    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

     SNAP: EXAMINING EFFORTS TO COMBAT FRAUD AND IMPROVE PROGRAM INTEGRITY

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

                                 JOINT HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                             GOVERNMENT OPERATIONS

                                    AND THE

                          SUBCOMMITTEE ON THE INTERIOR

                                     OF THE

                             COMMITTEE ON OVERSIGHT
                             AND GOVERNMENT REFORM
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  JUNE 9, 2016

                                   __________

                               Serial No. 114-100

                                   __________

    Printed for the use of the Committee on Oversight and Government Reform

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                  COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                         JASON CHAFFETZ, Utah, Chairman
    JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland,
    MICHAEL R. TURNER, Ohio                  Ranking Minority Member
    JOHN J. DUNCAN, Jr., Tennessee       CAROLYN B. MALONEY, New York
    JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of
    TIM WALBERG, Michigan                    Columbia
    JUSTIN AMASH, Michigan               WM. LACY CLAY, Missouri
    PAUL A. GOSAR, Arizona               STEPHEN F. LYNCH, Massachusetts
    SCOTT DesJARLAIS, Tennessee          JIM COOPER, Tennessee
    TREY GOWDY, South Carolina           GERALD E. CONNOLLY, Virginia
    BLAKE FARENTHOLD, Texas              MATT CARTWRIGHT, Pennsylvania
    CYNTHIA M. LUMMIS, Wyoming           TAMMY DUCKWORTH, Illinois
    THOMAS MASSIE, Kentucky              ROBIN L. KELLY, Illinois
    MARK MEADOWS, North Carolina         BRENDA L. LAWRENCE, Michigan
    RON DeSANTIS, Florida                TED LIEU, California
    MICK MULVANEY, South Carolina        BONNIE WATSON COLEMAN, New Jersey
    KEN BUCK, Colorado                   STACEY E. PLASKETT, Virgin Islands
    MARK WALKER, North Carolina          MARK DeSAULNIER, California
    ROD BLUM, Iowa                       BRENDAN F. BOYLE, Pennsylvania
    JODY B. HICE, Georgia                PETER WELCH, Vermont
    STEVE RUSSELL, Oklahoma              MICHELLE LUJAN GRISHAM, New Mexico
    EARL L. ``BUDDY'' CARTER, Georgia
    GLENN GROTHMAN, Wisconsin
    WILL HURD, Texas
    GARY J. PALMER, Alabama
                                     ------

                       Jennifer Hemingway, Staff Director
                     David Rapallo, Minority Staff Director
                Ryan Hambleton, Senior Professional Staff Member
        Katie Bailey, Subcommittee Staff Director, Government Operations
                               Willie Marx, Clerk
                     Subcommittee on Government Operations

                     MARK MEADOWS, North Carolina, Chairman
    JIM JORDAN, Ohio                     GERALD E. CONNOLLY, Virginia,
    TIM WALBERG, Michigan, Vice Chair        Ranking Minority Member
    TREY GOWDY, South Carolina           CAROLYN B. MALONEY, New York
    THOMAS MASSIE, Kentucky              ELEANOR HOLMES NORTON, District of
    MICK MULVANEY, South Carolina            Columbia
    KEN BUCK, Colorado                   WM. LACY CLAY, Missouri
    EARL L. ``BUDDY'' CARTER, Georgia    STACEY E. PLASKETT, Virgin Islands
    GLENN GROTHMAN, Wisconsin            STEPHEN F. LYNCH, Massachusetts
                                     ------

                          Subcommittee on the Interior

                      CYNTHIA M. LUMMIS, Wyoming, Chairman
    PAUL A. GOSAR, Arizona               BRENDA L. LAWRENCE, Michigan,
    BLAKE FARENTHOLD, Texas                  Ranking Minority Member
    KEN BUCK, Colorado, Vice Chair       MATT CARTWRIGHT, Pennsylvania
    STEVE RUSSELL, Oklahoma              STACEY E. PLASKETT, Virgin Islands
    GARY J. PALMER, Alabama

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on June 9, 2016.....................................     1

                                   WITNESSES

    Mr. Kevin Concannon, Under Secretary for Food, Nutrition, and
      Consumer Services, U.S. Department of Agriculture
        Oral Statement...............................................     5
        Written Statement............................................     8
    Ms. Kay Brown, Director, Education, Workforce, and Income
      Security, U.S. Government Accountability Office
        Oral Statement...............................................    19
        Written Statement............................................    21
    Ms. Mary Mayhew, Commissioner, Maine Department of Health and
      Human Services
        Oral Statement...............................................    43
        Written Statement............................................    45
    Mr. Mike Carroll, Secretary, Florida Department of Children and
      Family Services
        Oral Statement...............................................    59
        Written Statement............................................    61
    Ms. Stacy Dean, Vice President for Food Assistance Policy, Center
      on Budget and Policy Priorities
        Oral Statement...............................................    65
        Written Statement............................................    67

                                    APPENDIX

    April 26, 2016, letter from Connie Derr, Council 18 Exeutive
      Director, American Federation of State, County, and Municipal
      Employees, to Bill Ludwig, Southwest Regional Director, U.S.
      Regional Director, Submitted by Rep. Lujan Grisham.............   126
    October 13, 2016, Letter from Kevin W. Concannon, Under
      Secretary, Food Nutrition and Consumer Services, U.S.
      Department of Agriculture, to Chairman Mark Meadows of the
      Government Operations Subcommittee, Submitted by Chairman
      Meadows........................................................   128
    Florida State Agency Notification of Major Changes in Program,
      Submitted by Chairman Meadows..................................   130

     SNAP: EXAMINING EFFORTS TO COMBAT FRAUD AND IMPROVE PROGRAM INTEGRITY

                                  ----------

                             Thursday, June 9, 2016

                      House of Representatives,
     Subcommittee on Government Operations, joint with
                      the Subcommittee on the Interior,
                  Committee on Oversight and Government Reform,
                                                       Washington, D.C.
        The subcommittees met, pursuant to call, at 2:05 p.m., in
    Room 2154, Rayburn House Office Building, Hon. Mark Meadows
    [chairman of the Subcommittee on Government Operations]
    presiding.
        Present from Subcommittee on Government Operations:
    Representatives Meadows, Jordan, Walberg, Massie, Palmer,
    Carter, Grothman, Connolly, Norton, and Plaskett.
        Present from Subcommittee on the Interior: Representatives
    Lummis, Palmer, Lawrence, Cartwright, and Plaskett.
        Also Present: Representative Lujan Grisham.
        Mr. Meadows. All right. The Subcommittee on Government
    Operations and the Subcommittee on the Interior will come to
    order. And without objection, the chair is authorized to
    declare a recess at any time.
        I want to thank you for coming, and I thank my other
    chairman here and ranking members for their willingness to
    embark on this topic.
        For many individuals and families, the SNAP program is a
    vital lifeline to ensure that there is food on the table. And I
    think we can all agree that no one in America should go hungry.
    While most individuals and retailers in the SNAP program are
    honest participants, unfortunately, some do indeed take
    advantage of the system.
        We will hear examples today of various ways individuals and
    retailers commit fraud in trafficking such as swapping SNAP
    benefits for other cash or illegal drugs. There was a raid in
    the Florida flea market just last month that was the largest
    SNAP trafficking bust in the program's history. And so far 22
    owners of SNAP retailers at that flea market have been arrested
    or charged with over $13 million in fraud just for the past
    year.
        We will also hear about the connection between SNAP
    trafficking and the ongoing opiod epidemic in Maine and across
    this country. American taxpayers deserve to know that their tax
    dollars are being spent effectively and wisely, and when
    someone abuses a system, they defraud the American taxpayers.
    They hurt individuals and families that are truly in need.
    Despite improvements in prior years, OMB designated the SNAP
    program as a high-error program due to the estimated $2.6
    billion in improper payments for fiscal year 2015.
        So we are here today to examine how the SNAP program can
    better serve families, more efficiently utilize taxpayer
    dollars, and prevent fraud and trafficking of SNAP benefits.
    Innovative efforts to leverage technology and analyze data such
    as Florida's identity verification process and Maine's effort
    to analyze out-of-state SNAP usage can provide real helpful
    insights.
        And so I look forward to hearing from our witnesses about
    how we can improve the SNAP program to better ensure that the
    right benefits get to the families and individuals that need
    them most.
        Mr. Meadows. I now recognize my good friend, the ranking
    member of the Subcommittee on Government Operations, Mr.
    Connolly, for his opening statement.
        Mr. Connolly. I thank you, Mr. Chairman, and welcome to our
    panel. And I want to thank you for holding this hearing.
        I support the Supplemental Nutrition Assistance Program,
    which I think has proven to be an effectively managed program
    that does, in fact, reduce fraud and misuse. Individual and
    isolated examples of problems notwithstanding, there is very
    little evidence of widespread SNAP fraud. Actually, the
    evidence suggests that the Department of Agriculture
    investigates potential fraud pretty aggressively. State
    antifraud efforts are also functioning as effectively as
    possible, despite difficulties in conducting fraud
    investigations due to reduced funding and staff levels. Those
    antifraud efforts are important because SNAP benefits are a
    vital part of the national safety net.
        SNAP provides people at or below 130 percent of the poverty
    line, which is currently an annual income of $26,100 for a
    family of three--good luck in living on that--$127 a month
    toward an affordable, adequate diet. About 70 percent of SNAP
    participants are families with children, and 25 percent are in
    households with seniors and people with disabilities.
        SNAP also protects the overall economy. Because SNAP is an
    entitlement and provides money to people who need it, they
    spend it directly on food. CBO found that among policies
    implemented by Congress to stimulate economic growth and create
    jobs during the economic recession, SNAP had one of the largest
    increases in economic activity and employment per budgetary
    dollars spent. That is to say if you want a direct injection
    into the economy to stimulate, this is a great way to do it.
        According to the Census Bureau, SNAP kept 5 million
    Americans out of poverty during the recession, which followed
    the 2008 financial crisis. That is an extraordinary number.
    Since then, SNAP spending has fallen--as you would expect as
    the economy recovers--by 7 percent in 2014, and the Center of
    Budget and Policy Priorities reports that reduced caseloads
    will continue in 2016 because of the growing and stronger
    economy.
        I understand the concerns my friends on the other side of
    the aisle to ensure the SNAP program continues to work
    efficiently, and I think we have common ground on that. I too
    want to eliminate the small percentage of bad actors who
    misrepresent facts about themselves and cheat people in need.
        In fiscal year 2012, over 100 FNS analysts and
    investigators around the country reviewed more than 15,000
    stores and conducted nearly 4,500 undercover investigations.
    Over the last 10 years, more than 8,300 retail stores were
    permanently disqualified because of fraud.
        I find the House majority's recent proposal in the war on
    poverty troubling. The answer to completely eliminating fraud
    in the SNAP program is not by converting it into a block grant
    program. Actually, block granting step is probably the first
    step to eliminating SNAP. That could be the fate of a number of
    safety-net programs such as child welfare services and elderly
    services. They were put together into the social services block
    grant. This year, the Republican budget eliminates them.
        I would welcome the opportunity to work with my friends on
    the other side of the aisle to find ways to improve the SNAP
    program seeing as it actually serves more constituents often in
    their districts, rural districts than actually their Democratic
    counterparts. The absence of widespread fraud and the tiny
    potential savings from SNAP belie the purported interest
    sometimes in oversight.
        So I look forward to the common ground. We want to make
    sure this program is effective and as clean as possible, but we
    don't want to harm in the process the people who rely on this
    program and use it to get back up on their feet and become
    productive citizens.
        With that, I yield back.
        Mr. Meadows. I thank the gentleman.
        The chair now recognizes the chairwoman of the Subcommittee
    on Interior, Mrs. Lummis, for her opening statement.
        Mrs. Lummis. Thank you, Mr. Chairman.
        I want to waive my opening statement so we can listen to
    our witnesses, and I want to especially thank you all for being
    here today. The representatives and witnesses from Maine and
    Florida, I believe, are particularly to be recognized for
    traveling all this way to provide their guidance and expertise
    on this subject. Having come from the executive branch of State
    government, I know how hard you work, and you are on the
    frontlines. We really appreciate what you do, so thank you for
    being here today to share your expertise, one and all.
        Thank you, Mr. Chairman. I yield back.
        Mr. Meadows. I thank the gentlewoman from Wyoming.
        The chair recognizes the gentlewoman, Mrs. Lummis, for her
    opening statement, the ranking member of the Subcommittee on
    Interior--Lawrence, I am sorry.
        Mrs. Lawrence. Sister from another mother.
        [Laughter.]
        Mr. Meadows. My apologies. Twins separated at birth. Mrs.
    Lawrence, go ahead.
        Mrs. Lummis. Go ahead, sis. Give them a good one.
        [Laughter.]
        Mrs. Lawrence. Thank you, Mr. Chairman. I would like to
    thank our witnesses for being here today.
        The Supplemental Nutrition Assistance Program, SNAP, is our
    country's most effective and important tool for fighting
    hunger. In 2015 there were over 45 million SNAP participants.
    While this number sounds extremely high, the Great Recession
    drove many to depend on SNAP.
        My home State of Michigan was hard-hit by the recession, as
    many of you know, and SNAP was there to help. Michigan received
    over $2.5 billion in SNAP benefits, 198 percent higher than the
    national average. And 1.6 million residents depend on SNAP
    benefits to survive.
        In my district, 49 percent of SNAP participants were in
    families with children, 27 percent were families with elderly,
    and 48 were working families. Ladies and gentlemen, understand
    the qualification income levels to receive SNAP, and 49 percent
    were working families. In other words, they were working poor.
        SNAP is not easy to get. The average monthly benefit is
    $126 per person. That is less than $32 per person a week. How
    many of you can live on $32 a week to feed yourself? Not a
    luxury, food is a human basic need.
        Recipients must go through a rigorous application process
    where they meet specific qualifications and prove their
    eligibility. SNAP recipients must reapply every 6 to 12 months
    and inform the State of their income changes. There are even
    minimum periods of disqualifications ranging from 1 to 6
    months, which may be increased by the State SNAP agencies.
    States even have the option to disqualify an entire family for
    up to 180 days if the household head fails to comply with work
    requirements. So a child could be penalized if the parent does
    not comply.
        I would like to enter into the record the Michigan
    Department of Health and Human Services application booklet,
    which includes the types of forms families must fill out to get
    public assistance. And I want you to look at this. This is what
    a person is given in Michigan, 40 pages they must fill out in
    order to apply for SNAP.
        The SNAP benefit can only be used to purchase approved
    foods sold by authorized SNAP retailers. There is a restaurant
    option for populations that have difficulty preparing food such
    as elderly and veterans, and in a few States, including
    California, Arizona, and Michigan.
        I feel the allegations of fraud and abuse are overblown.
    SNAP has been one of the lowest fraud rates in any Federal
    program. Of the past several years, USDA has taken aggressive
    steps to improve SNAP oversight and to work with States in
    rooting out waste. USDA have seen declines in the rate of
    trafficking from 4 percent down to a little over 1 percent of
    benefits in the last 20 years. While no amount of fraud or
    waste is acceptable, we must not throw out the baby with the
    water. You would not shut off the water for an entire street or
    entire city if a few households leave their hoses on for an
    entire day. You would not stop buying groceries for your family
    because the oldest child drank up all of the milk or spilled
    it.
        We should not make the majority suffer for a few bad
    apples. But this is exactly what we are dealing with today.
    This year, Speaker Ryan's Task Force on Poverty, Opportunity,
    and Upward Mobility is proposing to transfer SNAP into a block
    grant. The 2017 budget, ladies and gentlemen, call on
    eliminating another block grant of social services for children
    and elderly. I am worried that some future actions by my
    colleagues on the other side of the aisle will call for
    eliminating a block grant that they are now trying to put into
    SNAP.
        And I yield back my time.
        Mr. Meadows. I thank the gentlewoman from Michigan, Mrs.
    Lawrence, for her opening statement.
        Mrs. Lawrence. Thank you, sir. But my sister and I, we are
    still good.
        Mr. Meadows. Well, we appreciate that.
        And I will hold the record open for 5 legislative days for
    any members who would like to submit a written statement.
        I will now recognize our panel of witnesses, and I am
    pleased to welcome Mr. Kevin Concannon, Under Secretary for
    Food, Nutrition, and Consumer Services at the U.S. Department
    of Agriculture, welcome; Ms. Kay Brown, director of Education,
    Workforce, and Income Security at the U.S. Government
    Accountability Office. Welcome, Ms. Brown. Ms. Mary Mayhew,
    commissioner of Maine's Department of Health and Human
    Services. Thank you, Ms. Mary Mayhew for your traveling and
    your willingness to be here. Mr. Mike Carroll, the secretary of
    the Florida Department of Children and Family Services. Thank
    you, Mr. Carroll, for making the special effort to be here. And
    Ms. Stacy Dean, vice president for food assistance policy at
    the Center on Budget and Policy Priorities.
        Welcome to you all. And pursuant to committee rules, all
    witnesses will be sworn in before they testify, so I would ask
    that you please rise and raise your right hand.
        [Witnesses sworn.]
        Mr. Meadows. And let the record reflect that all witnesses
    answered in the affirmative. And in order to allow time for
    discussion, I would ask that you please limit your oral
    testimony to 5 minutes. However, your entire written testimony
    will be made part of the record.
        And I would go ahead and now recognize Mr. Concannon for 5
    minutes.

                           WITNESS STATEMENTS

                      STATEMENT OF KEVIN CONCANNON

        Mr. Concannon. Thank you very much. Chairmen and members of
    the committee, I appreciate the opportunity to explain directly
    FNS's efforts to assure the integrity of the SNAP program.
    Integrity is essential to SNAP's success, and so it's paramount
    to me personally and to the agency. And as I've said many
    times, we have zero tolerance for fraud in SNAP.
        SNAP provides essential food assistance, nutrition
    education, work-support services to 44.3 million low-income
    individuals. In 2014, 64 percent of recipients were children,
    seniors, and those with disabilities, and 42 percent lived in a
    household with earnings. To those who claim that SNAP
    discourages work, I say that the data clearly states otherwise.
        In SNAP, those who can work must register to do so and
    accept a job if offered. This core program requirement cannot
    be waived by a State. In 2015, 13.6 million SNAP recipients
    were registered to work. USDA funds SNAP's employment and
    training programs to support States in helping recipients find
    and keep good-paying jobs.
        In 2015, SNAP EBT served more than 1 million recipients.
    Unfortunately, some State agencies do too little to use the
    Federal funding, technical assistance, and support available.
    So USDA has expanded its capacity to help States meet their E&T
    responsibilities through the newly established Office of
    Employment and Training, staff of the team with long experience
    at both the Federal and State level. They're building a more
    robust foundation of monitor, improve, and promote SNAP EBT.
        I believe strongly that the public's concern over high SNAP
    participation must be resolved in the right way, by getting
    people jobs. The wrong way is to reduce cost, is to kick people
    off SNAP, or worse, block grant it, which would also erode the
    national standards and accountability that helps make SNAP
    effective.
        Let me turn now to program integrity. USDA's focus on
    identifying, penalizing, and excluding those who seek to
    defraud SNAP has reduced trafficking from 4 percent to 1.3
    percent over the last 20 years. While this is real progress
    when almost $70 billion total are involved, there's no
    acceptable level of fraud, and complacency is never an option.
    Continuous attention, energy, and diligence are required.
        This administration is pursuing an energetic anti-
    trafficking strategy. First, we've organized SNAP retailer
    management into a single centralized business structure that
    targets resources to high-risk areas. Second, we use data
    analytics to closely track EBT transactions and identify stores
    most likely to traffic. Third, we've upgraded our alert system
    with state-of-the-art technology to better detect suspicious
    activity and are strengthening policies to combat misuse of
    benefits and impose stronger penalties against retailers who
    break the rules. Store owners that traffic are disqualified for
    life.
        And on the GAO report, we're in mutual agreement and
    support both the findings and the recommendations of the GAO
    audit. These efforts bring real results. In 2015, we issued
    almost 2,700 sanctions against violating retailers, a 21
    percent increase over the prior year. More than 1,900 store
    owners were permanently disqualified for trafficking or
    falsifying applications, and over 700 are sanctioned for other
    violations.
        We believe that predictive data analytics, combined with
    related information such as excessive requests for card
    replacements can be real game-changers in targeting the most
    likely trafficking recipients. Unfortunately, very few States
    really take advantage of this option, so there's much room for
    improvement.
        While the Federal Government is responsible for controlling
    retailer trafficking, action against recipient trafficking, the
    other side of the same crime, is a State agency responsibility.
    States conduct investigations of recipient fraud, disqualify
    violation of SNAP, and make claims to recover improperly
    received benefits.
        That said, I must caution that while some States see photo
    EBT cards as a solution to trafficking, it does not work as
    well as they may think. Let me explain. SNAP is a household
    benefit, so any member of that household may legally use that
    card. Putting one person's photo on the card simply creates
    confusion at the point of sale. A card with a photo cannot and
    will not prevent two bad actors from breaking the law, case-in-
    point, the 2001 audit in the State of Missouri. But it is an
    option for States, and our main concern is that States that
    implement photo EBT comply with Federal law and regulation.
    That's part of our oversight duties.
        One final but very important point I want to make, the
    majority of SNAP recipients honor the rules, play by the rules,
    as is true of the majority of retailers as well. The Nation
    entrusts USDA and our State partners to administer SNAP with
    accountability and integrity. Americans expect and deserve
    their government to manage hard-earned tax dollars. Without
    that, we simply cannot sustain public confidence. That's why we
    are committed to tough action to find and punish fraud.
        Thank you.
        [Prepared statement of Mr. Concannon follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Meadows. Thank you.
        Ms. Brown, you are recognized for 5 minutes.

                         STATEMENT OF KAY BROWN

        Ms. Brown. Chairman Meadows, Ranking Member Lawrence, and
    members of the subcommittees, I'm pleased to be here today to
    discuss our work on Federal and State efforts to combat fraud
    by SNAP recipients. My remarks are based on our 2014 report
    with updates on USDA actions on our recommendations.
        We studied the efforts of 11 States to prevent recipient
    fraud and detect recipient trafficking. First on preventing
    recipient fraud, States are responsible for investigating
    possible intentional program violations such as whether
    applicants have made false or misleading statements in order to
    obtain benefits. All 11 selected States were using well-known
    tools either required or recommended by USDA for detecting
    fraud. States were operating fraud hotlines and comparing
    information provided by applicants with data from various
    sources to check for accuracy. Some States were performing
    additional checks such as paying private companies for data to
    confirm the income information provided by applicants.
        However, most of these States reported difficulties in
    conducting fraud investigations in part due to steady or even
    reduced staffing levels at a time when the numbers of SNAP
    recipients had grown significantly. Further, the size, range of
    duties, and programs covered by the investigative units varied
    widely by State. We recommended that USDA explore ways that
    Federal financial incentives could better support cost-
    effective State fraud prevention efforts.
        Regarding detecting recipient trafficking, concerns had
    been raised that recipients may be trafficking their benefits
    by exchanging them for cash or goods and services on e-commerce
    and social media sites. In response, USDA recommended States
    use certain free Web-based automated tools to help detect such
    trafficking. However, State officials reported problems with
    these tools, and upon testing them, we found them to be of
    limited use. In fact, we found that manually searching e-
    commerce Web sites produced more positive results than were
    detected by the automated tools. We recommended that USDA
    reassess its guidance.
        We also reviewed USDA's guidance to States regarding
    recipients who requested multiple EBT card replacements. This
    can be but is not necessarily an indication of trafficking. We
    found that States had limited success detecting fraud using
    USDA's approach. Instead, using data we obtained from three
    States, we developed a more targeted and efficient approach. By
    combining data sources, we identified households that had
    requested multiple replacement cards and, at around the same
    time, had also made purchases considered to be potential signs
    of trafficking. This type of approach can help identify
    households at higher risk of trafficking for benefits. And we
    recommended that USDA revisit its guidance in this area.
        Finally, we also studied USDA oversight of State antifraud
    activities. We reported that USDA had increased its oversight
    in recent years. It issued new regulations and guidance and
    commissioned studies on recipient fraud. Also, in fiscal year
    2013 for the first time, the Department examined all 50 States'
    compliance with Federal requirements governing SNAP antifraud
    activities.
        Despite these efforts, we found that USDA did not have
    consistent and reliable data on States' activities. Its
    reporting guidance lacked specificity, and States did not have
    a uniform understanding of what should be reported. As a
    result, USDA could not compare activities and performance
    across States. We recommended the Department take steps to
    enhance the consistency among State reports.
        USDA officials agreed with all of our recommendations and
    are taking substantive steps in response. As you have just
    heard, they have made progress in studying improved anti-
    trafficking approaches, and they have redesigned the forms
    States used to report investigations. However, they have yet to
    finalize actions that would fully address all of our
    recommendations. Given the significant size of the program, the
    reality of constrained public resources, and the constant
    advances in technology, it's particularly important that USDA
    make every effort to make sure SNAP funds are used for their
    intended purposes.
        This concludes my statement. I'm happy to answer any
    questions.
        [Prepared statement of Ms. Brown follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Meadows. Thank you, Ms. Brown.
        Ms. Mayhew, you are recognized for 5 minutes, but before
    you start, I wanted to just say it was interesting to hear from
    your Governor about really leaving the home in an unbelievable
    age of 11 to go out and--so someone who has experienced poverty
    firsthand and now has raised to the highest level of the
    executive government in the State of Maine is a great story
    about American greatness. So, Ms. Mayhew, you are recognized
    for 5 minutes.

                        STATEMENT OF MARY MAYHEW

        Ms. Mayhew. Thank you, Chairman Meadows and members of the
    subcommittees. I appreciate the invitation to be here today to
    share some of our key welfare reforms that have helped to deter
    fraud, protect benefits for the truly needy, and guard against
    waste of precious taxpayer dollars.
        When Governor LePage took office in 2011, he prioritized
    reforming Maine's welfare programs to help lift families and
    individuals out of poverty and away from welfare dependency.
    Program integrity and accountability are critical to those
    reforms. There is no doubt that fraud exists in these programs,
    and every dollar that is diverted through fraudulent and
    criminal activity is a dollar taken away from a child or a
    family in need. The programs we have put in place to reduce
    fraud and abuse help to ensure that taxpayer dollars are
    reaching those in need, not fueling criminal activity.
        Our program integrity efforts have focused on data
    analytics, engagement with law enforcement, and commonsense
    measures to guard against fraud and abuse. I want to share a
    few of our efforts and make some suggestions for further
    improvements in the SNAP program. We have provided a number of
    recommendations attached to my testimony.
        Working with local law enforcement officials, we found
    regular instances of multiple EBT cards recovered in drug
    busts. In most cases, the cards are not issued to the suspects
    who are holding them. We know there is an unfortunate
    connection between benefits trafficking and the drug
    trafficking world, but current Federal SNAP regulations often
    create barriers to pursuing these traffickers. FNS rules
    provide that if someone has the EBT card and the PIN, they are
    considered an authorized user of the card. Regulations should
    require authorized users to register with the welfare agency
    and be limited to no more than three per case, similar to WIC.
        Under Federal law, States have the option of placing photos
    on EBT cards. Maine pursued this option to help address the
    trafficking in EBT cards for drugs or cash. When someone's
    picture is on their card, it follows that they are less likely
    to sell it or trade it. Maine's photo EBT program is voluntary,
    and we currently have about 60,000 cards with photos out of
    101,000 SNAP cases.
        While this is a legal option for all States, myriad
    regulations and rules place a chilling effect on States that
    may be considering photos. This basic protection against fraud
    and abuse should be streamlined so States can implement this
    reform without undue burden. It would also be a reasonable step
    to require States to place photos on their EBT cards to deter
    fraud.
        In 2011, Maine had more than $15 million in welfare
    benefits spent outside of Maine, including significant amounts
    in places like the Bronx, Brooklyn, Philadelphia, and
    Worchester, Massachusetts. Our drug enforcement agents in Maine
    have been clear that these cities are hubs for heroin
    trafficking and other drugs which flow up the I-95 corridor to
    Maine.
        Our data system identifies anyone using a Maine EBT card
    exclusively in another State for 2 consecutive months. We then
    follow up to confirm Maine residency and appropriate use of the
    benefit. Our efforts have reduced out-of-state use, but the
    data still shows uses of SNAP benefits in places all over the
    country like New York, California, and Florida. Federal
    regulations don't currently allow States to restrict SNAP
    benefits to certain geographic areas. We believe there should
    be some reasonable restrictions on the mobility of EBT cards.
        Often, what SNAP benefit cards are trafficked, it is in
    conjunction with a SNAP-approved retailer who's helping turn
    the card to cash that can be used to purchase things other than
    food. In a recent Maine case of suspected retailer fraud, a
    small store with just one cash register had SNAP reimbursements
    totaling nearly that of a large local Hannaford grocery store
    with 18 cash registers. We found numerous purchases of $300 and
    above in this small store that had no grocery carts. This same
    store is suspected of trading cash for EBT cards and helping
    SNAP participants commit tax fraud.
        States do not have the authority to remove noncompliant or
    fraudulent stores from SNAP participation. To assist with this
    problem, States should be given the authority to investigate
    and remove offending retailers similar to WIC. All States
    should operate robust welfare fraud investigation units. To
    incentivize this, States should be allowed to retain 50 percent
    of funds collected from welfare fraud overpayments instead of
    the current 35 percent.
        Additionally, Federal rules should require that recipients
    cooperate with State welfare fraud investigators if there is a
    credible allegation of fraud or risk losing their benefits.
    Maine is determined to address the issue of fraud and to
    protect benefits for our neediest residents. States need
    additional tools. Federal laws and rules should allow and
    encourage States to pursue meaningful program integrity efforts
    without unnecessary barriers.
        Today, policies that combat fraud are too often sacrificed
    in the name of convenient and expeditious access to welfare
    benefits. We hope that Congress and the Federal Government will
    give serious consideration to our suggested reforms and will
    work to ensure that laws and regulations give States a fighting
    chance against fraud and criminal activity. Thank you.
        [Prepared statement of Ms. Mayhew follows:]

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        Mr. Meadows. Thank you, Ms. Mayhew.
        Mr. Carroll, you are recognized for 5 minutes.

                       STATEMENT OF MIKE CARROLL

        Mr. Carroll. Thank you, Chairman Meadows. It's an honor to
    be here with you today and share some insights from Florida.
        The SNAP eligibility process has changed significantly over
    the past 20 years. Today, Florida is a leader in the
    modernization of our social services system. Virtually every
    State in the Nation has come to Florida to study our model.
    Today, we receive 93 percent of our applications online.
    Eligibility staff was reduced from 7,000 to 4,000. Cost-per-
    eligibility transaction dropped from $30 per application to $7,
    all while maintaining accuracy rates at or above 99 percent.
    All of these are at benchmark levels on a national level. Our
    experience is testament to how government can run an operation
    that is cost-effective, efficient, and optimizes access to
    services in a simplified way for customers.
        We do have a new fight on our hands, however, and it's
    identity theft and EBT trafficking. Our challenge now is to
    balance the need to continue being efficient with the need to
    maintain the integrity of this program going forward, and I am
    not talking about the individual who may fudge their income or
    their household composition. We're talking about major criminal
    enterprises with ties to drug sales, prostitution, and human
    trafficking. We have to work together and we have to work
    quickly to invest in the right technology, integrate fraud
    detection in every level of our process, and coordinate more
    effectively a response that's much more urgent than we
    currently have.
        In Florida, we've implemented effective front-end detection
    systems and commonsense legislation to address obvious fraud
    and abuse at the roots. We banned EBT card transactions at all
    adult entertainment and gambling venues and in the purchase of
    alcohol, we've created a fraud reward program, we've enhanced
    criminal penalties for fraud, and we've revised the definition
    of EBT trafficking in Florida law to include swapping food
    benefits for weapons or controlled substances. Last year, our
    Office of Public Benefits Integrity conducted more than 23,000
    investigations, which resulted in cost avoidance of $27.6
    million of benefits that would have been otherwise administered
    to folks who were not eligible.
        How can we improve the system? Florida has demonstrated the
    success of advanced technology with our automated identity
    verification tool and the complete automation of the system. We
    think we need to continue to invest in technology like this
    both at the front end and the back end of the system. We also
    would like to work with our Federal partners to build on these
    capabilities and eliminate the one-size-fits-all approach. We
    have to give States the flexibility and the space to implement
    and execute these programs and policies while still being able
    to come up with innovative solutions that meets the needs of
    the citizens in their State.
        We also suggest that we consider changing the current
    burden of proof of recipient fraud from a clear-and-convincing
    standard to a preponderance of the evidence, the same standard
    that's used for retailer fraud. Right now, it is easier to
    arrest a recipient than to disqualify them from the SNAP
    program.
        When it comes to retailer fraud, and this is where we feel
    a real sense of urgency in Florida, we need a much more
    comprehensive and urgent approach. FNS must start immediately
    suspending a SNAP retailer upon a criminal arrest. We need to
    require that retailers repay trafficked amounts in
    administrative sanctions that rarely happens now. SNAP retailer
    applications must be scrutinized more closely before vendors
    become authorized retailers. And we have to change the way we
    provide incentives to States and move away from a pay-and-chase
    model and start focusing on an upfront prevention model.
        I do want to talk briefly about the case that you
    mentioned, Opa-locka. It was the largest food stamp trafficking
    bust in Federal programs history. Twenty-two retailers were
    arrested. Investigators found cash and guns. They found
    storefronts that were actually drug sale operations, human
    trafficking, and prostitution operations. They found empty
    storage rooms, rotten produce, empty display boxes, plastic
    fruit and vegetables on display. One store owner was an illegal
    alien who used someone else's Social Security number to get FNS
    authorization. Another owner was here on a work permit. Another
    failed to disclose they were a convicted felon.
        Since 2011 when DCF first reported the fraud, nearly $89
    million in SNAP transactions have taken place at this location.
    DCF now has to review 41,000 SNAP recipients just since July,
    and that number is growing, to find cases that might rise to
    the level of clear and convincing evidence. And today, we've
    not been able to disqualify one SNAP recipient who was involved
    in that. The trafficking continues. At least eight retailers
    continue to operate in that location. In fact, the 2 weeks
    following the arrest, they did over $163 in EBT redemptions.
        Clearly, we can do better than this. In the State of
    Florida we're absolutely committed to making sure that folks
    who are eligible to receive these free services receive them in
    the most accurate and timely fashion possible, but we are
    equally as committed to making sure that we maintain the
    integrity of this program. And we do want to work with our
    Federal partners to make sure that happens.
        [Prepared statement of Mr. Carroll follows:]

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        Mr. Meadows. Thank you, Mr. Carroll, for your illuminating
    testimony.
        Ms. Dean, you are recognized for 5 minutes.

                        STATEMENT OF STACY DEAN

        Ms. Dean. Thank you. Chairman Meadows, Ranking Member
    Lawrence, thank you for the invitation to testify today. I'm
    Stacy Dean, vice president for Food Assistance Policy at the
    Center on Budget and Policy Priorities, a nonpartisan policy
    institute.
        I'm really pleased to have the opportunity to talk to you
    today about program integrity in SNAP. I've worked on SNAP for
    more than 20 years, and one of the most rewarding parts of my
    job is to work directly with State officials on improving the
    program at the local level, and that includes policy and
    operations related to program integrity.
        SNAP is the Nation's most important anti-hunger program. It
    currently helps about 44 million low-income Americans, or 1 in
    7 Americans, to afford a nutritionally adequate diet each day
    at the more than 200,000 retail store outlets that take the
    benefits.
        Despite its modest benefits which average only $1.41 per
    person per meal, it has powerful short- and long-term impacts.
    It helps family and communities weather tough economic times,
    it reduces poverty and food insecurity, it improves health, and
    it does support work. SNAP's successes can largely be
    attributed to its national entitlement structure, it's
    relatively uniform eligibility standards, its standards for
    program administration and integrity, and the fact that it's a
    food-based benefit.
        SNAP does operate with efficiency and has relatively sound
    program integrity. As I've outlined in my testimony and as you
    heard from Under Secretary Concannon, SNAP has a strong track
    record on issuing benefits accurately and identifying and
    preventing fraud. Critics who claim that caseload growth in
    recent years has been driven by waste, fraud, and abuse are
    just simply incorrect.
        Program integrity has two fundamental components. One is
    reducing errors, which is ensuring that benefits are issued to
    the correct people in the correct amount, and most error in the
    program resulting under--around error is a result of human
    error meaning basic mistakes, not fraud. States actually report
    that the majority of error in--that occurs through payment--
    through payment accuracy measurement is their fault and not
    clients'.
        By contrast, fraud is when clients or retailers collude to
    exchange benefits for nonfood items or some of the unfortunate
    activities you've heard of already today, or intentionally lie
    to the program for personal benefit. Each of these issues,
    error and fraud, merits their own solutions. Identifying and
    proving a retailer is trafficking is quite a different problem
    than ensuring State workers throughout the country understand
    program rules and are applying them correctly.
        We support the ongoing effort to maintain and improve
    SNAP's program integrity. As new technology becomes available
    and as awareness of how problems are arising, there will just
    continue to be opportunities to improve SNAP accuracy and
    prevent fraud, and that's why the most recent farm bill
    included several new initiatives.
        We encourage you to assess new ideas against several
    criteria. The first question is always does it work? USDA and
    States have a strong history of testing and trying new ideas to
    assess impacts in order to determine the potential
    effectiveness nationally, and I think the Florida demo is a
    great example of that.
        This--another question is what's the scope and scale of the
    problem under discussion? Some of the most egregious examples
    of fraud are highly isolated incidences. They are completely
    unacceptable, but they may be so infrequent such that they
    shouldn't drive the programs fundamental approach to addressing
    more common everyday program integrity issues. Building
    processes based on the assumption that everyone who uses this
    program is a criminal just simply isn't an effective way to run
    the program.
        Obviously, we need to look at what are the proposed--or
    proposed solutions, projected costs, and benefits. I do think
    it's important to--even though this seems obvious, when a
    proposal is promoted as an anti-fraud activity, some are really
    reluctant to rigorously weigh its benefits and costs out of
    fear of being perceived as soft on fraud. And data-matching, I
    think, is a very good example. High-quality focused matches to
    test the veracity of client statements against available data
    is a terrific tool both for access and integrity, but expanding
    matches to--against data that may be completely irrelevant to a
    household's current circumstances is a waste of resources and
    could undermine integrity.
        Will the proposal have any negative consequences? Any new
    program integrity proposal needs to consider the implications
    on access and whether all individuals, particularly individuals
    with disabilities or other special needs, could navigate them.
        And finally, who's promoting the change? Often, private
    vendors selling program integrity solutions are some of SNAP's
    biggest critics. Their self-interest in promoting the
    perception of a program in crisis really has to be considered.
        Cost, not a lack of interest or new ideas, is often our
    biggest obstacle to addressing fraud and error. While the
    Federal Government shares in the cost of administering the
    program, State budgets are often the limiting factor to
    ensuring the best systems and technology are deployed
    nationwide. Many States have downsized their program operations
    during the recent recession and have not yet rebuilt the
    capacity to take full advantage of new technology options or
    the staff resources that could improve their efforts.
        So I look forward to the discussion today. Thank you very
    much.
        [Prepared statement of Ms. Dean follows:]

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        Mr. Meadows. Thank you, Ms. Dean.
        The chair recognizes the vice chair of the Subcommittee on
    Government Operations, the gentleman from Michigan, Mr.
    Walberg.
        Mr. Walberg. Thank you, Mr. Chairman, and thanks to the
    panel for being here.
        This week, my colleagues on the Republican side of the
    aisle began unveiling a policy, as was mentioned earlier, an
    agenda that is intended to tackle some of our country's biggest
    challenges. The first plank of our initiative looks at ways to
    address poverty, and SNAP is a key part of our safety net to
    serve and support the most vulnerable and make sure that that
    is the population we really and intentionally meet the needs
    of.
        Our initiative is aimed at lifting people out of poverty
    and onto the ladder of opportunity, and so, Commissioner
    Mayhew, I was especially struck in your testimony, your
    personal testimony, about the lessons your family passed on to
    you about the value of hard work, depression-era, not you ----
        Ms. Mayhew. Thank you.
        Mr. Walberg.--though my parents had the same story, but
    they were the ones in the depression era, so I came from that.
    And they had similar lessons, again, from that experience that
    I think have benefited me well and apparently you also.
        If you would be so good, Commissioner Mayhew, as to talk in
    more detail about the Federal SNAP regulations that create
    barriers, as you mentioned, barriers to your efforts to pursue
    those who traffic in benefits. Give us some more insight on
    that.
        Ms. Mayhew. Thank you. I appreciate the opportunity to
    elaborate. Certainly, we care deeply. The Governor cares deeply
    about the success of these safety net programs. And it is
    critical that we are constantly evaluating whether or not our
    limited resources are being used effectively to support
    vulnerable individuals and families.
        I also have the privilege of overseeing our child welfare
    agency, and I want to make a point and a connection about what
    we are seeing in terms of the challenges and truly destruction
    of our families when 60 percent of the children today who are
    coming into protective custody are doing so as a result of
    parental substance abuse. We know we have a serious challenge
    in our State with drugs, with substance abuse, and certainly,
    as I mentioned in my testimony, we know there's a connection
    with trafficking and EBT cards for drugs and for cash.
        So as we look at ways in which to deter, we do feel
    strongly that the opportunity to use photos on EBT cards, we've
    been very clear that the photo on the EBT card is to discourage
    fraud, that when we speak and work with local drug enforcement
    agents and they tell us about the number of EBT cards that they
    are confiscating from drug raids, and since we have implemented
    photos, they have not confiscated an EBT card with a photo on
    it.
        The challenge has been, as we have implemented, we've
    received numerous concerns and communications from the USDA
    regarding our implementation of this federally permitted
    option. And again, we've done it on a voluntary basis.
        Mr. Walberg. I was going to bring that up again. I think
    you mentioned it was voluntary.
        Ms. Mayhew. It is voluntary. Okay. We certainly offer to
    individuals the ability to put their photo on the EBT card ----
        Mr. Walberg. So what is the problem the Federal Government
    is giving on that then if ----
        Ms. Mayhew. They have raised a number of barriers. When we
    first decided that we were going to implement, we had provided
    a number of documents to the USDA to provide all of the
    background to how we intended to implement responding to all of
    their questions. We were told to stop, to not go forward. We
    felt very strongly, the Governor felt very strongly that,
    again, this is federally permitted, that we had addressed the
    questions that had been asked of us, provided detailed plans of
    how we were operationalizing this and again felt strongly that
    this was a significant tool.
        More recently, we have developed a partnership with our
    Bureau of Motor Vehicles to more conveniently access the
    driver's license photos. We are getting authorized consent from
    each of the individuals to use their driver's license photo,
    and we recently received another letter telling us to basically
    cease-and-desist between two State agencies that have agreed to
    do this, and we now have the USDA asking us to stop.
        Mr. Walberg. To not do it even though you were permitted to
    do it by law?
        Ms. Mayhew. We are. And again ----
        Mr. Concannon. They must do it, though, within the
    framework of Federal law and regulations, and that was the
    issue in Maine.
        Mr. Walberg. Well, I guess that is ----
        Mr. Concannon. Poorly implemented, and I want
        Mr. Walberg. Excuse me. Excuse me.
        Mr. Concannon.--the record to show that.
        Mr. Walberg. Excuse me. Excuse me. I was asking Ms. Mayhew.
    I would like a full or description then if I could, Mr.
    Chairman, of what the pushback was. It indicated in the
    constraints of the law itself, but what were you violating
    according to them?
        Ms. Mayhew. We have not--in all of the letters and the
    back-and-forth we have not seen any verified, documented issues
    where we have poorly implemented or--you know, we can make a
    lot of these issues complicated. I oversee a large State
    agency. I know how quickly government can make things
    complicated. We are trying to protect this safety net program.
    We see the trafficking in these cards that is taking away a
    vital resource for a vulnerable child, from a family, and we
    have identified this as a meaningful tool to discourage
    trafficking.
        It has felt as though--you know, and I struggle a little
    bit with hearing that it's an option and then hearing all of
    the reasons why they don't believe that it's an effective tool.
    So it does feel as though we're constantly receiving all of the
    reasons why we can't move forward. And this is an option that
    we have elected to pursue. We have done it in consultation with
    the USDA. We have responded to their questions. We have met
    with their staff. This dates back to the spring of 2014 that we
    have been working with the USDA, responding to their questions,
    but we want to do it in partnership with the shared goals.
        Mr. Walberg. I appreciate that. My time is expired, but,
    Mr. Chairman, I appreciate you giving me that extra time
    because it is frustrating to hear of a State that is attempting
    to do something that seems to be having some positive impact,
    trying to do an option that they have available from Federal
    Government, continually push back. And again the perspective
    seems to have come already even in testimony that while it is
    an option, yet the feds don't want it to be an option. So I
    hope we get further information as we move along, but thank
    you.
        Mr. Concannon. Mr. Chairman, I'd like the opportunity to
    respond ----
        Mr. Meadows. Hold on just a second.
        Mr. Concannon.--to some of that.
        Mr. Meadows. We are going to go to the ranking member real
    quickly, and he probably will give you a chance to respond. If
    not, when I get my time, I will, okay?
        Mr. Connolly. Mr. Concannon, we just heard the State of
    Maine, my goodness, all they are trying to do is make sure
    there is not fraud and trafficking, and they are trying to do
    the right thing while preserving the program and the benefits
    and the safety net. And Ms. Mayhew runs a big program in a
    small State and a big bad Federal Government is just
    apparently, for no reason whatsoever, preventing them from
    doing this commonsense thing. You weren't given an opportunity
    to respond. I want to give you that opportunity.
        Mr. Concannon. I very much appreciate that. And just
    incidentally for the record, I'm a legal resident of the State
    of Maine, very familiar with what goes on ----
        Mr. Connolly. You sound it.
        Mr. Concannon.--in that State and ran this very same
    department for a number of years. So it's not news to me. First
    of all, it is an option to the State. We want the State, if
    States so elect, to adopt it, perfectly fine, but it has to be
    done in ways in which, for example, Maine, the business
    community was advised and trained on what to expect. There was
    a lot of confusion right at the outset by various--some other
    people in the retail business in Maine. They felt they were not
    really adequately trained, addressed about it. Consumers were
    confused about it. Was it--we sent people up to a regional
    office. They were unclear whether it was an option or
    mandatory. So we simply want it done properly. We're not
    opposed to it. So some of what I've heard today, you know,
    really greatly overstating some of these things.
        Mr. Connolly. So there is another side to the story?
        Mr. Concannon. There's a considerable other side to the
    story.
        Mr. Connolly. And did at any point your office of the
    Federal Government preclude Maine from pursuing this option?
        Mr. Concannon. No, we did not.
        Mr. Connolly. Did you advise them they should not use the
    option even though ----
        Mr. Concannon. We did not.
        Mr. Connolly.--it is an option?
        Mr. Concannon. We asked them, though, before they proceeded
    to make sure that they had done their training and so on, and
    they insisted on going ahead.
        Mr. Connolly. Okay.
        Mr. Concannon. And so we had a problem.
        Mr. Connolly. Let the record show, Mr. Chairman, that we
    had contradictory testimony in that matter. Apparently, there
    is another side to the story.
        Mr. Connolly. Ms. Dean, what would happen if we took this
    program and just made it a block grant? What is wrong with
    that?
        Ms. Dean. Well ----
        Mr. Connolly. Please, please microphone.
        Ms. Dean. Thank you. I think the single most powerful
    element of the program is its entitlement structure. It
    responds to increased need whether that's at the national level
    when we have the kind of significant and deep recession that we
    had several years ago, the State level due to a downturn, or a
    community or even an individual family household level. When
    folks, when their income goes down, they can apply for
    benefits, and the program is available ----
        Mr. Connolly. Why couldn't they do that if it were a block
    grant program so that Ms. Mayhew or Mr. Carroll could manage it
    and decide ----
        Ms. Dean. Across the board ----
        Mr. Connolly.--who qualifies?
        Ms. Dean.--block grants come with capped funding and that
    funding ----
        Mr. Connolly. With what?
        Ms. Dean. Capped funding, fixed capped funding that does
    not increase every year.
        Mr. Connolly. Oh, so the fine print in block granting is we
    also cut the program?
        Ms. Dean. Absolutely, both in terms of ----
        Mr. Connolly. Ah.
        Ms. Dean.--erosion due to inflation, not responding to
    need, and ----
        Mr. Connolly. Well, let me ask a different question
    because, you know, I come from northern Virginia, and while we
    love all Virginians and we love our General Assembly, we do
    tremble when our fate is in the hands of Richmond. And we
    sometimes describe Richmond as 300 years away. And when someone
    wants to block grant something or give the authority to
    regulate to Richmond rather than directly to the recipients,
    say, in my corner of the world, northern Virginia, we get
    nervous because formulas change and urban and suburban
    populations often end up paying a price.
        Now, if we block grant this program, could it also affect
    who receives benefits, not only the finite amount but could we
    find that States start finagling with who qualifies and who
    might receive what benefits?
        Ms. Dean. Absolutely. I don't actually think you even need
    to describe it as finagling.
        Mr. Connolly. I can't hear you.
        Ms. Dean. Yes, you don't need to describe it as finagling.
    States would--typically, under a block grant they're given the
    authority and power to set eligibility rules and standards.
        Mr. Connolly. Which is different than the current--the
    status quo today?
        Ms. Dean. Yes, it's a national program.
        Mr. Connolly. So the feds under the national program decide
    who is entitled and who qualifies?
        Ms. Dean. Yes, the Congress sets the rules.
        Mr. Connolly. Right. And so if we block grant it, that
    transfers that right and that authority to the States?
        Ms. Dean. Yes, it does.
        Mr. Connolly. And that is a mixed bag from a recipient's
    point of view?
        Ms. Dean. Yes, it is, and we've seen it be a mixed bag
    under cash assistance. Flexibility allows States to try and
    test new things, some of which can be terrific positive
    innovations, but the other--the incredible downside with
    flexibility is the fact that States have balanced budget
    requirements, and frequently, when they face a test against
    their budget, they need resources, say, because they've had a
    downturn. We've seen them turn to block grants as a way to
    divert funds from those--that core purpose, which in the case
    of SNAP is food, to other purposes to meet their shortfalls.
        Mr. Connolly. Thank you. Votes have been called, and I
    thank your indulgence, Mr. Chairman.
        Mr. Meadows. I thank the gentleman. They have called votes,
    which is an unfortunate aspect for each one of you.
    Unfortunately, it looks like we have got three votes. I don't
    anticipate that we will be back before 3:30, so that will give
    you--you know, you can go get coffee, do whatever you need to
    do, but we will stand in recess until 3:30.
        [Recess.]
        Mr. Meadows. The joint committee will reconvene. Thank you
    all for your patience. We apologize. They were actually
    swearing in a new Member, so it took a little longer than
    normal. We are now up to an official 435 and so--the chair
    recognizes the gentleman from Alabama, Mr. Palmer, for 5
    minutes.
        Mr. Palmer. Thank you, Mr. Chairman. I want to go back to a
    couple of things that were brought up earlier.
        Mr. Concannon, in your written testimony you say that 42
    percent of SNAP benefits lived in a household with working
    adults. Can you positively affirm that the working adult in the
    household is the SNAP participant? That is a yes or no.
        Mr. Concannon. The earnings ----
        Mr. Palmer. No, sir. Let me rephrase it.
        Mr. Concannon. Okay.
        Mr. Palmer. Can you positively affirm that the working
    adult in those households is the SNAP participant? It is a yes
    or no.
        Mr. Concannon. Yes.
        Mr. Palmer. You can positively affirm that? I find that
    answer ----
        Mr. Concannon. Yes, because anybody living in the
    household, their income is included in the SNAP benefit.
        Mr. Palmer. Well, it doesn't indicate that the income is
    from that participant because it could be another adult in the
    household. And I bring this up because ----
        Mr. Concannon. Anybody in the household is included in the
    benefit.
        Mr. Palmer. Excuse me. Your own information says that in
    2013 three-quarters had no earned income meaning they were not
    working at all. That is from USDA. That is your number.
        Mr. Concannon. I'm not sure what number you're referring
    to.
        Mr. Palmer. I am referring to the food and nutrition
    service characteristics of supplemental nutrition assistance
    program households, fiscal year 2013, U.S. Department of
    Agriculture.
        Mr. Concannon. Yes. So your--if you're talking about
    children, for example, almost half of the folks on food stamps
    are children, then seniors and people with disabilities ----
        Mr. Palmer. No, I am talking about ----
        Mr. Concannon.--and parents working for ----
        Mr. Palmer.--you said ----
        Mr. Concannon.--very young children.
        Mr. Palmer.--42 percent of SNAP participants lived in a
    household with a working adult, and then your 2013 report says
    that 75 percent had no earned income, and I just want to point
    out that inconsistency for the record.
        Ms. Mayhew ----
        Mr. Concannon. I would be happy to provide you with
    clarification.
        Mr. Palmer.--you may be aware that in some--I beg your
    pardon?
        Mr. Concannon. We'd be happy to provide you with
    clarification on that in writing.
        Mr. Palmer. I would appreciate that, and I believe the
    committee would, too.
        Mr. Palmer. Ms. Mayhew, earlier when Mr. Concannon
    indicated that he had run the Maine program, it appeared that
    you wanted to make a clarification. Would you like to do that
    now?
        Ms. Mayhew. No, I appreciate ----
        Mr. Palmer. Would you turn on your ----
        Ms. Mayhew.--Mr. Concannon's response. Clearly he was a
    commissioner of the--of a Department of Human Services. Since
    that time, the agency has certainly changed somewhat. It
    merged. It created a much larger agency. But certainly I
    appreciate the history that Mr. Concannon has particularly with
    this program in Maine. Thank you.
        Mr. Palmer. I appreciate that. I am staying with you, and
    we touched on this a little bit before we had to break away. Do
    you believe there is a growing epidemic of SNAP benefits
    exchanging their cards for drugs?
        Ms. Mayhew. I do. And it is--certainly as we look across
    all of our programs within the Department and our desire to
    evaluate holistically our efforts to improve the lives of the
    individuals that we're serving, and certainly as I said, both
    looking at these welfare programs and their support of
    vulnerable families in my oversight of child welfare, I am
    incredibly concerned about the impact of drug abuse in Maine
    and the role that EBT cards are playing, being trafficked in
    for drugs and certainly for cash.
        Mr. Palmer. This past February, my own State of Alabama
    started to allow individuals with previous drug convictions to
    be eligible for benefits such as food stamps, and it is coming
    at a time when Alabama's monthly average SNAP enrollment has
    almost 20 percent more Alabama enrollees than we have in K
    through 12 public education system. So we are giving out food
    stamps, SNAP benefits faster than we are educating children to
    prepare them to join our workforce. Why shouldn't we be able to
    require drug testing in the program to ensure that taxpayer
    money is going toward the recipients it was intended, and why
    should the State be obligated to fund those programs if the
    individual engaging in activity that is harmful to them is not
    conducive to their reintegration into society?
        Ms. Mayhew. Congressman, we support drug testing. We have
    worked to increase drug testing in Maine. We have been met with
    resistance. We share your observations that these safety net
    programs are in fact intended to certainly help individuals out
    of poverty onto that pathway of prosperity and employment and
    that any amount of substance abuse is detracting from their
    ability to succeed and to be self-sufficient and again on that
    pathway to employment. It is clearly counterproductive to those
    goals.
        Mr. Palmer. Mr. Chairman, with the indulgence of the
    committee and the chair if I may, I would like to make one
    other point and that is in regard to Ms. Dean's comment that we
    went through a recession and apparently believes that our
    economy has recovered. I would wonder if our economy has
    recovered why there are almost 5 times as many people on food
    stamps as there were in 2008 and three times as many as in
    2009. I yield back.
        Mr. Meadows. I thank the gentleman.
        The chair recognizes the gentlewoman from the District of
    Columbia, Ms. Eleanor Holmes Norton, for 5 minutes.
        Ms. Norton. I just want to mention that the issues you are
    running into with drug testing is we can't just drug-test
    people. There has to be some predicate laid in a constitutional
    system to doing that, and that is why I think courts have cast
    some doubt on doing drug testing as drug testing.
        I do want to note, especially the GAO report where no new
    recommendations were made, I put them in that the program is
    making some progress. And I note that the GAO report does note
    some continuing challenges, and the first one it notes is
    inadequate staffing levels. You know, if we want more of
    something, then we have to do more of something else.
        So I want to congratulate all of you involved in the
    program for what you have been able to do at a time of
    sequestration with what resources you have. Congress is quick
    to chastise programs for what they haven't done but offers very
    little self-criticism of what its obligation is, so I do want
    that for the record to be known.
        I also want to say for the record some of us have a
    tradition of trying to live for a week on SNAP benefits. All I
    can tell you, it took me close to starvation when I tried to
    adhere to it for a full week, so I am pretty convinced that
    they are not extravagant rewards here for needing what we used
    to call food stamps.
        I was interested in this very low fraud rate because it is
    among the lowest if not the lowest in the Federal Government.
    You might expect it to be the highest given what we have just
    gone through in the Great Recession and the like. And so I am
    trying to get to the bottom of what is left. I am not sure
    anybody can get it to zero, and I compliment you for trying to
    do that.
        But I want to know if the main part of SNAP's improper
    payments are administrative or are they fraud?
        Mr. Concannon. If I may, Congresswoman, on the improper
    payment rate for the SNAP program, this refers to when
    consumers come into the program, 60 percent of that problem are
    mistakes made by State or county ----
        Ms. Norton. So give me examples of the kind of mistakes in
    the course ----
        Mr. Concannon. Well, they may not correctly record the
    income of the consumer. Forty percent is on a--the mistake is
    made by the consumer, occasionally deliberately but often it
    may be, hey, I didn't properly report my income or my spouse or
    somebody else considered in the household had some part-time
    income. So--but 60 percent of it is a State mistake.
        When we look at improper payments, the chair referenced the
    $2 billion or so estimate. That's the combined underpayment as
    well as overpayment because about two-thirds of it is an
    overpayment on the part of the State, but about one-third of it
    is we underpay consumers based on the--and the convention has
    been the requirement--this used to drive me crazy when I was a
    State director--we have to count both of them as though they
    were aggregated together.
        Ms. Norton. I don't know why you have to count both
    numbers. They are not the same numbers. I tell you one thing,
    if you are undercounting, you never get that money back, so I
    don't even understand how it helps us to understand what is
    happening to say lob it all together, who cares? But that ----
        Mr. Meadows. Will the gentlewoman yield for just a second?
    I will be glad to work with her on that particular issue.
        Ms. Norton. I thank the chairman very much for his
    intervention, and he is in a position to do it. I know he means
    it when he says it, my good friend.
        I understand when you see this low level, wow, that the
    program has very strict eligibility requirements and a rigorous
    application process. You know, people don't like what you have
    to go through to apply for anything in government, but is that
    the case? And how do you facilitate people getting their
    benefits when the eligibility requirements are so strict and
    apparently adhered to?
        Mr. Concannon. Well, I might point out something that was
    referenced earlier to the deep recession we have just come
    through. Prior to that deep recession, again, I spent 25 years
    as a State director in different States. Across the country,
    typically, about half of the people who are eligible for the
    program were receiving it. They met the income eligibility,
    they were citizens of the United States who are here legally.
    Only about half were receiving it.
        During the deep recession, more people came forward but
    also States on a bipartisan basis, Democrats and Republican
    Governors, simplified the process still within the law. And
    now, about estimated 85 percent of people who meet the
    eligibility requirements receive the benefit.
        Ms. Norton. Well, it took a recession to do it but I
    congratulate you for bringing forward people who are hungry and
    apparently needed the program all along.
        Look, I don't see a lot to complain about in this program
    with your low eligibility rate, with the GAO who loves to tell
    people what they are doing wrong, saying they don't have any
    current recommendations at this time, so you deserve the
    commendation of the committee as well.
        Thank you very much, Mr. Chairman.
        Mr. Meadows. I thank you.
        The chair recognizes the gentleman from Wisconsin, Mr.
    Grothman, for 5 minutes.
        Mr. Grothman. Thanks much. I think we are eventually going
    to call on Ms. Mayhew to ask questions, but I will just make a
    little comment first. I think there is probably no program in
    my district that people come up and talk to me about more.
    People are aware almost anywhere that they sell food stamps or
    whatever, SNAP, for 50 cents on the dollar, and of course if
    you needed every dollar on food, you wouldn't be selling your
    food for 50 cents on the dollar, so that by itself indicates
    that there is--you know, people are getting these things who
    don't need them at all.
        You know, I know somebody whose sister runs a grocery
    store, and she says you can tell just by what is in the cart
    who has got the SNAP and who is paying their money, and I think
    that is routine, which also shows there is something
    fundamentally wrong program. It is one of many welfare-related
    programs that our employers attribute to having a hard time
    getting employees to work because of course the more you work,
    the more you lose the benefits.
        And finally, it is something more and or we are hearing
    over time that discourages people from raising children in
    wedlock because, of course, if you raise children in wedlock,
    like many other welfare benefits, you lose your SNAP. I think
    that is probably, of all the bad things about the program, the
    worst. It is one more inducement to raise children out of
    wedlock, which is unfortunate.
        But we are going to start with Ms. Mayhew. Could you
    comment on after you went through the wonderful things you did
    are SNAP benefits still being sold for 50 cents on the dollar
    in Maine? What is the going rate as far as you know?
        Ms. Mayhew. Well, certainly, we have, as I indicated,
    partnered with local law enforcement to both train them on the
    misuse of EBT cards to provide assistance with them. We
    certainly continue to have cases where EBT cards are trafficked
    in. It's unfortunate for the Congressman from Alabama. There
    was a very high-profile case about a year ago where--very
    similar to what you are describing, rampant trafficking and EBT
    cards selling at 50 cents on the dollar, significant engagement
    with retailers.
        I think, you know, certainly, we all have shared the same
    goals of improving the integrity of this program. There are
    need--there was a need for additional fraud investigators. For
    the New England region there's one fraud investigator for the
    USDA. I mean, I think that alone would indicate that we're
    under-resourced.
        Mr. Grothman. Right. I will just give you the question. In
    Maine what is the going rate for SNAP right now? Are they
    selling it for 50 cents on the dollar, 60 cents on the dollar?
    What is the going rate?
        Ms. Mayhew. I honestly can't comment on--I think that just
    varies on the individual who's trying to get cash.
        Mr. Grothman. Okay. Well, I will ask Ms. Dean. Do you live
    here in the Washington, D.C., area?
        Ms. Dean. I do.
        Mr. Grothman. When you ask your local ----
        Mr. Meadows. Put your mic on, please.
        Mr. Grothman. What is the going rate for SNAP benefits in
    the Washington, D.C., area?
        Ms. Dean. I'm not sure that that--like Commissioner Mayhew,
    I don't think that there is a common understanding or a shared
    understanding of it. It is a very rare occurrence.
        Mr. Grothman. Wait a minute. Whenever I talk to people in
    the food stores or people of the class that good food share,
    they don't think it is uncommon. They tell me about these 50-
    cents-on-the-dollar sales all the time. In Florida, Mr.
    Carroll, what is the going rate for SNAP in Florida?
        Mr. Carroll. I can't answer that definitively. I will tell
    you what made the Opa-locka flea market so popular to draw
    folks not only from Florida but around the Nation was they were
    purchasing food stamps at 80 cents on the dollar. And we know
    that because on several of the stores that were rated, they
    actually--it was like a sale sign that you go in and you would
    see all the things and then you would see the 20 percent off
    sale. It was right on the registers, how much $30 would be
    converted into, how much $600 would be converted into, so it
    was right there. Folks saw it. It was posted.
        Mr. Grothman. Okay. Mr. Concannon, when you get out and
    talk to people in the underclass, what are they selling their
    SNAP benefits for?
        Mr. Concannon. I travel across the country, including
    Florida, Maine, I was in Michigan earlier this week. As has
    already been noted, it is a rarity. I want to be very clear on
    that, that there are 44 million people in the country. The vast
    majority of them abide by the rules. Just as there are 260,000
    authorized retailers, most of them abide by the rules, but we
    have a proposal out these days to strengthen the requirements
    for convenience stores. That's where much of this happens.
        I do want to make a comment on something you mentioned
    because I think it's a misunderstanding. One, there is no
    penalty in the SNAP program if you're married or not married.
    If you live in the same household with somebody, you share the
    meal, we count that whether you're married or not, so there is
    not a marriage penalty. And I just want to be clear about that
    because when that's expressed, people don't understand that.
    They think, hey, that's a problem.
        Mr. Grothman. No. No, no, no.
        Mr. Concannon. It's not part of the SNAP program.
        Mr. Grothman. No, can I finish up because he is just saying
    something I don't think is true or he is ----
        Mr. Meadows. Well, we will save that for a second round --
    --
        Mr. Grothman. Okay.
        Mr. Meadows.--if we can at this ----
        Mr. Grothman. You want to give me a second round.
        Mr. Meadows. Okay. So the chair recognizes the gentlewoman
    from Michigan, Mrs. Lawrence, for 5 minutes.
        Mrs. Lawrence. Thank you, sir. SNAP provides critical
    support to people seeking to enter into the workforce by
    providing services to people who are looking for employment or
    training to become self-sufficient in contrast to the
    stereotype that if you are on SNAP, you are at home not
    working.
        Mr. Dean, some critics of SNAP believe that participation
    in SNAP discourages work, yet your testimony states that the
    SNAP participants want to work and do work. Can you explain in
    more detail how SNAP helps people when they are unemployed and
    how it helps to support and encourage work? I am sorry, I am
    sorry. Mrs. Dean, I am sorry.
        Ms. Dean. That's all right. Well, first of all, one of the
    core elements of the program that allows participants who
    aren't working to obtain and maintain a job is that the
    eligibility limits, while restrictive, are set significantly
    higher than, say, a cash--the cash-assistance programs most
    States offer. So participants who are not working can get a
    job, their benefits are reduced, but they can maintain
    eligibility.
        There's also an earnings disregard built in the program so
    that income coming from work is treated more favorably than
    income, say, from Social Security or other unearned sources.
        We see a significant share of participants working. If you
    look at working-age adults who aren't disabled, over half of
    them are working, and if you look at the year before or the
    year after a typical month of receipt, that goes to above 80
    percent.
        The bottom line is that you cannot--it is nearly impossible
    to be poor in this country and not be working. There's very
    limited forms of assistance available to struggling unemployed
    families. The unemployment insurance program is an open door
    for low-income workers who are in and out of the workforce.
    TANF cash assistance is incredibly restrictive. SNAP is the
    benefit that is available to all low-income individuals,
    nonworking and working like.
        Mrs. Lawrence. I just can't pass up an opportunity to make
    a statement here. There are many who debate Planned Parenthood
    and contraceptives and say that the life of a child is
    precious. How can we debate that once a child is born that we
    would not ensure that the child would not be hungry? In
    America, SNAP program feeds poverty, those who cannot provide,
    those who are working poor so that they can have food.
        And I continue to say food is not a luxury, it is a human
    basic need. And so it troubles me when you have this conflict
    of philosophies. Once a child is born in this world and they
    are in America, we don't have a choice of whether we are born
    or not, we are born, and that in America this program, SNAP,
    says that if you are in America, you will be able to get food
    to eat so that you can live.
        Just one last point, Ms. Dean. Many States have suspended
    the limited due to high unemployment rates during this recent
    recession, but that is now changing. I understand that some
    States are kicking hundreds of thousands of people off SNAP
    this year. Can you discuss why this is happening in some States
    and not in others?
        Ms. Dean. Sure. The 1996 welfare law included a provision
    that limited SNAP to 3 months out of every 36 months, so 3
    months out of every 3 years, for childless adults unless they
    are working 20 hours a week. It's a little bit more
    complicated, but that's the gist. States have the ability--and
    this--there's no obligation on the State to offer a job slot or
    test the individual's willingness to work. It is truly a time
    limit in most States that apply the rule.
        States have the ability to waive that rule in periods or in
    areas of high unemployment, and during the recession, virtually
    every State availed themselves of that opportunity to suspend
    the time limit so that food assistance could go to unemployed
    needy people.
        As the unemployment rate has fallen, areas no longer
    qualify, and this year happens to be a year where over 20
    States had to re-implement the rule either because of their
    unemployment rates or they chose to, and as a result, we
    estimate a minimum of half-a-million people were removed from
    the program in April and May of this year. And we'll see data
    to confirm that in a month or so.
        Mrs. Lawrence. Thank you. In closing, I just want to say
    that the SNAP program, 1 percent fraud, I wish I could sit and
    look every Federal agency in the eye and say that your fraud or
    your mismanagement is at 1 percent of everything that you do. I
    don't want any fraud, but I want to applaud this team and
    individuals who are in this program knowing that you are there
    to feed people in America. In today's world there are Americans
    who are going hungry every day.
        Mr. Meadows. I thank the gentlewoman.
        The chair recognizes the gentleman from Ohio, Mr. Jordan,
    for 5 minutes.
        Mr. Jordan. Thank you, Mr. Chairman, for having this
    hearing and for our witnesses and the chairman for his work in
    this area, extensive work in this area.
        Mr. Concannon, how much money is spent annually on the food
    stamp program both--well, how much is spent annually?
        Mr. Concannon. Total expenditure including administration,
    $75 billion.
        Mr. Jordan. Seventy-five billion dollars. You know what it
    was 8 years ago?
        Mr. Concannon. No, I do not.
        Mr. Jordan. The chart I am looking at says it was less than
    half of that.
        Mr. Concannon. Well, that was before the ----
        Mr. Jordan. Thirty-seven ----
        Mr. Concannon. That was before the deep recession the
    country went through, so I'm not surprised by that.
        Mr. Jordan. A lot of people would say we were in a
    recession in '07 and '08. I am looking at that, so 2008--well,
    even if you go 2009, it is 50 percent greater, more than 50
    percent greater. It was $53 billion just a few years ago.
        How many people are getting this benefit today?
        Mr. Concannon. Forty-four point three million people
    receive the benefit each month.
        Mr. Jordan. And do you know how many of that 44.3 million
    are able-bodied adults?
        Mr. Concannon. Yes, we can give you that. I know that just
    under half are children, another 10 percent are people with
    disabilities, another close to 10 percent are seniors, some
    adults, but we can give you the actual percentage, a very small
    percentage ----
        Mr. Jordan. So half ----
        Mr. Concannon.--of them.
        Mr. Jordan.--are kids, 10 percent are individuals with
    disabilities, 10 percent are seniors, so is that 30 percent are
    ----
        Mr. Concannon. No, it isn't 30 percent. It's another--it's
    about 10 percent are adults without dependents, able-bodied
    adults without dependents.
        Mr. Jordan. So over 4 million?
        Mr. Concannon. Correct, in that range.
        Mr. Jordan. Okay. And, Ms. Mayhew, my understanding is you
    have taken that population you just talked about, at least the
    ones who live in the State of Maine, and you have put back in
    place a work requirement for able-bodied adults, able-bodied
    adults, I assume, with no dependents, is that accurate?
        Ms. Mayhew. Yes. We're talking ----
        Mr. Jordan. Okay. And what has been your experience with
    that program?
        Ms. Mayhew. So these are individuals between the ages of 18
    and 49 not disabled, no dependents. And we reinstated the work
    requirements from the 1996 reforms. We did ----
        Mr. Jordan. Exactly the same requirements that were working
    fine back then ----
        Ms. Mayhew. Correct.
        Mr. Jordan.--20 hours a week, got some work requirements,
    20 hours a month or ----
        Ms. Mayhew. Twenty hours a ----
        Mr. Jordan. Twenty hours a week, excuse me. That is right.
        Ms. Mayhew. But there are other options. It's 20 hours a
    week or--working or being in a vocational training program ----
        Mr. Jordan. Got you.
        Ms. Mayhew.--or volunteering one hour a day.
        Mr. Jordan. So some options. All right. And what happened
    when you did that?
        Ms. Mayhew. When we did that, we also reached out to all of
    these individuals through our Department of Labor career
    centers to offer them slots in programs to help them with work
    skills development, resume writing, opportunities to identify
    employment. We made over 12,000 phone calls to that population.
        Mr. Jordan. Hold on one second. Back up a second. What was
    the number in Maine when you--able-bodied adults 18 to 49 in
    the program? What was that number?
        Ms. Mayhew. Fifteen thousand.
        Mr. Jordan. Fifteen thousand. What is the number--and you
    have implemented this program now several months?
        Ms. Mayhew. We implemented that in the--October 1, 2014.
        Mr. Jordan. Okay. So a year-and-a-half. And what have you
    seen happen? Is it 12,000 you said?
        Ms. Mayhew. Yes. The vast majority did not come forward to
    demonstrate and comply ----
        Mr. Jordan. So they are no longer in the program?
        Ms. Mayhew. They're no longer in the program, but what is
    more important ----
        Mr. Jordan. No, I am asking, is that--I would view that as
    a good thing. My guess is what happened is they said, you know
    what, if I got to do all this job training, job requirement,
    da, da, da, why don't I just get a job?
        Ms. Mayhew. Exactly.
        Mr. Jordan. Imagine that.
        Ms. Mayhew. And then we looked at their wages ----
        Mr. Jordan. Right. And that is a good thing, wouldn't you
    say?
        Ms. Mayhew. Yes.
        Mr. Jordan. Yes.
        Ms. Mayhew. And their wages have increased by over 114
    percent from prior ----
        Mr. Jordan. So you followed them up?
        Ms. Mayhew.--to implementing--yes, we did.
        Mr. Jordan. And, Ms. Dean, is that not a good thing?
        Ms. Dean. Is it a good--I think the question is what's the
    counterfactual? How many of them would have gone and gotten
    jobs anyway because we know that there's a high ----
        Mr. Jordan. But they did get a job so that is a good thing
    and they are no longer living off the taxpayer ----
        Ms. Dean. But there's ----
        Mr. Jordan.--so it is good for the taxpayer and it is good
    for the individual, and you are somehow implying in questions I
    have heard from the other side somehow that is not a good
    thing?
        Ms. Dean. There's also a group of people who lost food
    assistance without a job. That's ----
        Mr. Jordan. Ms. Mayhew, what is that number?
        Ms. Mayhew. I'm sorry, what was the comment? Which ----
        Mr. Jordan. She is saying that there is some of that 12,000
    who are no longer getting food stamps who didn't get a job. Do
    you know what that number is?
        Ms. Mayhew. We can get you that ----
        Mr. Jordan. But the point is they can still get food stamps
    if they are willing to do the three options you gave them,
    correct?
        Ms. Mayhew. Correct.
        Mr. Jordan. Okay. Ms. Dean, how is that negative?
        Ms. Dean. I think there are many parts of the country where
    there are not ----
        Mr. Jordan. In--okay.
        Ms. Dean.--part- to full-time jobs available.
        Mr. Jordan. I am asking you about Maine. I am asking you
    about Maine because Maine has done it. That is the one
    experiment we have that I think is working win-win-win. Either
    they can do the job training, which is going to help them long-
    term to stay on food stamps or they can do what most people did
    in Maine and say, you know what, I don't want to do that. I am
    just going to get a real job, right? And if they decide to opt
    out and can't get a job, they can always come back and go to
    one of those three options. So tell me what is negative about
    that. That seems to be helping that individual who was in the
    system get to a better position in life, and just as
    importantly, help treat taxpayers with the respect they deserve
    so someone is not living off their tax dollars who is able-
    bodied. Why is that wrong?
        Ms. Dean. Representative Jordan, you're not characterizing
    the rule correctly across the country. States are not ----
        Mr. Jordan. I am talking about the State of Maine.
        Ms. Dean. I cannot speak to whether Maine genuinely offered
    every single individual--whether a slot was available for them
    to participate in and whether those individuals were
    appropriately screened. Commissioner Mayhew can best do that.
    But the problem is that across the country that's not
    happening. It's operating as a time limit, so individuals
    living in high unemployment areas or individuals who face
    barriers to work. For example, in Florida there were disabled
    veterans who didn't have 100 percent disability rating who were
    terminated from the program. They were not exempted.
        Work requirement is ----
        Mr. Jordan. Well, wait, wait, wait ----
        Ms. Dean. Work requirement is very different than ----
        Mr. Jordan. We just heard that this was not about people
    with--there is a big difference between able-bodied individuals
    between 18 and 49 with no dependents and someone with a
    disability and someone with children and some who is a senior.
    There is a big difference. If I could, Mr. Chairman, one last
    question.
        What is the number today, Ms. Mayhew, that is in that
    category in Maine? What is the number? It was 12,000. What is
    the number today?
        Ms. Mayhew. It is less than ----
        Mr. Meadows. Your mic, please.
        Ms. Mayhew. We can get you the final number, but obviously
    ----
        Mr. Jordan. Less than what?
        Ms. Mayhew. Less than 1,000 individuals.
        Mr. Meadows. Okay.
        Mr. Jordan. That is unbelievable. Thank you, Mr. Chairman.
        Mr. Meadows. I thank the gentleman.
        The chair recognizes the gentleman from Pennsylvania, Mr.
    Cartwright, for a generous 5 minutes.
        Mr. Cartwright. I thank the generous chairman. Mr.
    Chairman, our colleague from Wisconsin just lately made a
    comment to the effect that the current SNAP program, the food
    stamps program has the effect of encouraging women to bear
    children out of wedlock. And to respond to that, I would like
    to recognize and yield to the gentlelady from the District of
    Columbia for 30 seconds.
        Ms. Norton. Well, first of all, I think that the error rate
    speaks for itself and answers much that was raised in that
    regard.
        And I must say, at a time when we have reduced among poor
    people as well as middle-class people the birth rate, it is
    inconceivable to me that somebody says, you know what, why
    don't I go out and get pregnant so I can get some food stamps.
        I yield back to the gentleman.
        Mr. Cartwright. Mr. Chairman, I would like to thank you for
    holding this hearing today. It is shameful when women and
    families go hungry in the United States of America, and I will
    not be part of a system that forwards the chance that we will
    have that in this country. I strongly support the food stamp
    program, SNAP, among other food assistance programs for this
    reason, and I would like to thank the witnesses for their work
    to relieve hunger in this country.
        I would like to also point out two numbers related to fraud
    and waste in the SNAP program that have been touched upon here.
    In 2014 less than 3 percent of SNAP benefits had error
    associated with them, and the trafficking rate is down to 1
    percent. And it occurs to me that the SNAP program is improving
    at its good job of ensuring the limited resources it is given
    are being used properly. We can and should do more to relieve
    hunger.
        That is why I am reintroducing the SNAP Healthy Incentives
    Act, and this expands a pilot program nationwide in which SNAP
    participants receive a 30-cent rebate for every SNAP dollar
    they spend on fruits and vegetables. Now, this pilot program
    proved to be successful, and it proved a 25 percent increase in
    the consumption of healthy foods.
        Now, Under Secretary Concannon, can you tell us a little
    bit more about the types of people who are aided by the SNAP
    program?
        Mr. Concannon. Thank you very much for the question. Thank
    you for introducing that act, the health incentive pilot was
    highly success. And early this week I was in Michigan. I've
    seen firsthand discussions with community leaders around the
    country on the impact of SNAP now.
        As has been mentioned earlier, nearly half of the
    recipients on SNAP--it's 48 percent plus--are children, another
    10 percent are people with disabilities, another seniors and
    other parents looking after young children. But I also want to
    emphasize again something that's been mentioned already. Forty-
    two percent, two out of every five persons living in a SNAP
    household, at least one of the adults is in--currently in the
    workforce. And that income is counted in the benefit.
        And to me, the--that's the highest rate of people working
    in the history of the program and it, to me, reflects the fact
    that across the country more and more people are getting part-
    time jobs or they're struggling with low wages that still
    qualify them for the benefit. So I think that's something that
    ought to be really more fully discussed by Congress now.
    There's--say what can we do about that?
        In places across the country, economists tell us the
    recession is over for many but it's not over for tens of
    millions of people in places like Maine to be perfectly frank
    or just about any State in the country. And so the program has
    very much become a supplement. That is by intent to--for wages
    and health for families.
        And I think it gets very stereotyped in some quarters I
    think very unfairly. There's a very low fraud rate, there's a
    very low rate of misuse of the funds. We don't tolerate it. But
    poor income people, whether they're from Florida, Maine, or any
    other State shouldn't be painted as though they are among that
    small minority who are misusing the program. That's not the
    history of the program across the country.
        Mr. Cartwright. Thank you, Mr. Concannon.
        And, Ms. Dean, I wanted to also thank you for your
    testimony today and all of your work in your adult life in
    support of nutrition assistance.
        You know, Republicans in the House are proposing turning
    SNAP into a block grant and eliminating the social services
    block grant, and I wanted to get your input on the wisdom of
    that approach and whether you think it would do anything to
    eliminate the low percentages of errors and fraud that we're
    hearing about today.
        Ms. Dean. Just very briefly, we think it would be very ill-
    advised, and the experience and history of block grants would
    suggest that converting SNAP into a block grant would increase
    hunger and hardship amongst low-income Americans because less
    food assistance would be available to them over time.
        It's also highly likely, as you're pointing out, that error
    and fraud would become a more serious issue because you would
    start to have 50--well, in SNAP there are 53 States, Ms.
    Plaskett representing one of them, 53 States with different
    rules, different criteria, and lots of complexity and
    duplication on which stores to bring into the program and how
    to administer and ensure that everyone is adhering to the
    rules.
        Mr. Cartwright. Thank you. And, Mr. Chairman, I yield back
    to you in your generosity.
        Mr. Meadows. I thank the gentleman from Pennsylvania.
        The chair recognizes himself for a series of questions.
        We talked a lot about fraud rates and what it is and what
    it is not, and yet I hear a lot of testimony that shows a lot
    of ambiguity in that area. So, Ms. Brown, let me come to you.
    Do we really know what the fraud rate is? Do we have good data?
        Ms. Brown. Well, the rates that we're hearing about with
    fraud I believe are the trafficking rates for retailers. That's
    the ----
        Mr. Meadows. Right, and ----
        Ms. Brown.--1 percent ----
        Mr. Meadows.--those are 3 years old, aren't they?
        Ms. Brown. Yes, there's--they--there've been--a number of
    questions have been raised about the estimate, but I don't want
    to underplay the fact that it's very difficult estimate to
    make.
        Mr. Meadows. So to suggest that that 1 percent or 2 percent
    is accurate would be very difficult with any degree of
    certainty to ascertain that based on the reporting and the way
    that we track fraud and abuse at this point ----
        Ms. Brown. In ----
        Mr. Meadows.--is that correct?
        Ms. Brown. In--yes, and it doesn't include what--we don't
    really know what the rate of trafficking or fraud is for the--
    on the recipient side. So ----
        Mr. Meadows. Right.
        Ms. Brown.--you know, the question--put percentages that we
    talked about with the 60 percent that's the fault of the States
    when they're making mistakes and the third--one-third that's
    the problems with the recipients, some of that can be
    intentional error that would be fraud, and then in addition to
    that, once they receive the benefits, if they traffic, that
    would be fraud.
        Mr. Meadows. Right. And so that number and being able to do
    that--Mr. Concannon, I will come to you. Hold on just a second.
    You are always ready to jump in. I can see your rebuttal. I
    tell you, it is--but as we look at that, I will come--because
    here's my concern. When we talk about fraud--and for me I want
    make sure that every single person that deserves the benefit
    and is starving gets the benefit. But the bad actors, I want to
    make sure they go home and they go home for good.
        And so if anything is said here is when we--it is not just
    about fraud and abuse for an individual. It is taking away
    finances from those that are deserving. And that can be a
    bipartisan issue. I mean, if we put forth that any saving from
    fraud actually went to increase the benefits for some of the
    others that are receiving it, we would find some real uniform
    bipartisan support for that. So I guess, Ms. Brown, we need to
    do a better job, so how can we do that?
        And let me come to you, Mr. Carroll, because one of the
    things that you said really concerned me. We have got a flea
    market where there was trafficking going on, and there have
    been no arrests for fraud at that particular point? We have not
    been able to prove it? Did I hear you correctly?
        Mr. Carroll. No, there ----
        Mr. Meadows. You need your mic.
        Mr. Carroll. There have been arrests. What we have not--the
    process involves--it's a pretty complex process, but our
    investigation into that flea market began in 2011 when we saw
    ----
        Mr. Meadows. And you were doing it from the recipient side,
    not from the ----
        Mr. Carroll. We were doing it from ----
        Mr. Meadows.--retailer side, is that correct?
        Mr. Carroll.--recipient side where we got information that
    food stamp cards kept coming back to us in the mail, the EBT
    cards. We checked up on it. That address didn't exist. We did
    some further exploration and we found out that that was
    probably identity theft. We then tracked where that card was
    used, and it led to the flea market, so we started surveilling
    that flea market, and at that time in 2011 there were five
    authorized vendors. It took 2 years, but after 2 years, two of
    those five authorized vendors were arrested. But within a
    matter of days, the three vendors that were left absorbed that
    business because business continued to grow at that flea
    market.
        Now, at that flea market we have 48 authorized vendors with
    four more pending, and that flea market has done $79 million
    worth of business. Now, to put that in perspective, they have
    done more business than the six super box stores that are
    within a 5-mile radius of them combined. They have done more
    business in that flea market during that time period than the
    16 major supermarkets that are in a 5-mile radius combined. So
    to say that our fraud rate is 1 percent I think is
    underestimated.
        But here's what concerns me about this, and this is what I
    think confuses folks because I think your point is well made.
    I'm not here to demean recipients of public assistance. I
    strongly support public assistance programs, and we do that in
    Florida. We have done everything in Florida to make it easier
    for folks who are eligible to apply. We've gone to an
    electronic system. Folks don't have to take off from work. They
    apply online.
        Even the automated identification system, it wasn't made to
    keep people out of the system. It was made to--so that we
    didn't have to bring people into the office because if we could
    authorize--if we could authenticate your identification without
    you coming into the office and taking time out of work, why not
    do that? That's why we did it.
        And so we have done everything we could to make it easier
    to apply. Since 2008, the number of recipients in Florida has
    gone from 1.3 million to--we have currently 3.3 million
    recipients on food stamps in Florida, and our food stamp
    redemption numbers have gone from 2.8 to 5.6. So to say that
    our concern around fraud is about some--somehow pointed at
    trying to demean folks who are on public assistance or to limit
    access I think is misguided.
        I do think the numbers that you talked about are difficult
    to come by. I think with the automated system in Florida, we do
    a better job of preventing what I would call recipient fraud in
    terms of--because what we used to battle years ago was folks
    coming in and quite frankly not being truthful about their
    situation. We see less of this.
        This is not--in Florida, this is not about the folks who
    walk through our door and apply for assistance. It is not about
    how they use their food stamp card. I wish my family ate
    healthier. I wish I didn't put so many Mountain Dews in the
    carriage, okay? And I think the more we put together
    legislation like that, we just go down rabbit holes and we
    spend administrative cost chasing after things we shouldn't
    chase after.
        But I will tell you there is an element that is organized
    that is--where their intent is to defraud, and it starts with
    folks who come into the system and get benefits and they're not
    who they purport to be. Part of this--the authentication
    process identified 2,800 people, for instance, last year that
    applied that were dead, another 2,800 people that applied that
    were incarcerated. Without doing the things that we did from an
    electronic standpoint, we would have never been able to prevent
    that. We can now.
        But our big challenge now is with authorized vendors. The
    number of folks who were authorized--and I understand--I
    don't--I am not here to impede small business. We want to grow
    small business, but we have got to make sure that when we are--
    it's got to be more than taking a snapshot of the front of a
    store, putting a driver's license together, sending it in, and
    asking that I be an authorized vendor. And we have to do some
    work around is that a real legitimate business because some of
    these businesses that we're authorizing as retailers are not
    legitimate businesses.
        And I do agree with Secretary Concannon that the
    overwhelming amount of people on food stamps are there rightly
    so and are using their benefits appropriately, overwhelmingly,
    but I will tell you that small percentage, when you look at a
    program like ours that does $5.6 billion worth of business,
    even a small percentage is in the hundreds of millions of
    dollars, and it grows a stigma for the rest of the folks who
    are out there who need these benefits, who need the hand up,
    and who we're trying to provide these assistance--this
    assistance for.
        Mr. Meadows. And that is precisely why we are having this
    hearing because it shouldn't be a stigma that everybody is
    cheating the system. And sometimes that gets a default. That is
    where we run. I appreciate your heart.
        Mr. Concannon, I gave you your rebuttal time. I am way
    over. You go ahead, and then I am going to recognize the
    gentlewoman from the Virgin Islands. Go ahead.
        Mr. Concannon. Thank you, Mr. Chair. I'll try to be brief.
    I just wanted to mention the way we derive that figure of 1.3
    percent. When we take a small store out of the program, and
    last year, it was like 2,300 stores--most of the trafficking,
    by the way, happens in small stores. Supermarket chains won't
    tolerate it, Walmart, Hannaford Brothers up in Maine, they're
    not going to tolerate that.
        So when we take a small store out, we ascribe 90 percent of
    the annual use of food stamp benefits or SNAP benefits in that
    store as though it were trafficking. And if it's a larger
    store, we ascribe 40 percent. That's how we get to the 1.3
    percent. If anything, it's a conservative estimate, so I want
    to be clear on that. We're not just counting ----
        Mr. Meadows. Well ----
        Mr. Concannon.--you know, individuals. So with that, point
    one. Point two, we currently have proposed strengthening the
    requirement especially for these small stores because I fully
    agree with Mr. Carroll that some stores are in the program that
    absolutely shouldn't be. That's where we have our problems.
        Mr. Meadows. Well, we will get ----
        Mr. Concannon. We're getting pushback on that issue.
        Mr. Meadows. We will get to that.
        Mr. Concannon. Okay.
        Mr. Meadows. We will get to that because that is one of the
    areas that honestly I want to drill down on on exactly what we
    are doing there. Let me tell you my concern with what just
    said. You only know what you know, and so fraud is only to the
    point of where you actually have inspectors going out. I would
    assume you have a limitation on the number of people who can
    actually follow that or are you fully staffed--you have got as
    many people as you ever would want?
        Mr. Concannon. Interestingly enough ----
        Mr. Meadows. Yes or no, as many people as ----
        Mr. Concannon. Most of our fraud is coming from data
    analytics. It's not coming from ----
        Mr. Meadows. That is not the question. Do you have as many
    people inspecting as you really need?
        Mr. Concannon. We can never say we have enough.
        Mr. Meadows. All right. Thank you. I thought that would be
    the answer.
        The gentlewoman from the Virgin Islands is recognized.
        Ms. Plaskett. Thank you. Good afternoon.
        And I guess if you don't have as many as you need and this
    committee is concerned with you stopping fraud, they will be
    very helpful to increasing the budget for the SNAP program so
    that you can have the funding to be able to enforce it, because
    although I think the chairman is sincere and, you know, is one
    of the people who is concerned about the right individuals
    having this, my concern is that I don't think everybody on his
    side really thinks that way as well.
        I sit on the House Committee on Agriculture and I sit on
    the Subcommittee on Nutrition, and in the last 17 months we
    have had 14 hearings on SNAP, 14 hearings on SNAP. And the
    purposes of those hearings is in my mind being to say why SNAP
    should be cut back, why it is not effective, why we need to
    stop this, why we need to stop feeding the people that we are
    feeding. Why do we need to stop feeding people? I mean, my
    mother would lose her mind if you denied someone a plate of
    food because it was painful for you to give it up.
        This program, we say, is about lifting people out of
    poverty, and I think the indictment is on us as a body, this
    Congress, who has not lifted enough people fast enough as we
    should. And in turn what is happening I think more often than
    not is that we have these hearings to indict the people who are
    recipients of SNAP program, the recipients of those individuals
    who are still living in poverty.
        So we have said that SNAP is a program that we would like
    to focus quite a bit of our time on for the abuse and the fraud
    that it has. From the statistics it seems that there is only 1
    percent of the 45 million recipients and 1 percent of the money
    that is going is going for trafficking. Would we like to see
    that those numbers are corrected? Of course. But we need the
    funding to be able to do that because are we going to take the
    funding out of the people that are receiving the money or are
    we going to add additional funding for the administrative
    portion? That is the question that I would like to pose on the
    other side.
        You know, and one of the other issues that I am very
    certain about is it seems that the legislative proposals are
    really to eliminate the ability of States and territories to
    request waivers from the strict work requirements already
    contained in the SNAP laws. And the reason that is a concern is
    that because there is a chronic rate of high unemployment rate
    in many of these areas.
        We talked about people going to convenience stores rather
    than going to the big box or the grocery stores. More often not
    it is because they can't afford to drive to those other places
    because they live in food deserts. And, you know, it is not
    that people don't want to work but there are no jobs for them
    to work. And are we going to keep these time restrictions and
    cut out the waivers for this so that people now don't have a
    meal?
        The majority of people who are on SNAP are not able-bodied
    individuals. They are women and children and elderly people who
    cannot work.
        Ms. Dean, do you think elimination of work waivers,
    especially in high areas of unemployment, would impact--how
    would that impact on those places that have unemployment?
        Ms. Dean. Well, I think the Virgin Islands would be a good
    example. Currently, the Islands waive the time limit so the
    time limit is not in effect. If it were to elect to drop it,
    given your relatively high unemployment, the shutdown of
    certain businesses in recent years, that would mean that there
    are individuals willing to work who cannot find work.
        There are also individuals working less than 20 hours, say,
    18 hours, who would lose the food assistance as a wage
    supplement to them. So it just means increased hunger and
    hardship, more demand on local charities. It's ill-advised
    given that there is this terrific program available to help
    feed people that supports and encourages work.
        Ms. Plaskett. Now, when you are a recipient of SNAP and you
    have the EBT card, can you buy every piece of grocery or every
    need in your household from that?
        Ms. Dean. The benefits are based on a food plan called the
    thrifty food plan, and it is meant theoretically for someone
    with perfect information in an extreme environment to be able
    to purchase enough. But we believe and actually have a paper
    coming out next week that suggests that it really is
    insufficient to purchase a healthy diet.
        Ms. Plaskett. So what are the things that you would not be
    able to purchase?
        Ms. Dean. Well, the--I think there are tradeoffs. Fresh
    fruits and vegetables, whether you can buy foods with
    sufficient--low levels of sodium versus highly processed foods.
    A lot of participants substitute in starches versus protein
    and, as I said, fruits and vegetables.
        That having been said, SNAP participants do purchase very
    consistent with how the average American purchases. They do an
    incredible job with the benefits that they have, but we think
    they'd do much better if they had sufficient resources.
        Ms. Plaskett. A woman who is a single parent and has a
    child, have you ever seen instances--because I know I have--of
    that individual, as my colleague talked about, using the SNAP
    money to purchase other things, to use it to buy diapers or to
    use it to buy things that are necessities that we have not as a
    country been able to supply them the resources to be able to
    take care of? Have you seen some of the fraud based on that?
        Ms. Dean. To be clear, that is also not legal and it is
    unacceptable, but yes, some mothers with young children face
    extraordinary choices, just extraordinary choices, and taking
    care of their children, as you're, I think, trying to
    illustrate with the question, is always going to come first.
        Ms. Plaskett. Okay. Thank you. Thank you for the additional
    time.
        Mr. Meadows. The chair recognizes the gentlewoman from New
    Mexico, Ms. Lujan Grisham.
        Ms. Lujan Grisham. Thank you, Mr. Chairman, and thank you
    very much for this hearing.
        And frankly, I agree with my Democratic colleagues in
    recognizing that the SNAP program as a policy is a very
    important policy to protect seniors and children and families
    in poverty and folks in the military with a focus on making
    sure that they don't go hungry. And like many of my colleagues
    on this committee, I want to make sure that we address the
    fraud issues and we also, as Ms. Plaskett, my colleague from
    the Virgin Islands just identified, that there are issues that
    we need to address that don't meet the requirements of the
    program but still shine a light on the extraordinary
    circumstances that so many of these families face.
        And I want to point out that even when we have fraud where
    someone is selling their food stamp benefit, they are in
    collusion with the grocery store in the private sector, and so
    we really need to be thinking about that. And I want everyone
    to know, and I think they do, that SNAP I think is one of the
    most important policies and programs in this country and that I
    believe, based on the evidence that I have seen, that generally
    speaking it has a very low fraud rate, and I think that that is
    a remarkable standard. What I wish for every program is that
    there was a zero fraud rate.
        But I do want to talk about the integrity of the program as
    a whole, and I am very, very concerned about that on two
    levels. I have very deep concerns about the integrity of the
    SNAP program in my State in New Mexico. I believe that these
    problems are clearly being caused by the way the State is
    administering the program and the fact that I don't believe
    that the Federal Government has been providing sufficient
    oversight, and the results are that many eligible New Mexicans
    who need emergency benefits are not getting them, and the
    overall result of course is that they are going hungry, which
    is why New Mexico has some of the hungriest children and
    families in the country still.
        Now, Mr. Concannon, in your testimony you are very clear
    that FNS needs to take a look--and I think I am quoting you--
    look carefully at States that are pushing recipients off SNAP
    programs or are not processing SNAP applications or application
    re-certifications in a timely manner. And I know that you are
    aware that the State of New Mexico has been doing just that
    because we are in court, we have sent you letters, we have
    asked you to do an investigation. We have been very involved.
        And that these New Mexico advocates that you and I have
    personally spoken about have been raising this issue in fact
    with your office for years. In fact, our office received a
    formal letter in April from the American Federation of State,
    County, and Municipal Employees, which represents many of the
    State employees involved in this issue who administer the SNAP
    program. And, Mr. Chairman, I ask for unanimous consent to
    enter the letter into the record.
        Mr. Meadows. Without objection, so ordered.
        Ms. Lujan Grisham. I was pretty sure that was going to
    occur. Thank you, sir.
        Now, these employees, as you know, allege that the State
    has failed to provide training and staff support and all true,
    so that what is occurring in New Mexico is that in order to
    meet the time request to deal with emergency applications, they
    are adding assets to falsify those applications so that people
    don't get the benefit that they deserve and need, and that is a
    very serious integrity program.
        But just as terrible and heinous as that is that current
    court records indicate that that has been going on since 2003.
    So in addition to the years that I have been asking the
    Department to look at this and in addition to the April letter
    where I asked for an investigation, it looks as if the
    Department has had information about this very issue since
    2003. And we can see that one of those results is the hungriest
    State in the country.
        Now, the most disturbing thing to me--I just want to repeat
    this--isn't these lapse of audits and integrity and issues
    between the Federal Government and State government. The most
    egregious issue here is that I have vulnerable families that
    aren't getting the support that they deserve it.
        And according to AFSCME, there is a pattern and practice of
    adding these assets that should have been counted as income or
    adding assets in order absolutely to prevent people in our
    State who are eligible for being eligible.
        So basically the State is lying to you, Mr. Concannon, and
    it is also clear to me that we have not been holding them
    accountable since at least July of 2014. Now, I need to
    understand why your office didn't know about these violations
    since 2003 and hasn't responded to us and others when you had
    clear knowledge of what is going on. So before the AFSCME
    letter, given all these issues, why didn't your office take--
    and then after, why didn't your office take immediate action?
        Mr. Meadows. The gentlewoman's time is expired, but please
    answer the question.
        Mr. Concannon. Well, thank you very much for the question.
    Let me just, in support of the Congresswoman's concerns,
    confirm that I believe New Mexico is probably the most fouled
    up SNAP system in the United States right now and has been,
    unfortunately, I think for years. There is a major Federal
    lawsuit that's been underway there for many, many years, and I
    think even the courts have been less than successful in getting
    the State to really fully respond.
        We have been engaged with the State offering them
    additional support, offering them additional technical
    assistance just as--we also are in receipt of that letter from
    AFSCME ----
        Ms. Lujan Grisham. And I am out of time ----
        Mr. Concannon.--on the 26th ----
        Ms. Lujan Grisham.--Mr. Chairman. I know that you are
    really patient with me, but you know what, giving them
    technical assistance when they are lying to you, they are
    cheating the beneficiaries, they are not protecting the
    beneficiaries, they are in Federal court, this requires
    investigatory action and audits, which is exactly what this
    entire committee wants for all of these ----
        Mr. Concannon. It is being investigated ----
        Ms. Lujan Grisham.--programs.
        Mr. Concannon.--right now by the inspector general of ----
        Ms. Lujan Grisham. Because in a letter from your office, we
    don't have that. They are being investigated for this issue?
        Mr. Concannon. The--since that letter from AFSCME, the
    State--the State IG in New Mexico is investigating that--those
    claims. We also had a visit to several of their offices in May.
    We did not identify that in our management review of those two
    offices, but I--the State inspector general is currently
    investigating the State for those very claims.
        Ms. Lujan Grisham. As I yield back my time, and the
    chairman is being very generous, what I have in writing from
    your office, sir, is that you are going to hold beneficiaries
    accountable for overpayments and that there is not an ongoing
    investigation about this issue. So I am very happy to hear that
    what we have in writing is incorrect, and I am expecting you to
    put in writing your statements today so we get this rectified.
        I yield back, Mr. Chairman.
        Mr. Meadows. All right. So let me follow up on the
    gentlewoman's--while she is closest to this particular issue
    and I think that this is really why we have Maine and Florida
    here today is that we have a Representative from New Mexico
    that is up close and personal with a particular problem. So,
    Mr. Concannon, do I have your assurance that you will report
    back to this committee with a plan of action of how to address
    her concern within the next 14 days?
        Mr. Concannon. Yes, you do, but I ----
        Mr. Meadows. Just ----
        Mr. Concannon.--do want to be clear. The problem is on the
    part of the State agency ----
        Mr. Meadows. I didn't ask you ----
        Mr. Concannon.--not consumers.
        Mr. Meadows. Well, so you don't have any involvement
    whatsoever?
        Mr. Concannon. No, we have involvement.
        Mr. Meadows. Okay. Well, then ----
        Mr. Concannon. I'm just saying that it's the State agency
    that is at fault here, not the consumers ----
        Mr. Meadows. Okay.
        Mr. Concannon.--of the SNAP program ----
        Mr. Meadows. I understand. You made your point.
        Mr. Concannon.--in New Mexico.
        Mr. Meadows. She has made the point, but what she also said
    is that you haven't been forthcoming in following up with her,
    and what I am saying is from the other side of the aisle, that
    is inexcusable ----
        Mr. Concannon. Well ----
        Mr. Meadows.--wouldn't you agree?
        Mr. Concannon.--I don't accept that claim.
        Mr. Meadows. Okay.
        Mr. Concannon. I don't accept that, that we are not ----
        Mr. Meadows. Well, I ----
        Mr. Concannon.--forthcoming.
        Mr. Meadows. The gentlewoman has yielded back, so let me go
    ahead and recognize myself for a series of questions because,
    Mr. Concannon, you come and you are very quick to point at
    Maine and suggest that what they are doing is not adequate from
    a standpoint of the way that they are conducting it. And that
    was really early on. You were very quick to do that. But yet
    when my good friend and the gentlewoman from New Mexico points
    out a problem where you have not even respond properly, you are
    not willing to take and accept responsibility. I think that
    that is a double standard, wouldn't you?
        Mr. Concannon. No, it's not a double standard. I haven't
    said we haven't responded. I've said we've been doing
    evaluations of New Mexico. We're not happy with their
    performance.
        Mr. Meadows. But there is no investigation ----
        Mr. Concannon.--We have offered them ----
        Mr. Meadows.--going on at this point?
        Mr. Concannon. Yes, there is, the inspector general ----
        Mr. Meadows. By the State ----
        Mr. Concannon.--of the State.
        Mr. Meadows. By the State. By the OIG of the Federal
    Government for USAID ----
        Mr. Concannon. I can't ----
        Mr. Meadows.--or USDA, is there any ----
        Mr. Concannon. I can't speak for the OIG because I don't --
    --
        Mr. Meadows. Would you ----
        Mr. Concannon. I know they're aware of it ----
        Mr. Meadows. Would you recommend ----
        Mr. Concannon.--but I can't tell you what they are ----
        Mr. Meadows. Would you recommend that there would be a
    Federal investigation?
        Mr. Concannon. I'd be happy to.
        Mr. Meadows. All right.
        Ms. Lujan Grisham. Thank you.
        Mr. Meadows. All right. So let me go on a little bit
    further. Ms. Mayhew, one of the things that I was perplexed by
    is a started looking at statistics of SNAP use by Maine
    recipients in other States other than Maine. And by the list
    that I got, it looks like they are using all over the country,
    indeed all over the world, and yet it comes from your State.
    Would you say your State is atypical? Is it unique that you
    have a lot of SNAP travelers?
        Ms. Mayhew. Maine is not unique.
        Mr. Meadows. Okay. So if it is not unique, I guess one of
    the questions I have is in just looking at one of the numbers
    that popped out happened to be in Mr. Carroll's State. And so I
    have got Maine recipients who are getting SNAP benefits that
    traveled apparently to Florida, and over the last 5 years,
    there has been over $3,700,000 and change benefits from Maine
    that get used in Florida. Is that correct, Ms. Mayhew?
        Ms. Mayhew. That is correct.
        Mr. Meadows. So how do you stop that? I mean, are they just
    traveling? So is this somebody that just happens to travel with
    SNAP benefits and go down there or are they going to the flea
    market where Mr. Carroll is doing--and cashing it in? I guess I
    am very concerned in that he is doing a great job and even I
    guess, Mr. Concannon, you would recommend that Florida is doing
    a job? In fact, there is a bonus--didn't you all get a bonus
    for good--have you all paid that bonus?
        Mr. Concannon. No, we have not paid the bonus ----
        Mr. Meadows. And why not?
        Mr. Concannon.--since 2015. No.
        Mr. Meadows. Why have you not paid the bonus?
        Mr. Concannon. Because we have some concerns about the ----
        Mr. Meadows. Well, you just said he did a good job.
        Mr. Concannon. Well, no ----
        Mr. Meadows. You can't have it both ways.
        Mr. Concannon.--Florida is doing a good job, but I'm not --
    --
        Mr. Meadows. Well, that's Florida.
        Mr. Concannon. That's--I'm not translating that ----
        Mr. Meadows. I am talking about the $7 million ----
        Mr. Concannon.--to whether we should pay the bonuses.
        Mr. Meadows. So why are you holding up the $7 million
    payment on someone who is recognized as doing a great job? Why
    would you be holding that up?
        Mr. Concannon. Because I want to make sure that what we are
    getting are valid reports from States across the country.
        Mr. Meadows. So you are holding up his to make sure that
    you get valid reports from everybody else?
        Mr. Concannon. I'm holding all of them up.
        Mr. Meadows. Okay. When can we expect a response on his
    bonus money? And he didn't ask me to ask this, by the way. So
    when can we expect you to get it resolved?
        Mr. Concannon. As soon as I'm satisfied and others ----
        Mr. Meadows. How many days?
        Mr. Concannon.--are satisfied--no, it's not a matter of
    days because ----
        Mr. Meadows. Well, you are going to give me ----
        Mr. Concannon.--I want to be ----
        Mr. Meadows.--some days. When will you report back this
    committee? Thirty days, is that enough to evaluate it?
        Mr. Concannon. No, it may take longer than that because
    we're in the middle of investigating that right across the
    country right now, not just in Florida, in States right across
    ----
        Mr. Meadows. So you are saying you don't owe it to Florida?
    Is that what you are saying?
        Mr. Concannon. I'm not sure if we do.
        Mr. Meadows. All right. You have 30 days to address that
    issue and make a compelling case on why you're not paying it to
    them to this committee. Are you willing to accept that, to make
    a compelling case?
        Mr. Concannon. I'm willing to report back to the committee
    within 30 days, but I'm not sure whether the matter will be
    resolved ----
        Mr. Meadows. Mr. Concannon, let me just tell you what
    concerns me is that you supposedly have the answers for all
    food stamp ailments, and yet what I am seeing are experts here
    that are on the ground that in my opinion know a lot more about
    what is going on in their States than you do, and now you are
    going to hold it up because Mr. Carroll has supposedly done a
    great job. You just admitted it under sworn testimony, and yet
    you are saying you are not going to give him a bonus for good
    performance?
        Mr. Concannon. I said he's doing a good job. I didn't say
    he deserves a bonus ----
        Mr. Meadows. Well, let me just tell you ----
        Mr. Concannon.--so ----
        Mr. Meadows.--this will not be the last hearing then, and
    we will have you back. If you are going to report back in 30
    days, I would appreciate that.
        Mr. Meadows. Ms. Mayhew, let me come to you. Why do you
    think there is so much use of Maine's SNAP benefits across the
    country?
        Ms. Mayhew. Well, certainly, as I indicated in our
    testimony there are no Federal SNAP regulations that would
    restrict the mobility of that benefit. We have concerns about--
    around that. Now, certainly States have access to EBT card
    transactional data. We have invested in effort software
    applications to analyze that EBT card transactional data to
    look at that out-of-state use.
        We've established triggers when a card is used for a
    prolonged period of time, 2 months or more out of State, that
    is a red flag that certainly the individual may no longer be a
    resident of the State, but it may also be an indicator of other
    activity that's not consistent with the requirements of the
    program. That is an effort that we certainly believe all States
    need to be using, data analytics and tools, to analyze out-of-
    state transactions.
        Mr. Meadows. So I show that there has been $64 million
    worth of Maine benefits used in other States. Is that correct?
        Ms. Mayhew. That is correct. And certainly this is across
    the country and including St. John and Las Vegas and California
    there have been Maine EBT cards used. Now, that is both food
    stamps but would also include other benefits on the card,
    including TANF.
        Mr. Meadows. All right. So as we look at that, Ms. Brown,
    from a GAO perspective, that type of tool that allows us to
    track those benefits and where they are being used and perhaps
    allow for better fraud prevention, is that a tool that you have
    or is that a tool that we could use, as Maine has used it, to
    give us a better picture of potential--and I say potential--
    fraud?
        Ms. Brown. Well, the issue of people using their benefits
    in other States has been something that's come up many times
    both whether there were questions of fraud but also whether
    there are questions that recipients are applying for and
    receiving benefits from multiple States. And we do have and are
    looking right now at some data-sharing applications that would
    shed some light on whether they were actually receiving
    benefits from multiple States. And USDA has activity in that
    area, too.
        I don't know of anything ----
        Mr. Meadows. So could we get a report like this for every
    single State where we see the benefits that are being used in
    other States? Is that something that is easy for you to do, GAO
    to do?
        Ms. Brown. I'm not sure if it's easy for GAO to do it. We
    ----
        Mr. Meadows. How about you at USDA, Mr. Concannon? Can you
    get us that?
        Mr. Concannon. We could certainly on SNAP, on food stamp
    benefits. As the commissioner mentioned, those benefits you're
    talking about in those several States include other functions
    that are on that same EBT card, so I'd caution against that.
    The majority ----
        Mr. Meadows. What do you mean ----
        Mr. Concannon.--of out-of-state benefits for Maine are
    actually ----
        Mr. Meadows. You can't get the information?
        Mr. Concannon. We can give you the information for SNAP,
    not for ----
        Mr. Meadows. For TANF?
        Mr. Concannon.--the TANF or for child support, as the case
    in many States, too.
        Mr. Meadows. All right. Mr. Carroll is wanting to weigh in.
    I saw the pencil go up.
        Mr. Carroll. I do. And I'm glad that Ms. Brown brought this
    up. We're in a collaboration right now with five southern
    States that border us so that we electronically up front when
    somebody applies for assistance can ping our data off of their
    data to make sure that they're not concurrently receiving
    assistance in two States. That's a pilot program we've been
    working with our Federal partners on doing that, and it's--
    quite frankly, it's worked quite well.
        I hear there's another 15 States going to come in on that,
    and we hope at some point that all 50 States are up on it so at
    least we can stop folks from receiving in multiple States.
        The issue that we have with folks using food stamps in
    other States, it's like everything we deal with, it's complex.
    You've got to peel the onion back because in Florida when you
    look at the panhandle, it's usual for somebody to cross the
    border and use it at--the nearest grocery store may be in
    Alabama if you live in Pensacola. It may be in Georgia. It may
    be in Louisiana. So we see some of that. But I can tell you, to
    have folks from 6 or 10 or 12 States visiting the Opa-locka
    flea market, if you've walked through the Opa-locka flea
    market, that is not a tourist destination. So there's something
    going on there.
        And what we don't know is I don't think that folks
    physically came here from Maine to use their card or to sell
    their card here. I suspect it was more related to--we have ID
    thieves in southern Florida that we know are now applying for
    assistance in Missouri, that now are applying for assistance in
    New York. They'll probably apply for assistance in Maine
    because there's no way these folks are physically coming to
    Florida to go to the Opa-locka flea market.
        Mr. Meadows. Yes, I have been there. I can assure you, you
    have got to be going there to get there so ----
        Mr. Carroll. Right.
        Mr. Meadows.--I mean, as we look at that--Mr. Carroll, let
    me point out one thing, and, Mr. Concannon, I want to come back
    to you because I mentioned bonus things and it was really just
    a footnote. I want to make sure, Mr. Carroll, you have not
    asked me to address that, and I want you to hear that, Mr.
    Concannon. The relationship between the two of you I think is a
    very good one. It is one that I want to continue to support and
    applaud. And so my interaction here is more of frustration out
    of trying to make sure that we don't create a disincentive for
    good performance. And when you have someone who is performing
    well, I want to make sure that the compensation is there.
        And the other aspect, Mr. Concannon, and I will close with
    part of this, if you are asking the States to really look and
    police the recipients, would it not be prudent to allow them to
    police the retailers as well? And I am not asking for--you can
    comment on that if you would like.
        Mr. Concannon. Yes, I can comment on it because we have
    given--for example, Maine, we entered into a--what we call a
    SLEB agreement. We have one in Florida as well where we allow
    them to--the police agencies to--if you suspect something is
    going on, I'm aware that we have an agreement currently out on
    the West Coast with a State that States can come forward, one,
    report to us that they're--here's my complaint in all of this.
    I am confident we're going after stores across the country. I'm
    a lot less confident that States, with due respect, are going
    after the individuals who are using places like that Opa-locka
    market or whatever it's called. And we have urged States ----
        Mr. Meadows. You butchered that ----
        Mr. Concannon.--to take a store out ----
        Mr. Meadows.--but that is okay.
        Mr. Concannon. We--okay. Well, when we take a store out, I
    have urged States--these people have been at meetings when I've
    said to them look at the redemption history in the previous 3,
    6 months and you will see by--based on the amounts of
    redemption, the time of day, where people are from, you will
    identify, and yet it's a handful.
        Mr. Meadows. Okay.
        Mr. Concannon. I think in Maine last year, the year before,
    two people were taken out of the program for trafficking ----
        Mr. Meadows. Okay. Mr. Concannon ----
        Mr. Concannon.--so there's not much ----
        Mr. Meadows.--let me ----
        Mr. Concannon.--going on in this department.
        Mr. Meadows. Let me tell you, it is harder to go after the
    recipient and it is very easy for you to make statements about
    recipients when that is not under that purview when actually
    the retailers are under your purview right now. And here is
    what I am saying--and I will come to you, Mr. Carroll, because
    I think you wanted to--what I am saying is maybe let's look at
    a pilot and give all authority for policing the retailer to the
    States and maybe let's do it in two or three States.
        You know, part of the farm bill actually asked for you to
    come up with some pilots on fraud, and have you done any of
    those pilots?
        Mr. Concannon. Yes, we've actually ----
        Mr. Meadows. Your mic, please. Your mic, your mic.
        Mr. Concannon. We've made grants to these States, Maine
    including ----
        Mr. Meadows. No, no, no, no, no.
        Mr. Concannon. Yes, we have.
        Mr. Meadows. So in what form did you do a pilot because I
    haven't seen any results or even start of a pilot ----
        Mr. Concannon. No, they have started.
        Mr. Meadows.--in your other sworn testimony ----
        Mr. Concannon. They have started.
        Mr. Meadows.--so you may want to check with your staff
    behind it. What kind of pilots ----
        Mr. Concannon. No, we have ----
        Mr. Meadows.--have you done?
        Mr. Concannon. We have made grants to these States ----
        Mr. Meadows. That is not what I asked. The farm bill ----
        Mr. Concannon. Okay. Some of the ----
        Mr. Meadows.--was very specific. It said for you to set up
    pilots to do that. I voted for the farm bill, and so I know
    that it's there.
        Mr. Concannon. Terrific.
        Mr. Meadows.--there. So have you ----
        Mr. Concannon. Great.
        Mr. Meadows.--done any pilots?
        Mr. Concannon. Yes, we have.
        Mr. Meadows. In what States?
        Mr. Concannon. There are a list of them here. We'll give
    you a number--Maine is one of them on case management, for
    example, where we've given Maine money, and there are some
    other examples ----
        Mr. Meadows. Mr. Carroll ----
        Mr. Concannon.--on that line.
        Mr. Meadows. Mr. Carroll, you--let me ----
        Mr. Concannon. SLEB agreements with a number of States as
    well ----
        Mr. Meadows. What is that?
        Mr. Concannon.--so yes. We'll give you the list of States
    and what they're doing.
        Mr. Meadows. Mr. Carroll, is what we are talking about,
    does that go far enough to solve your flea market problem?
        Mr. Carroll. No. And, first of all, I want to say to Under
    Secretary Concannon that when we have partnered and they have
    gone after vendors, we'd have a very strong partnership. What
    I'm worried about is even using their definition of a high-risk
    vendor, we have over 16,000 authorized retailers in the State
    of Florida. Based on the definition that classifies some of
    those vendors as high-risk, 13,000 of our vendors are high-
    risk.
        And if you use the statistic out of FNS in terms of what
    percentage of those might potentially be actively engaging in
    this activity, it would be about 2,300. FNS and the State of
    Florida gets to about 100 of these establishments,
    investigations per year. So based on that, it would take us 23
    years to get through that population. We ----
        Mr. Meadows. All right. So your--hold on. Your sworn
    testimony here today is that based on the potential for fraud
    in Florida of 2,300 retailers with the way that we are going
    after those, it would take 23 years ----
        Mr. Carroll. Correct.
        Mr. Meadows.--to evaluate all of those?
        Mr. Carroll. With the current--the way we do
    investigations, the current staff available to those folks ----
        Mr. Meadows. That is unacceptable. I am just telling you
    that is unacceptable. And so I am going to go ahead and come to
    the gentleman from Wisconsin, Mr. Grothman, for his second
    round, and we'll close up.
        Mr. Grothman. Well, thank you. A couple things. First of
    all, I want to respond to something one of the other
    Congressmen said where he I think intentionally
    mischaracterized what I said or lied about what I said. With
    regard to my exchange with Mr. Concannon, the question is when
    you have so many programs, the benefits of which disappear when
    you marry somebody with an average income, the question is
    whether it affects people's decision as to whether or not to
    get married. And when you add up the Medicaid and the SNAP and
    the low-income housing and the Pell grants and the disability
    for kids, you can wind up with huge amounts of money.
        So I think what I said was completely mischaracterized, but
    I will ask Mr. Concannon again because I think you gave me a
    wrong answer as well. There is a marriage penalty, I believe,
    associated with SNAP. And you sit there and shake your head on
    that. But if you marry someone who moves in with you and they
    are making, let's say, $40,000 a year, isn't it true that if
    the person who initially has some benefits that you will lose
    your SNAP benefits, as well as many other benefits which you
    are entitled to by your classification of being low income
    because no longer you and the father of the child are
    considered low income? Isn't that true, Mr. Concannon?
        Mr. Concannon. No. What's true is this. If somebody moves
    in with you, whether they are married or not, their income is
    counted in the SNAP program ----
        Mr. Grothman. That's exactly right ----
        Mr. Concannon.--period.
        Mr. Grothman.--Mr. Concannon. That's exactly right. So
    first of all, assuming you catch somebody has moved in, which a
    lot of times is not--I'd argue most times is not--but if you
    decide to move in with the father of your children and the
    father of your children is making $40,000 a year, will you not
    lose the SNAP benefit?
        Mr. Concannon. Yes.
        Mr. Grothman. That is what we call a marriage penalty. Very
    good.
        Now, a question for Mr. Carroll, and Congressman Meadows
    dealt with this a little bit, but we are going to talk a little
    bit more about the National Accuracy Clearinghouse, right? And
    that was a very successful program, correct?
        Mr. Carroll. Well, it's a pilot ----
        Mr. Grothman. It is a pilot but ----
        Mr. Carroll. Yes.
        Mr. Grothman.--would you say you discovered people who were
    getting SNAP benefits in more than one State or trying to get
    SNAP benefits in more than one State?
        Mr. Carroll. Yes.
        Mr. Grothman. A substantial number, right?
        Mr. Carroll. I'd have to get back to you the number. I
    don't have that number, but there is an active number, sure.
        Mr. Grothman. Somebody here put down on this thing they
    gave me currently Florida averages 162 matches a day. Is that
    possible?
        Mr. Carroll. That's correct.
        Mr. Grothman. Okay. I guess I would call that a successful
    pilot program.
        I will ask Mr. Concannon what you have learned from that
    pilot program and whether you think it would be a good idea to
    follow up with that pilot program all over the country.
        Mr. Concannon. Yes, I do. I support the program and I--
    again, when I meet with commissioners, I tell them do data
    matches with other States. You can do it in batch. You don't
    have to do it exactly the way that was structured. The beauty
    of that particular pilot was it was real-time so they could
    identify people. But there are ways to identify people trying
    to enroll in other States by even doing simple match processing
    matches, and I highly supported that.
        Mr. Grothman. And will the program--you think the program
    will be expanded nationwide?
        Mr. Concannon. That I don't know at this time. If States
    come forward and say we want to do it, we're certainly
    interested in it.
        Mr. Grothman. Okay. I will just give you one more question
    because you really didn't answer before or I will give it to
    any of you, and I always wonder about this. Like I said, I get
    around my district, I even talk to people here in Washington,
    but certainly, you know, in Wisconsin we have big cities, we
    have little cities. Wherever I go, people are selling their
    SNAP benefits at 50 cents on the dollar.
        Now, that indicates to me that they must be getting food
    from somewhere else or that maybe they don't need the benefits.
    I would strongly encourage you who are not familiar with that
    to get out a little bit more and talk to people in the real
    world and, you know, deal with people in that income class and
    see how much SNAP benefits are being sold for in your area.
        But could anybody give me a reason as to why, if we have
    this huge food crisis in our country, people are selling their
    benefits for 50 cents on the dollar? Mr. Carroll?
        Mr. Carroll. I'd like to take that question. What we find
    the highest profile of somebody who's likely to engage in that
    type activity is--we go back to that able-bodied--it's usually
    a single adult that doesn't have kids because we very seldom--
    unless it's identity fraud where it's not the person it's
    purported to be, we very seldom come across a mom unless
    there's a serious other issue like a drug addiction or
    something--but we very seldom come across a mom who is going to
    sell the lifeblood of that family for--no matter how much.
        So--and this is why I want to focus on the vendor rather
    than the recipient because if you're a recipient and those
    able-bodied folks make--or get about $111 a month or $114 a
    month. If you get 50 cents on the dollar, you're talking about
    they get maybe $60, but if you're a vendor in Opa-locka and you
    multiply that over and over, all of a sudden you get $7 million
    worth of redemptions off an EBT card that you're keeping 20
    percent of with no overhead.
        And so I agree it's an issue. I don't think that families
    that are on assistance are selling their food stamps like that.
    I do think that some of this becomes urban legend because we
    don't do a good job at curtailing it so it's difficult to put a
    number on it. But if we don't go after the vendor side of this,
    we're never going to stop it.
        Our focus is on the recipient side, and Under Secretary
    Concannon talked about how States don't go after the
    recipients. The difference of going after a recipient, you can
    go after a retail vendor and you can have preponderance of the
    evidence and you can use the EBT transactions to shut them
    down. Because we have a clear-and-convincing standard, I can
    bring that standard in. And most of the time when we get it, by
    the way, it has been under investigation for a number of years.
    It took 7 months to go through a disqualification. So when we
    get a lot of the transactions that are given to us, a lot of
    them are a year, 2 years old, we have to re-run more current
    transactions.
        But with a clear-and-convincing standard, we then have to
    prove they had the intent to commit fraud, and short of having
    a witness that saw them do it or having some type of admission
    from the person that they in fact, misused their food stamps,
    it's very difficult to overcome that hurdle, which is why we
    asked to have that standard reduced to the same as retail
    merchants where it's preponderance of the evidence because then
    we can do exactly what Under Secretary Concannon said and use
    the EBT usage data to begin taking some of these people off the
    rolls.
        Right now, they refer to us--because of the vendors--they
    shut down on average about 21,000. We have 41,000 folks that
    we're looking at just in the Opa-locka area. That's 62,000
    folks. I don't have enough folks to investigate at the level of
    investigation you need to disqualify 62,000 folks. I just
    don't. We've got to stop this at the vendor level, and we've
    got to reduce the standard on the recipient level.
        Mr. Grothman. May I have another question?
        Mr. Meadows. Last question and then you are out of time.
        Mr. Grothman. You gave yourself ----
        Mr. Meadows. Yes ----
        Mr. Grothman.--15 minutes.
        Mr. Meadows.--it is part of being a chairman.
        Mr. Grothman. Wisconsin we have PIN numbers. They have PIN
    numbers nationwide. Is that a nationwide thing now?
        Mr. Concannon. Yes.
        Mr. Grothman. Okay. And how about photo ID, photo on the
    card? Do you think we should be doing that, everybody have a
    photo on the card?
        Mr. Carroll. This is where Maine and Florida differ a
    little bit. We looked into putting photos on the card, and the
    initial up-front cost would be about $450,000 and then $1 per
    card, and with 3.3 million recipients, the cost of instituting
    that would be costly.
        But what we don't think would--this is why I think we need
    to target our prevention efforts. Most of the folks that are
    trafficking in EBT cards, there's a willing vendor who is
    openly breaking the law and buying these food stamp cards
    illegally. They're going to continue to do that whether there's
    a picture on it or not. For the vendors in big-box stores like
    you work at a Walmart and all of a sudden somebody hands you a
    card. If you checked the ID and it happens to be dad but mom is
    on the card, then what happens in that grocery line? We don't
    know. So we don't think it's a bad idea but it has to be
    fleshed out a lot further than that before we go down that
    road.
        We think you get a bigger bang for the buck in
    strengthening the data analytics portion of this looking at
    transaction history with vendors, and we think you get a bigger
    bang for the buck looking at folks coming through the front
    door, how they're using their EBT card and drilling down into
    that stuff to begin to prevent it.
        I do think--and I think Secretary Mayhew alluded to this--
    that the fact anecdotally there's been less cards collected
    because I do think it would be a deterrent to folks who don't
    want it traded because their picture is on it. But the people
    that we see in Florida are intent. They could--I'm talking
    about a small segment that's accounting for a big chunk of this
    fraud. These folks are criminals. They don't care whose picture
    is on it. They're going to sell and they're going to traffic in
    that EBT card.
        Mr. Meadows. I thank the gentleman. I thank each of you for
    your testimony. Let me clear up two or three little leftover
    items.
        So, Mr. Carroll, is it my understanding that you believe
    that you need more authority as it relates to retailers to be
    able to go after those bad actors in terms of retailers and
    transfer some of that authority from USDA to the State to allow
    you to prosecute the fraud and abuse? Is that correct?
        Mr. Carroll. That is correct.
        Mr. Meadows. All right. And so if we gave you that, you
    believe that we would be able to not only make a more focused
    approach on those that are fraudulently trying to game the
    system without affecting those that Ms. Dean so eloquently put,
    the real people who need the benefits, that you can go after
    those bad guys if you had that authority, is that correct?
        Mr. Carroll. Absolutely.
        Mr. Meadows. All right. Mr. Concannon, let me come back to
    you. I mentioned pilots and I mentioned the 2014 farm bill. The
    kind of pilot that I want to see is to give the kind of
    authority that we just talked about with Mr. Carroll. It would
    be great if we took Ms. Mayhew, Mr. Carroll, and maybe somebody
    out West, you get North, South, and you get the West where you
    have three States that you give that authority, essentially
    give all of that authority to those States to be able to do
    that so that we can monitor, to have Ms. Brown, to have USDA
    monitor that to see if it is making a big difference. It may
    not.
        But here is what I am saying. As someone who will advocate
    on behalf of a new farm bill that is, as you know, already in
    the works, that the Ag Committee and that committee is doing a
    yeoman's job to do a great job to make sure that we have a good
    farm bill going forward.
        I want to give them the tools coming out of Oversight and
    from GAO and the others to say here is how we define the
    argument, because if not, the argument is always going to be is
    that there is somebody gaming the system. And what I want to do
    is narrow that to the ones who are gaming it and let's get
    them, and the ones who really need the help, that we actually
    look at increasing the ability to help those that are truly
    starving in our communities. Does that make sense to you?
        Mr. Concannon. I'm with you totally on that.
        Mr. Meadows. So are you willing to get back to this
    committee and maybe look at amore defined pilot program? And
    obviously, we would not be the only committee, but from an
    oversight standpoint, it would be ours. But the other is
    obviously work with the chairman of the Ag Committee to look at
    three pilots. I would suggest two that are here today and
    another one out West. I can tell that you are not buying into
    that, but as long as we get three States, as long as we get
    three States to give them that authority where we allow Ms.
    Brown to look at those numbers, are you willing to commit to do
    that today?
        Mr. Concannon. I'm certainly willing to work with you and
    with the committee on it. I want to make sure that what we can
    do is going to be legally okay by the Office of General Counsel
    ----
        Mr. Meadows. Well, going after fraud is legal.
        Mr. Concannon. No, no--but they may say to us, look, you
    have that responsibility. You can't turn it over completely to
    the State.
        Mr. Meadows. Okay. If it needs a ----
        Mr. Concannon. Now, we may be able to give them more
    authority.
        Mr. Meadows. So if it needs a legislative fix, I think you
    have that in the 2014 farm bill the way that it was worded,
    maybe not, but if you need a legislative fix, if you will get
    your folks to get with us, we will work in a bipartisan way to
    step up that kind of thing so that Mr. Carroll doesn't have to
    try to track down 42,000 people individually and come up with
    probable cause later. Does that make sense?
        Mr. Concannon. Yes, but I think the point, though, he's
    making that the evidence standard is still a higher one. That
    hasn't solved that issue.
        Mr. Meadows. But that is a different thing.
        Mr. Concannon. That hasn't solved that.
        Mr. Meadows. If you give him the ability to go after
    retailers, some of the evidence standards are not as
    problematic because the timing of that and the ability to tie
    the two together where it is not you coming in on one--it
    allows him to do that. The time gap is certainly very
    different. Does that make sense?
        Mr. Concannon. It could. It could. We're doing variations
    on that with a Western State right now, so we'll have to see
    whether that works.
        Mr. Meadows. Okay. All right. So can you in the next 120
    days get me an updated report on the trafficking because it is
    3 years old, the 2015 report. Can you ----
        Mr. Concannon. We ----
        Mr. Meadows. You said you were working on it already.
        Mr. Concannon. They are working on an update of that ----
        Mr. Meadows. So what is a reasonable ----
        Mr. Concannon.--right now. I don't know what ----
        Mr. Meadows.--time? If 120 days is not reasonable, what is
    reasonable?
        Mr. Concannon. End of calendar year this year because
    that's--it's very complicated, but end of calendar year,
    December.
        Mr. Meadows. It is so complicated to figure out trafficking
    that it is going to take 6 months?
        Mr. Concannon. They are currently working on it right now,
    but they have just advised me, the people who are working on
    it, that we won't have it until the end of the calendar year.
        Mr. Meadows. So we will have the 2015 report in 2017?
        Mr. Concannon. Two thousand twelve to fourteen is the
    current time period they're working on.
        Mr. Meadows. All right. But can you include 2015 in that?
        Mr. Concannon. I think they're already working on it so I
    don't think I can.
        Mr. Meadows. So you can't include that? She is shaking her
    head no, you are saying yes.
        Mr. Concannon. Well, they are the researchers so ----
        Mr. Meadows. So we will have--let me make sure I
    understand. We are going to have 2012 through 2014 but no
    information on 2015 trafficking by the end of the year, is that
    correct?
        Mr. Concannon. Correct.
        Mr. Meadows. Okay. We will follow up with you on that.
        And my final issue is more of a comment, and it gets to
    something that you talked about earlier. You talked about a
    rule about addressing the retailers. There is a very big
    difference between going after fraud with retailers than
    telling them what they have to stock on a shelf. And you
    conflate the two, and I am here to tell you that I am going to
    be looking at that very closely. I want your first priority to
    be fraud. That is what the farm bill talked about. And what you
    are suggesting in your rules is something that perhaps is other
    than that, and I want to make sure that we are clear that I
    want you to focus and have your priority on fraud versus on
    what goes on a shelf.
        Mr. Concannon. Well, actually, the farm bill authorized
    depth of stock is the term ----
        Mr. Meadows. It did ----
        Mr. Concannon. So it isn't just ----
        Mr. Meadows. But I think ----
        Mr. Concannon.--on fraud. It's to improve ----
        Mr. Meadows. But I am telling you that ----
        Mr. Concannon.--the ----
        Mr. Meadows.--priority is fraud first.
        Mr. Concannon. Okay.
        Mr. Meadows. The depth of stock and where you are going
    with it I think you will find a very--your interpretation of
    what I voted on is very different than what I voted on. And I
    will yield back.
        And with that, I want to thank all of you for your time,
    and if there is no further business, this joint committee
    stands adjourned.
        [Whereupon, at 5:20 p.m., the subcommittees were
    adjourned.]

                                    APPENDIX

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                   Material Submitted for the Hearing Record

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