WASHINGTON - The U.S. government sends nearly $36 million in federal farm subsidies paid to dead individuals annually, with only a fraction of the improper payments being recovered, according to a report prepared for the Senate Agriculture Committee.
Once fixed, improved U.S. Department of Agriculture procedures could trim a substantial amount from the mistaken allotments, a nagging issue that is still in contention as Congress works to pass a farm bill before a Sept. 30 deadline.
“While measures do exist to prevent payments to the deceased, there are more steps that must be taken to protect the integrity of the program and hold individuals who are accepting incorrect payments responsible,” U.S. Sen. John Boozman, R-Ark., a member of the Senate Agriculture Committee, said Thursday.
The report by the Government Accountability Office was commissioned by the Senate Agriculture Committee “to evaluate USDA’s guidance and control over payments to deceased individuals and the appropriateness of such payments.”
Of the $20 billion spent annually to provide federal safety nets for the farming industry, the report focuses on contracts supporting agricultural policyholders who have died. It calls “into question whether these safety-net programs are benefiting the agricultural sector as intended.”
While the $36 million paid to dead individuals constitutes less than 1 percent of the overall program, the GAO report is part of an overall effort to cut down on waste.
“We are actively working to correct this problem and protect the farm safety net and other programs, not just within the USDA but on a government wide level,” Boozman said.
While Arkansas ranks ninth in all states receiving farm subsidies, the amount being paid to deceased growers in specific states was unavailable. Overall, Arkansas farmers have received more than $2.5 billion in direct payments to support local farmers since 2002, according to the Environmental Working Group, which tracks farm subsidies.
The USDA operates three agencies that provide conservation and crop assistance programs for farmers, ranchers and landowners.
In its report released in June, the GAO found that $35.9 million is paid to dead individuals by the USDA’s Farm Service Agency, Natural Resources Conservation Service and Risk Management Agency.
While the report explored the payments on a national scale, state-by-state data was not available, according to Anita Wilson, a spokesman for the Arkansas Farm Service Agency.
The Farm Service Agency arm is the only one of the three agencies that has implemented a system that cross-checks all farm payments with Social Security Administration data on a quarterly basis. This step was included in the 2008 farm bill to identify improper payments.
Of the $3.3 million in improper benefits distributed by the Farm Service Agency between 2008 and 2012, officials have recovered approximately $1 million nationally.While this constitutes a small amount, the report recognizes that by instituting new measures, greater amounts of improper payments can be recognized and collected by the other two agencies.
“People found guilty of abusing the system need to be held accountable to the full extent of the law and we will look at strengthening the law if needed,” Boozman said.
However, officials warn that the numbers do not tell the whole story.
The Farm Service Agency oversees contracts with roughly 1.9 million program participants and is legally obligated to meet all contract requirements. Once it is noted that a recipient has died, the contract must be reviewed by the agency to determine if payments should continue, according to a Farm Service Agency official. And this takes time.
For instance, if an eligible recipient who later dies is operating as a limited liability company, payments may still go to the company or the recipient’s family depending on what is stipulated in the contract.
The Natural Resources Conservation Service administers voluntary conservation programs. Between 2008 and 2012, the service allocated $10.6 million on behalf of 1,103 individuals deceased one year or more.
In response to the report, Philip Sharp, operations and review director at the USDA, stated that the Conservation Service works with an “escrow agent which insures that program participants have title to the rights to be conveyed, including whether any of the individuals identified on the deed have died and their title transferred to someone else.”
Sharp also noted that the Risk Management Agency program requires a signed certification from participants each year along with annual production and yield reports.
The Risk Management Agency administers crop insurance and spent $22 million in subsidies and allowances between 2008 and 2012 on 3,434 policyholders for two or more years after their deaths. The GAO report said some of those payments may have been properly shipped. But without review and crosschecking procedures in place,the agency cannot be certain that all payments were accurately disbursed.
In a letter to the GAO, the USDA “generally agrees with the report’s findings” and has recently received approval to begin using Social Security data for crosschecking purposes to improve processes.
These gaps in procedure reported by the GAO will hopefully cause the USDA agencies to improve systems for payments. Updating procedure will allow all agencies to identify improper payments and efficiently recoup funds.
“In about two months’ time, we will get updates from the agencies to see what improvements they have made, and we will be evaluating their progress to determine whether they have satisfied our recommendations,” said Daniel Garcia-Diaz, the GAO’s director of natural resources and the environment, who wrote the report.
Business, Pages 69 on 09/01/2013