Federal Programs with a Financial Eligibility Component
(14-DEC-05, GAO-06-292R).
Each year, federal benefit programs make billions of dollars of
improper payments, in some cases, due to inaccurate personal and
financial information provided by applicants. For federal
agencies administering those programs, getting reliable personal
and financial information is vital for making good decisions
about whether an individual or business is eligible for federal
benefits. As one of the largest repositories of personal and
financial information in the United States, IRS has a number of
data-sharing relationships with federal agencies to help verify
applicant-provided information. This letter conveys information
Congress requested as a part of work we conducted on verifying
financial information at federal agencies, including the IRS. As
agreed, we (1) compiled a listing of federal benefit programs
with a financial eligibility component and (2) described
documentation requirements to qualify for these programs.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-292R
ACCNO: A43218
TITLE: Federal Programs with a Financial Eligibility Component
DATE: 12/14/2005
SUBJECT: Eligibility criteria
Eligibility determinations
Erroneous payments
Federal aid programs
Financial management
Government information
Information management
Interagency relations
GSA Catalog of Federal Domestic
Assistance
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GAO-06-292R
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United States Government Accountability Office Washington, DC 20548
December 14, 2005
The Honorable Charles E. Grassley Chairman The Honorable Max Baucus
Ranking Minority Member Committee on Finance United States Senate
Subject: Federal Programs with a Financial Eligibility Component
Each year, federal benefit programs make billions of dollars of improper
payments,1 in some cases, due to inaccurate personal and financial
information provided by applicants.2 For federal agencies administering
those programs, getting reliable personal and financial information is
vital for making good decisions about whether an individual or business is
eligible for federal benefits. As one of the largest repositories of
personal and financial information in the United States, IRS has a number
of data-sharing relationships with federal agencies to help verify
applicantprovided information. This letter conveys information you
requested as a part of work we conducted on verifying financial
information at federal agencies, including the IRS.3 As agreed with your
offices, we (1) compiled a listing of federal benefit programs with a
financial eligibility component and (2) described documentation
requirements to qualify for these programs.
To identify federal programs with a financial eligibility component, we
searched federal programs found within the General Service
Administration's (GSA) online Catalog of Federal Domestic Assistance
(CFDA).4 The CFDA is a database of federal benefit and service assistance
programs compiled with information self-reported by agencies. We reviewed
the eligibility requirements and financial information of 1,238 financial
assistance programs in the CFDA as of December 2005 to determine if they
1
Improper payments include payments that should not have been made or were
made for incorrect amounts.
2
GAO, Financial Management: Challenges in Meeting Governmentwide Improper
Payment Requirements, GAO-05-907T (Washington, D.C.: July 20, 2005).
3
See GAO, Taxpayer Information: Options Exist to Enable Data Sharing
Between IRS and USCIS but Each Presents Challenges, GAO-06-100
(Washington, D.C.: Oct. 11, 2005); Taxpayer Information: Data Sharing and
Analysis May Enhance Tax Compliance and Improve Immigration Eligibility
Decisions, GAO-04-972T (Washington, D.C.: July 21, 2004); and Taxpayer
Information: Increased Sharing and Verifying of Information Could Improve
Education's Award Decisions, GAO-03-821 (Washington, D.C.: July18, 2003).
4 Users can access the CFDA online at http://www.cfda.gov.
met three criteria we applied for identifying benefit programs with a
financial eligibility component: (1) eligible applicants must have
included an individual, business, or non-profit entity, (2) the applicant
or beneficiary was required to provide financial information as a
condition of eligibility, and (3) the benefit program's fiscal year 2003
financial obligation had to equal or exceed $1 million. We conducted our
work from October 2005 through December 2005 in accordance with generally
accepted government auditing standards.
The types of financial assistance offered by agencies included grants,
loans, direct payments, and insurance. As defined within the CFDA,
o Grants include fellowships, scholarships, and a variety of grants for
research, training, technical assistance, surveys, and construction
with funding for fixed periods for specific projects.
o Loans include direct loans and guaranteed/insured loans. Direct loans
are for a specific period of time with an expectation of repayment.
They may or may not require the payment of interest. The federal
government arranges to indemnify a lender against part or all of any
defaults by those responsible for repayment of a guaranteed/insured
loan.
o Direct payments are provided directly to recipients from the federal
government, and there may or may not be restrictions imposed on the
recipient as to how the money is spent.
o Insurance is a type of financial assistance provided to assure
reimbursement for losses sustained under specified conditions. The
coverage may be provided directly by the federal government or through
private carriers and may or may not involve the payment of premiums by
recipients.
Results in Brief
We found 74 federal benefit programs that met our criteria. The financial
obligations for fiscal year 2003 varied by financial assistance type with
approximately $16 billion in grants, approximately $158 billion in loans,
approximately $62 billion in direct payments, and approximately $3 billion
in insurance.5 More than half of these programs were offered by the U.S.
Department of Agriculture (USDA). Federal benefit programs varied in the
level of documentation required to support financial eligibility. Most
required applicants or beneficiaries to provide financial information on
an application plus additional supporting documentation. They generally
allowed discretion in the type of supporting documentation applicants or
beneficiaries could provide such as financial statements, payroll
documents, and/or tax documents according to the eligibility requirements
reported in the CFDA. One agency, the Small Business Administration (SBA),
required applicants to complete an IRS form
In this report, a financial obligation is different from a budgetary
obligation. In the CFDA, financial obligations for grants and direct
payments represent the dollar amounts provided to awardees in fiscal year
2003 according to a GSA official and a Department of Commerce official.
Insurance amounts represent the federal government's maximum coverage or
commitment to those who file a claim. There is no insurance payment unless
a claim is filed and an amount is paid out. The dollar amounts of loans
represent either amounts that have been paid out to recipients or amounts
of loans for which the federal government has guaranteed repayment.
requesting that tax information be sent directly to the agency in addition
to providing other financial documentation.
Over Seventy Federal Benefit Programs Had a Financial Eligibility Component and
Each Varied in Required Documentation
Of the 74 programs with a financial eligibility component, USDA accounted
for the most with 38 programs or 51 percent, and the U.S. Department of
Housing and Urban Development (HUD) offered the second largest number with
9 programs or 12 percent. Fiscal year 2003 obligations for the programs
ranged from about $1 million to $69 billion, as shown in table 1. Table 1
also shows the type of documentation required. In addition to completing
an application, a majority of programs allowed applicants to provide
financial documents and/or information provided at their discretion
(indicated with a letter A in table 1); some programs required applicants
to provide specified documents and/or information (indicated with a letter
S in table 1); and a few programs required applicants to fill out an IRS
form in addition to other documents in some cases (indicated with a letter
I in table 1).
Table 1: Federal Benefit Programs with a Financial Eligibility Component,
Fiscal Year 2003
CFDA Identifying Eligible Assistance Assistance Documents
Number and Program Applicant Type Amount Requireda
Name
USDA
10.054 Emergency Individuals Direct $4,071,721,000 A
Conservation Program payments
10.056 Farm Storage Individuals and Loans $140,480,633 S
Facility Loans businesses
10.064 Forestry Individual, Direct $1,877,013 A
Incentives Program group, payments
association,
corporation
10.066 Livestock Individuals Grants $429,867,460 A
Assistance Program
10.073 Crop Disaster Individuals Direct $1,808,000,000 A
Program payments
10.077 Livestock Individuals and Grants $886,000,000b A
Compensation Program businesses
10.081 Lamb Meat Individuals and Direct $10,000,000 A
Adjustment businesses payments
Assistance Program
10.404 Emergency Individuals and Loans $95,698,000 A
Loans businesses
10.405 Farm Labor Individuals and Grants $4,382,000 A
Housing Loans and businesses
Grants
Loans $55,862,000
10.406 Farm Individuals and Loans $1,974,658,000b A
Operating Loans businesses
10.407 Farm Individuals and Loans $1,448,170,000b A
Ownership Loans businesses
10.410 Very Low to Individuals and Loans $4,124,628,459b A
Moderate Income households
Housing Loans
10.411 Rural Housing Nonprofits Loans $1,165,000 A
Site Loans and
Self-Help Housing
Land Development
Loans
CFDA Identifying Eligible Assistance Assistance Documents
Number and Applicant
Program Name Type Amount Requireda
10.415 Rural Rental Individuals, Loans $115,857,000 A
Housing
Loans cooperatives,
nonprofits,
corporations,
trusts,
partnerships
10.417 Very Low Individuals Grants $31,135,058 A
Income
Housing Repair
Loans and
Grants Loans $31,036,185
10.427 Rural Rental Individuals/ Direct $721,148,000 A
Assistance Payments organizations payments
10.438 Section 538 Businesses Loans $101,751,499 A
Rural Rental
Housing Guaranteed
Loans
10.441 Technical Nonprofits, Grants $1,113,282 A
and Supervisory agencies,
Assistance Grants institutions,
organizations,
and other
associations
10.444 Direct Individuals Grants $1,942,110 A
Housing-Natural
Disaster Loans and
Grants
10.446 Rural Organizations Grants $6,000,000 A
Community
Development
Initiative
10.451 Noninsured Individuals and Direct $176,500,000 A
Assistance businesses payments
10.551 Food Stamps Individuals Direct $24,606,021,000 A
payments
10.600 Foreign Nonprofit Direct $34,500,000 S
Market payments
Development
Cooperator
Program
10.606 Food for Organization/ Grants $86,000,000 S
Progress agency
10.607 Section Organization/ Grants $332,274,620 S
416(B) agency
10.608 Food for Organization/ Grants $100,000,000 S
Education agency
10.760 Water and Not-for-profit Grants $496,311,592 A
Waste
Disposal Systems corporations
for Rural
Communities Loans $767,174,249b
10.766 Community Corporations Grants $18,486,513 A
Facilities Loans
and Grants
Loans $414,515,275b
10.768 Business and Cooperative, Loans $906,501,963 A
Industry
Loans corporation,
partnership,
trust
10.769 Rural Nonprofits Grants $51,403,000 A
Business Enterprise
Grants
10.771 Rural Nonprofits and Grants $6,332,000 A
Cooperative
Development Grants institutions of
higher education
10.773 Rural Nonprofits and Grants $3,109,000 A
Business cooperatives
Opportunity Grants
10.775 Renewable Individuals and Loans $21,707,000 S
Energy
Systems and Energy businesses
Efficiency
Improvements
Program
10.855 Distance Organizations Grants $33,507,000 A
Learning and
Telemedicine Loans
and Grants
CFDA Identifying Eligible Assistance Assistance Documents
Number and Applicant
Program Name Type Amount Requireda
10.912 Individuals Direct $39,820,568b S
Environmental payments
Quality Incentives
Program
Grants $164,470,000
10.918 Ground and Individuals Direct $9,130,000 A
Surface payments
Water Conservation-
Environmental
Quality Incentives
Program Grants $44,814,000
10.919 Klamath Individuals Direct $1,724,800 A
Basin- payments
Environmental
Quality Incentives
Program Grants $10,635,900
10.961 Scientific Institutions of Direct $2,500,000 A
Cooperation payments
and Research higher learning
and
nonprofits
Commerce
11.112 Export Nonprofits and Grants $2,000,000 S
Promotion Market trade
Development associations
Cooperation
11.415 Fisheries Individuals and Loans $62,300,000b S
Finance Program businesses
Housing and Urban
Development
14.157 Supportive Nonprofits Direct $783,286,000 A
Housing for the payments
Elderly
14.167 Mortgage Businesses Loans $3,820,000 S
Insurance-Two
Year Operating Loss
Loans,
Section 223 (D)
14.181 Supportive Nonprofit Direct $250,515,000 S
Housing for Persons payments
with Disabilities
14.195 Section 8 Individuals/ Direct $4,718,248,246 A
Housing payments
Assistance Payments Businesses
Program-
Special Allocations
14.197 Multifamily Individuals/ Direct $504,373,000 A
Assisted payments
Housing Reform and Businesses
Affordability
Act
14.235 Supportive Nonprofits Grants $816,286,711 S
Housing Program
14.850 Public and Public Housing Direct $3,616,858,036 A
Indian Housing Agencies payments
14.865 Public and Individuals Loans $40,305,000 S
Indian (Native
Housing-Indian Loan American)
Guarantee
Program
14.871 Section 8 Public Housing Direct $11,272,905,390 A
Housing Choice Agencies payments
Vouchers
Interior
15.113 Indian Individuals Direct $63,534,180 A
Social Services- payments
Welfare Assistance
Labor
17.262 Employment Open Grants $9,038,863 A
and Training
Administration
Evaluations
State
19.425 Benjamin Individuals, Direct $1,575,000 A
Gilman payments
International nonprofits,
Scholarship
institution/
organizations
Transportation
CFDA Identifying Eligible Assistance Assistance Documents
Number and Program Applicant Type Amount Requireda
Name
20.802 Federal Ship Individuals Loans $20,655,270 A
Financing Guarantees
20.901 Payments for Air carriers Direct $113,000,000 S
Essential Air Services payments
National Foundation on
the Arts and
Humanities
45.301 Museum for Museum Grants $15,381,000 S
America Grants
Railroad Retirement
Board
57.001 Social Individuals Direct $9,063,000,000 A
Insurance for Railroad payments
Services
Small Business
Administration
59.002 Economic Injury Businesses Loans $100,565,000 I
Disaster Loans
59.008 Physical Individuals, Loans $7,339,000 I
Disaster Loans businesses,
charitable,
and
nonprofits
59.012 Small Business Businesses Loans $12,703,000,000 S
Loans
59.016 Bond Guarantees Businesses Insurance $593,572,000 A
for Surety Companies
59.049 Office of Small Businesses Loans $4,750,000 I
Disadvantaged Business
Certification and
Eligibility
Veterans
64.104 Pension for Individuals Direct $2,463,890,000 A
Non-Service-Connected payments
Disability for
Veterans
64.114 Veterans Individuals Loans $40,129,134,594 A
Housing-Guaranteed and
Insured Loans
Overseas Private
Investment Corporation
70.002 Foreign Individual, Loans $1,151,000,000 S
Investment Financing corporation,
partnership,
or other
association
Education
84.007 Federal Higher Grants $760,028,000 A
Supplemental education
Educational institutions
Opportunity Grants
84.032 Federal Family Individuals Loans $68,726,000,000 A
Education Loans
84.033 Federal Higher Direct $1,004,428,000 A
Work-Study Program education payments
institutions
84.038 Federal Perkins Higher Direct $99,350,000 A
Loan Program-Federal education payments
Capital Contributions institutions
84.063 Federal Pell Individuals Grants $11,364,646,000 A
Grant Program
84.268 Federal Direct Individuals Loans $25,283,000,000b A
Student Loans
Pension Benefit
Guaranty Corporation
86.001 Pension Plan Businesses Insurance $2,272,000,000 A
Termination Insurance and
organizations
Health and Human
Services
CFDA Identifying Number Eligible Assistance Assistance Documents
and Program Name Applicant Type Amount Requireda
93.924 Ryan White Nonprofit Direct $9,702,200 A
HIV/AIDS Dental schools of payments
Reimbursements dentistry and
dental hygiene
Social Security
Administration
96.020 Special Benefits Individuals Direct $9,238,000 A
for Certain World War payments
II Veterans
Homeland Security
97.048 Federal Individuals Direct $202,758,829 A
Assistance to and households payments
Individuals and
Households - Housing
Source: CFDA, December 2005.
a
In addition to completing an application, programs with the letter A
allowed applicants to provide financial documents and/or other information
at their discretion; programs with the letter S required applicants to
provide specified documents and/or information; and programs with the
letter I required applicants to fill out an IRS form in addition to other
documents, in some cases.
b
In cases where agencies reported two or more types of financial
obligations for grants, loans, and direct payments, we summed the amounts
for reporting purposes.
Documentation requirements related to an applicant's income information
differed among agencies and programs. We grouped benefit programs into
three broad categories wherein (1) the applicant or beneficiary was
required to provide supporting documentation at their discretion to
support their financial status, (2) the applicant was required to provide
one or more specified documents to support their financial status, and (3)
the applicant was required to fill out an IRS form in addition to
providing other financial documentation to support their financial status.
For 54 of the 74 benefit programs, the eligibility requirements reported
in the CFDA did not specify the type of financial documents the applicant
needed to submit to support his/her application. Thus, it was the
applicant's discretion on which financial documents to provide. For
example, USDA's Very Low Income Housing Repair Loans and Grants program
required applicants to provide evidence of their income and debts without
specifying which documents to provide. Also, the U.S. Department of
Interior's social services program for American Indians required
individuals to provide proof of their income/resources to qualify for
financial assistance. Like the USDA program, it did not specify which
financial documents the applicant must provide, only that the applicant
must prove its sources of income.
For 17 of the 74 benefit programs, the applicant was required to provide a
specific document/information or one or more documents/information
indicated from a specified list. These benefit programs outlined which
documents to submit from financial statements to tax-related documents.
For instance, the U.S. Department of Commerce required applicants to
submit audited financial statements when applying for the Export Promotion
Market Development Cooperation program. Additionally, USDA's Foreign
Market Development Cooperator Program required applicants to submit their
IRS tax exempt identification number along with their application. HUD
required applicants to submit documentation such as pay stubs, W-2 forms,
and other evidence of assets such as bank accounts to support their
ability to obtain and repay the loan from the Indian Loan Guarantee
Program.
Three SBA programs required applicants to fill out IRS forms to enable
officials to contact IRS directly to obtain their tax information. These
programs required applicants to submit a signed IRS Form 8821 Tax
Information Authorization or IRS Form 4506 Request for Copy of Tax Return
to enable SBA to obtain tax information directly from IRS for previous
years. Form 8821 allows a third party such as SBA to inspect taxpayer
information, receive taxpayer information, or both relating to the
specific tax matters listed on the form. Form 4506 allows taxpayers to
request that IRS directly provide a copy of their tax returns to SBA (at a
cost of $39 to the taxpayer per copy). Also, two of the three SBA programs
required these IRS forms in addition to financial statements.
Scope and Methodology
To identify federal programs with a financial eligibility component, we
reviewed federal programs found within the GSA's online Catalog of Federal
Domestic Assistance. The CFDA is a government-wide compendium of federal
programs, projects, services, and activities that provides assistance or
benefits to the American public. It contains agency self-reported
information on 15 types of financial and nonfinancial assistance programs
administered by departments and establishments of the federal government.
We focused on the financial assistance programs because of the potential
benefits of increased data sharing by verifying applicant-provided
information that can reduce fraud among federal benefit programs. The
programs listed in table 1 are limited to those in the CFDA database as of
December 2005.
We relied on all program descriptions found within the CFDA. We reviewed
the eligibility requirements and financial information of 1,238 financial
assistance programs to determine if they met three criteria we applied for
identifying benefit programs with a financial eligibility component:
(1)
The applicant must have been an individual, business, or
non-profit entity.
(2)
The applicant or beneficiary was required to provide financial
information as a condition of eligibility. For the purposes of
this report, we considered a social security number to be an
identification number and not a document or source of information
to qualify for assistance.
(3)
The benefit program's fiscal year 2003 financial obligation had to
equal or exceed $1 million.
To assess the reliability of the CFDA data, we reviewed GSA responses to
questions about the process of collecting and checking the data. We
determined the data to be sufficiently reliable for the purpose of
illustrating the range of programs with a financial eligibility component
and the documentation requirements for qualification.
As agreed with your office, unless you publicly release its contents
earlier, we plan no further distribution of this report until 30 days from
the date of this letter. At that time, we will make copies available to
others on request.
This letter will be available on GAO's home page at http://www.gao.gov. If
you or your staff have any further questions about this report, please
contact me at (202) 512-9110 or [email protected]. Contact points for our
Offices of Congressional
Relations and Public Affairs may be found on the last page of this report.
GAO staff who made major contributions to this letter were Signora J. May,
Assistant Director; Michele Fejfar, Jyoti Gupta, Shirley Jones, Amy
Rosewarne, and Tina L. Younger.
Director, Tax Issues, Strategic Issues Team
(450442)
*** End of document. ***