staffing. because it's a profession that is so specialized, we get the question all the time, why do you need four people when there are other municipalities that have three or respond with less. the best way i guess i can -- the best quick example i can give you is that we can go to the airport and get on a plane and there only needs to be one person flying it. but you wouldn't get on a you wouldn't go down to an airline and get on plane if they said, well, we're short-staffed today, and usually we only need one pilot, so you'll be fine. in the grants we're talking about here, the most ---ible valuation of success is what we've seen in improvement in staffing since we have safer in place. and that's -- that's a quantifiable example i think we can look at. we've seen progress there, and i think we would like to see that progress continue.

>> thank you. one thing i do want to ask about the fusion centers, could you tell the subcommittee a little bit about what the fusion centers provide for the federal government that is not provide normally by the state and the local public safety? >> sure. there is -- what is really provided is this national network. and having this network, as i mentioned in my oral statement where alabama can pick up the phone, talk to north carolina. it's also the notion of before fusion centers were in place, there was no mechanism to communicate critical national security information down to our state and local decision makers. it didn't exist, at the classified or unclassified level that mechanism is now in place. and put that local and state kind of flavor on the information for the official that makes it relevant to them. the other is the pushing of

information from the state and local officials back up to the national intelligence community. and that partnership with dhsina that allows that information to get to the national intelligence community, to be able to prevent acts of terrorism. this committee commissioned a report a number of years ago with the research triangle institute. basically, that report stated that in 80% of the cases of any terrorist threats since 9/11, either actual or thwarted that the additional piece of information that came from that was either derived from the public or a state and/or law enforcement official. if you look at where the department is going, if you see something, say something campaign, with the nationwide suspicious activity reporting and the support and requirement for justify indications and fusion centers, we see that moving in the right direction. and investing in those areas that provide those capabilities that were not there prior to 9/11, that are critical for making sure that we don't have an event in the port or transit system.

that is the key. we can't afford for the event to happen in the first place. >> thank you. mr. price? >> let me follow up with you immediately about the kind of funding that the fusion centers require. most of this i understand is from state grants, most of your funding. what is your federal grant funding total overall? and do you see this proposal for a grant consolidation as in any way putting your funding at risk? >> now i'm probably one of the few people to tell you and i believe mr. mullen and myself basically, i don't think that puts our funding at risk. i think the department has made it clear, the secretary has made it clear that fusion centers in the national network is a priority. so we view that -- we don't view that as a problem. let me give you an example of where we are with finding out about how much money actually goes. i'm going to use fy '11 as an example. i gave you a couple anecdotal evidence. we have information back from 43 of the fusion centers at this point of the 77 now recognized

fusion centers. in fy '11, the total budgets of 43 of the centers was approximately $110 million. of that, $74 million was state and/or local funding. which totals about 67%. 33% of that was from federal investment, either through the state homeland security grant program or the program. that was pretty specific. i asked earlier with the staff to keep the record. we would actually like to submit state by state, urban area by urban area the funding both the total budget of the centers as well as what categories of funding, where it's coming from with the committees. >> let me ask you another question. >> we'll keep the record open. >> let me ask you another question related to this consolidation proposal.

it has to do with uasi. i think you were fairly outspoken last year about the undesirability of limiting the number of uasi eligible cities during our debate, especially on hr 1. now given our current fiscal environment, and mr. mullen has stressed this as well, this money is hard to come by these days. and knowing the orange intent of the uasi program, do you still believe that uasi shouldn't be targeted to the very highest risk urban areas? >> from the national fusion center association, we don't take an opinion on whether funding ought to go towards uasi or state. we basically have urban areas and we have state centers. i think it gets down to what can we afford at that point. we believe in eligibility for the urban areas. however, given fiscal constraints, it is logical to figure that we're going to have to reduce funding.

and i think the department has moved in a way to try to look at sustained capabilities where we have capabilities. and to we can't afford to continue to build new capabilities. let's focus on what we have. so i think we still hold by the fact of having urban areas still eligible, even in a reduced fiscal environment. >> i'll close with you, mr. mullen. i want to return to the question that the chairman raised, the very last question the chairman raised with administrator fugate. it has to do with the major change, or maybe it's a major change. i don't know. maybe that's what i'm really asking you in empg guidance that's included in the budget. and that is the expanded use of the dollars, or the potentially expanded use of the dollars permitted in empg grant's funds to be subcommitted to nongovernment emergency entities

such as nonprofit, public and private universities, hospitals, faith-based entities. it's not mandated, but the possibility is opened up. how do you regard this change? do you think it's likely to make a significant difference? as you well know, a lot of the people in the emergency management community have raised concerns about this, have asked a lot of questions about it. how do you assess this proposal, and how does your organization -- what kind of position, if any, have you taken on it? >> we have not taken a position on that specific guidance at this time. but a couple of things need to be considered. one is that with the funding levels remaining static, i think the needs that are currently being fund ready going to be prioritized at the local and

state level for epg, which might not leave as much room as one would hope for the programs. but some states actually do fund those programs as part of their overall efforts. so in a sense, it may not make that much a difference in the short-term, but we will -- we're going to look at that, and we'll be happy to get back to you with a more thorough position on that. we have not had a chance to meet and review and take a specific position. but some states already provide that, and some do not. >> thank you, mr. chairman. thanks to all of you. >> any further questions? well, thank you all for being here, for your presence here this morning and this afternoon. and i know we went long. but we've talked about some very important issues here this afternoon. so we appreciate each of you for taking your time to come here and testify before the committee. we look forward to getting your written testimony for the

record. and so with nothing else, the meeting is adjourned. later today on c-span3, the senate indian affairs committee looks at how the president's proposed budget will effect indian tribes. we'll hear from the interior secretary for indian affairs. the headsst indian health service and the bureau of indian education and a cherokee chief and other representatives from tribal organizations. that hearing has been moved to 3:30 eastern. we'll have it live on c-span3. this is c-span3 with politics and public affairs programming throughout the week and every weekend 48 hours of people and

events telling the american story on american history tv. get our schedules and see past programs at our web sites. and you can join in the conversation on social media sites. earlier this year the scripts howard news service found millions of dollars in fraud in the food stamp program. reports said that hundreds of retailers banned from the programs continued accepting food stamps, some in exchange for beer, cigarettes and cash. this morning the house oversight committee held a hearing on the issue. this is about 90 minutes. >> the meeting will come to order. 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 the rights. our responsibility is to hold government accountable to taxpayers. taxpayers have a right to know what they get from their government. we will work tirelessly in partnership with citizen watch dogs to deliver the facts to the american people and bring genuine reform to the federal bureaucracy. i'll now recognize myself for an opening statement and pursuant to the mission statement i would ask the video be played since it reflects the watchdog in question. >> it is happening in new york, l.a., miami, detroit, and 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 federal government. >> 23 of those retailers are in

the palm beach. >> this store, like many to be found, is both banned from accepting food stamps and approved to accept them. >> investigators poured over the records. >> 1500 stores across the country on both of them. >> the usda says 99% of the time it's for illegal trafficking. >> a retailer will overcharge a customer and then pocket the difference. >> then what to trade their benefits for cash or banned merchandise like alcohol. >> and trading booze for taxpayer money. >> the store keeps $50, the card holder gets $50, all taxpayer money. >> what does this, you know, back door ultimately cost us taxpayers? >> akorccording to records, $33 million in 2008. >> america deserves better.

how much better it was. it is not for us today to question whether or 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 store front anywhere in america, find out who, what, where owns that or in this case the scripts howard could do a few public record searches available to the department of agriculture and find out what they were doing wrong from open source, 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.

it's about who misuses food stamps. it's about america's responsibility, this administration and this congress' responsibility to make sure that the money or the benefit of the money gets to the people who were supposed to get it. it is not to buy alcohol, cigarettes, or drugs. a relatively few store fronts around america represent a considerable amount of fraud. understand that a small amount of stores does not mean there's a small amount of fraud. people who want to use or misuse, i should say, the resources provided to them by the taxpayer in the way of food stamps seek out stores will cheat. it's not an accident that you find out that somewhere in the neighborhood an entity will trade you $100 in food in cash

score. that score is bad enough. but let's understand, somewhere there's a family that relied on food that instead got nothing. these companies and these individuals behind these companies need to be punished on consistent basis if they're suspended, it needs to be for a period of time with an 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 mean permanent. more importantly, in this day and age of 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 and stealing from families who need that food and need that benefit. one of those 100 assigned to do what whistle blowers 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 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's more oversight, more accountability with less money available for that and more need by people on the food stamp program. ultimately, we're going to hear testimony that on both sides saying we're doing a better job and we're going to hear people saying you're not doing well enough. both can be true.

america, in fact, expects both to be true, continuous improvement but, in fact, never satisfied that we've done enough. with that, i recognize the ranking member for his opening statement. >> i want to thank you very much. i welcome today's opportunity to conduct oversight of the snap program which is one of the most vital missions of any government program and that is to prevent abject hunger in homes all across america. and i'm so glad that you said that this hearing amongst other things is about children. mr. chairman, thank you for agreeing to invite the minority witness miss jennifer hatcher of the food marketing institute. census hearing is about store owners. i thought it was appropriate to invite them. miss hatcher's organization represents 26,000 supermarkets and food stores across the country that implement the snap program on a daily basis.

i also want to thank you for allowing our minority witness to appear on the first panel with everyone else. you 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 snap program are poor, hungry children. snap currently serves 46 million americans with incomes at or below 130% of the poverty level. according to usda, 47% are under 18 years old. snap also serves millions of people who are elderly or have disabilities. snap is never been more critical than it is today. 2008 financial crisis dreef more americans into poverty than any other time since we started tracking this data.

the collapse wall street and the loss of trillions of dollars forced millions of americans to turn to this critical safety net. it has been there for them. while the need for the snap program is at an all-time high, snap is one of the most efficiently run federal programs with one of the lowest forward rates of any government benefits program. fraud declined from approximately four cents of every dollar expended in 1993 to only one cent of every dollar expended today. but i agree that that is not good enough. the majority appears to be basing today's hearing on a recent press story about certain store owners who had been disqualified from the program but allegedly regained entry in

some way. although this would be problematic if 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. in fact, today we'll hear just the opposite. that this has significant problems. the usda acted quickly to address the bad actors and the snap program continues to be an extremely well run program given strong track record i'm concerned that the true purpose of this hearing may to be discredit the entire program in order to justify draconian cuts. last year every republican member of this committee voted to convert snap program into a block grant program, slash the funding by $127 billion over the next ten years.

massive reduction of almost 20%. again, i go back to what you said a little bit earlier, mr. chairman, in part 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 center on budget policies, this proposal will force up to eight million men, women and children to be cut from the program or will severely reduce the amount of food they can buy. where are 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 to impose draconian cuts to this program will cause even greater harm to people who need the most help. so while i strongly support

efforts to make the program more effective and efficient, i strongly support the fact that we must root out fraud, i will do everything in my power to propose efforts to use the isolated examples to discredit and gut the entire program. 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 these united states. with that, mr. chairman, i yield back. >> members will have seven days to submit opening statements for the record. we now recognize our first panel. mr. kevin canyon is the undersecretary for food, nutrition and consumer services at the usda. prior to his service at the department of agriculture he served as director of three different state government departments of health and human services, maine, oregon and iowa. welcome. miss phyllis fong is the usda inspector general and has served the department for ten years.

she is also concurrently serving as the first chairperson of the counsel of inspector generals on integrity efficiency and, in fact, in that role you may be aware that this committee would like to pass on to that 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 investing in inspector generals. miss jennifer hatcher is the senior vice president of government and public affairs for the food marketing institute prior to joining ffm, she served as chairperson for chairman spencer baucus as his chief of staff. lastly, miss faulkner is inspector general of the commonwealth of pennsylvania prior to becoming inspect juror general she was a law partner to

philadelphia office of ballard, spal, llp. she's had a lengthy career in public service as an assistant u.s. attorney, deputy attorney general of pennsylvania and philadelphia public defender. that is a lot to pack in a short time. 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 are about to give will be the truth, the whole truth and nothing but the truth? >> i do. >> let the record reflect all witnesses -- please be seated -- 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 work period last working day. i know my people. they will not return. so in order to not have you wait an hour for a relatively small

period afterwards, if we have not concluded by the time of the vote, we will end at that point. as a result, i 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. so i ask all the members on the panel to include time in your five minutes for both questions and a reasonable period for witnesses to answer. and with that, mr. secretary, you're recognized for five minutes. >> thank you very much for the opportunity to join you to day. let me thank inspector general fong who is a strong and independent oversight agent at the usda. the mission of the supplemental nutrition assistance program is to help low income people get the food they need while they get back on their feet. it is never been more important in the lives of americans than now. so strong administration and oversight including accurate 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 snap benefits across the united states. particular emphasis is given to recent news stories, the result of several months of intensive investigative journalism by a team of reporters that scripts howard news service. that focused on retailers that had previously been disqualified from snap for trafficking. trafficking is the sale of purchase of snap 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 scripts brought to our attention very seriously. we immediately began our own investigation into the stores that were referred to us. our results suggest that the issues may not be as widespread as reported by scripts, as many

of the cases they raised have not proven to have integrity problems. of the 36 owners, scripts referred to fns as suspicious our investigation found that over three quarters had no connection to the disqualified owner or were not authorized as snap stores. the remaining quarter have been either disqualified, charged, or withdrawn from snap. one is under criminal investigation by the oig. that said, we still believe broader action was needed. we increase security measures to keep out previously disqualified owners including morrow bust review of applicants, public records and shorter time period authorizations for stores and locations with previous disqualifications. prior to these reports, fns has been upgrading its electric transaction data mining technology to better detect suspicious snap redemptions. and we are preparing to post

information regarding the owners of permanently disqualified stores to gsas, excluded party list system, a federal list to protect other federal agencies. we're also developing rules that will increase penalties for trafficking stores. combatting fraud has long been a usda priority over the last 15 years and i believe the charts are rotating up here. you'll see one of those charts reflects various initiatives that have taken over the years. we're not yet satisfied and usda continues to work closely with our partners to fight trafficking. in fiscal year 2011, fns reviewed over 15,000 stores conducted nearly 5,000 undercover investigations and sanctioned or punished 2,000 retailers. bh while usda has responsibility for overseeing snap retailers, our integrity work includes every aspect of snap administration. by overseeing and working closely with our partners,

including state and local governments, usda strives to insure that scarce taxpayer resources are managed with integrity and accountability. first, over the past decade, we have made major improvements in snap payment accuracy. over 98% of snap clients are indeed eligible and accuracy reached 96%, a historic high. 2010 errors were less than billions than they would have been under the 2000 year rate. second usda also oversees and provides guidance to states to fine, hold accountable recipients who commit fraud. usda recently issued new policy to clarify that even the intent to sell benefits, for example, by offering a snap card on a social media site like craigslist can lead to disqualification. last year i wrote to all of the nation's governors, individually, asking them to make snap integrity a priority. we've also engaged t