down to as low as 1% on fraud, 20% cut in the budget, i understand why they're looking that way. you know, we have about 15,000 people in our district that benefit from these programs. i guess 35% of them have a household member over 60. 41 plus person like have a house member under 18. we're talking seniors and children. so it's important we get this right. julie fontaine who does art open door program, they serve about 5400 families. about 2200 families on that, but do we have bootstraps, a lot of

people working very hard on the. we need to know that we're focusing, and this is a situation we have to do. but i do make the know, you know, this committee has a broader portfolio on the subcommittee which i sit. we've been looking at contracts in afghanistan and i just noted on food service, a subcommittee chairmen to have a hearing on the. we just reason a situation where the defense logistics agency thought that they were overpaying the food is triggered in afghanistan $787 million have asked for the money back. that a serious, serious money. i'm impressed, mr. concannon, that you will continue work on this and your numbers are getting a debit we need to do it right across the board on that because we can't allow it to happen. folks here, what i'm hearing is you think you have got and well below 4%, maybe as low as 1%, is that correct? and you are trying to get all the new permutations of the people -- do have a new website? >> we have a new website.

later this spring we will be promulgated regulations that have increased the financial penalties when a source taken out of the program and it is sold to a new owner. i have been interested in increasing the financial penalties so people don't use it well, it was the cost of doing business, i'll flip the store. so we continue to add layers. >> how did you attack than? >> we have notified, that's the inspector general was talk about new types of fraud. that's an example. we've had several examples that way. recently, and we have written craigslist comes on the other social media sites, but we have also amended our regulations. so even a simple intent, the express intent to sell your benefits constitute a violation. we consider that trafficking. you'll be out of the program. >> you try to increase some of the fines, things of that major? >> we have indeed.

we have strengthened against requirements and to look for in a variety of, for example, tax. these are particularly from stores to the earlier comments that were made, on looking for additional corroborating information beyond what we have traditionally sought. and especially so in locations where we have had prior issues. these kind of issues of trafficking tend to congregate in the same locations. so we want those spots get moved up on our high-risk profiles. but we also want to make sure that we are exhausting every of able source of information to us. >> on the debarment issue, that contract in afghanistan those overcharge $787 million, he is still operate on a single source contractor didn't have to compete for the contract and they're still in business so i know you're efforts of deporting people is important to this committee. and moving put on that i hope that you do perceive it but i'm

hearing from pat baker does our mass lottery from secured in a very good job, and they're adamant to work with you on that. but people are clever and they keep coming up with different ways. one of the ones they've noticed recently, they're finding some women who are supporting their children on this are being threatened. sometimes even physically attacked by people to get them to turn over the electronic card. are you addressing that issue at all? >> that would be the kind of incident where we have a number of partnerships with what we call state law enforcement bureaus as well. and we would have wanted to know about that because that absolutely is the worst kind of extortion. so we would want to work closely as inspector general faulkner mention. we work very closely with state agencies and a variety of things, but that would be horrific. would be happy to pursue that. >> thank you all.

i think it's important work that you are there. thank you, mrthank you, mr. cha. >> i thank the gentleman from massachusetts. i apologize to the gentleman from virginia and texas. i got the order out of whack so i will now recognize the gentleman from virginia as i should have, and then the gentleman from texas. >> mr. chairman, thank you. no need for apologies. i know the pressure sitting in that chair. but you're always gracious and i thank you. mr. concannon, i'm old enough to remember some groundbreaking books, like let there be promises, and the other america. and a groundbreaking work done by dennis its congress, especially by then senator george mcgovern, bipartisan basin within senator bob dole. to establish a food stamp program to address a pervasive problem of hunger and meditation in the united states.

has the food stamp program in fact successfully address hunger and meditation in the trainings because i believe the food stamp program has been one of the most effective first line efforts to reduce hunger in the country. and it also has reduced poverty. we know even the census bureau in the last year pointed out that last year alone, 4 million additional americans would have sunk below the poverty line, absent the food stamp program. as has been mentioned here today, almost half, 47%, of beneficiaries of food stamps our children, another 8% our senior citizens over 60. about 20% of households have a person with disabilities. and increasingly these days, the foods that program and serving households in which 41% of the household members live in a household where one of the adults is arne, that is, is in the work force. and i refer to that group of

beneficiaries as in often many faces of s.n.a.p. these are folks who have been displaced in this difficult economy. they may not be getting as many hours at their work comes so it is really important that the s.n.a.p. program be responsive. across the country s.n.a.p. is now serving 72% of the eligibles in the country. and that reflects, that has been moving upwards from in the mid '50s, then the mid '60s, now 72%. we are serving more than 90% of the eligible children across the country. there are few states that are still far below the rest of the country that we continue to dialogue with and work closely with. but the program really is responding, as they should, to the needs of folks in this country, is the most inclusive of both state and federal feeding programs. >> so if i understand your testimony, in the 40 push yourself we started this program

it has in fact achieved its desired results in reducing hunger, malnutrition in rural and parts of urban america as well as reducing the poverty rate in the united states? >> yes, indeed. there's a measure the federal government use that we publish reports on annually, food insecurity. we have data that points to the impacts of the food stamp program as it is still known, about 20 -- >> what percentage of food stamp recipients are children? >> 47%. >> and that translates into how many people? >> there are 46 million people, so in round figures -- >> million children. it's too bad the tide of this hearing is food stamp fraud as a business model. usda struggle to police store owners but it seems to suggest or one could infer from that title that we've already prejudge the case, apparently fraud is rampant to a kind of

begs the question on the purpose and original mission of this program, and was it in fact has achieved that mission or some fraud that has to be stamped out not withstanding. but let me ask you a question. given the title what percentage of s.n.a.p. funds were improperly issued last year? this committee, subcommittee i sit on has looked at improper payments. what percentage of the federal program has been classified as improper payments to? >> last year we achieved record low. we instead, i should point out we were closer, all of our benefits are extended through states, and we achieved an improper payment rate of three-point 81% to about 3% of that was overpayments, and just under 1% of that was under payments, meaning the beneficiary based on his or her income or household income, 3% of them received more than they should have. less than 1% received less. this is part of our quality control effort.

>> mr. chairman, your pitch hitter as chairman offered to give me one extra minute, i think. >> he is so much kinder than i would be. >> i lucked out, mr. chairman, batch right. so i would ask the chair to honor that request. 3.8% roughly of improper payments. to all of that was not fraud? >> correct. >> what percentage of fraud against the rest of fraud figure we have is 1% stake have we reduced over the last decade? >> that is one of the charts i think we handed out. we have reduced it considerably over the past decade, and continue to focus on it as well as reducing fraud in the program. >> so it's good that this committee is having this hearing to absolute highlight there are still problems. we have to get, agriculture always be to get dizzy or. but let's not overstate the problems and let's not lose sight of the mission.

especially at budget time when some people might be thinking of $100 billion cut in the program. ms. fong, you mentioned to us that you still think that mr. concannon's operation still do a better job of department and suspension, corrects? >> that's correct. >> mr. concannon, could you address that come in my final question? >> as i speak in your second overrun minute. go ahead, please. >> i mentioned earlier that we believe that the approach that we take of moving people out of the program immediately is a more effective way, and two, most of the beneficiaries, stores i should say that we're concerned with, don't do other business with the federal government. but even to cover that, we have been working with the general service administration to have these stores or companies put on the excluded parties list system, which will prevent them from being able to participate

with other governments, government programs but we're also, we continue that dialogue with the office of the attorney general to see if there are ways we can do both. our desire, we will have an aversion to the debarment process. it's that it slows it down. and we like the authority we have right now. when we find that a store has misled us about their business relationships, or being debarred before, we can take them out of the program. we send them a letter, given 10 days, they are out. i don't have to give them more hearings. i don't have to give them due process. they are gone. >> mr. chairman, i thank you for your consideration. >> because i know he wants full disclosure, ms. faulkner, i think of something to say on those questions, to. >> i wanted to talk about what my s.n.a.p. trafficking program has done in the fiscal year 2010-2011. we conducted 584, just s.n.a.p.

traffic investigations. we scheduled 150 administrators with its recitation back of over $250,000. we disqualified 77 recipient of s.n.a.p. benefits. which really gave us a cost savings of close to $500,000. and that's with the limited staff we have. so in pennsylvania as i stated earlier, we are seeing more fraud. we are. and that we have little staff, hope to get a little more. that was our 2010-2011 a loan. we don't expect it to go down. >> i know ms. fong has previously said that you don't necessarily concur with those figures independently at this point. and i would only ask since the secretary said that they're going to redo them again, i would hope that we could expect them to be mutually agree to biometrics that then you could essentially concur with.

>> yes, we have some work planned for this year to take a look at methodology and those numbers. >> thank you. we not go to the gentleman from texas. >> thank you, mr. chairman. and i'd like to do with something that i hear about from my constituents, and that is the stretching of action items that qualify under the program. for instance, i received a photograph from a constituent of a sign outside of a place that prepares pizzas to order. they just don't cook them. so apparently it qualifies under the letter of the law, certainly i wouldn't think under the spirit of the law, the sign that they are said it accepts the lone star card, which in texas is our method for doing that. and you also see an instance of grocery stores in convenience stores also offering quite a few hot food items that i would think would not qualify under the program.

what are you all, i guess i will address this to ms. fong, what are you all saying with respect to that? and what can we do to combat that? >> we, as far as i know, have not received any allegations along those lines that would indicate fraud or criminal activity. i would defer to the undersecretary because i think it's really a policy question. >> i would be happy to try to answer. to the second part of your question, when you look at, first of all, consumers cannot buy hot food, period. they can buy frozen foods, and there are pizza chains that have been admitted into the program over time. i mentioned earlier, my testimony, one of the definition of who's eligible for the program in terms of the 231,000 providers is set in the statute through the farm bill. and it requires a minimum number

of certain food groups is what referred to as the depth of require that i would like to see that strengthened. >> let me follow up on that maybe with ms. hatcher because we have the technology now in place through upc codes. we can actually determine what items are qualified and don't qualify. and i guess if you want to get into a big brother senator, could actually probably linkup who is buying what. and with the cost of upc readers or 20, $30, look up to a pc, i can't imagine any sort being too small to implement. do you see some technological solutions to these problems? and could some of these technological solutions -- i will let you answer and i will come back, the undersecretary. >> i guess the question about hot food, that one is already taken care of now because our members come and we educate them

very clearly, hot foods are not eligible. we code in anything that is a hot food item as an eligible in the store. so, and then i think the question on the pizza thing, you know, it would depend exactly, if it's a frozen pizza in the frozen section then it would be eligible. if it's a heated pizza over in the deli area would not be eligible. >> it strikes me, made to order pizza cooked on a coat is stretching it. mr. undersecretary, i guess my question to you is do you see a technological solution? another complaint that i hear consistently from constituents is people will go in and buy highly processed food with low nutritional value. i mean, i don't want to get in the business of dictating what people do and don't eat, but to some degree our money, our rules. i mean, what do you see as an optimum situation there? >> unfortunate on the processed

food question, i'm not talking about those many care to come from larger cares, i'm talking about processed foods that has too much sodium and too many trans fats and so on, all of us unfortunately as americans, we eat more processed food in any country in the world. so we are trying to another part that i've responsibility for, the center for nutrition policy, to encourage americans to eat healthier, more fruit and vegetables, my plate is a simple but i think a very effective icon. and would also encourage access to farmers markets, in your case lone star beneficiaries, to try to nudge them, direct them to buying healthier often locally grown foods. but i'm also still, i remain very interested in increasing the requirement for these small stores to have better choices and fresh fruits, healthier foods rather than just the overabundance of processed food. >> i see my time has expired.

thank you very much. >> i thank the gentleman. all time has expired. i want to thank our panel of witnesses. i think this was informative. contrary to what might have been perceived, this was a limited hearing, limited to businesses do in fact defraud the government and deny our children, that 22 million or more children, the receipt of the actual food rather than trading 50 for 100. our attention -- intent is to allow for at least five days for members who were not able to get different questions to supplement by asking all of your questions. would you agree to respond to them if you get them in writing? >> certainly spent i want to thank you out also like to ask unanimous consent that any witness who thinks of something that you didn't say that wants to supplement their own record be allowed to do so. without objection, so ordered. we stand adjourned.

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>> [inaudible conversations] tonight on c-span2, a senate hearing on the budget for native american programs. the surgeon general releases our report on tobacco use. and later house republicans talk about jobs legislation. >> on "washington journal" tomorrow morning we will focus on u.s. options in syria.

>> the senate indian affairs committee held a hearing today focusing on the president's 2013 budget request or berries native american programs. the budget proposal for fiscal 2013 includes two and a half million dollars for the bureau of indian affairs and 4.4 billion for the indian health service. speakers at the hearing included the indian affairs assistant secretary at the interior department, and indian health service director of hhs. senator daniel akaka of hawaii chairs this one hour 20 minute

hearing. >> the hearing on the president fiscal year 2013 budget for native programs. in these difficult economic times, the president's budget request for fiscal year 2013 reflects a continued commitment to strengthen tribal nations. advanced indian education supports and expands health care services. however, it is important to remember that the federal government has a trust responsibility to indian tribes, even during the economic recovery. this responsibility is especially important to remember if the sequester occurs at the beginning of 2013, which would require across the board cuts in

the majority of programs of government agencies. this could have a devastating effect on tribal programs, which chronically are underfunded, even during prosperous times. i was especially pleased to see that the president's budget included in legislative recommendation to address the contrary decision. fixing the carcieri decision remains a top target of the committee and administration. righting this wrong will cost no money, and will, in fact, be instrumental in saving and creating jobs and bringing economic development opportunities in indian country. today, we will hear from the department of the interior and

the indian health service of the president's budget. and we will hear from several tribal organizations with the impact this budget will have on tribes and their area. at this hearing, impacts all tribal nations. i would like to emphasize the importance of submitting comments or written testimony for the record. the hearing record will remain open for two weeks from today. and i would like to invite our first panel to the witness table. serving on our first panel is the honorable larry echo hawk, assistant secretary of indian affairs at the department of interior. accompanying secretary echo hawk

is mr. michael smith, deputy director of the bureau of indian affairs, and keith moore, director of the bureau of indian education. next, we welcome the honorable yvette roubideaux, director of indian health service, department of health and human services. accompanying ms. roubideaux is mr. randy grenell, deputy director of the indian health service. let me just thank you for your patience, and i've been looking forward to this hearing. so secretary echo hawk, would you please proceed with your testimony? >> thank you, chairman akaka.

we have previously submitted a written statement, but i will summarize my statement to begin with. we thank you for this opportunity to provide the department statement on the fiscal year 2013 president's budget request. the 2013 budget request for indian affairs within the department of the interior totals 2.5 billion in current appropriations. this is 4.6 million below last years enacted level, which amounts to a reduction of two-tenths of 1%. as you know, indian affairs meets with tribes on a quarterly basis on the budget through the tribal interior budget council, and through this informed consultation with tribes, we included in this budget request $43.8 million in program

increases in priority areas, such as contract support costs, rights protection implementation and law enforcement. and chairman akaka, there are some reductions in the budget. the indian affairs 2013 budget request contains, or continues to provide funding for two of the department priority initiatives, strengthening tribal nations and a new energy frontier. this budget request seeks an increase of 43.8 million for strengthening tribal nations. within this initiative, we plan to advance nation to nation relationships by seeking to appoint 3 million programmatic increases for contract support costs, and the indian self-determination fund and indian land and water claim settlements for continued work

on the navajo-gallup water project. we also plan to continue protecting indian country by seeking an additional $11 million in public safety funding. with the increase, 3.5 million will go toward hiring additional tribal and bureau of indian affairs law enforcement personnel, and 6.5 million will pay for staff increases at newly constructed tribal in your of intention -- detention center. this request also supports the expansion of a highly successful pilot program launched in 2010 that saw 35% reduction in violent crime with high violent crime rates. the department also seeks an increase of 5.2 million for our education activities. $2 million will go toward tribal grants support costs, which

cover administrative and indirect costs and 125 tribally controlled schools and residential facilities. .. which we anticipate will come from savings from eliminating duplicate data and overlapping functions. the $13.8 million reduction will

come from anticipated management efficiencies. the departments requested reduction of 33.1 million is for program decreases, which includes 2.6 million last from one person and special initiatives and $6.19 less for information resource technology and other programs. an education related that dignities, we seek to decrease a decrease of 4.54 million isaf funding should reflect a slight decline in student population and we request 17.8 million months for new school construction and being. the budget provides $5 million for the indian guaranteed loan program, which is reduction of 2.1 million from the 2012 enacted level. overall the 2013 budget reflects a fiscally responsible balance

of the priorities expressed by tribes during the consultation together with the broader object is that the administration. the 2013 budget continues to focus on core responsibilities to ndn tribes and alaskan natives through programs and services that are vital to indian country. this budget focuses on priority areas than in the in country and honors the federal government's obligation to try the nations in a focused and informed manner. the best example is by the inclusion of those six language of the 2013 budget request, just as it was requested and 2012. thank you very much. i'd be happy to respond to questions. >> thank you very much, mr. secretary. i will call on doc or roubideau

after i recognize senator frank in who has to be back on the floor and i'm going to ask him for any opening remarks he may have. >> thank you, mr. speaker. -- thank you for your courtesy. unfortunately, i have to preside in 15 minutes. so i would just like to say a couple things. each year this committee holds hearings on many issues of great importance for indian country, but only once here to read and an overall funding levels for native programs and what we choose to find sends a powerful message to tribes about our priorities. and in these times of tight budgets, programs across the federal government are being forced to make painful cuts and do more with less.

sadly, native communities are far too accustomed to doing more with less. i hope that as we expand and a serious budget, we will all remember our trust, responsibility to tribes and think carefully about any cuts to travel programs. the president's fiscal year 2013 budget dissented things and am very happy to see their proposed increases for indian health services. contract support costs of public safety and law enforcement. i know these are all top priorities that are requested by the top but the president's budget also makes and spirit cuts. i'm concerned about the over $2 million increase in the indian guaranteed program and name deeply troubled by the theory now a replacement school construction. school construction funding its

initiate that i brought up in the committee over and over again. there is a $1.3 billion backlog for indian school construction and repair, but this year the president has requested only $53 million mm of the money would go to new construction. the state is pid schools is simply unacceptable. the bug on a cliché school on the leech lake reservation in my home state of minnesota is in desperate need of replacement students and teachers that have to do with leaky roofs, mold, rodent infestations and sewer problems. the facilities that meet safety fire and security standards. and i want to think the deputy

secretary at go hock -- at go for coming in my office the other day. i want to ask my colleagues in this committee this question, which you countenance your children getting their education in this cooler that wasn't safe, and a score that had rodents running around? with mold that had leaks when it rains and sweltering on a hot, humid days and i know the answer would be no. and how can we expect native to succeed under these conditions. the senator from minnesota, i have responsibilities to every child in a state that every child in every.

as making sure every child gets a good education. we know what the purpose of that is every know why to do that. it benefits every child. benefits and makes them more productive at the benefits our economy. we know the reasons to do this, but there is another reason, too. one of the reasons is these are children. they are beautiful children. they are guests and they deserve to be educated in a place that is safe and that is comfortable that it doesn't have rat americans. so i'll fight to restore funding for construction and i hope i can count on support from other members of this committee.

i want to thank the witnesses for coming today. i want to apologize because i have got to go with my turn to preside. and i have read your testimony and i look forward to watching later and i went to thank you, mr. chairman for giving me this opportunity and for your indulgence and for the ranking members indulgences for good thank you good >> thank you very much, senator frank and for your statement. and now before we go to.or roubideau, let me call on our vice chairman to give his opening remarks. >> thank you very much, mr. chairman and i appreciate the patient of the members of her piano. not to thank you for this important hamlets again congress is examining a budget requests after all federal programs

including indian programs. for the enormous and growing vending data set, we look at the issues facing our country as we see at both sides of the out an agreement that there is no avoiding the problem anymore and most if not all agencies and programs are going to be called on to participate in the solution. we all recognize the federal government has important responsibilities in indian country. public safety, education, health care each name is the u.s. senator frank and had mentioned. we know carrying out these responsibilities requires money. this year and into the foreseeable future agent a decision that priorities and efficient use of taxpayer funds are going to receive battering recent recent recent. i look forward. i look forward to additional testimony on how this budget is meaningful and respectful manner. to thank you him and

mr. chairman >> thank you very much, senator. i now call on dr. roubideau. would you please precede with your testimony. but before you do, let me say that your false statement will be made a part of the record. doc or roubideau. >> thank you, mr. chairman, mr. vice chairman, members of the committee. i am the director of the indian health service and i'm accompanied by mr. randy purnell, deputy director of human health service. i am very pleased with the opportunity to testify the president fiscal year 2013 budget request for the indian health service. my written statement reviews and detailed what i just accomplish with the funding congress has appropriated for us over the past few years and since it does

make him a ihs budget has increased by 29% and this funding has helped the indian health service make significant progress in iraq first to change and improve the organization as well as in addressing the priorities of our work. our partnership with tribes is fundamental to improving the health of our communities and he cheerfully incorporate incorporate tribal budget priorities inter budget request. for also making progress on reforming the indian health service with an emphasis on improving the way we do business and how we lead and manage our staff, said in a strong tone at the top that we must change and improve our financial control, finding more efficient and effective ways to conduct their business matters and performance management and accountability have been very important to our progress. for example, i just was able to demonstrate the best performance ever as a part of the hhs cfo

audit in 2011. our hiring times have improved and we're addressing pay disparities to help with recruitment and retention. the contract health services program are how we pay for referred care has demonstrated accomplishments through improved business practices and improving access to care. the contract health service budget work for curious increase 46% since 2008 and as a result, sun programs are able to pay for more than priority relates his party want our life for them referrals is services. about the overall need a still significant come in the funding increases are making a difference. we've also made significant progress including quality of access to care with improvements in customer service are improving patient care program and use of health information technology. the success of the special diabetes programs for indians in the early compliment of the

methamphetamine of suicide prevention in domestic violence prevention initiatives. in fy 2011 for the first time after we met all of our clinical measurement goals. the ihs health care programs has contributed to ihs increase in access to care and improving partnership with tribes and helping us complete and continue help facility construction projects. when i was first appointed to be the director of the indian health service, i hurt and tribes, patients and our we need to change and improve the indian health service in many ways and although we've made significant progress in addressing our priorities, much work remains to be done. the population research continues to grow on the challenges of providing health care in rural america are ever present. again he continues to show the incredible need for services specifications reserve and

continued to work hard to meet our mission with available resources. the increases over the past few years have helped decimate progress, but we still have much work to do. so that 2013 president's budget request for ihs will help us address these challenges and make progress on our agency priorities are targeted investments to increase access to care and quality of care to support our oversight and accountability functions and address tribal management support costs. the budget request is $4.42 billion in an increase of $116 million over 2012. and that includes funds to support activities identified by tribe is budget priorities. so the budget request includes $34 million to increase inflation caused a $20 million for program increase for the contract health service broker and how we referred paper referred care and that will be

spent on commanding the purchase of health care from private secretary providers outside the host system. an increase of 49 land is included to staff and operate newly constructed house civilities including our joint ventures facilities constructed by tribe. 5 million-dollar increase is included for contract support costs as a priority for tribes that is the management of our hope their program previously managed by the federal government. $1 million increase in direct applications will help the agency continuous reforms and provides accountability and oversight and key administrative areas. we also include $6 billion for health and animation technology to support mandatory acb 10 implementation of $1 million support for electronic dental record programs. i know for facilities that have been $81.5 million budget to continue construction on two facilities in progress and an increase of 1.7 million will help us address routine maintenance and improvement needs.

in closing we have shown ability to make progress in improving and changing the indian health service. however we got there his bachelor to be done. we will continue to work in partnership with tribes to make these improvements and improve the quality of an access to care for the patients that we serve. the president's budget request help us make progress in changing and improving the indian health service. thank you for the opportunity to present the 2013 budget. >> thank you very much for your statement. secretary echo, hawk. the budget contemplates saving and you mention $19 million of streamlining operations across all components of the organization. my question to you, are all

aspects of the organization being can better for this reduction, such as office closers cuts to programs productions employers, how do you intend to consult with tribes during this process quite >> mr. chairman, the first point that i would like to make has to do with complication. and of course, the president of the united states gave us the directive across the federal government to improve how we consult with tribes. this past december the department of the interior about today's new consultation policy and in all of the areas we do consultation, perhaps there is no more important part and consulting on the budget and

pass on a quarterly basis, we assembled tribal leaders from all regions of the country to make sure they they have input on how we are crafting the budget. and i have to say that their position has been very clear to s. but they do not support any cuts in spending through interior indian affairs. nevertheless they are very helpful to estimate in design but priority areas are at one of the messages that i have heard very clearly in this consultation policy over the last three years is that when budgets are tight, and we have to be fiscally responsible but tribal leaders say don't forget the federal government has got to take its turn, too. don't just turn to trioval programs and start chopping.

so in this 2013 request, we have proposed streamlining, which means that what we are going to do is look very carefully at what we can do more efficiently to consolidate programs, do everything we can to take the federal government spell. we are not going to do that just ontario. our plan is to move forward in a consultation process. we're not talking about re-organization here that the approval of the congress, and were talking about identifying ways we can save dollars in the federal bureaucracy so we can fund the priorities of tribes and so we will be out there consulting, beginning in april and listening to what tribes have to say about the areas where we can do the belt-tightening within the indian affairs, within the bureau of indian education in the office of the assistant secretary. thank you.

>> thank you very much. it's good to hear. but you'll do it by consultation and i rather recent experience with this area, i find that somehow indian tribes they are don't get the phone message for many other things and to hear you're consulting directly is great to hear. dr. roubideau, in your testimony, you state that tribal consultation is fundamental to your budget formulation process, too. please discuss how tribal consultations led to tribal

priorities being reflect it in the proposed budget. >> well, tribal consultation is fundamental. i really feel the only way we will repeal the help of our communities is to work in partnership with them. we have a tribal budget formulation process that starts first at the local level in the area level. so with a told ihs areas in the fall. to hold meetings with tribes and they determine what the area of levels ajit priorities are for tribes. and then we have a national budget consultation that occurs usually in january and february, representatives from all the ihs areas can together and fight among each other to try to get their priorities into the list. there's so many priorities for

funding and it's a very typical conversation for a tribe, but i'm grateful they do the important work because it results in a great set of recommendations for st is this a begin our budget formulation process. and so, each are they present their budget priorities to me and that is the first step in developing our proposals for the health service and it is an annual process of tomorrow the tribes will be presenting their recommendations on the 2014 budgets i'm really looking forward to hearing the results as well. >> thank you very much. let me now ask the vice chairman. >> thank you very much, mr. chairman is an attack of specific being. and first for mr. atco hawk the president's budget request $12 million for eight india and

irrigation projects. none of these are the poorest area for the wind river irrigation in wyoming. according to it 2006 gao report, there is a total of $84 million in deferred maintenance for this project. i wyoming field hearing last april the department of the interior testified that they would begin working on a long-term plan to repair the deferred maintenance on indian irrigation projects. so i'm wondering what has the department done since april 2 referred the deferred events in the irrigation project? >> senator barrasso, i am not prepared to address that today, but i would be happy to look into that in working with my staff get your immediate answer to your question. >> thank you get moving on to enforcement, the high-priority performance goal pilot project was implemented on the wind is a

reservation in wyoming to decrease by mcrae made typical was 5% over two years. after the two years the violent crime rates in the on the wind river reservations increased by 7%. i understand there was an overall downward trend. so some success in reserve of the last two years beyond what we saw was an increase. i wonder what efforts will be made to route to decrease. >> senator barrasso, that's an excellent question and i'm happy to bring good music needs today because we did achieve the overall dirty fat% reduction across the four reservations. wind river was the largest reservation that we dealt with and he was the area where we had to bring in the most law enforcement officers. and i want to just emphasize that this is not a surge. these officers that were funded

will be there permanently. so it is nonsense they were refunded temporarily, see how it works and then back off. and you know, it is correct that by the end of the 20 24 month period, we actually had a 7% increase in crime they are. but because it was large, because with so many many law-enforcement officers come in there and what happens when you bring in that large number of officers, you actually will generate more reap words that comment and then eventually because people feel safer, they report and then restart to see see a downward trend. so after the 24 months and it come to give it another three months we actually decreased crime at wind river by 11%. so we knew that was probably going to be the case, but were obviously moving in the right direction there and that is good news for the community.

>> i look forward to additional reports. >> dr. roubideau, this includes a 54 million increase for the contract health services program. you testified at our hearing lasted at the federal tribal workgroup was to review the funding formula for contract health service is and then make recommendations to you. i asked you last or whether the formula would include consideration of mortality and morbidity rates because those experienced traditions that homeport matters. can you tell me whether those are now factored into the farm that what decisions you need? >> thank you for the question. contract health services is such an important budget priority. tribal leaders have been helping us over the past two years to make recommendations on how to improve the way we do business and look at how we provide from and. the workgroup decided they needed to have another year to look at the impact of our recent

budget increase as to see how the formula really played out. so we expect them to have their discussion about the formula and whether it needs to be changed in the next year. >> i appreciate your personal attention given your background and if you can involve me in the findings that would be very grateful. thank you. >> senator franken mentioned something about public safety, people needing a place to feel safe in their homes or were place and i want to talk about if they could with you, doc or roubideau public safety and health care because go hand-in-hand. patients and employees need to feel safe in a workplace and especially a place where pharmaceutical drugs need to be secured. at the budget hearing in 2008, before you are responsible. dr. coburn asked her predecessor, mr. mcswain do with the indian health service is doing to protect patient

employees, claremore and in hospital in oklahoma. he indicated the agency was working to resolve jurisdictional issues to local law enforcement could protect patients and staff at the facility. it's four years later and again it is not sent you are charged with. you inherited this problem, but for your site if they're still not banned inadequate resolution to the problem. could you maybe help address the needs to be done to resolve this matter quite >> yes. where were the issue at claremore indian hospital is seriously needs to be resolved as soon as possible. i just recently was briefed by staff. it looks like we've been working closely with the department of justice and the bureau of indian affairs and the outlines an administrative and possible legislative options. and so the next step would be to decide what our priorities are for