    [Senate Hearing 109-585]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 109-585

      HOUSING-RELATED PROGRAMS FOR THE POOR: CAN WE BE SURE THAT FEDERAL
                ASSISTANCE IS GETTING TO THOSE WHO NEED IT MOST?

    =======================================================================

                                    HEARING

                                   before the

                    FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                         INFORMATION, AND INTERNATIONAL
                             SECURITY SUBCOMMITTEE

                                     of the

                                  COMMITTEE ON
                             HOMELAND SECURITY AND
                              GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                           ONE HUNDRED NINTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 27, 2005

                                   __________

           Printed for the use of the Committee on Homeland Security
                            and Governmental Affairs

                        U.S. GOVERNMENT PRINTING OFFICE
    24-243                      WASHINGTON : 2006
    _____________________________________________________________________________
    For Sale by the Superintendent of Documents, U.S. Government Printing Office
    Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512�091800
    Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001

            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                       SUSAN M. COLLINS, Maine, Chairman
    TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
    GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
    NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
    TOM COBURN, Oklahoma                 THOMAS R. CARPER, Delaware
    LINCOLN D. CHAFEE, Rhode Island      MARK DAYTON, Minnesota
    ROBERT F. BENNETT, Utah              FRANK LAUTENBERG, New Jersey
    PETE V. DOMENICI, New Mexico         MARK PRYOR, Arkansas
    JOHN W. WARNER, Virginia

               Michael D. Bopp, Staff Director and Chief Counsel
       Joyce A. Rechtschaffen, Minority Staff Director and Chief Counsel
                      Trina Driessnack Tyrer, Chief Clerk

    FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, AND INTERNATIONAL
                             SECURITY SUBCOMMITTEE

                         TOM COBURN, Oklahoma, Chairman
    TED STEVENS, Alaska                  THOMAS CARPER, Delaware
    GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
    LINCOLN D. CHAFEE, Rhode Island      DANIEL K. AKAKA, Hawaii
    ROBERT F. BENNETT, Utah              MARK DAYTON, Minnesota
    PETE V. DOMENICI, New Mexico         FRANK LAUTENBERG, New Jersey
    JOHN W. WARNER, Virginia

                          Katy French, Staff Director
                     Sheila Murphy, Minority Staff Director
                John Kilvington, Minority Deputy Staff Director
                           Liz Scranton, Chief Clerk

                                C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Coburn...............................................     1
        Senator Carper...............................................     3
        Senator Lautenberg...........................................     8

                                   WITNESSES
                          Tuesday, September 27, 2005

    James M. Martin, Assistant Chief Financial Officer for Financial
      Management, U.S. Department of Housing and Urban Development...     5
    David G. Wood, Director, Financial Markets and Community
      Investment, U.S. Government Accountability Office..............     7
    Josephine Bias Robinson, Director, Office of Community Services,
      Administration for Children and Families, U.S. Department of
      Health and Human Services......................................    17
    Jim Wells, Director, Natural Resources and Environment, U.S.
      Government Accountability Office...............................    19

                         Alphabetical List of Witnesses

    Martin, James M.:
        Testimony....................................................     5
        Prepared statement...........................................    30
    Robinson, Josephine Bias:
        Testimony....................................................    17
        Prepared statement...........................................    54
    Wells, Jim:
        Testimony....................................................    19
        Prepared statement...........................................    62
    Wood, David G.:
        Testimony....................................................     7
        Prepared statement...........................................    38

                                    APPENDIX

    Chart submitted by Senator Coburn................................    29
    Questions and responses for the Record from:
        Mr. Martin...................................................    68
        Mr. Wood.....................................................    75
        Ms. Robinson.................................................    80
        Mr. Wells....................................................    85

      HOUSING-RELATED PROGRAMS FOR THE POOR: CAN WE BE SURE THAT FEDERAL
                ASSISTANCE IS GETTING TO THOSE WHO NEED IT MOST?

                                  ----------

                          TUESDAY, SEPTEMBER 27, 2005

                                           U.S. Senate,
                Subcommittee on Federal Financial Management,
            Government Information, and International Security,
                                of the Committee on Homeland Security
                                              and Governmental Affairs,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 2:30 p.m., in
    room SD-342, Dirksen Senate Office Building, Hon. Tom Coburn,
    Chairman of the Subcommittee, presiding.
        Present: Senators Coburn, Carper, and Lautenberg.

                  OPENING STATEMENT OF SENATOR COBURN

        Senator Coburn. The Committee will come to order.
        Senator Carper will be here forthwith, and we will begin.
        We like to be on time, so you can know what your time
    constraints are. Let me welcome each of you.
        I am not going to read from a written script right now, but
    our purpose today is to make sure that the funds that we have
    to help people are doing exactly that, and they are doing it in
    a way that is done efficiently; that we are not missing some;
    that we are also not providing funds to people who don't meet
    the requirements of the programs.
        We were all stunned by the carnage that Hurricane Katrina
    left in her wake. Now Hurricane Rita is going to put some more
    burden on all of us. Hundreds of thousands of people have been
    displaced. Many will remain so for months to come.
        Federal housing assistance programs are going to be
    stretched to their limits to try to help everybody in need. The
    Congress will do its part. That is why the financial management
    of these programs matters.
        I don't know, and I am not sure, staff can tell me--when
    was the last time an oversight hearing was held on one of these
    programs? When was the last time anybody here has testified at
    an oversight hearing on one of these programs? That answers the
    question.
        Every penny that is misspent is a penny that could be
    helping families in distress. Every overpayment means somebody
    goes without help. Every underpayment means a family that
    doesn't get help--all the help that they could have gotten or
    deserved to have received.
        Some have argued that these programs are too important, too
    valuable to the country, especially during the hurricane
    recovery to open up the books and start scrutinizing. I would
    think now is exactly the time to open up the books and
    scrutinize to make sure that we do what we intend to do through
    these programs.
        Taxpayers have donated over a billion dollars to the
    recovery efforts thus far in terms of voluntary contributions.
    But they have also contributed by funding Federal agencies
    represented here today, who will be on the front lines of
    disaster assistance.
        Real compassion demands that Congress and the Executive
    Branch guard that trust with integrity and humility, ensuring
    that every dollar is spent helping people and not being lost in
    the bureaucratic morass.
        In fiscal year 2003, 75 percent of HUD's total expenditures
    went to assist low-income individuals afford decent rental
    housing. This figure totaled approximately $28 billion,
    reaching 5,000,000 low-income tenants.
        HUD also paid an estimated $1.4 billion in improper
    payments in the year 2003. $896,000,000 of these were made in
    overpayments; $519,000,000, more importantly, were dollars that
    never went to the intended recipients.
        What that means is that the net amount of taxpayer dollars
    lost was $377 million, enough to house 56,000 additional
    people--families--with rental assistance, in decent affordable
    housing.\1\
    ---------------------------------------------------------------------------
        \1\ Chart appears in the Appendix on page 29.
    ---------------------------------------------------------------------------
        It is inexcusable that the Federal Government could have
    helped these individuals that are struggling, had HUD performed
    proper oversight of its voucher program. HUD's Section 8
    program alone had an improper rate of 6.3 percent, twice the
    amount of the government-wide error rate of 3.9 percent.
        HUD's low-income public housing programs, different from
    Section 8, had an error rate of 10.4 percent. That means that
    over 10 percent of the payments made by the program were wrong.
        A 10 percent error rate for government payments is totally
    unacceptable. Of the 17 Federal agencies that are reporting
    improper payment information, the average government-wide rate
    for fiscal year 2004 was 3.9 percent. Compared to the private
    sector, even the private NGO sector, that rate is deplorable.
        HUD's public housing numbers were at least double the
    government-wide rate or more.
        One huge program at HUD, the Community Development Block
    Grant Program, isn't even reporting improper payments. So
    heaven only knows what we will find when these books are
    opened.
        This is the same program that the Louisiana delegation is
    asking us to increase by $50 billion just for that one State.
        If the rates of errors made in that program are anything
    like the rest of HUD, the taxpayers are going to get robbed if
    we increase funding by that amount.
        The taxpayers deserve better.
        The private sector has no tolerance for improper payments
    and rightly so. Any number above zero is considered an improper
    payment in any business, any organization, or any corporation.
        I have made it a top priority to see, along with Senator
    Carper, that agencies are complying with this key mechanism,
    the Improper Payments Information Act, used to locate where
    payments made by Federal agencies are unjustified.
        I would also reiterate that no agency--no agency--is exempt
    from the Federal law.
        If I have to invite agencies to testify one by one, to tell
    us what they are doing to comply with the law, to institute
    fiscal integrity of payments, then that is what this
    Subcommittee will do.
        I want to note that HUD is aware of this problem, and has
    taken necessary steps to fix it. That I am appreciative of, and
    I commend them for it. It is a necessary first step.
        Today's hearing will also look at the financial integrity
    of the Low-Income Heating Energy Assistance Program. And I
    can't emphasize enough that this year, this is going to be one
    of the most important programs that this government has to help
    those people in need.
        With natural gas prices up about 70 or 80 percent, fuel oil
    up 70 or 80 percent, it is going to be very important that the
    dollars go to the people in need, that we don't underpay
    because it is going to mean the difference between food,
    medicine, or warmth.
        Hearings on improper payments don't seem glamorous, like
    other topics that Congress talks about, but if people go to
    jail for not paying their taxes, then there certainly ought to
    be something wrong if we don't pay out the way we are supposed
    to or overpay when we shouldn't.
        I look forward to our hearing. I look forward to the status
    of the efforts that are underway to improve the improper
    payments at HUD and at LIHEAP. I think it is important to have
    financial integrity and transparency at ever level of our
    Federal Government. That is one of the things we are going to
    do. The purpose of an oversight hearing is to hold
    accountability. Here is what the law says. Here is what the
    programs are. And the purpose of this is to make sure that when
    we as taxpayers in this country reach out to help those of us
    that need help that we do it in an efficient way that helps the
    most people possible.
        I want to thank each of our witnesses for being here today,
    and especially those who left a vacation to come and testify, I
    appreciate so much your coming, and I would now yield to my
    Ranking Member, the other ``TC'' on our Subcommittee, Senator
    Carper.

                  OPENING STATEMENT OF SENATOR CARPER

        Senator Carper. Thank you, Mr. Chairman.
        To our witnesses, welcome. Who came back from their
    vacation?
        Mr. Wood. Actually, it wasn't me. I am not sure who came
    back from the vacation.
        Senator Coburn. Nobody. But somebody there right behind
    you. OK.
        Senator Carper. All right. Or whether you're back from a
    vacation or just here enjoying a beautiful fall day, welcome.
        And I want to thank our Chairman for continuing our
    Subcommittee's look into the problem of improper payments.
        Senator Coburn and I took over the leadership of this
    Subcommittee back in March, and I think we have learned a lot
    since that time about the state of our Federal Government's
    finances. One of the most disappointing things that I have
    learned--some of you may have known this; I didn't--that the
    amount of Federal agency overpayment had been quantified, and
    it was in the realm of almost $50 billion per year. Most of
    that is overpayment. Some was underpayments.
        At a time when our Federal budget is in such dire shape,
    when it is being stretched so thin by war and now by multiple
    natural disasters, I think it is unacceptable, and I suspect
    most taxpayers believe the same: That it is unacceptable that
    tens of billions of our tax dollars would be wasted on error
    and fraud that might be completely preventable. And this error
    and fraud is happening across the Federal Government, not just
    in a handful of agencies and programs.
        We are called on every day now to make tough decisions
    about how to fund important programs under a tight budget.
    Every dollar that goes to waste because we haven't done enough
    to prevent improper payments is a dollar that can't be spent on
    a worthy program that has real impacts and consequences in our
    communities. It is also a dollar that we are borrowing around
    the world.
        I am pleased to see, then, that the program that we will be
    examining today have, for the most part, a pretty good track
    record on improper payments, or at least they are improving.
        HUD's Rental Assistance programs have been under a
    financial microscope for some time now. And during that time,
    it appears that the Department has done a lot of work to get
    things right or closer to right. I believe we still have
    improper payments of about $1.4 billion, with a ``B,''
    according to numbers from fiscal 2003. And that is a lot of
    money. That is also about a 39 percent reduction from 3 years
    prior, when HUD really started working on this problem. And I
    believe this achievement, this reduction, surpasses the
    Department's improper payment reduction goal.
        Then we have LIHEAP, which the Chairman has talked about.
    And LIHEAP has been deemed at low risk for improper payments in
    Department of Health and Human Services reports under the
    Improper Payment Information Act.
        I believe the program received good scores under OMB's
    program assessment rating tool, when it was evaluated during
    the development of the President's fiscal year 2005 budget.
        I don't believe many programs get good scores there, and
    that is especially grant programs.
        And while there is definitely work to be done at HUD, and
    despite their good reviews, I am sure there are areas that
    could be improved at LIHEAP as well.
        But I think that we are on the right track here.
        And, Mr. Chairman, you may not agree entirely on this, but
    I think in some cases the biggest obstacle to getting rental
    and energy assistance to those who need it most has been
    insufficient funding for these programs, and not always, but
    sometimes that has been the problem.
        And I want to thank you, my friend, for your commitment to
    this issue, and it is the right issue to be on. I am glad to be
    here sitting next to you as we do it, and I look forward to
    continue with you and our other colleagues who are going to be
    joining us on finding ways to eliminate spending mistakes that
    waste our scarce resources. Thank you.
        Senator Coburn. Thank you, Senator Carper, our first panel
    is Jim Martin, Assistant Chief Financial Officer for Financial
    Management at the Department of Housing and Urban Development.
    He has worked there since February 2002 to eliminate HUD's high
    risk and material weakness issues, improve the content of HUD's
    annual performance and accountability report and review; and
    coordinates the Department's efforts to implement the
    President's management agenda.
        Prior to that, Mr. Martin's work at HUD included
    implementation of the Federal Managers Financial Integrity Act
    in the Office of the Inspector General, and the development and
    implementation of the Multi-Family Housing Financial Assistance
    Subsystem to remotely monitor financial and compliance risk in
    a $53 billion portfolio.
        David Wood has been at GAO since 1977, and serves as
    Director for Financial Markets and Community Investment. In his
    capacity, Mr. Wood is responsible for leading GAO audits and
    evaluations concerning a range of Federal housing and
    financial-related issues, policies, and programs.
        Thank you, both, for being here. We will start off with 5
    minutes. Your complete testimony will be made a part of the
    record. I would also remind any in the Administration we would
    love to have testimonies 48 hours beforehand. You were very
    cooperative in giving us outlines, but, again, we would love to
    have testimonies, so we can really do the job we want to do.
    And if you can meet with us on that in the future, we would
    very much appreciate it.
        Mr. Martin, you are recognized for 5 minutes.

      TESTIMONY OF JAMES M. MARTIN,\1\ ASSISTANT CHIEF FINANCIAL
     OFFICER FOR FINANCIAL MANAGEMENT, U.S. DEPARTMENT OF HOUSING
                         AND URBAN DEVELOPMENT

        Mr. Martin. Thank you. Chairman Coburn, Ranking Member
    Carper, I want to thank you for the invitation to join you
    today to discuss the important topic of reducing improper
    rental housing assistance payments at the U.S. Department of
    Housing and Urban Development.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Martin appears in the Appendix on
    page 30.
    ---------------------------------------------------------------------------
        As you have mentioned, HUD's various rental assistance
    programs collectively represent our largest program area, with
    over $26 billion in total payments in fiscal year 2004.
        These programs serve to house over 4.8 million low-income
    households and are administered locally, on HUD's behalf, by
    4,100 public housing agencies and another 22,000 private multi-
    family housing property owners and their management agents.
        Despite, the significant size and impact of these programs,
    staff reductions and competing priorities diminished HUD's
    oversight of these programs during the decades of the 1980s and
    1990s.
        In 1996, the HUD Inspector General reported material
    weaknesses in the Department's internal controls over HUD's
    rental housing assistance payments, and in January 2001, the
    Government Accountability Office separately identified these
    programs on its list of high-risk Federal programs.
        The magnitude of the problem came into focus late in the
    year 2000, when HUD's own Office of Policy Development and
    Research completed studies that showed that 60 percent of all
    housing subsidy determinations were done in error, contributing
    to an estimated $2 billion in net annual subsidy overpayments
    and $3.2 billion in gross annual improper subsidy payments from
    both subsidy determination errors and tenant underreporting of
    income, upon which the subsidies are based.
        The significance of this problem warranted corrective
    actions through the President's Management Agenda, which was
    established in early 2001.
        Under the President's Management Agenda, HUD established
    goals to address the underlying high risk and internal control
    deficiencies and to reduce by 50 percent by fiscal year 2005
    the improper payment level.
        The Rental Housing Integrity Improvement Project, or RHIIP
    Initiative, as it's referred to within HUD, was established as
    a HUD secretarial priority to take the corrective actions
    necessary to assure that the right benefits are paid to the
    right households.
        Through the RHIIP Initiative, HUD and its housing industry
    partners at PHAs and multi-family housing properties have
    surpassed all interim improper payment reduction goals.
    Whereas, 60 percent of all subsidy determinations were found to
    be in error in 2000, that percent was reduced to 41 percent in
    fiscal year 2003 and further, to 34 percent, in 2004.
        The impact on the reduction in the dollars paid has been
    even greater. Whereas, we had a $3.2 billion gross improper
    payment in 2000, that number dropped to $1.6 billion in 2003,
    and down to $1.2 billion in the most recent numbers available
    for fiscal year 2004.
        That represents a total improper payment reduction of 62
    percent over our 4-year effort.
        These reductions resulted from HUD's extensive outreach on
    problem resolution with its housing industry partners and
    tenant advocacy groups, and through the provision of updated
    and improved program guidance and increased training, not only
    for the program administrators at PHAs and multi-family housing
    properties, but for HUD's monitoring staff.
        HUD also increased its onsite program monitoring, technical
    assistance, and enforcement efforts at PHAs and with the multi-
    family property owners.
        In January 2004, the Congress enacted HUD's proposal for
    statutory authority to work with the Department of Health and
    Human Services on a more effective computer matching capability
    for up front verification of household income to avoid improper
    payments.
        HUD's new computer matching system with the HHS National
    Directory of New Hires database will be available for PHA
    program administrator use to begin fiscal year 2006. We believe
    this increased computer matching capability has the potential
    to avoid the majority of the remaining error in this program.
        HUD's new goal is to reduce the total improper rental
    housing assistance payment level from its fiscal year 2004
    rates of 6.5 percent of total program payments to less than 3
    percent of total program payments by the end of fiscal year
    2007.
        Secretary Jackson, Deputy Secretary Bernardi, and the rest
    of HUD's leadership team are committed to taking the actions
    necessary to achieve this goal for the benefit of the American
    taxpayers and for the low-income households HUD serves.
        Mr. Chairman, I hope I have been able to shed some light on
    HUD's corrective actions and progress towards eliminating
    improper rental housing assistance payments. Your
    Subcommittee's interest and oversight on this issue is
    appreciated and important. That concludes my testimony, and I
    stand ready to address any questions you may have.
        Senator Coburn. Thank you very much, Mr. Martin. Mr. Wood.

    TESTIMONY OF DAVID G. WOOD,\1\ DIRECTOR, FINANCIAL MARKETS AND
      COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

        Mr. Wood. Thank you, Mr. Chairman. I appreciate the
    opportunity to be here.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Wood appears in the Appendix on
    page 38.
    ---------------------------------------------------------------------------
        My statement today is based primarily on our February 2005
    report concerning HUD's improper rent subsidy payments. That
    report was requested by the Chairman of the Subcommittee on
    Housing and Community Opportunity of the House Financial
    Services Committee.
        Since 2001, GAO has designed HUD's rental assistance
    programs as high risk; that is, particularly vulnerable to
    fraud, waste, or abuse. In addition, as noted, the President's
    Management Agenda for fiscal year 2002 identified HUD's rental
    assistance as one of nine Federal program areas with severe
    management challenges.
        HUD has identified three basic sources of errors that
    contribute to improper rent subsidy payments. The first. and
    likely the largest, is incorrect subsidy determinations made by
    program administrators, such as landlords or housing
    authorities.
        Determining correct subsidy amounts can be challenging. For
    example, program administrators must assess each tenant's
    eligibility for 44 different income exclusions and deductions
    when determining how much the tenant can afford to pay.
        As a result of program administrator errors, HUD paid an
    estimated $1.4 billion in gross improper subsidies in fiscal
    year 2003.
        The second source of error is unreported tenant income.
    These errors occur when tenants do not report an income source,
    either their own or another household member's, to program
    administrators.
        Such errors may be intentional or honest mistakes. HUD
    estimate that in fiscal year 2003, the Department paid $191
    million in gross improper rent subsidies due to unreported
    tenant income. However, a small number of files formed the
    basis for that estimate, and, according to HUD, there were
    large variances in the amounts of income that tenants did not
    report.
        Therefore, while we agree that the incidence of the errors
    was small, we believe the dollar estimate is not very
    meaningful.
        Finally, the third source of error is incorrect billing.
    While the specific problems vary, in general, billing errors
    arise when the amount of rent subsidy determined by the program
    administrator differs from the amount ultimately billed to and
    paid by HUD.
        The agency does not have a complete and reliable estimate
    of improper payments due to billing errors. HUD has estimated
    that billing errors in one program, Project-Based Section 8,
    amounted to approximately $100 million in fiscal year 2003.
        However, again, the small sample size and the concentration
    of errors in a small number of properties means that that
    figure might be greatly overstated or understated.
        HUD has begun a process to estimate billing error in its
    other major rental assistance programs.
        On the basis of our findings, we made three recommendations
    to HUD. First, we recommended that the agency include an
    assessment of compliance with rent subsidy determination
    policies in it regular oversight of housing authorities.
        Second, we recommended that HUD collect complete and
    consistent information from those monitoring efforts and use it
    to help focus corrective actions where they are needed.
        HUD has taken steps to address these two recommendations.
    We also recommended that HUD study the potential impacts of
    simplifying the subsidy determination process. According to HUD
    officials, the complexity of existing policies makes it harder
    for program administrators to correctly determine rent
    subsidies.
        However, simplifying the policies, which would likely
    require statutory changes by Congress, could affect the rental
    payments of many tenants, as well as the overall program costs.
        HUD has not yet done a comprehensive study of
    simplification, and its likely effects on tenants.
        Mr. Chairman, that concludes my prepared statement. I will
    be glad to answer any questions you have.
        Senator Coburn. Thank you very much, Mr. Wood.
        Senator Lautenberg, welcome. I would like to recognize you
    for 5 minutes for an opening statement.

                OPENING STATEMENT OF SENATOR LAUTENBERG

        Senator Lautenberg. That is very kind, Mr. Chairman. And I
    apologize for my lateness, but I do want to say to you, Mr.
    Chairman, and to our friend, Senator Carper, as well that I
    have great respect for the things that you attempt to do in
    terms of curbing excessive expenditures.
        And while we may differ on the approach, and we may differ
    on the value of the programs, the fact is that I think Senator
    Carper, who was a governor of a State, and you, with your
    experience, bring a particular view to the subject.
        So I just wanted a moment to be able to say how important I
    think this review is and to say to those agencies that you are
    obviously have to sharpen your oversight; otherwise, what
    happens will be essentially throwing the baby out with the
    water, because there are some excellent programs here.
        And to abandon the program in order to accomplish another
    goal, in my view, is not quite the way to do it.
        And so I will forego taking any more of the time. Thank you
    very much.
        Senator Coburn. Thank you. Well, I am just going to start
    with a couple of questions.
        We are now at the end of 2005, why do we not have 2004
    numbers on improper payments?
        Mr. Martin. We just got 2004 numbers. And that is the gross
    improper payment level has been reduced to $1.2 billion.
        Senator Coburn. And how much overpayment-underpayment on
    that number? Can you recall?
        Mr. Martin. I think that is broken out in my detailed
    testimony here.
        Senator Coburn. You all are obviously making great headway
    in trying to remedy this process, and Mr. Wood brought up the
    point about the simplification of the application process and
    the complexity of it. Where are you on that? Is HUD going to
    bring us something and say here are the things we think you
    need to change statutorily to make this easier? Don't we have a
    board? Put that up for us, so you just see the progress.
        I want my fellow Senators to see--and please be critical of
    this--but as we look at this, this is where we see all the
    complexities--if you look at what all you have to go through to
    get housing, you can see where all the errors are coming from,
    or the potential for errors.
        Here is what you have to go through for the rent subsidy
    determination process, and you look at all those steps through
    there. You can see, besides the 44 questions that have to be
    answered, here are all the potential errors on the way down
    that you can find the potential for somebody to make a mistake.
        So are you all in the process, Mr. Martin, of sending some
    recommendations on changing first of all what is statutorily
    limiting you to change in terms of the 44 steps of the
    application process, but also in terms of how we go through
    eliminating the number of errors? The idea of checking with the
    employment information, check it with IRS information, in terms
    of income tax, all that is great. But unless we know what to
    change statutorily, we can't help you as much as we would
    probably like to help you.
        Mr. Martin. First off, we have approached it from better
    controlling the programs that have been enacted, and the vast
    majority of the income exclusions, the deductions, are based in
    statute, so we don't have a lot of flexibility in that regard.
        I know HUD has proposed a current proposal. The State and
    Local Housing Flexibility Act of 2005 is pending that would
    allow local public housing authorities flexibility in
    determining their own local rules on how they would apply this.
        Certainly if you went to a flat rent subsidy and eliminated
    the income-based exclusions and deductions it greatly reduces
    the risk of error. But each of those exclusions and deductions
    has a constituency that benefits from them, that fought hard to
    get those, and that is up to the Congress.
        Senator Coburn. So basically, you all haven't made a
    recommendation? The Administration has not made a formal
    recommendation to Congress on some things that could be changed
    that would help lower the error rate, statutorily?
        Mr. Martin. At this point, I am not aware of anything,
    other than proposals to allow flexibility to local program
    administrators.
        Senator Coburn. OK. In this recommendation that you say is
    in the--is it the Housing Flexibility Act?
        Mr. Martin. Yes.
        Senator Coburn. Wouldn't that make it a whole lot harder to
    audit if every housing agency had their own?
        Mr. Martin. In essence, unless you get it as a block grant.
        Senator Coburn. Yes.
        Mr. Martin. It is up to them that we would monitor
    performance in terms of the number of households served and the
    average cost per household and put some incentives in that
    regard.
        Senator Coburn. OK. Your goal for 2007 is less than 3
    percent.
        Mr. Martin. Correct.
        Senator Coburn. How did you come up with that?
        Mr. Martin. Looking at where we were and the things we had
    in place, we believe that the income-matching program is going
    to be the last big improvement we make to substantially reduce
    error; looking at what other programs, like food stamps,
    Medicare, and others have been able to do that have been at
    this issue of reducing improper payments much longer than we
    have and where they are at.
        Senator Coburn. Yes.
        Mr. Martin. And we think that is a realistic, achievable
    goal.
        Senator Coburn. Food stamps is down to the same level you
    are, about 6.5 percent.
        Mr. Martin. Right.
        Senator Coburn. But they came from, I think, 17 percent, so
    they have moved.
        Mr. Martin. Well, in terms of percent of total payments,
    our 2000 numbers were close to 17 percent of total payments
    made that year.
        Senator Coburn. Yes. OK. That is correct.
        Discuss with me the $100 million that you say are billings
    that you don't have real confidence of whether that is a low
    number or a high number. Explain how that happens.
        Mr. Wood. The reason for the uncertainty is just because it
    was a fairly small sample size.
        Senator Coburn. So statistically, it is not significant?
        Mr. Wood. Right. Well, a large margin of error.
        Senator Coburn. Right. And that margin of error is plus or
    minus what percent?
        Mr. Wood. We don't have the actual number. Sorry.
        Senator Coburn. OK. All right.
        Did GAO make any recommendations about the complexity of
    the subsidized housing application?
        Mr. Wood. We made one recommendation to HUD that they study
    the impacts--do a more comprehensive study of some
    simplification approaches.
        Senator Coburn. OK. And what has been the response to HUD
    to that?
        Mr. Wood. So far, we are not aware of any comprehensive
    study that has been initiated.
        Senator Coburn. OK. Is there any response to that
    recommendation by GAO?
        Mr. Martin. I know we have studied numerous proposals for
    simplification.
        Senator Coburn. OK. So go ahead. I am sorry.
        Mr. Martin. And we have looked at the winners and the
    losers so to speak under various scenarios. I mean, if you were
    to go to a flat percentage of income, eliminating all
    exclusions and deductions, what impact would that have on
    families of young children who lose their daycare exemption?
    What impact would that have on elderly households that lose
    their medical deductions. I know that our policy development
    research staff have sliced and diced this information a number
    of different ways for our policy makers, and, as Mr. Wood has
    indicated, there are winners and losers under various
    scenarios. And it is a policy decision as to who you want to
    benefit.
        Senator Coburn. Thank you, Mr. Martin. Senator Carper.
        Senator Carper. Thanks, Mr. Chairman.
        A number of years ago, when I served in the U.S. House of
    Representatives, I recall working on an issue--I think it was
    called Tenant Income Verification--to try to make sure that
    when folks applied for assisted housing that there was an
    effort to make sure that the monies that they were reporting as
    earned were indeed correct.
        I think it involved running the numbers that were submitted
    by the person applying for assisted housing against a database
    compiled by the Department of Labor and earnings submitted to
    the Department of Labor by employers.
        And I have been out of the Congress for a while to be
    governor of Delaware for 8 years, but whatever happened to that
    approach?
        Mr. Martin. In terms of HUD, we have had a history on that
    issue. We started out--we got statutory authority to do
    computer matching with Federal tax records. The problem with
    that was that it was old information when we got it, and it
    wasn't that useful, and it was on the back end of the program.
    It was basically chasing after incorrect benefits after the
    fact. And the lion's share of these people are still low-income
    people, and it just wasn't very productive.
        So what we have tried to do is what we call an up-front
    verification process, and our public housing authorities have
    statutory authority to pursue that information directly with
    the States, because it is the State wage information that comes
    into the Federal data sources on a quarterly basis. And, that
    has taken time. We had pursued that because that is the only
    authority we had. And we got up to 30 States with agreements to
    do computer matching and share that information.
        When Congress enacted our proposal to give us that same
    information that is available through HHS, this National
    Directory of New Hires database that was created for their
    Child Enforcement Program activity, and it is all the State
    wage data in one place, plus unemployment benefit information,
    plus monthly information from employers on all new hires, so it
    is a central, much more efficient source for us to use.
        So that is the process we are opening in 2006 to our public
    housing authorities to use, and we think that is going to be a
    very effective process.
        Senator Carper. OK. Good.
        I think earlier you said that you are just getting data for
    2004?
        Mr. Martin. Right.
        Senator Carper. And would you just go back and compare
    where you are when we started doing this comparison and
    tracking? Where you were in 2003 and where HUD was in 2004?
        Mr. Martin. Our baseline was established in 2000, and that
    is when we estimated that 60 percent of subsidy determinations
    were in error and that equated to a $2 billion net overpayment
    problem, as well as a $3.2 billion gross improper payment
    problem, adding both the underpayments and the overpayments
    together. I mean there are households that don't get the full
    assistance that they are entitled to because of errors made in
    their determinations.
        So that problem is focused on two out of the three billing
    components that Mr. Wood--error components that Mr. Wood
    alluded to. That is the determination errors and the tenant
    reporting of income problem. It didn't include the billing. Two
    thousand four is the first year we are going to have the full
    billing error. Our preliminary estimates it is about $300
    million.
        So that $3.2 billion gross problem that we identified in
    2000 came down to $1.6 billion in 2003 and down to $1.2 billion
    in 2004. And you add the $300 million that we are going to have
    in the billings, so we are at a total problem of about $1.5
    billion dollars right now. And in 2004, I think we had $26
    billion in payments. So that is where we are running the 6.5
    percent rate. And our goal is to reduce that to 3 percent by
    2007.
        Senator Carper. What more do we do? I think there is value
    in what the Chairman and I are trying to do on behalf of the
    Subcommittee, and that is to hold oversight hearings, to invite
    in agencies who are not doing a very good job of complying with
    the law on overpayments or improper payments, but at the same
    time putting a spotlight on the agencies that are doing a good
    job, where there is actual improvement that is being made to
    see--one I believe in positive reinforcement. Second, our hope
    is to identify some best practices as well to hold out to other
    agencies who have their work cut out for them.
        Aside from that oversight role that we are attempting to
    play, what further can this Subcommittee or Committee or the
    Senate do to further reduce the levels of improper payments at
    HUD?
        Mr. Martin. We participate in the CFO Council's
    Subcommittee on Improper Payments. It is focused on
    implementing the Improper Payments Information Act you referred
    to. And I mean there is really disparate treatment in the
    statutory authorities various income-based programs have to do
    effective computer matching. So if there was some way of
    standardizing that across the government so that we all have
    access. It is kind of perverse that SSA keeps most of this data
    on behalf of the Federal Government, but they are not even
    allowed to use it for certain of their program purposes,
    because of the statutory barriers over concerns about the
    Privacy Act implications.
        But we think that we can--we know that we can control our
    information in a secured manner for its business intended
    purpose, and it is the same information that our program
    administrators are processing in paper form. It is just that it
    is a lot more efficient and effective to deal with it on a
    large-scale automated process of computer matching, and it is
    going to reduce program cost, because, right now our program
    administrators have to verify that income with the employer. It
    also adds dignity to the beneficiaries, because now their
    employers don't have to be notified that they are getting
    Federal assistance, because we can remotely verify their income
    levels. So there are a lot of benefits to it. But not all
    agencies have it, because it is closely controlled by statute
    as to who gets it and who doesn't.
        Senator Carper. All right. Good. Thanks very much.
        Senator Coburn. Let me just follow up for a second. Mr.
    Martin, how will the enterprise income verification system
    improve errors? Explain that to me. How is that going to
    improve the error rate, because I thought a lot of the error
    was at the program administrator level and at the determination
    level rather than at that level. Can you teach me that if you
    would?
        Mr. Martin. Sure. Yes, a lot of the program administrator
    error is in processing income information. Like I said, they
    are required to go out and verify with the employers the
    income. Often times, we will go out and we will do a monitoring
    visit, and we will find that the employer has responded to
    their certification of income letter, and they haven't opened
    it up and used it. So that's an error on the program
    administrator, not on the tenant.
        Conversely, you can't hold the program administrator
    responsible for not verifying an income source that the tenant
    didn't just divulge to them. That is where the computer
    matching will come into play, because then that precludes the
    opportunity for them to conceal income sources.
        Senator Coburn. Is there a sanction in the law if you
    falsify records to enable yourself to obtain eligibility when,
    in fact, you are not eligible for it?
        Mr. Martin. Yes.
        Senator Coburn. And what is that?
        Mr. Martin. Well, they have false statements--our
    application forms have the false statement warnings and
    penalties, and that is actually an area where our Inspector
    General has gotten much more involved. And we think they are
    having a very beneficial impact in sending a deterrent message
    to our tenant beneficiaries in that regard, going after the
    more egregious cases where tenants are failing to disclose
    their income sources.
        Senator Coburn. As Senator Carper said, for the foreseeable
    future, we are going to be on a tight budget, with everything
    that is out there. And, I kind of look at that as one citizen
    stealing from another. If you are getting a benefit you are not
    really entitled to, and we don't have enough money to give
    those benefits to those who are entitled, it really says
    something about our society today. And I would just urge you to
    be aggressive in that.
        Have you thought about requesting a formal study, like GAO
    recommended on the alternatives for determination
    simplification? Have you thought about asking for help to try
    to make this simpler?
        Mr. Martin. Well, I think in our response to their draft
    report we responded that we felt we had done sufficient
    analysis of various options.
        Again, it gets down to the policy call. There are going to
    be winners and losers. And who are you trying to benefit and to
    what extent? And, I am not sure what scenario you would study.
        Senator Coburn. Well, for example, take this process. We
    can't simplify the process of an application for housing
    assistance in this country to where we eliminate how many--1,
    2, 3, 4, 5, 6, 7, 8, 9--nine potential errors that we can't
    make that to where that is down to five potential errors? I
    mean just in terms of the process? There is not a way we can
    make that less cumbersome, less bureaucratic, to where there is
    less opportunity for error?
        Mr. Martin. We think that the enterprise income
    verification system is going to simplify several steps there,
    because now when a tenant comes to recertify their benefits
    annually when the program administrator is sitting down with
    them at the table, they are going to have access to that
    computer information on all their income sources and their
    history. So they are not going to be able to conceal sources at
    that point, like they were in the past. And that negates some
    of these steps about verifying their income on outside----
        Senator Coburn. Right.
        Mr. Martin [continuing]. Going back and forth with the
    employer trying to get the information. And it even improved
    our error rate, because a lot of times they report an income
    source, and it wasn't what it appeared to be, because you have
    franchise owners and they say I work at McDonald's, but the
    employer name is a franchise holder.
        Senator Coburn. Right.
        Mr. Martin. Or we got to verify and computer match it, and
    it is an ADP payroll service or something. So there is, we
    think that this system has the potential to simplify the
    process as best we can within the current statutory structure
    of the programs.
        Senator Coburn. OK. Well, I would just encourage that the
    message ought to go back to the Administration. Reform bills
    for Section 8, the ones that are going through the Senate have
    very few sponsors. And I think we need some leadership on some
    reform proposals, and everything we do up here, there are
    winners and losers.
        I want to make sure the winners are the people that need
    us, and the losers are the people that don't need us. And I
    would just hope that you would--the Administration would come
    forward, in conjunction with some ideas, and say do we make
    this better? How do we make it do what it needs--and you all
    know the problem is taking the political heat to make the
    recommendations for what you do know. I mean that is what you
    have said. You didn't say it in my words, I said it for you.
        But that is the real thing. Because there are winners and
    losers, you don't want to touch it in terms of making the
    recommendations.
        But my hope is that the Administration would have some
    leadership because if we have three-quarters of a billion
    dollars every year that could be going to help people, or $250
    million, a quarter of a billion dollars, that is not helping
    them, that is just as bad as any other thing we might do in
    terms of wasting money anywhere else in the Federal Government,
    except morally it is worse, because now we have people that are
    depending on us that we are not helping that we should.
        And so I would just hope that you would do that. Any other
    questions? Senator Carper.
        Senator Carper. Just one more if I could.
        The Chairman and I have been working with Senator Obama and
    others to try to make sure that the enormous sums of money that
    are being spent rather quickly down along the Gulf Coast to
    help folks that are victims of Hurricane Katrina and now
    Hurricane Rita. I want to make sure that the monies that are
    being spent are being spent properly, and I am just wondering--
    and I guess this is probably more for you, Mr. Martin, than for
    Mr. Wood--but with all the additional money that is going to go
    out the door from HUD, especially--as well as other agencies--
    but I think it is not unlikely that some of the money is going
    to be inappropriately spent, improperly spent.
        And I guess what I would like to ask is have you all
    thought about that? Have you put any additional accounting or
    waste prevention safeguards into place? Are you thinking about
    that? Are you asking yourself that question?
        How do you plan to balance the need to get aid out quickly
    with the need to make sure we get it right?
        Senator Coburn. Good question.
        Mr. Martin. Absolutely, I have thought about it, and
    planning on it. And I think that the lessons we have learned in
    reducing this problem have carried over into our new program
    implementation or our temporary program implementation in terms
    of the disaster relief efforts. The Office of Management and
    Budget has put a call out to all agencies involved in relief
    efforts in terms of developing adequate risk matrices and
    control matrices to plan how we are going to address these
    issues.
        We are going to be using some of the tools that we've
    developed here to verify citizenship and other eligibility
    requirements; working with FEMA to try to use their data to
    match and determine up front that these are truly people that
    are affected by that disaster and need the benefit and are
    entitled to the benefit. So, yes, we are absolutely planning
    that.
        Senator Carper. All right. Thanks very much.
        Senator Coburn. Mr. Wood, I have one follow-up. The Rental
    Integrity Monitoring Program, how would you assess HUD's
    progress on this front? How is HUD doing at making GAO's
    recommended improvements, and what is the most effective way to
    get at the improper payments problem?
        Mr. Wood. I think they are making good progress. The RIM
    reviews were a very good exercise, and I think HUD learned a
    lot.
        We recommended that they institute something like that as
    part of their permanent monitoring, and, according to what
    information that we have gotten from them recently, they plan
    to do about 275 of those per year, and that will include 20
    percent of the largest PHAs each year, and then a risk-based
    sample of about 5 percent of the others.
        I just will speak to something you raised earlier about the
    simplification recommendation that we made. I think we would
    agree that the ability to verify income up front will help
    program administrators when they sit down and go through this
    process. But that alone doesn't change the fact that you still
    have to apply those 44 income exclusions and deductions.
        So it is that process that needs to be or could be
    simplified that might help reduce the overall error rate. And
    that is what we were speaking to.
        Senator Coburn. Is that statutory? In other words, does it
    require a change by Congress?
        Mr. Wood. Well, a number of the deductions and exclusions
    are statutory.
        Senator Coburn. Are there things that HUD could change that
    don't require congressional approval that would simplify that?
        Mr. Wood. I believe some of them are in regulation as
    opposed to statute.
        Senator Coburn. Would you be so kind as to make a
    recommendation to this Subcommittee of what those are? Not what
    the changes should be.
        Mr. Wood. Yes.
        Senator Coburn. But the ones that are in regulation and not
    statute?
        Mr. Wood. I can follow up with that. I don't have it at my
    fingertips.
        Senator Coburn. All right. I have no other questions.
        We will be submitting some written questions to you that we
    would like to have back within about 2 weeks if we could, and
    then I plan on looking at this again in light of what Senator
    Carper said and the tremendous amount of monies that are going
    to go out for this associated with the Katrina relief, and so
    you can kind of count on 3 months being back here. Senator
    Carper won't mind coming when we are not in session, when he is
    just over in Delaware in January where we can take a peek at
    this and just make sure how things are going.
        I think it is very important that you are on top of this
    going out.
        Mr. Martin. Yes, sir.
        Senator Coburn. Thank you both, very much.
        Mr. Wood. Thank you.
        Senator Coburn. Our next panel is Josephine Bias Robinson,
    who was appointed Director of the Federal Office of Community
    Services, OCS, on March 15, 2005. In that capacity, she is
    responsible for overseeing 11 programs, including the LIHEAP
    Program.
        I have had the great pleasure of knowing her for a couple
    of years. We both worked on the Presidential AIDS Commission,
    and she was the Director of that during my tenure as Co-
    Chairman. I want to welcome her. It is great to see her smiling
    face. A lot of times in Congress, we fail to have the personal
    connection with people who are serving in the government.
        And when we get that personal connection, it really helps
    us know and see and flavor what we hear, and so I am thankful,
    and I look forward to trying to hear that and have that kind of
    relationship with other people in the Administration.
        I also want to welcome Jim Wells. He is Director with the
    U.S. Government Accountability Office in the Natural Resources
    Environmental Team at GAO, and has served there since 1969.
        He did come up here from his Florida vacation; got on the
    airplane this morning. He is going to go back this afternoon,
    and I can't thank you enough for doing that. And had I known
    that, I would have delayed this meeting even further.
        So, once again, thank you. Both are recognized for 5
    minutes, and I appreciate your being here. Ms. Robinson.

     TESTIMONY OF JOSEPHINE BIAS ROBINSON,\1\ DIRECTOR, OFFICE OF
     COMMUNITY SERVICES, ADMINISTRATION FOR CHILDREN AND FAMILIES,
              U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

        Ms. Robinson. Good afternoon, Mr. Chairman and Members of
    the Subcommittee. I am Josephine Robinson. I am the Director of
    the Office of Community Services in the Administration for
    Children and Families within the Department of Health and Human
    Services. I appreciate the opportunity to appear before you
    today to talk about the Low-Income Home Energy Assistance
    Program (LIHEAP) which provides assistance to millions of low-
    income Americans in meeting the cost of home energy cooling and
    heating.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Robinson appears in the Appendix
    on page 54.
    ---------------------------------------------------------------------------
        The Low-Income Home Energy Assistance Program, commonly
    known as LIHEAP, grew out of a series of emergency programs
    generated by the energy crises of the late 1970s.
        Today, the LIHEAP Program ensures that low-income families
    and individuals have adequate home energy through a Federal-
    State partnership that provides States with the flexibility
    they need to design the best program approach to meet consumer
    needs.
        This year, States received $1.9 billion in LIHEAP block
    grant funds. States also received $250 million in emergency
    contingency funds because of the much higher fuel prices this
    past winter.
        Earlier this month, the Department released $27.25 million
    in contingency funds to Alabama, Florida, Louisiana, and
    Mississippi to help with the home energy crisis needs of
    households impacted by Hurricane Katrina.
        States and other LIHEAP grantees have great capacity in
    applying LIHEAP funds to meet local needs. States are required
    to have agreements in place with energy vendors to permit
    payments on behalf of low-income households receiving LIHEAP
    benefits.
        Payments are usually distributed in the form of a credit
    toward the household's energy bill, with the benefit applied
    automatically to the client's account.
        This process ensures that the LIHEAP assistance is provided
    for the purpose intended, and only under rare circumstances
    does the State provide a household with a direct check or cash
    to pay their home energy bills, such as when a client's home
    energy source is wood or propane.
        In such cases, the State often issues a two-party check to
    the vendor.
        The Administration is committed to ensuring that all
    Federal programs achieve their specific program objectives and
    performance outcomes. And, as such, the Office of Management
    and Budget has established the Program Assessment Rating Tool
    (PART), to evaluate program performance and take action to
    remedy deficiencies and achieve better results.
        The LIHEAP Program underwent a PART assessment in
    preparation for the President's fiscal year 2005 budget. The
    PART assessment found that the LIHEAP Program has a clear
    mission targeted to a specific problem and need; yet, revealed
    a need to develop long-term efficiency measures in the LIHEAP
    Program.
        In response to the PART findings, the President's fiscal
    year 2005 reauthorization request for LIHEAP included a
    provision to conduct and fund at $500,000 a feasibility study
    of a nationally representative evaluation of LIHEAP program
    operations.
        It is our hope that Congress will act soon on the
    President's request to grant targeted authority for a LIHEAP
    feasibility study. Additionally, as part of the President's
    Management Agenda (PMA), Assistant Secretary Wade Horn has
    launched a major initiative at the Administration for Children
    and Families (ACF), dedicated to improve financial performance
    for all agency programs.
        ACF's PMA Plan is structured to ensure that our Federal
    financial management systems produce accurate, timely, and
    useful information to support operating budget and policy
    decisions.
        Similarly, since the passage of the Improper Payments
    Information Act of 2002 (IPIA), ACF has been working
    collaboratively with the officials at the Department and OMB to
    assess whether its programs are at-risk of improper payments.
        As a result of conducting IPIA risk assessments of the
    LIHEAP Program for 2004 and 2005, ACF determined that the
    program was at low risk for improper payments.
        This conclusion was based on financial management and
    Federal programmatic monitoring of grantees established by the
    Low-Income Home Energy Assistance Act, the lack of Government
    Accountability Office or Office of the Inspector General (OIG)
    findings of improper payments in recent year studies, and also
    the proper identification of questioned costs in A-133 audits
    for LIHEAP grantees. Based on our assessments, we believe that
    LIHEAP administering agencies have satisfactory systems in
    place to address Federal financial integrity issues.
        However, the feasibility study requested by the
    Administration as part of reauthorization will allow the
    Department to institute a more thorough evaluation of the
    issue. We have also asked the Inspector General to review the
    current risk assessment model.
        In conclusion, the Administration believes that LIHEAP is a
    program that works. During 2006, ACF will closely review the
    LIHEAP risk assessment model to ensure that LIHEAP is at low
    risk for improper payments.
        We can all be very proud of how LIHEAP has worked to serve
    those most in need, including many hard-pressed working
    families, not unlike my own.
        What I would like the Subcommittee to also know is that
    this program is not only professionally important to me in my
    role as the Director of the office, but personally important as
    well, having been a recipient of LIHEAP benefits as a child
    with my family. There were a number of occasions where my
    family was faced with eviction and LIHEAP benefits actually
    assisted my mom in meeting our needs so that we were not
    evicted. I have lived in 9 homes on Long Island, 6 of which I
    was evicted from; 3 of which I was saved from being evicted
    from because of LIHEAP benefits.
        So there is a personal commitment to ensure that each and
    every family receives a LIHEAP benefit should they so deserve
    one so they don't have to face those situations.
        I thank the Committee for their time.
        Senator Coburn. Thank you. Mr. Wells.

      TESTIMONY OF JIM WELLS, DIRECTOR,\1\ NATURAL RESOURCES AND
           ENVIRONMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

        Mr. Wells. Thank you, Mr. Chairman, and Senator Carper.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Wells appears in the Appendix on
    page 62.
    ---------------------------------------------------------------------------
        I, too, appreciate the opportunity to be here today enough
    to return from my vacation.
        I have been doing oversight for 37 years with the
    Government Accountability Office, and I can tell you I really
    believe it is important, and I support your mission.
        Our last look at the LIHEAP Program occurred in 2001, when
    we reviewed and reported on a subprogram that is a part of
    LIHEAP called the Reach Program, which awarded about $6 million
    in grants to fund demonstration projects to help reduce energy
    usage.
        Although we were not tasked at that time by the Congress to
    look at the potential for improper payments, we did find
    payments that we believe were more related to social services
    and not specifically related to meeting home energy needs. For
    example, payments were for skill job development and paying for
    past due rent or mortgage payments as opposed to the heating
    and cooling type expenses that were spelled out in the
    authorizing legislation.
        We took issue with HHS, not that the above payments were
    not needed, but as you said, Mr. Chairman, earlier, the
    intended recipients may not be getting the maximum benefit from
    a program like LIHEAP.
        We did make recommendations and changes and suggestions on
    how they might want to develop performance goals that are more
    measurable and quantifiable. It is encouraging to hear in
    Josephine's statement today that HHS intends to relook at the
    LIHEAP Program to find out if it is, in fact, as good as it
    looks. This is very encouraging.
        Regarding oversight and audit responsibilities, I would
    like to make two points, two quick points.
        As you know, LIHEAP is about a $2 billion block grant
    program, and, as you heard today, LIHEAP offers a lot of
    flexibility to the States and the grantees to basically manage
    and oversee those programs as they see fit.
        While the Federal Government establishes guidelines,
    overall guidelines, each grantee operates its own program and
    makes most of those decisions about how it is to operate.
        My second point is that, although this sounds like the
    Federal Government has limited audit and fiscal controls, the
    LIHEAP Program is subject to review under the Single Audit Act.
    The Single Audit Act makes States and local governments
    primarily responsible for obtaining independent audits of the
    Federal programs, including payments made under LIHEAP.
        As a result, HHS, sitting here today, has a principal
    oversight function to monitor, but not audit, LIHEAP payments.
    Monitoring to us looks like it includes assessing the quality
    of the audits that are being performed, reviewing the audit
    results, and ensuring that corrective actions are taken to
    respond to audit findings.
        Perhaps in the follow-up questions, I would like to respond
    in terms of what our observations are on that task that is
    assigned to HHS.
        Clearly, the grantees should return funds that are spent in
    ways that are contrary to the LIHEAP statute.
        In our brief review, as we heard you would like us to talk
    about the LIHEAP Program, we quickly looked at about 40,000
    single audit reports that were issued in 2004, and basically
    they showed relatively few specific LIHEAP-related audit
    findings; 26 out of the 300 that we could find with LIHEAP
    coding where audits were done looking specifically at LIHEAP
    provisions.
        In some cases, the grantees were found to not meet
    accounting criteria for managing those Federal funds, both from
    LIHEAP and other Federal programs. So really it was difficult
    to determine whether this 26 number audit findings had any
    specific improper payments, LIHEAP payments, because of that.
        We were able to identify only a certain, relatively small
    number of payments that were questioned in the audit reports,
    such as about $8,800 in what appeared to be incorrect or
    duplicate payments made by one grantee.
        Another audit report questioned about $1,200 in payments
    because of inadequate procedures to prevent overpayments.
        I do need to say that in addition the Single Audit Act, it
    is not the only oversight Federal responsibility. The Improper
    Payments Information Act of 2002, Mr. Chairman, as you referred
    to earlier, requires that Federal agencies identify those
    programs that may be susceptible to significant improper
    payments.
        Agencies are required to estimate the annual amount of
    improper payments and basically tell the Congress. HHS has
    conducted risk assessments earlier and have identified specific
    programs, with specific risk.
        Although HHS has identified seven of its programs as high
    risk, LIHEAP was not among them.
        We are not aware of any more comprehensive information that
    exists on improper payments within the LIHEAP Program other
    than the few examples we discussed above. But that doesn't
    necessarily mean that they are not there.
        Mr. Chairman, the Congress has to date shown interest in
    having GAO evaluate how the money gets out to the grantees, and
    not how well it has been used.
        Given GAO's mission and statement of accountability,
    integrity, and reliability, we agree with you how important it
    is that Federal agencies get it right when they are awarding
    such large sums, and the LIHEAP Program is a $2 billion grant
    program.
        That concludes my short prepared remarks. I will be glad to
    answer any questions you may have. Thank you.
        Senator Coburn. Let me see if I understand what you are
    saying. It may be that LIHEAP is at low-risk for improper
    payments, but the basis under which that assessment was made,
    there are no data out there that would confirm that you could
    audit that and say that is necessarily a good assessment of it
    being low risk. Is that what you are saying?
        Mr. Wells. I am not prepared today to offer the conclusion
    about the success of that program. We have not been asked to
    audit the model. I understand HHS has agreed that they are
    going to revisit and look at the model that it used that
    predicted the low success. And, therefore, it would have less
    improper payments and did not meet the criteria to be put on
    its high-risk list.
        We have not looked at that.
        Senator Coburn. But basically, there has not been a good
    audit of the grantees in terms of the distribution of LIHEAP
    funds because it has been felt that there is not a problem
    there?
        Mr. Wells. That is my understanding.
        Senator Coburn. OK. All right.
        Now, you had some observations that you wanted to make in
    regards to LIHEAP.
        Mr. Wells. I did. Mr. Chairman, when you asked us to come
    up and talk about improper payments, one of the first things we
    do as auditors is to make initial inquiries to the agency, and
    we looked at the oversight responsibilities of the Federal
    agencies and determined that there were requirements for the
    Single Audit Act and the Improper Payments Act. And we asked
    some questions of the programmatic folks there at HHS, and it
    was an observation that we didn't get real quick responses
    about what they knew about the Single Audit Act.
        There didn't appear to be a lot of information quickly at
    their fingertips about how well or if they were monitoring the
    Single Audit--monitoring the audit results.
        There were some questions that we raised that perhaps they
    are not quite on top of things in terms of using the Single
    Audit Act findings that may have been generated in these 40
    some thousand audits that have been required.
        So these were just early indicators to us that holding a
    hearing like this probably serves notice to the agency that
    they need to look at their responsibilities in terms of
    oversight.
        So that would be my additional observation just based on
    not having audited the program recently.
        Senator Coburn. Well, first of all, my staff's experience
    mirrors that experience as well.
        I would note that the author of the Single Audit Act sits
    on this panel, Senator Carper, and I know he has an interest in
    it, and the motivation for doing that was accountability, and,
    as you can see, each one of our hearings is based on
    transparency.
        And, Ms. Robinson, what is your feeling about putting your
    hands down on the administration of LIHEAP in terms of here is
    what you have seen; here is what is filtered up? What do your
    people tell you?
        Ms. Robinson. One of the challenges that I have is just
    grasping, if you will, the complexity of this issue with
    respect to who has the controls within the office. We are a
    program office, and we have an Office of Administration, which
    does the actual auditing and working cooperatively with them to
    determine where, in fact, in the process we work with each
    other, and we determine where and how quickly information is
    coming in and how quickly information is dispensed to me as a
    program official; this is one of the areas that I am working
    very hard to ensure occurs.
        I am 6 months into the job, and I have announced we
    definitely moved forward in determining and ensuring that we
    are doing effective monitoring and actual follow up.
        Each of the audits that come in, after they have been
    processed within our Office of Administration are reviewed by
    our Office of Inspector General; reviewed again by our Office
    of Administration; forwarded to me with respect to the
    findings, whether they are monetary or non-monetary, and I am
    given advice as to where and how I should transmit those
    findings.
        Once the findings are signed off and sent back, then we
    have the responsibility in the Program Office to ensure that
    the findings are secondarily communicated. The principal
    responsibility is with the audit resolution office. But there
    is a secondary responsibility in my program office which I have
    to take direct responsibility with my staff. And there is a new
    found commitment to ensuring that we are working cooperatively
    with the States and we are in constant communication with them.
        It also means that we are doing additional training and
    discussion with them. We issue guidance to the States when we
    have new information or rules, and to achieve transparency; to
    ensuring that we are communicating the rules effectively; that
    we are underscoring what corrective actions are being taken;
    that we are following up; and that we are on top of things.
        Senator Coburn. Right.
        Ms. Robinson. Because there is an atmosphere of that not
    being the case with our limited resource and staff.
        Senator Coburn. Right. And there is no question you all are
    subject to the Improper Payments Audit Act.
        Ms. Robinson. Yes.
        Senator Coburn. OK. Senator Carper, and then I will come
    back.
        Senator Carper. Thanks. My wife jokes--I think she is
    joking from time to time. She says I don't want to be married
    to the Senator that no one has ever heard of; and from a little
    State on the East Coast, and I always say to her, honey, for a
    brief spell of time and at least in every state auditor's
    office in America, my name was a household word.
        It was a fleeting moment, back in the 1980s, when we worked
    on the Single Audit Act, and it is nice to hear--actually it's
    kind of interesting because we talk about this, which a number
    of us Democrats and Republicans worked on in the Congress in
    the late 1980s, and also the low-income tenant income
    verification stuff we were talking about earlier.
        And I never expected to hear both of these come up today,
    but I have kind of had a little trip down memory lane, thanks
    to our witnesses.
        I want to thank you, both, for coming today, but I
    especially want to thank Mr. Wells for coming back from Florida
    to be with us and interrupt your vacation. You are good to do
    that.
        Ms Robinson, I understand you have been on the job for what
    6 months?
        Ms. Robinson. Six months.
        Senator Carper. And you once served in another capacity
    here with our Chairman?
        Ms. Robinson. Yes, I had the absolute pleasure of serving
    with the Chairman.
        Senator Carper. All right. I know that pleasure. And I
    think I would like----
        Senator Coburn. I worked for her.
        Ms. Robinson. We worked together.
        Senator Carper. I will let you two work this out. Chain of
    command not later.
        I would like to talk about what I think are three
    components of LIHEAP. One is heating. Another is cooling. And a
    third is weatherization. And would you just talk about each of
    those and how they sort of fit together please?
        Ms. Robinson. Certainly. The program was set up to deal
    with the energy crisis, and so it was primarily a heating
    program. The cooling components are added based on the States'
    determination of what their own respective needs are. We have
    to remember that the States design their respective programs,
    and determine whether or not there is a cooling component. In
    addition, weatherization is a component of the program as so
    determined by the State.
        Each of the States then makes an assessment as to how they
    are going to determine their eligibility with respect to their
    poverty rates, and each of the programs are to complement each
    other with respect to weatherization and any educational
    awareness that goes on within the program, because you don't
    want is this to be singularly an assistance program that is not
    going about the education of consumers. I think a more
    important aspect of providing aid to families is also educating
    them about their energy usage and resources within their homes
    to improve the conditions in their homes. That is part of the
    lesson learned in my own family. The weatherization component
    is important to provide insulation and to teach about proper
    energy use.
        So all of those programs cooperatively work within the
    State to ensure that overall energy needs of a family are met.
        Senator Carper. Yes. Give us some idea, if you can, of how
    much money is being allocated for LIHEAP during this current
    fiscal year, which is about to conclude.
        Ms. Robinson. The total appropriation, was $1.9 billion for
    LIHEAP in fiscal year 2005. Of that, you have the appropriation
    for the block grant, which is allocated to the States based on
    a set formula.
        There is an additional component of that $1.9 billion that
    is set aside as part of a leveraging pot, which is
    approximately $27 million of that $1.9 billion. Of that $27
    million, 25 percent is the REACH Program that Mr. Wells was
    talking about, which is the Residential Energy Assistance
    Challenge Program.
        And so that is where the education and additional awareness
    is incorporated into the program. So it is, again, a total
    appropriation of $1.9 billion, with the pieces of leveraging
    and REACH incorporated therein.
        Senator Carper. Yes. What I am trying to get to is $1.9
    billion appropriated in 2005? How much again for
    weatherization?
        Ms. Robinson. I don't know the specific----
        Senator Carper. Just roughly.
        Ms. Robinson. I will have to provide that information to
    you at another time. I don't know it off the top of my head.

                      INFORMATION SUPPLIED FOR THE RECORD
             States can choose to use up to 15 percent of their LIHEAP
            block grant funds (25 percent with a waiver from HHS) for low-
            cost residential weatherization or energy-related home repair.
            For FY 2004, 45 States obligated $220,927,883 (11.3 percent) in
            available LIHEAP funds for weatherization. Seventeen of the
            States reached the funds cap of 15 percent.

        Senator Carper. OK. All of us, particularly those who live
    in the northern part of our country, are probably thinking
    about our energy bills for the winter.
        And I know some of our colleagues are--I think it is
    Senator Snow, maybe Senator Reed from Rhode Island have been
    circulating letters I think to send to the appropriators for
    the Appropriations Subcommittee asking that some additional
    monies be provided for LIHEAP in 2006.
        I think the argument is bolstered for those monies to the
    extent that we can ensure our colleagues and others that the
    money is being appropriated and properly spent.
        And to the extent that we can do that, all the better.
        I am one who believes that there is great value in energy
    conservation and weather proofing our homes, and it is all well
    and good that we give people money, as your family benefitted
    from on several occasions as you were describing in order to
    help keep them in their homes and from being literally
    displaced.
        There is also great value I think in providing folks with
    the wherewithal to reduce long-term----
        Ms. Robinson. Right.
        Senator Carper [continuing]. Their energy bills, heating
    bills, and cooling bills. And I would be interested to know how
    much of the need that we are actually meeting through this
    program?
        Ms. Robinson. Certainly. That is what the REACH Program, in
    part, is about; it is actually educating consumers about the
    reduction and overall awareness of energy use.
        It is a competitive program and not all of the States will
    receive funds from the REACH Program, because they make the
    determination if they would like to participate in that
    discretionary component of the LIHEAP Program. There is
    approximately $6 million that is allocated across applicant
    States. Not very many States participate in it, but it is, in
    fact, to deal with the educational awareness and decrease in
    energy usage among low-income families.
        So there is a small component in that. The larger component
    is encompassed within the LIHEAP Program in general. Any time
    you apply for assistance through the LIHEAP Program, energy
    usage information is made available to you.
        I had the pleasure of participating in the District of
    Columbia's Energy Fair that they held recently a little over a
    week ago. They brought together all of the utility companies
    within the District of Columbia. In the District, Washington
    Gas provides your heat and PEPCO provides your electricity;
    and, therefore your cooling.
        But they also had Verizon and other partners there, and
    what they did in that venue was, as people were applying for
    LIHEAP benefits, they were actually educating them as well
    about other options available to them--insulation, energy,
    budget programs that are at the gas company. All of those
    things are usually components of the overall LIHEAP Program. I
    think it speaks to your question with respect to overall
    awareness, because you don't want LIHEAP to singularly be an
    aid program. You want a larger educational awareness going to
    reduce energy consumption.
        Senator Carper. All right. Thanks so much.
        Ms. Robinson. Thank you.
        Senator Coburn. Ms. Robinson, in the fiscal year 2003, the
    Single Audit Act has 28 management decisions that will have to
    be made, and I notice that there are 10 missing that aren't
    even addressed on that, and I am not going to go into that
    other than to say we are going to invite you back and just get
    a commitment from you that all 28 will be complied with in
    terms of the Single Audit Act, in terms of those management
    decisions.
        Ms. Robinson. You will have that commitment. I have already
    talked with the staff, and we are determining a timetable. We
    should have those resolved by January 2006.
        Senator Coburn. OK. I want to talk a little bit about the
    REACH Program, and feel free, either one of you, to jump in
    here.
        Is that a program that was authorized by statute?
        Ms. Robinson. Yes.
        Senator Coburn. OK. And that was in 1996?
        Ms. Robinson. In 1996.
        Senator Coburn. And can you explain the relationship
    between the REACH Program and LIHEAP. I think you have already
    done that.
        Has it been successful in doing what it is supposed to do--
    the REACH Program?
        Ms. Robinson. I think that is one of the questions that was
    encompassed within the 2001 GAO report. I would like to note
    that that assessment in 2001 was 5 years after the program's
    initiation, so there is some degree of learning, if you will,
    of how to manage that program at the time. We have discussed
    with States some of the findings of the 2001 report that they
    have been fully educated with respect to what is an allowable
    cost and activity within that program.
        Senator Coburn. Within the PART assessment program, the
    program has to have defined specific goals.
        Ms. Robinson. Yes.
        Senator Coburn. What are the defined specific goals of--you
    don't have to answer that, but they are there, I presume?
        Ms. Robinson. We have developed performance measures and
    performance outcomes as part of the overall LIHEAP program and
    REACH is encompassed in that process.
        Senator Coburn. Why would REACH not have been one of the
    programs that failed the PART assessment analysis? If it has no
    defined goals that are written out, why would it not have----
        Ms. Robinson. I think it does have defined goals within
    what the program is structured to be. I can--if you give me a
    moment----
        Senator Coburn. OK.
        Ms. Robinson. There are no separate goals for REACH. Under
    the statute, REACH grantees must have an independent evaluation
    of their projects. We are working on evaluating how REACH
    operates and how we can best use these evaluations.
        Senator Coburn. So we are 9 years out, and we are just now
    developing performance measures?
        Ms. Robinson. I think they have learned, and they have
    incorporated, and we have not yet gone back formally to do the
    evaluation.
        Senator Coburn. Are there other Federal programs that do
    some of the same things that the REACH Program does?
        Ms. Robinson. I don't think so.
        Senator Coburn. I think there are. Mr. Wells.
        Mr. Wells. Just this year, we released a report where we
    looked at all the Federal agencies that had energy-related
    expenditures, of 18 Federal agencies, over $10 billion worth of
    energy expenditures. The Department of Energy has a
    weatherization program. I believe funding this year was around
    $224 million a year, a grant program that helps teach people
    how to weatherize a facility--building--to help contain heat or
    cooling to make it more efficient and use less energy.
        Senator Coburn. So actually in our analysis, looking at
    what the GAO has done and what my staff has found, there is
    somewhere between 15 and 20 different Federal agencies that do
    the same thing as the REACH Program. What I am going to do is I
    am going to ask GAO to come back and look at that again, and
    make a comparison. This has nothing to do with the intentions.
        I haven't found a Federal program since I have been here
    that doesn't have a well-intended purpose. What I have found is
    tons of Federal programs whose intended purpose is the same as
    some other intended purpose somewhere else and one doesn't know
    what the other one is doing.
        Mr. Wells, does the GAO believe that money is lost in the
    REACH program?
        Mr. Wells. No, sir. We don't have evidence to support money
    has been lost in the program. When we looked at the program,
    wherever our auditors went, there always appeared to be a far
    greater need for assistance than what the limited funding
    provided could provide.
        Even as we talked about the payments that were given out in
    the REACH Program to assist in rent assistance, I mean it did,
    in fact, help, and it was needed, but it didn't necessarily
    relate to the specific goals of that particular program.
        But I do not have any instances where money was actually
    wasted that I am aware of, nor did I see anything in the Single
    Audit Act that would indicate that money was wasted.
        Senator Coburn. OK. But the point being that this program
    has parameters and goals; that it may be reaching beyond or
    other programs have that will--so we have duplications, but not
    necessarily delivery to those people who are needing it? I
    mean, if, in fact, there are 16 other programs out there that
    do similar things to REACH, my question is do we need to beef
    up REACH and cut the money over here or why do we do that? Why
    do we have 16 programs?
        Mr. Wells. I would certainly hope that if there are 16
    programs, which I do not know if there are 16 programs doing
    exactly the same thing, but I would hope that it is a
    coordinated effort and there are not duplications and wasted
    expenditures.
        Senator Coburn. OK. That is one of the things that we are
    going to ask you all to find out.
        Mr. Wells. That is our job.
        Senator Coburn. Any other comments for us? I have several.
    I have pages of questions here that I am not going to put you
    through that we want to know in terms of follow up. I think it
    is very important, Josephine, that this next winter is going to
    be the toughest winter the people in need who are depending on
    us in this country are going to have. Not only is it forecast
    to be a harsh winter, but with natural gas at eleven dollars
    and sixty something cents a thousand BTUs and heating oil at an
    all-time high, making sure the money gets to the people who
    need it, and the money doesn't go to the people that don't--and
    so I have implicit trust in your management. I just want to
    make sure it gets carried all the way down; and I am sure we
    are going to appropriate more money for this program. But we
    are going to have to find it by taking it from somewhere else.
    And maybe it is from some of the wasted money that is not going
    out for housing, but we are going to find it.
        I appreciate each of you being here. We will have a
    submitted list of questions, if you would please respond.
        I have one other observation, one of the things that we
    want to avoid doing is putting a ceiling on people. And, as we
    were listening to the HUD testimony, one of our problems with
    Medicaid today is that we don't have a transition program. We
    have a cutoff on eligibility, and so what we do is we are
    ceiling people in so that they can't go anywhere, because they
    have got to keep their Medicaid.
        And I am worried that we are about to do that in housing
    and now with energy assistance if you don't meet the
    requirements, you are going to have to limit your income so you
    can maintain this.
        We need the help to figure out how to take the ceilings off
    so that people can continue to prosper and grow and take
    advantage of opportunities, but not have it go from help to
    nothing. And I would hope that in light of this program,
    especially LIHEAP, that we are not doing that, and, if we are,
    I would love to hear back from your how we can change that
    program to where we transition people as they up their incomes
    so that they don't lose the benefit, so we stimulate their
    seeking of opportunities. I think too often we put a ceiling on
    people and say if you want to keep this, you can't go above a
    certain income level. And so I would love that recommendation
    coming from you as well.
        Ms. Robinson. Well, I think you would be pleased to note
    that States do actually have some flexibility in determining
    the eligibility of individuals, and it is not singularly based
    on the poverty level of the respective State.
        Senator Coburn. Right.
        Ms. Robinson. It also has something to do with the energy
    burden in the house with respect to what their bills are. Some
    of the States take a larger look at the households and what the
    households are spending as a whole with respect to their
    current needs and their energy needs.
        Senator Coburn. So there is a transitioning mechanism?
        Ms. Robinson. I think there is, sir.
        Senator Coburn. Great. All right. Thank you all, very much.
        The hearing is adjourned.
        Ms. Robinson. Thank you.
        [Whereupon, at 3:55 p.m., the Subcommittee was adjourned.]

                                A P P E N D I X

                                  ----------

    [GRAPHIC] [TIFF OMITTED] T4243.001

    [GRAPHIC] [TIFF OMITTED] T4243.002

    [GRAPHIC] [TIFF OMITTED] T4243.003

    [GRAPHIC] [TIFF OMITTED] T4243.004

    [GRAPHIC] [TIFF OMITTED] T4243.005

    [GRAPHIC] [TIFF OMITTED] T4243.006

    [GRAPHIC] [TIFF OMITTED] T4243.007

    [GRAPHIC] [TIFF OMITTED] T4243.008

    [GRAPHIC] [TIFF OMITTED] T4243.009

    [GRAPHIC] [TIFF OMITTED] T4243.010

    [GRAPHIC] [TIFF OMITTED] T4243.011

    [GRAPHIC] [TIFF OMITTED] T4243.012

    [GRAPHIC] [TIFF OMITTED] T4243.013

    [GRAPHIC] [TIFF OMITTED] T4243.014

    [GRAPHIC] [TIFF OMITTED] T4243.015

    [GRAPHIC] [TIFF OMITTED] T4243.016

    [GRAPHIC] [TIFF OMITTED] T4243.017

    [GRAPHIC] [TIFF OMITTED] T4243.018

    [GRAPHIC] [TIFF OMITTED] T4243.019

    [GRAPHIC] [TIFF OMITTED] T4243.020

    [GRAPHIC] [TIFF OMITTED] T4243.021

    [GRAPHIC] [TIFF OMITTED] T4243.022

    [GRAPHIC] [TIFF OMITTED] T4243.023

    [GRAPHIC] [TIFF OMITTED] T4243.024

    [GRAPHIC] [TIFF OMITTED] T4243.025

    [GRAPHIC] [TIFF OMITTED] T4243.026

    [GRAPHIC] [TIFF OMITTED] T4243.027

    [GRAPHIC] [TIFF OMITTED] T4243.028

    [GRAPHIC] [TIFF OMITTED] T4243.029

    [GRAPHIC] [TIFF OMITTED] T4243.030

    [GRAPHIC] [TIFF OMITTED] T4243.031

    [GRAPHIC] [TIFF OMITTED] T4243.032

    [GRAPHIC] [TIFF OMITTED] T4243.033

    [GRAPHIC] [TIFF OMITTED] T4243.034

    [GRAPHIC] [TIFF OMITTED] T4243.035

    [GRAPHIC] [TIFF OMITTED] T4243.036

    [GRAPHIC] [TIFF OMITTED] T4243.037

    [GRAPHIC] [TIFF OMITTED] T4243.038

    [GRAPHIC] [TIFF OMITTED] T4243.039

    [GRAPHIC] [TIFF OMITTED] T4243.040

    [GRAPHIC] [TIFF OMITTED] T4243.041

    [GRAPHIC] [TIFF OMITTED] T4243.042

    [GRAPHIC] [TIFF OMITTED] T4243.043

    [GRAPHIC] [TIFF OMITTED] T4243.044

    [GRAPHIC] [TIFF OMITTED] T4243.045

    [GRAPHIC] [TIFF OMITTED] T4243.046

    [GRAPHIC] [TIFF OMITTED] T4243.047

    [GRAPHIC] [TIFF OMITTED] T4243.048

    [GRAPHIC] [TIFF OMITTED] T4243.049

    [GRAPHIC] [TIFF OMITTED] T4243.050

    [GRAPHIC] [TIFF OMITTED] T4243.051

    [GRAPHIC] [TIFF OMITTED] T4243.052

    [GRAPHIC] [TIFF OMITTED] T4243.053

    [GRAPHIC] [TIFF OMITTED] T4243.054

    [GRAPHIC] [TIFF OMITTED] T4243.055

    [GRAPHIC] [TIFF OMITTED] T4243.056

    [GRAPHIC] [TIFF OMITTED] T4243.057