from eligibility government wide. why do you not use it broadly and will you begin using the debarment 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've taken stores out this very week. for misleading us. we don't have to hold hearings. if we use debarment we have to go through a whole extended hearing process. when we take the stores out, most of the stores we're talking about are small stores. they rarely interact with other parts of government. they don't have pharmacies. they are not stores, government doesn't buy liquor from liquor stores to use the earlier reference point. it's far more efficient for us to do this. i will say this, we have completed requirements with the general services administration to allow our agency to now start

filing excluded parties listing, which means once that company is on that list, they can't do business with any part of the federal government. this is a more efficient way to do it. meantime we can take that out. >> mrs. fong, my time is expired. it looks like you have at least a partial answer beyond that. >> thank you. we feel very strongly that usda as a whole needs to be a better job with suspension and debarment. we believe there's room to work with fns to really get the best possible system in place. i think excluded parties, program suspension and debarment are remedies to be looked at and we feel strongly about that. >> thank you. ranking member is recognized for five minutes. >> thank you, mr. chairman. let me make it clear, if there is one dime of money going where it's not supposed to go, there's nobody in this room, particularly on this side of the

aisle or the other that will stand for that. i want a higher standard than the 1%. i want zero. at the same time i want to make sure we have balance in this whole process when we've taken $127 billion out of the program, we want to make sure the people who need the program are taking advantage of it and have an opportunity to get the funds they need. mr. secretary concannon, i want to thank you for your testimony. again, going back to what i just said, house republicans have cut $127 billion out of this program. that means that they would eliminate food assistance to some 8 million people, according to the center on budget and policies. mr. concannon, according to your agency's data, nearly half of the s.n.a.p. beneficiaries are under the age of 18. is that right? >> right.

>> i want to go back for a moment. there's something the children, there's something that the chairman, he didn't give you a chance to answer it but i think i know what you were trying to get to. sometimes you'll have a store that is debarred. this goes with the own er. is that right? >> that is correct, sir. >> sort of like when i was practicing law if somebody, for example, had a liquor license, and they were a bad actor, they were then thrown out or sold it or whatever. then the new person comes in the whole -- that'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 that came a whole new situation. is that correct? >> correct. some of those articles referenced to me suggested that, again, the location and owner

were one and the same when they came back in. we have 231,000 locations in the united states authorized for this. the majority of them are small stores. that's invariably where these problems occur in small stores. of that 231,000 over the year, we've taken out permanently some 8,300 stores over a ten-year period. and in about just over 1,200 locations of that 8,300 more -- different owners came and are operating the program. so it's not the same as saying that same person came back. in fairness to scripps howard, they found a small number in that 36 that i showed here earlier that had slipped back into the program by falsifying their applications. we have strengthened on the basis of working just in the past two months, strengthened the requirements for a variety of vetted pieces of information

that will assure us that there's no connection whatsoever to a prior owner. >> now, you know, let me give you some interesting information. my good friend senator demint in south carolina introduced legislation to cut s.n.a.p. benefits. provided under the recovery act. the pennsylvania governor tom corbett announced a plan to disqualify anyone under age 60 who has more than $2,000 in savings and assets, which will prevent families from working towards self-sufficiency. the mayor of philadelphia called this proposal, and i quote, one of most mean-spirited and asinine proposals. to come out of harrisburg in decades. the bill was introduced to beneficiaries to obtain mandatory 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 state level? >> i'm unfamiliar with that. i've seen references to that in the media but i'm unfamiliar with the specifics of the bill. >> we all know there will be instances of fraud. we all know we need to be vigilant before it happens. and prosecute it in all of these cases. according to your data, fraud rates have been going down, not up. is that right? >> that's correct. >> do you concur with that, miss fong, they have been going down? >> we are aware of fns studies that say that. we have not personally assessed those studies. we plan to do some work on that. >> now, mr. concannon they dropped to an all-time low record of less than 1%. is that right? >> that's correct. >> i know the chairman had a minute and a half longer under the circumstance. would you just answer that? >> we have been working very

closely with states across the country, both to reduce what's called the improper payment level, meaning individuals get more than they should or less than they should. that's less than 4%. what was traditionally an 8% number. in the case of trafficking, as mentioned earlier by the chair in the era of paper coupons, it was much more widespread, the electronic benefit card has considerably brought that down. that and other work with states. it is -- 1% was the last study we did. we're going to do another study later this year to update that on trafficking. 1% is one of the best records among federal programs. >> that's not good enough for you, is it? >> it is not. i'm not satisfied with that either. >> the gentleman from tennessee mr. desjarlais is recognized for five minutes. >> thank you, mr. chairman. thank you all for being here today. i think this is one thing that

we can agree on on both sides of the aisle. we don't want to see hungry children. we don't want to see hungry people. we live in a country that's fortunate to be able to share and help these people. it's unfortunate here in congress it's so common for democrats and republicans to make accusations against one another when really we agree in all these programs designed to help people, we want to do the best we can to ensure those in need will get help. if we can tone down political rhetoric and look at how we can do the very pest we can to make sure that not a single calorie is taken away from those in need, we can get a lot further than arguing and making accusations. i know that's the case in medicare, medicaid, social security disability. so often one side accuses the other of trying to go over the top. oftentimes that's for political reasons. these aren't democrat issues or republican issues, these are people issues. so again, i appreciate you being here today.

miss fong, if we're going to try to do the very best, whether 1%, 5%, a half a percent, we need to find out what the problems are and how to solve them. can you tell me what is the most typical kind of fraud you see in the food stamp program? >> well, we have a number of schemes we see. most of them focus on trafficking, which is a situation where a recipient goes to a retailer and tries to cash in the card for money, in which case both parties come away feeling they have gotten a good bargain. there are numbers of ways this happens. we've seen different schemes over the years where retailers and recipients get creative about shopping the card as it were. >> the people with food stamps, do they tend to try to commit fraud in other government assistant programs, like section

8 housing or medicaid? >> i don't believe we have any data on that. i will say we do on occasion do joint investigations with other government agencies like hhs, which manages medicare and medicaid program. sometimes there will be recipients involved in all of those programs. >> how much money could a store owner who trafficks in food s m stamps likely make illegally? >> i think you'd want to look at it on a per benefit basis. you can range. there are some very small retailers who in the context of their business 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. 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 are citizen watch dogs and

people out there looking for this type of problem, can you give us the example of the most elaborate scam involving store owners 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 to many different retailers and swipe those cards to get benefits. there will be a group of retailers who work together to do this. there's very complicated schemes there. >> miss faulkner, you probably also have seen this type of thing. could you share what one of the most egregious fraud cases you're aware of. when that happens, do you see children deprived when their guardians engage in s.n.a.p. fraud? >> i think any time there's fraud there are children involved especially when it relates to the s.n.a.p. program.

what i'd like to share with you is a more sophisticated trend and i think inspector fong touched on it. in s.n.a.p., a recipient will go to a restaurant or bar, a place that would not accept the cards. they would go there and the restaurant or bar would go to the grocery store and buy $200 worth of groceries for the bar restaurant and give the recipient half, 75%, something off the edt card. it cuts out, you never really see the bar restaurant transaction. what you see is the recipient using to buy $200 worth of groceries at this particular grocery store. that's a little hard to track. being stricter on retailers will help this problem. you cut out the restaurant being used to get the money. you see that in pennsylvania

sometimes. >> i see my time has expired. thank you all for what you do to make sure those people in need get the food they need. i yield back. >> the chair thanks the gentleman from tennessee and recognizes the gentle lady, mrs. 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 think you have a 98% grade. a 98% grade is something we should be applauding. a 1% fraud rate is just remarkable. i'm very impressed by what you're doing. here is my question, are we spending more with the budgets for fraud detection and the ig

than we're generating in restitution or repayments? yes, inspector general fong. >> i'll be happy to comment on that. i will say our budget in the ig's office is around $85 million a year, and we bring in, on average, $14 or $15 for every dollar appropriated to us. >> so you're valuable in what you're doing. here is my concern. there has been a recommendation i think by the ig that you review retailer applications for criminal records. it makes a lot of sense. why aren't you doing it? >> thank you very much. we have received that recommendation that we rely on something called the ncic, national crime information center data. i was a former state director and i used that system through the state police in the states 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, it could possibly do so. we're not allowed to -- you have to be a law enforcement agency. >> all right. i understand what you're saying under-secretary. so then this is to general fong then. how would you suggest we review the criminal records then? what do we need to do to accomplish that? will it give us enough bang for the buck? if we invest in doing that, will we save a significant amount so it would be worth our while to do it? >> that's a very complex question. the under-secretary 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 a certification under penalty of criminal prosecution, and i think that's a very good move. i think we continue our discussions on this.

right now we do not have the authority as the ig's office to run these checks for this purpose. we will need further consultation. >> we're able i know in california to do background checks for child care providers. i can't believe the federal government, as talented as it is, cannot find a way to create a means by which this background check can take place. i would encourage the committee to pursue this and find a way to achieve that. the other issue i wanted to draw attention to was this issue of suspension and debarment. as 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 that it's costly. well, you know, democracy is costly. i don't think we can use the argument that it's 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? >> if i can answer that, the preample to the new regulations on debarment on s.n.a.p. precludes wic because of statutory language that provides for statutory disqualification. in every day english let me say we rely on our taking owners of corporate groups out of the program. as i mentioned earlier in my testimony we've been negotiating with the general services administration to have these folks listed on the listing that they operate where people who are permanently barred from doing work with the government,

they will now be listed on this list that goes to all federal agencies. in our view will achieve what debarment is intended to but allow 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 has expired. thank you, mr. chairman. >> thank the gentle lady. the chair will now recognize mr. meehan from pennsylvania. >> thank you, mr. chairman. you sit well in that seat. i'm very appreciative of all of the panel for the work that you do, the significantly important work that you do. i want to attach myself to the comments of dr. desjarlais earlier in our shared interest, first and most importantly, delivering these services to those in need. to the extent we're able to effectively root out the fraud,

more is available for those purposes. miss faulkner, i notice 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 administration's guidelines with regard to point at which there would be determines determinations of eligibility. there was a proposal. to the best of my understanding, there was collaboration on the part of the governor's office and they have made a significant change with regard to that guide line so that it's far more realistic. is that accurate? >> yes. what i'd like to say, been referring to the asset test, which was always in place in pennsylvania until 2008. but the assets test is apples and oranges. we're talking about fraud and the acid test is something different. yes, the governor reinstated it and increased the threshold to $9,000 in -- and $5,500. it has been increased, has

always been in place. it's apples and oranges to the fraud we're talking about today. >> i wanted to make sure. i want to express my deep appreciation in a short time you've developed a good reputation for the work you're doing in that office. >> thank you. >> i'm particularly interested for the work relating to this concept, between 8% and 15% of the fraud is associated with trafficking. it would seem to me this is a choke point, that we would really be able to work on. now, is there some things you do that you see characteristics that take place when there is trafficking that help you to identify those that may be the most suspect? >> what we've been doing in pennsylvania is we have a dedicated unit. we have fraud, but we have osd, which is really a unit that focuses on s.n.a.p. what we find in pennsylvania is that's been growing. the fraud hasn't been reducing.

so we have worked with federal and local d.a.'s offices to try to reduce what's going on with the retailers and recipients. what we find is that once the federal government determines who the real -- these stores are, we then come in and tell them who the recipients are in order to close the loop. the recipient is the one that starts the ball rolling in this. >> it would seem to suggest if you're seeing an increase, that is one of the -- that's contrary to the important progress that we've been able to make through the electronic process. you've given testimony right now about earlier that creative criminals can find ways around the system. are you looking for patterns and other kinds of things that help us get to those? i'm particularly interested in the retailers because they are the ones facilitating the ability. >> i'm sorry to interrupt. one of the things we did notice with the realtors is that they would have whole dollar amounts.

you would go to the store and see $100 used. that's one of the things they used to determine if this could be some type of fraud. we do follow that. people going to the same stores all the time. those are just indicators. they are not always determinative. we look at those things to see if trafficking is occurring there. we have, like i said, a small unit in the office right now, supervisor and three people working on this entirely. we are hoping to expand it more. that's what we see in pennsylvania, that there's a need to investigate this more. i can't talk about the federal government or other states but in pennsylvania we see a need -- >> do states work with other states so that while you're looking at patterns within your own state, are you able to check with new jersey or delaware or maryland to determine whether you're matching your efforts to see if there's patterns that exist among some of the same individuals? >> i think the concern is i did

reach out to new jersey. they handle their s.n.a.p.s differently. every state is different. while i personally have done some reaching out, i haven't been able to connect in determining whether there are patterns in states. >> thank you. as a former prosecutor, i am sort of quite surprised by the concept that we aren't able to take the very simple information that's contained in the ncic, one of the fundamental databases we use oftentimes. i would really appreciate the work of you individuals to help us identify what we can do. i would be delighted to work with the gentle lady to do what seems like a common thing. i would ask your sis answer in i would ask your assistance in following up and submitting to us whatever recommendations you have that would make it easier. i once again applaud the work of each of you for the efforts that

you do. thank you. >> i thank the former distinguished u.s. attorney mr. meehan and would now 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 control system the s.n.a.p. program uses to assure that people only truly eligible for s.n.a.p. are actual ly receivin it? what do you have in place to detect it? >> thank you very much. as was mentioned at the outset i was state health and services director for 25 years in three states. of all the federal and state benefit programs administered, the food nutrition service long preceding my time here puts a particular emphasis on what is referred to as quality control

era meaning people need to be eligible for the program. they have to demonstrate their eligibility by virtue of pay stubs or other sources of information. also we have to make sure when i present myself i am who i say i am. that qc program, that error rate has gone from historically up in the 8% to 9% range down to below 4%. that has been achieved by encouraging states to use multiple databases. for example in the states i worked in, when somebody would come in and apply we'd check against the labor department, irs, child support program list for new hires every state has to maintain. so security has something called the social security list, the u.s. department of health and human services has another list. the acronym of which is

p.a.r.i.s. now some 47 states rely on that database alone. back in 2000 only 16 states used it. the office of the inspector general, among others, has urged us to make sure that states make use of these particular databases. so there are a variety of ways to assure, one, i am who i am. when i report my income, it is that which is truly income that is coming into my household. >> let me ask you this. how does the s.n.a.p. era compare to other programs. >> i haven't tracked them lately but i think it's one of the best among federal state benefit programs. i know at a state level, governor's office, i know this directly, pay attention when the qc error rate is made known to each state. we do this individually. we punish the state that falls

below certain minimums around qc error rates and reward states who do an outstanding job in that regard. >> let me ask you, miss fong, you mentioned the amount of indictments. you know, my question to you would be what is the conviction rate? sometimes we read about indictments and that's all we hear. sometimes people get all excited because there's an indictment but no conviction. what is your conviction rate? >> i'll be happy to provide that for the record but my recollection of the data is we have a very high conviction rate. it's a significant percentage of our indictments. >> the reason i sort of raise this question, i was thinking in terms of the question the gentlewoman from california, raised in terms of your budget versus the amount of money you bring in because i was worrying about that other piece which is not a part of your budget would also be a certain amount.

i'm not sure how much. i was sort of looking to see in terms of the profit involved here based on your budget, based on the amount you are actually retrieving. >> i'm just retrieving some data here. just to give you a general sense of it, in the last few years our monetary results in s.n.a.p. alone have been almost $30 million. i think i should just make sure i provide that for the record. our conviction rate is close to 50%. >> right. the reason i ask this, you know, i don't view this committee as one of those i gotcha committees. i view it as a committee that's working to save the government money and make certain that people that are supposed to get service, that they get service and that we have an obligation and responsibility on this side of the aisle to work with you to try to make certain that that happens. i want you to know that's my reason for being on it for like 30 years. that's my purpose. i hope my purpose never changes. thank you very much, mr.

chairman. >> real quick. mr. concannon, you said you punish the folks whose states have a bad error rate, how do you pinnish them? >> states, we have sanctioned states and punished them both by we can recover, we can penalize them financially. we send them letters, warning letters saying basically you're falling below a certain threshold. our goal obviously is to get that error rate down so 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 it can be a financial penalty. we do pay attention to the performance of states because we know it affects the very consumers members have been asking about this morning.