GAO tells House panel that TANF oversight gaps and fraud risks put billions at stake

At a House Ways and Means subcommittee hearing, Government Accountability Office officials told members that long‑standing weaknesses in oversight and state reporting have left large portions of Temporary Assistance for Needy Families (TANF) funding difficult to track and exposed some funds to fraud and misuse.

The GAO said non‑assistance spending (services such as child care, job training and child welfare supports) has grown while reporting and audit resolution have lagged. "Non assistance spending accounted for about 44% of state's total spending" in fiscal year 2022, Jeffrey Arkin, Director of GAO's Strategic Issues Team, told the committee. He added that states' unspent federal TANF balances rose from about $4,000,000,000 at the end of FY2015 to about $10,000,000,000 in FY2023.

GAO's findings matter because TANF is a major source of flexible funding that many states use to finance child welfare, child care and workforce programs. Without clearer reporting, the federal agency charged with oversight — the Department of Health and Human Services (HHS) — has limited visibility into who gets funded and whether programs achieve intended outcomes.

GAO and subcommittee members pointed to three categories of problems: incomplete state reporting on non‑assistance spending, persistent and sometimes long‑running single‑audit findings, and gaps in fraud‑risk management. "Some states did not include the required narrative" in their TANF expenditure reports, Arkin said, and GAO recommended that HHS require more-complete reporting within its existing authority and seek expanded statutory authority from Congress where needed.

James Dalkin, Director of GAO's Financial Management and Assurance Team, summarized single‑audit results: GAO's review found 37 states had TANF‑related audit findings and 22 states had at least one finding categorized as a material weakness. Dalkin said some states had repeat findings spanning multiple years — "approximately 23 percent had repeat findings for over 2 years," and some problems had persisted for more than a decade. GAO also found HHS did not issue many required management decisions in the six‑month timeframe and that roughly two‑thirds of required management decisions had not been issued at the time of GAO's review.

Sato Bagdoyan, Director of GAO's Forensic Audits and Investigative Services Team, told the committee that TANF fraud risk is elevated because the program combines large spending, wide reach and technical vulnerabilities such as electronic benefit transfer (EBT) cards. "Annual combined spending on TANF totals over $30,000,000,000 which is potentially at risk for fraud," Bagdoyan said. He described high‑profile cases cited in GAO's report: Mississippi audits alleging potential misspending of more than $77,000,000 in non‑cash grants and California court records that GAO said show criminal schemes using hidden cameras at ATMs to skim EBT card data.

Bagdoyan said HHS had taken initial steps — for example, identifying 21 fraud risks and developing risk profiles — but still lacked several "fraud risk management fundamentals," including formal, recurring fraud risk assessments, consultation with state and local partners, and clear prioritization of identified risks. GAO made seven recommendations to HHS on fraud risk management; according to witnesses those recommendations remained open at the time of the hearing.

Cathy Lehi, Director of GAO's Education, Workforce and Income Security Team, summarized GAO's review of participant and outcome data for TANF‑funded non‑assistance services and a separate review of states' use of TANF for child welfare. She said states and local service providers commonly collect participant data for program delivery, but that data are not consistently reported to state TANF agencies or to HHS. "At the state level, that data does exist," she said, "but it is not being reported up in a way that makes it easily accessible."

Lehi told members that in FY2022 states spent about $3,300,000,000 of TANF dollars on child welfare (about 11% of overall TANF spending per GAO's figures), with wide variation among states. She said Texas spent the most, about $417,000,000 in FY2022, and that some states use TANF because it is more flexible than Title IV‑E reimbursement for child‑welfare costs.

Roxanne Summerlett, Director of the Marion County (Ohio) Department of Job and Family Services, described how a county with about 65,000 residents uses TANF non‑assistance funds for prevention, retention and contingency (PRC) programs, youth employment and child care. She told the committee Marion County served 853 families in 2024 through PRC and related local programs, and gave examples: short‑term car repairs to preserve employment, a benefit‑bridge pilot to avoid benefit cliffs, and a paid summer youth employment program that placed 30 youth with 14 employers last year. "Our mission is to first stabilize and then strategize to support families as they find their first, next, or better job and career," Summerlett said.

Several members pressed witnesses on policy responses. Ranking Member Representative Davis criticized proposed federal cuts and urged stronger accountability, saying the hearing should not be a pretext to "support cuts that will keep struggling families struggling." Representative Chiu and others said Congress should authorize HHS to require more reporting for non‑assistance spending (the TANF State Expenditure Integrity Act was cited by members as pending legislation). Multiple members raised concern about recent HHS personnel changes and regional office closures; witnesses said those actions could weaken HHS's ability to provide technical assistance and enforce audit resolutions.

GAO's witnesses offered a set of recommended steps rather than immediate policy actions taken at the hearing: expand HHS reporting authority (statutory or within existing law where possible), improve HHS audit‑resolution procedures and timeliness, implement recurring fraud risk assessments that incorporate state and local input, and use existing data‑collection practices at the state level to build better federal reporting on non‑assistance outcomes.

The hearing record includes repeated calls from members for congressional action to improve transparency and enforcement. Committee members will submit written questions and statements for the hearing record; the chair closed the hearing and set a two‑week window for follow‑up written questions.

No formal votes were recorded during the hearing.