[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
RELATED AGENCIES APPROPRIATIONS FOR 2014
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
________
SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG
ADMINISTRATION, AND RELATED AGENCIES
ROBERT B. ADERHOLT, Alabama, Chairman
TOM LATHAM, Iowa
ALAN NUNNELEE, Mississippi
KEVIN YODER, Kansas
JEFF FORTENBERRY, Nebraska
THOMAS J. ROONEY, Florida
DAVID G. VALADAO, California SAM FARR, California
ROSA L. DeLAURO, Connecticut
SANFORD D. BISHOP, Jr., Georgia
CHELLIE PINGREE, Maine
NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full
Committee, and Mrs. Lowey, as Ranking Minority Member of the Full
Committee, are authorized to sit as Members of all Subcommittees.
Martin Delgado, Tom O'Brien, Betsy Bina,
Pam Miller, and Andrew Cooper,
Staff Assistants
________
PART 2
Page
USDA Food Safety and Inspection Service.......................... 1
USDA Food and Nutrition Service.................................. 83
USDA Inspector General........................................... 267
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COMMITTEE ON APPROPRIATIONS
HAROLD ROGERS, Kentucky, Chairman
C. W. BILL YOUNG, Florida \1\
FRANK R. WOLF, Virginia
JACK KINGSTON, Georgia
RODNEY P. FRELINGHUYSEN, New Jersey
TOM LATHAM, Iowa
ROBERT B. ADERHOLT, Alabama
KAY GRANGER, Texas
MICHAEL K. SIMPSON, Idaho
JOHN ABNEY CULBERSON, Texas
ANDER CRENSHAW, Florida
JOHN R. CARTER, Texas
RODNEY ALEXANDER, Louisiana
KEN CALVERT, California
JO BONNER, Alabama
TOM COLE, Oklahoma
MARIO DIAZ-BALART, Florida
CHARLES W. DENT, Pennsylvania
TOM GRAVES, Georgia
KEVIN YODER, Kansas
STEVE WOMACK, Arkansas
ALAN NUNNELEE, Mississippi
JEFF FORTENBERRY, Nebraska
THOMAS J. ROONEY, Florida
CHARLES J. FLEISCHMANN, Tennessee
JAIME HERRERA BEUTLER, Washington
DAVID P. JOYCE, Ohio
DAVID G. VALADAO, California
ANDY HARRIS, Maryland
----------
1}}Chairman Emeritus NITA M. LOWEY, New York
MARCY KAPTUR, Ohio
PETER J. VISCLOSKY, Indiana
JOSE E. SERRANO, New York
ROSA L. DeLAURO, Connecticut
JAMES P. MORAN, Virginia
ED PASTOR, Arizona
DAVID E. PRICE, North Carolina
LUCILLE ROYBAL-ALLARD, California
SAM FARR, California
CHAKA FATTAH, Pennsylvania
SANFORD D. BISHOP, Jr., Georgia
BARBARA LEE, California
ADAM B. SCHIFF, California
MICHAEL M. HONDA, California
BETTY McCOLLUM, Minnesota
TIM RYAN, Ohio
DEBBIE WASSERMAN SCHULTZ, Florida
HENRY CUELLAR, Texas
CHELLIE PINGREE, Maine
MIKE QUIGLEY, Illinois
WILLIAM L. OWENS, New York
William E. Smith, Clerk and Staff Director
(ii)
AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
RELATED AGENCIES APPROPRIATIONS FOR 2014
----------
Wednesday, March 13, 2013.
DEPARTMENT OF AGRICULTURE
FOOD SAFETY AND INSPECTION SERVICE
WITNESSES
ELISABETH HAGEN, UNDER SECRETARY, FOOD SAFETY, UNITED STATES DEPARTMENT
OF AGRICULTURE
ALFRED V. ALMANZA, ADMINISTRATOR, FOOD SAFETY AND INSPECTION SERVICE
Introduction of Witnesses
Mr. Aderholt. Good morning. I want to welcome all the
members of the subcommittee to the first of several hearings
that we will conduct oversight for the agency and programs
under our jurisdiction of this Subcommittee. I want to
emphasize that I look forward to working with each and every
member of the subcommittee as we move through our hearings, and
then into this year's appropriations process later on in the
spring.
The USDA's Food Safety and Inspection Service work to
ensure that our nation's supply of meat, poultry, and processed
eggs are safe, wholesome, and correctly packaged and labeled. I
want to welcome back to the subcommittee Dr. Elisabeth Hagen,
USDA's Under Secretary for Food Safety, and Mr. Al Almanza, the
administrator for the Food Safety and Inspection Service.
Opening Statement
When we have had you before this Subcommittee in the past,
it has been to review the President's budget request for the
Food Safety and Inspection Service. The President has indicated
that his budget submission is late and may not be delivered
until April the 8th. Having said that, we still have oversight
responsibilities to carry out. And given the state of play on
current budget issues, we are in a position to discuss with our
panel the activities of the Food Safety and Inspection Service.
Dr. Hagen, the work that you and all the men and women of
FSIS perform on a daily basis on the behalf of consumers and
taxpayers is unquestionably some of the most important work of
the Federal Government across the spectrum.
Mr. Almanza, you started as an inspector, so you have seen
firsthand the importance of the work that FSIS performs. I want
to thank both of you for your work, for all the FSIS employees,
their work that keeps the nation's food supply safe and
wholesome.
At this time I would like to recognize the ranking member,
Mr. Farr, and see if you have any opening comments.
Mr. Farr. Well, thank you very much, Mr. Chairman.
Congratulations on your chairmanship and your first reign of
this Committee, we look forward to these hearings.
We are all faced with sequestration. We are having a lot of
questions about it. I guess the real impact I would like to
hear you tell us is what needs to be done to give you a little
more flexibility. Will that happen? I know that 80 percent of
the cut is in salaries. I mean 80 percent of your budget is
salaries and benefits. So you do not have a lot of wiggle room.
But is there anything Congress can do--we have just given a lot
of wiggle room to the Defense Department, and we ought to be
able to give some room to the Ag Department, particularly for
first responders, which is what your ag inspectors, meat
inspectors, poultry inspectors, are.
So, everybody is saying you have to live with this
sequestration, however, it is just a decision. That is a wrong
decision. We made it and we can change it. So if you have some
ideas of how we can improve it, I would appreciate that. That
is all.
Mr. Aderholt. Thank you. Under Secretary Hagen, before I
turn the microphone over to you, I would like to say there is a
lot of debate surrounding sequestration, as Mr. Farr had just
mentioned. I do not agree with the position that the Secretary
staked out on the issue as he has been traveling across the
country. And FSIS budget has increased by nearly $75 million
since 2008 to over $1 billion. And while I realize this is a
salary-intense agency, I hope that there is a reasonable and
responsible way to meet the challenges of sequestration, while
at the same time minimizing the impact on frontline inspectors
and the industry alike.
With that, I will turn it over to you, Dr. Hagen, and then
to Administrator Almanza. And so, without objection, the text
of your full statements will be included in the record. Dr.
Hagen.
Opening Statement
Ms. Hagen. Thank you. Mr. Chairman, Ranking Member Farr,
and members of the subcommittee, I am Dr. Elisabeth Hagen,
Under Secretary for Food Safety. With me today is Al Almanza,
the Administrator for USDA's Food Safety and Inspection
Service. We thank you for the opportunity to discuss the
agency's policies and programs.
When I appeared before this Subcommittee last March, I
discussed the FSIS strategic plan, which set specific goals for
fiscal year 2011 through 2016, including annual benchmarks for
reducing illnesses from meat and poultry. However, before
highlighting some of our progress, I would like to outline our
efforts to mitigate the effects of sequestration on consumers,
industry, and the regulated industry and employees.
Although the final funding levels for fiscal year 2013 are
not yet determined, the projected FSIS sequestration amount is
estimated to be $52.8 million, based on OMB assumptions. By
law, FSIS is required to examine and inspect all livestock and
poultry slaughtered and processed for food. At the end of
fiscal year 2012, our frontline team included more than 8,600
dedicated employees and more than 6,200 establishments
nationwide. Eighty percent of total FSIS funding is applied
towards salaries and benefits, primarily for frontline
personnel. An additional 15 percent is allocated to frontline
travel, fixed support costs, and other inspection services.
Given this formula, and given the advanced stage in the
fiscal year, furloughs are unavoidable under a $52.8 million
sequestration scenario. I would like to make clear that
furloughs will affect all FSIS employees, not just inspectors.
Furloughing only non-frontline personnel would not produce a
large-enough cut to meet the sequester requirement. Therefore,
the current plan is for an across-the-board furlough for all
employees for 11 days. In order to minimize the impact on our
employees and the marketplace, we intend to apply the furloughs
on non-consecutive days, to the extent possible.
USDA and FSIS have taken extraordinary measures to reduce
expenditures, including big cuts in conference and travel
spending. While these measures have produced noteworthy
results, they simply are not enough to meet the sequester
requirements.
Despite funding challenges, FSIS continues to meet current
and new statutory obligations. For example, we implemented an
important part of the last farm bill when we signed our first
cooperative interstate shipment agreement with Ohio last year
and agreements with North Dakota and Wisconsin earlier this
year.
In addition to meeting our statutory obligations, we are
always asking ourselves how we can better protect consumers. We
know from CDC reporting that foodborne Salmonellosis rates have
remained stagnant for years. And despite important steps and
promising trends in FSIS data, Salmonella illness estimates
from meat and poultry reflect this trend.
These numbers tell us that we must better align our
activities with risk in order to reduce illness burden. That is
why, this past December, we set new requirements for
establishments to reassess their HACCP plans for ground poultry
products to account for several recent Salmonella outbreaks
caused by these products. This action will improve companies'
ability to identify hazards and better prevent illness.
We are also developing a raw chicken parts baseline in
order to collect data on the prevalence of key pathogens in the
poultry products most commonly purchased by consumers.
In order to better align our activities with identified
risks, we have proposed to modernize poultry slaughter
inspection in a way that focuses our inspection activities and
our workforce on those things that matter most for public
health protection. Currently, many FSIS plant personnel are
focused on looking for visible defects, despite the fact that
we know that it is the pathogens they cannot see that are the
true risk to consumers.
Under this new proposed system, FSIS would focus on
critical food safety tasks. The tasks related to quality
assurance would be turned over to the company. FSIS would
continue to inspect every carcass, as required by law. We
estimate that the new poultry inspection system would prevent
at least 5,000 illnesses per year.
The need for modernizing our food safety system is evident.
As our scientific knowledge of what causes foodborne illness
evolves, we must ensure that our regulatory tools correspond
with that current knowledge. Our proposal will help the agency
respond to these challenges with greater efficiency. We
estimate that taxpayers will save approximately $90 million
over the next 3 years, and that industry and consumers will
enjoy a shared benefit of $250 million annually.
The implementation of the Public Health Information System
also provides us with another important tool to do our work
better. This system supports a comprehensive, data-driven
approach to inspection, allowing us to identify food safety
threats more rapidly and more accurately.
We must also ensure that our in-commerce activities best
align with risk. For example, FSIS is developing a proposed
rule to require retail operations to maintain accurate grinding
records, which would greatly improve our ability to trace
contaminated product from retail to its source.
While our primary focus is ensuring that industry produces
safe food, we can also prevent foodborne illness by
collaborating with our federal and state partners and educating
consumers. In this past year we have worked with federal
partners and stakeholders on issues of pre-harvest food safety
and consumer education, and we have sought opportunities to
leverage resources when possible.
In one visible example, FSIS, HHS, and the Ad Council have
continued our work on the Food Safe Families campaign, which
educates consumers about the risk of foodborne illness, and how
to prevent it. For an investment of $2.8 million, the Ad
Council has run a national, multi-media campaign worth an
estimated $46 million.
We are using many different tools to prevent foodborne
illness in the most effective and efficient ways possible.
Government can and should deliver more than people expect, and
we are committed to doing so.
Thank you for the opportunity to appear before you today,
and we look forward to your questions.
[The information follows:]
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Mr. Aderholt. Thank you. Mr. Almanza.
Mr. Almanza. I do not have prepared remarks; I'll just
submit them for the record.
[The information follows:]
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Mr. Aderholt. We will proceed with the hearing under a
five-minute rule. Members will be recognized for five minutes
in order of seniority at the dais at the beginning of the
hearing, and then in order of appearance, alternating between
the majority and the minority.
We may have several rounds of questioning to allow ample
time for everyone. So I would ask that everyone in the room, if
you do have an electronic device, if you could cut that off or
put it on silent so that it will not disrupt the proceedings as
we move through the Q&A.
FURLOUGHS
I would like to cut through some of the rhetoric that has
surrounded FSIS furlough issue, and really try to figure out
what the whole story is here, as it relates to frontline
employees and the mandatory work that they perform in order to
assure, as you mentioned, that America's meat, poultry, and egg
products continue to be the safest in the world.
Secretary Vilsack traveled the countryside, telling folks
that furloughs could last up to 15 days, that many of those
dates would be consecutive, and the economic loss to the
economy could be upward to $10 billion. More recently, however,
the Secretary told the House Ag Committee on the authorizing
side that the furloughs could now be 10 to 11 days.
You are, of course, the under secretary for FSIS. Could you
tell the subcommittee what your assessment of the furlough
situation would be?
Ms. Hagen. Mr. Chairman, at this point the correct answer
is that we are looking at 11 days. Now, that number has some
flexibility. As we look for continued opportunities to save
money as we put hard hiring restrictions in place, it is
certainly possible that we could see that number get a little
bit smaller. But 11 days is what we are looking at here.
Mr. Aderholt. Could you clarify for the committee? Will
these furloughs be consecutive? Will they spread out over a
period of time? And what is the period of time that you are
anticipating these furloughs to occur.
Ms. Hagen. Sure. Thank you, Mr. Chairman. At this point it
is absolutely our intent to try to make these non-consecutive
days. We want to minimize the impact on the marketplace, we
want to minimize the impact on our employees. This is very
difficult to absorb for anybody.
And so, to the extent that we are able, we intend to spread
these furlough days out over non-consecutive days. As we
discussed when we met in your office, we do have some
constraints when it comes to our collective bargaining
agreements, requirements that we have in terms of
notifications, in terms of the right to oral conferences,
things like this, that put us in a bit of a different position
than some other agencies. But at this point in time, that is
what we are looking at: eight, hopefully non-consecutive days.
And we think that this would likely start mid-summer some time.
Mr. Aderholt. When a furlough day occurs, will the entire
FSIS workforce who are anticipating in the furlough have to
take the same day, or will you be able to manage furloughs in a
responsible manner that will stagger USDA operation, and so
that would minimize the impact?
Ms. Hagen. At this point we are looking at furloughing
everybody on the same days. We actually think that is the most
responsible and we think it is the most equitable. It is hard,
when you look at how integrated inspection is in this day and
age, all the support that is required for frontline inspection,
to think about furloughing administrative staff at a different
time from frontline inspectors, or trying to roll the furloughs
throughout the country, it is hard to think of how we would
have an equitable impact on the regulated industry. If we were
to do it by just class or establishment size or geographic
location, someone is going to get the short end in that deal.
Mr. Aderholt. As you mentioned in your comments, the
furloughs would begin, you say, somewhere mid-July? Some time
in July?
Ms. Hagen. That is what we are anticipating, Mr. Chairman,
based on the requirements that we have in our collective
bargaining agreement. It is just an estimate, and things could
always happen sooner if we are able to move through that
process more quickly. But that is what we are estimating.
FURLOUGH DAYS FOR INSPECTORS
Mr. Aderholt. Correct me if I am wrong, but if we are
talking primarily about people who make somewhere in the range
of $32,000 to $40,000 per year, if this is the case, then how
many days per pay period will inspectors have to be furloughed?
Ms. Hagen. At this point we are looking at two days per pay
period. Is that right? One day per week.
Mr. Aderholt. One day per week. Can you give the
subcommittee a scenario in which FSIS could move through the
furlough days earlier in the fiscal year to minimize the impact
that it would have, both to the inspector and also to the
industry?
Ms. Hagen. Is it all right if I ask Mr. Almanza to take
that?
Mr. Aderholt. Please.
Mr. Almanza. So as we move through the process, we have a
bargaining agreement that we have to comply with. And in that
time we have already notified the union of the notice to
bargain. That would be 15 days in which we come to an agreement
as to when the bargaining would occur. We have not been
notified as to whether we will bargain or not. The union has
not notified us of that.
We are anticipating bargaining to occur, if they request
bargaining, some time in April. So, if that comes to an
agreement rather quickly, then we could expedite the
notification of our employees, which is a 30-day period. We
notify all our employees of what the agreement with the union
is. And then we start with the oral conferences of the
employees that request them.
Mr. Aderholt. Mr. Farr.
FURLOUGH IMPACT ON TRADE
Mr. Farr. Mr. Chairman, I have to say that walking in this
building, this whole process of sequestration just infuriates
me. It was totally unnecessary, it is a partisan tool, it was
picked up, and now we are implementing. We had people waiting
in line to get into this building, trying to come in here to
petition their government, and they can't get in. They have to
wait a half-hour. It is like waiting for voting. This country
is just falling apart with this cut, squeeze, and trim
mentality that we have in this House--right now.
And here we are, with this key requirement in our country
that meat and poultry has to be inspected before people can
consume it, a great thing. And we are talking about how do we
lay these people off.
It seems to me that the consequences are, just like the
lines outside, you are going to have a scarcity of resources--
you are not going to have as much meat processed and poultry
processed. Therefore, price is going to go up. Supply and
demand.
Is this going to put a greater pressure on imports? Are the
imported product going to be able to come in a lot cheaper
because they don't have to wait in line to get the inspections?
We have some great concerns about imports, and Ranking Member
Rosa DeLauro is chairing her own committee right now. She beat
on the Chinese chicken to the point that it would infuriate
you.
But I just think that what frustrates me is that this isn't
necessary, and that as we learn the problems we can make
corrections. I come from a state that went through this because
of partisan gridlock, took a two-thirds vote to make any
decision. The state couldn't get those votes, went into
furloughs. Have you learned any lessons from California? I mean
they have a lot of first responders.
And does this furlough affect those states with equivalency
agreements--in a few states you have your meat inspection
contractor through the state. Isn't that correct? I mean you
have given the authorities for the states to run the federal
program. So what happens to those states in furloughs? You have
a contract with them. Are they exempted?
Again have we learned? What happened in California,
politically, is that people got so fed up with it they threw
all the Republicans out of office and they--went out and voted
for taxes by statewide ballot. And so I think some day we are
going to get over this, too.
But I am concerned--as you know, as this Committee's
Ranking Member, which is responsible for the budgets of the
USDA and FDA, we are here talking about how we are going to
manage food safety through a lot of uncertainty and chaos,
which has got to create market disruption and all kinds of
unintended consequences, like possibly states that are going to
be severely affected by it.
So, if you could answer those questions, I would appreciate
it.
Ms. Hagen. Thank you, Mr. Ranking Member. I think the
points that you wanted us to address were imports and how
states would be affected and whether we had learned any lessons
from a state like California.
Import inspection will be affected, just as domestic
inspection will be affected. So I think there will be market
disruptions, and I can't speculate on whether there will be a
desire to bring more food into the country. But import
inspections will be impacted as well, because those inspectors
will also be furloughed.
As far as have we learned anything from California----
Mr. Farr. So does that reduce the amount of imports?
Ms. Hagen. It means that I-Houses will be shuttered on the
same days that--or that our activities will not be able to be
performed in those I-Houses on the same days that other
establishments will not be operating.
Mr. Farr. Does that have some treaty issues and treaty
violations? Are we going to now, like we did with that damn
cotton in Brazil, have to pay--what was it, $150 million a year
to offset WTO violations?
Ms. Hagen. I would have to take that question back to our
colleagues at the Department. But I can tell you that import
inspections will be impacted. Just as domestic products cannot
leave establishments without the mark of inspection, imported
product cannot leave those import houses without having gone
through our system and having been looked at by our inspectors.
Regarding your question about whether we have learned any
lessons from California, this is a blunt instrument. We don't
have the flexibility to be able to do things differently than
we are doing them. We have taken just really unbelievable
number of steps in order to reduce our spending and to just do
things more effectively and efficiently at FSIS.
We reduced our fiscal year 2013 budget allocations. We have
dramatically reduced conference and travel spending. We have
eliminated positions at headquarters. We have, you know, put a
hard hiring freeze on. We have done all kinds of things. But
that is not going to give us the money that we do not have
under sequester. That is not going to give us any kind of
flexibility to be able to do what we cannot do.
And the last thing, I wanted to address your question about
whether it impacts states. Absolutely, this will impact states.
And when we have to cut every line item across the board, we
will be impacting our support to state programs.
[The information follows:]
Furlough Impact on Imports
As I stated in my testimony, given FSIS' budget allocations,
furloughs would be unavoidable under a sequestration scenario. In turn,
furloughs would affect FSIS import inspections and limit available meat
and poultry coming into our country. It is possible that an impact on
meat and poultry imports due to furloughs may be construed as an
international trade issue.
Mr. Farr. Are there legal liabilities for doing that?
Ms. Hagen. Our legal team has looked at these issues
repeatedly and feels that our interpretation of the statutes is
correct.
Mr. Farr. So the states cannot sue for you not living up to
your contract obligations?
Ms. Hagen. To your specific question, Mr. Ranking Member, I
would have to take that back and get an answer. But certainly
our legal team has looked at these issues from multiple
different perspectives.
[The information follows:]
Furlough Impact on States
The authorization language for the primary cooperative state meat
and poultry inspection program authorizes FSIS to reimburse ``up to''
50 percent of approved state expenses. FSIS could therefore legally
reimburse state costs at a lesser percentage than 50 percent.
Mr. Aderholt. Mr. Latham.
SEQUESTRATION IMPACT
Mr. Latham. Thank you, Mr. Chairman, and congratulations on
your new position here, and the ranking member. Welcome.
You know, when the President insisted upon sequestration
and the Budget Control Act, were you notified? Were you told to
make any preparations? Did they consult with you to find out
what the ramifications were going to be?
Ms. Hagen. Did the President personally consult with me?
Mr. Latham. Did anyone from the White House consult with
you as to what was going to happen when his policy went into
place?
Ms. Hagen. Certainly, Congressman, everybody in the
Administration has been aware that there was the threat of
sequestration for some time now. And, as I just outlined, we
have taken a lot of steps to be able to prepare, not just with
the threat of sequestration, but just to manage our fiscal
house better than we have, you know, in years and decades past.
So certainly, people were prepared that this could happen. But
I think no amount of preparation can put us in a position to be
able to absorb $53 million in cuts 6 months into a fiscal year.
Mr. Latham. Have you been told to make it as painful as
possible, like other parts of the USDA?
Ms. Hagen. Absolutely not. Absolutely not.
Mr. Latham. Because, you know, the statement was that,
well, it is going to be all this terrible stuff out here. We
want to make sure that it is as bad as possible. Have you ever
been told that?
Ms. Hagen. I am not aware that any statements like that
have been made within USDA. And certainly no statements like
that have been made to me. As I have told the members of the
subcommittee this morning, we simply don't have the flexibility
to do anything else at this point.
Mr. Latham. When there was a threat of a government
shutdown, Mr. Almanza said that what would happen--because if
the government shut down--I am quoting--``would impact
business. We are making plans for an orderly shutdown, but food
safety will continue in the absence of appropriations.''
Is--there is no contingency plan out there. There was no--
and if you have an emergency, is there a plan?
Ms. Hagen. Congressman, there is absolutely a plan, but it
is a completely different scenario when we are talking about a
lapse in appropriations, where we expect that eventually
funding will be provided and people can be reimbursed. In this
situation we are looking at mandatory, permanent cuts.
Mr. Latham. Right.
Ms. Hagen. And we are prohibited by law from spending money
that we don't have. We also can't have people work for free.
Mr. Latham. When did you start making decisions as to when
these policies were going to be put in place?
And I still do not understand why you cannot have rolling
furloughs that you would not disrupt inspections.
Ms. Hagen. So we have been doing as much financial planning
as we can.
Mr. Latham. Since when?
Ms. Hagen. Really since Mr. Almanza and I have been a team
in the Office of Food Safety. For the last three years we have
been trying to manage things in a conservative fashion.
Mr. Latham. Having to deal with sequestration?
Ms. Hagen. As I said, no amount of financial planning could
prepare us to be able to absorb $52.8 million in cuts 6 months
through a fiscal year.
Mr. Latham. Have you talked to the White House, why they
insisted on it?
Ms. Hagen. I have not personally talked to the White House.
I think that Congress can solve this problem.
Mr. Latham. But the President proposed and insisted it be
in the Budget Control Act, but you haven't talked to him about
the ramifications.
Ms. Hagen. I think the President is well aware of the
ramifications.
Mr. Latham. But you haven't talked to him?
Ms. Hagen. I have not spoken to the President personally
about this, no, Congressman.
FURLOUGH IMPLEMENTATION
Mr. Latham. Why cannot you have rolling?
Ms. Hagen. Well, there are a number of reasons. When you
look at the complexity of what we do in the scheduling of 8,600
people in 6,200 establishments nationwide, ensuring--at this
point we are not concerned about the safety----
Mr. Latham. So you are going to shut them all down at once,
rather than to roll through it so that they can continue
operations?
Ms. Hagen. Well, if I may explain a bit of our reasoning
behind that, at this point we are not worried about the safety
of these products, and that is one thing that will protect
producers and protect packers and processors, because the
product cannot go out the door without the mark of inspection
on it. So we are not worried about the safety of the product.
When we begin moving people around to assignments that they
have not had, training them for assignments that they don't
normally work in, when we have to expend money on travel to
move people to cover something like that, then we start to
worry about food safety, and then we are looking at spending
even more money that we do not have.
But the main concern driving that is being fair and
equitable, so that if we start in one part of the country or we
start in one particular product class, or one type of
establishment, and that particular sector gets impacted, if
this gets worked out at some point along the way someone has
taken a hit that someone else isn't going to take. So there was
no way to produce a fair and equitable impact by rolling this
across the country. So it is really those two issues----
Mr. Latham. So shutting down everything is fair and
equitabler; working through it would not be.
Ms. Hagen. This is not a situation that we ever wanted to
find ourselves in. And so we are trying to manage it to the
best extent that we can and in the fairest way possible. And
part of doing that is doing non-consecutive days so that we can
keep animals moving through the animal pipeline, albeit slower.
We think that is a lot better than shutting down everything for
consecutive days or consecutive weeks.
Mr. Latham. I am out of time. Thank you, Mr. Chairman.
Mr. Aderholt. Mr. Bishop.
SEQUESTRATION MANDATE/FLEXIBILITY
Mr. Bishop. Thank you very much. Dr. Hagen and Mr. Almanza,
I certainly appreciate the tremendous challenge that your
agency faces with regard to food safety. But what you are doing
is really in compliance with the directive from Congress under
the Budget Control Act. Is that correct?
Ms. Hagen. That is correct, sir.
Mr. Bishop. And what the Office of Management and Budget
and what the President has undertaken is really compliance with
the mandate from Congress. Is that correct?
Ms. Hagen. That is correct, sir.
Mr. Bishop. So it is really not the President's sequester,
it is the responsibility that the--or the mandate that the
congress has placed upon the executive branch to implement
these cuts, these painful cuts, the cuts that may very well
cause some real problems for the consuming public.
You talked about the fact that in the implementation of the
sequester the--you did not have the flexibility that would
allow you to do it in a less painful manner. Are you familiar
with the continuing resolution that the Senate has adopted,
which includes the agriculture appropriations bill? Does that--
as compared to the CR that passed the House, does that provide
any additional flexibility, were the Senate version to become
law? Does it give you any more flexibility than the CR that
came out of the House?
Ms. Hagen. At this point, Congressman, we don't feel that
we do have more flexibility. I understand there are discussions
about ways in which that could be achieved, but no.
Mr. Bishop. What I am asking is the bill that has been
drafted in the Senate, as I understand it, includes
Agriculture, among other agencies, which the House maintained
the same level of funding for Agriculture as it did in, I
think, 2012.
Ms. Hagen. That is correct.
Mr. Bishop. Prior to the implementation of the sequester.
But for military construction and for defense some flexibility
was given to reprogram some of the accounts which the
agencies--those two agencies--indicated would be very, very
helpful to them, although they would still experience pain. But
it would give them a little bit more leeway to deal with what
they had to do.
And what I am asking is the Senate apparently is moving on
a track and they have developed a CR which the Senate
Appropriations Committee has taken up which includes
Agriculture, and which, obviously, would include your agency.
Would that piece of legislation that they are working on and
the concepts that they are working on, would that give you more
flexibility, since you mentioned in your testimony the lack--in
response to the questions--the lack of flexibility, will that
give you a little more flexibility than--not necessarily all
that you would like to have, all the resources that you would
like to have, but would it give you more flexibility to deal
with the impending exigencies that you are faced with?
Ms. Hagen. My understanding of that, of the Senate version
of the CR, Congressman, is that it would not give us additional
flexibilities. The funding levels are different, but it would
not give us additional flexibilities. If I am incorrect in that
interpretation, we will certainly correct that for the record.
PROPOSED USER FEES
Mr. Bishop. All right. Let me go back to the fiscal year
2013 budget. There was a proposal to generate approximately $13
million in new user fees--that was the submission from the
Administration--as well as in the two previous budgets, which
included a user fee to be collected from the establishments for
additional inspections due to failure in performance by the
covered establishment, and a food safety services user fee that
would recover part of the cost for providing the FSIS services
at the establishments and the plants.
Are you--should we expect a similar proposal this year?
Ms. Hagen. As you know, Congressman, I cannot comment on
what is contained in the President's 2014 proposal. But you are
correct, we have put up user fee proposals in previous years.
Mr. Bishop. I am sorry?
Ms. Hagen. You are correct that we have put up user fee
proposals in previous years, but I cannot comment on what is in
the 2014 request.
Mr. Bishop. Were you to have the additional user fees,
would that help your situation?
Ms. Hagen. I don't see how user fees would help the
situation, no.
Mr. Bishop. Well, how would they have helped in the
previous budgets that were submitted?
Ms. Hagen. User fees were submitted--we had two different
types, but the type I think that folks are most familiar with
would be sort of a for-cause user fee, where if a plant was
involved in an outbreak or an investigation and it required
additional taxpayer-funded resources in order to solve the
problem, solve the outbreak, that the plant could be charged
back. Those user-fee proposals have never been approved by
Congress.
But that is not what we are--that is not the need that we
are talking about for--here, when we talk about sequestration.
Mr. Aderholt. Mr. Rooney.
FURLOUGHS
Mr. Rooney. Thank you, Mr. Chairman. I think that, you
know, before I ask you a question, I think that this idea that
we are getting into a back-and-forth over, placing or trying to
infer that there is a blame game with sequester and the
implications, I think that we can all agree that it is bad.
None of us up here want to go through what we are talking
about. And now we are trying to figure out the best way forward
to deal with the situation.
You know, we can drive ourselves crazy trying to figure out
whose idea it was or who the blame should rest on, but the fact
of the matter is that the people I think that are not only in
this room but who are interested in this hearing would like to
know how we are going to move forward.
So with that I will just say or ask, if I could, during the
past government shutdowns and preparations for shutdowns, FSIS
declared inspectors ``essential employees,'' who would remain
on the job, despite furloughing other positions. The Agency
never indicated the inspection system would be incapable of
operating in this manner for a short period. Moreover, the
Agency routinely provides inspectors for weekends and overtime
shifts.
That being said, I think you sort of addressed some of this
already, why does FSIS take the position that the inspection
system cannot function temporarily without all supporting
operations running at full capacity?
Ms. Hagen. Thank you for your comments and your questions,
Congressman.
In the past we have designated or identified employees as
being essential or excepted from a shutdown scenario. We are
not talking about a shutdown scenario, we are not talking about
a lapse in appropriation. We are talking about permanent
mandatory cuts. We cannot--we are prohibited by fiscal law from
spending money that we do not have. We do not have enough money
to do the work. And we cannot ask people to work for free. So
this is a different situation than we are in when we have a
shutdown.
And I think the second part of your question was about
overtime. We are not aware of any mechanism by which inspectors
could be paid in an overtime fashion because they are not
considered to be in overtime status until they have worked 40
hours. So this is something that we have been asked, it is
something that we have looked at, and it is the opinion of our
legal team that that is not something that can be done.
Mr. Rooney. Thank you, Mr. Chairman.
Mr. Aderholt. Ms. Pingree.
SEQUESTRATION
Ms. Pingree. Thank you, Mr. Chair. Congratulations on being
the new chair, and thank you for welcoming me to your Sub-
committee. I am very pleased to be here and I was very pleased
to visit your home state of Alabama. I did not expect I would
coincidentally get to see your home state. It was nice, it was
a great trip.
So, thank you very much for being here today, and it is a
pleasure to hear some of your testimony and some of the
challenges that you are facing. I did not intend to weigh in on
the sequester, and I appreciate how you have laid out, you
know, what has got to be a very challenging situation. When you
think about the essential needs of food safety and the
importance to our country of having this food inspection
system, and how you figure out going about those cuts, I do not
have any better suggestions for you.
And the only thing I would say to some of my colleagues--
and I appreciated Mr. Rooney saying this--you know, and I think
it is appropriate to just try to figure out who is to blame,
here. Congress voted for this act. I am actually very proud to
say I did not vote for this. I did not believe that the Budget
Control Act was the way that the Congress should conduct its
business. And I think, like many Members of Congress, we had
been hoping that we would come to a completely different
solution, as in people would come to their senses about a right
way to go about cutting our deficit, and we are not there yet.
And it is, I know, an extreme burden on budgets across
state government, and an issue that many of us are dealing with
in our home states. So I am sorry you have to be in this
situation. I see how dramatically different it is from a
government shutdown. These are permanent, long-term cuts. And
if we are going to care about the future of food safety in this
country and some of the huge challenges that do mean life or
death and how to handle them appropriately, we are going to
have to pay a lot of attention to how we handle this in the
future.
I really want to use this opportunity to ask some
substantive questions about the work you do. It is my first
opportunity to really get to know your department better. And
coming from the state of Maine, as many people do, we have lots
of issues in our home state and are interested in how we
interact with FSIS.
SALMONELLA OUTBREAK
We talked to you about this a little bit in December 2011.
We had a pretty serious outbreak of Salmonella. They are all
serious, but this one garnered a lot of attention in a grocery
chain in our state, and affected several individuals in Maine
and dozens around the country. Now, you conducted a thorough
investigation of the outbreak and determined that, because of
the current grinding rules in place, and because they were
voluntary, there wasn't enough complete information to
determine the origin of the contaminated beef.
I found people who talked to me about this situation, in
fact, were shocked, given our current system of food safety,
that information wasn't available, and that, in fact, you could
say to someone, ``We really just don't know where it came
from.'' I know you brought this up today, and I know we are in
the rulemaking process. I am very supportive of the idea that
you are working on those rules, and I have also brought forward
to the USDA some of the concerns I have of how you do this in a
way that also treats the small retailers in a way that they are
not unable to continue doing business.
So, can we talk a little bit about this? I would love an
update. I get asked all the time about when this rule is going
to be finished. It is 15 months since that outbreak. And back
in my home state people are saying, ``Hey, did you ever fix
that problem? Does it require another piece of legislation?''
Where are we with that?
Ms. Hagen. Thank you for your question, Congresswoman. Yes,
we think this is important. For some time we have been aware of
what an impediment poor record-keeping can be to solving an
outbreak. It is a problem for public health investigators in
order to--so we have people get sick associated with a retail
chain. If we don't know what went into that product, we can't
tell what the ultimate source is, we can't mitigate the scope
of the impact to the extent that we would like to. It also is a
problem for the retailer, because they end up with the
liability from those illnesses and that contaminated product.
So we do think it is important to have accurate record-keeping.
We have been working with the regulated industry for some time
to try to find ways that we can do this voluntarily. We think
that it is time that a requirement be codified.
And to your concern or question about doing this fairly
with different size establishments, I think that the proposed
rule that we will eventually put forward will take that into
account, and will set forth what we think is important in
accurate record-keeping, why we think it is important, and will
allow flexibility on how different size and types of
establishments get there.
Ms. Pingree. Well, I appreciate that, and I will certainly
be following that closely, since we have a variety of everyone,
from large, international retailers based in our state to
people who like to sell directly to the consumers who follow
clean and healthy practices, but need to be able to continue
that, and consumers who really want to have that opportunity.
Again, given that it is 15 months since that outbreak, and
in conversations that we had at that point, we gave our
constituents the sense that, you are working on this. Can you
give me just a little more of the timeline of the rule-making
process, or where you are with developing a rule?
Ms. Hagen. Sure. It is always hard to give a firm timeline,
but this is a priority piece of policy for us. And we hope to
have a proposal ready to head over to the Office of Management
and Budget in the next few months. That is probably the best I
can tell you.
Ms. Pingree. Great. Well, we will certainly be staying in
touch. And thank you very much. Thank you, Mr. Chair.
Mr. Aderholt. Mr. Fortenberry.
SEQUESTRATION BACKGROUND
Mr. Fortenberry. Thank you, Mr. Chairman, for conducting
this important hearing. And as our first official hearing under
your leadership I want to say I look forward to serving with
you and appreciate your willingness to be so generous in
welcoming me to the committee.
Dr. Hagen and Mr. Almanza, thank you for appearing today.
I think it is important to back up and have a little bit of
a history lesson here on the sequestration process. Over a
year-and-a-half ago we bumped up against a debt ceiling which,
in the past, has been a routine measure in which Congress
undertakes to raise the amount of borrowing authority that the
Administration can have. But given the fact at that time we
were around $16 trillion in debt, the overall size of the
output of the economy--this year we will probably approach $17
trillion--the debt ceiling became a focal point, an important
focal point of a debate about the fiscal future of this
country.
And so, I voted to increase that debt ceiling. But there
was a deal that was put in place that we were only going to
increase it by an amount that was less than the amount of
spending reductions that went into effect.
The second negotiated point was that there was going to be
a supercommittee, which was charged with the task of trying to
break through the Administration's and the legislative branch's
logjam on how do we properly reform our tax code, as well as
undertake constructive spending reductions to get this fiscal
house in order.
The third part of that agreement was if the--to give an
incentive to the supercommittee to act, and the rest of
Congress, we would entertain a sequestration process, which is
a big, fancy Washington word for automatic spending cuts, which
were supposed to be so distasteful to everyone involved because
they disproportionately affect military and military
infrastructure, but your work as well as all the other what we
call discretionary, non-defense discretionary components of the
government, that there was going to be a real motive to get
this done.
Well, the supercommittee failed, and here we are. So we are
having to deal with, yes, a clumsy way in which to go about the
necessary reductions in spending, and we wish that were not so,
and we will continue to look for a more appropriate way to get
the fiscal house in order with the proper amount of flexibility
to reduce spending in the right way. But we are where we are.
So I think it is important that we all understand where
this came from. It was the President's original idea, supported
by Congress. So we are in full partnership on this.
FURLOUGH IMPACT
With that said, if you shut down your inspections on a
continuous basis, will that disrupt the nation's food supply
and undermine the food safety of our nation?
Ms. Hagen. Thank you for your question, Congressman. I
think it potentially will disrupt the nation's food supply. I
cannot tell you to what extent, but I think there could
certainly be shortages.
We differ from FDA in terms of our statutory obligations
for inspection. We are required to be in every slaughter and
processing facility every single day. And for establishments
that slaughter livestock and poultry, we have to be there for
the entire duration of operations.
So, this is an enormous economic impact if we have to
furlough our entire workforce. We do not think that this is
going to have a food safety impact, because the product still
has to be inspected and passed. It cannot leave establishment,
it cannot be slaughtered, it cannot be processed, and it cannot
get the mark of inspection on it without our people there.
So at this point I think what we are looking at is an
enormous economic disruption, not only to the regulated
industry, but to the people who work for that industry and to
the consuming public.
Mr. Fortenberry. All right. So, you have broken up the
answer into two parts. Yes, safe food, but a disruption,
potentially, on supply.
So, with that said, why this format for dealing with the
reductions that have been proposed to your agency?
Ms. Hagen. We don't have any other format available to us,
Congressman. We have--88 percent of our workforce is frontline
workforce. And we have--80 percent of our budget goes to
salaries and benefits, 15 percent of the budget on top of that
goes to other fixed costs. That leaves us about five percent
money to do operating expenses and supplies. We are halfway
through a fiscal year. We are talking about nearly $53 million.
There is no other way to come up with that kind of money, other
than to furlough our workforce.
Mr. Fortenberry. Now, if you did not do this continuous
reduction or shutdown of inspections, and you asked--I think
this gets into what you were inferring, Mr.--I am sorry, I am
going to look at your name again--Almanza?
Mr. Almanza. Yes.
Mr. Fortenberry. In terms of union negotiations. What other
flexibility do you have, in terms of overtime, which, as I
understand it, would then be picked up by the industry?
Ms. Hagen. We don't think that we have any other
flexibility.
Mr. Fortenberry. Well, that is kind of why we are here, to
hear what other options there are. Because the twofold purpose
of the agency, obviously, is safe food supply but an adequate
food supply, as well.
Ms. Hagen. If we thought there were other options we would
have pursued them. We don't think there are any other options
on the table.
Again, when you look at how our budget is structured, and
you look at where we are in the fiscal year and how large of a
target we have to meet, these are mandatory, permanent cuts. We
don't see any other way forward.
BUDGET INCREASES
Mr. Fortenberry. What is the increase of your budget that
you have received over the last five years?
Ms. Hagen. I would have to bring that number back to you. I
don't have it with me.
Mr. Fortenberry. It is substantial?
Ms. Hagen. I don't know if I would call it substantial, no.
But it has actually come down since 2010.
Mr. Fortenberry. You have an answer to the question?
Ms. Hagen. We don't have a strict percentage increase, but
we can certainly get that for you, for the record.
Mr. Fortenberry. Five years I would like to see, if you
would, please.
Ms. Hagen. Sure, we can do that.
[The information follows:]
FSIS Budget
FSIS' budget has increased approximately $74 million, or 8 percent
over the last 5 years (2008-2012). These increases are directly related
to rising salary and benefit cost ($50 million) due to Federal pay
raises and mission related increases which include but are not limited
to the takeover of inspections for New Mexico; strengthening of humane
handling; implementing the Cooperative Interstate Shipment program;
integration of the Public Health Information System (PHIS), improving
telecommunications and meeting cyber security mandates; and increased
Food Safety Assessments.
Mr. Fortenberry. Thank you, Mr. Chairman. I yield back.
Thank you.
Mr. Aderholt. Ms. DeLauro.
EQUIVALENCY DETERMINATIONS
Ms. DeLauro. Thank you, Mr. Chairman. I apologize, we are
all running between various hearings, so--and I understand that
the impact of sequestration has been discussed, it may continue
to be discussed, so--but let me make a point before my
questions. I continue to be concerned about the process used to
announce changes to the equivalency of verification process.
And so what I would like to do is to get a complete response to
each question from the November 20, 2012 and the January 2013
letters, and that they be included in the record of this
hearing.
[The information follows:]
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MECHANICALLY TENDERIZED BEEF RULE
Ms. DeLauro. So, moving on, I was very, very delighted to
see FSIS finally sent a proposed rule to OMB to label
mechanically tenderized beef products. When do you expect the
proposed rule to be published, in which quarter of this year?
And I am going to ask you to answer quickly, because they only
give me five minutes, so----
Ms. Hagen. Thank you----
Ms. DeLauro. Yes, when do you expect the rule?
Ms. Hagen. It is nice to see you, and thank you for your
questions. The rule has been at OMB since September, and we
don't control how quickly it comes out of the OMB review
process. They have asked for an extension. This is a high
priority for us. We will keep trying to get this done. So I
can't give you an estimate of when it will come out----
Ms. DeLauro. In this year? Which quarter of in year?
Ms. Hagen. Yes, that was our intention.
Ms. DeLauro. Okay. Okay, well, we will see what we can do
in that respect, as well, to try to get that rule to be
published.
POULTRY SLAUGHTER MODERNIZATION RULE
Second, the status of the proposed rule on poultry
slaughter. Are you moving forward? And, if so, when will a
final rule be published? Many of the public comments submitted
to date raise serious food safety and worker safety issues. Can
you address those concerns? And do you anticipate making
substantial changes to the proposal, based on the public
comments?
Ms. Hagen. Thank you for your question. As you know, we did
receive quite a few comments on the proposed rule, and it has
taken us some time to get through all those comments. We are
still in the process of comment review, and incorporating
information that we did receive through the public process into
what would be a final rule. I really can't speculate on how
quickly something might move through the process. We don't
control all the steps of notice and comment rulemaking.
But to your--did you want to say something?
Ms. DeLauro. Yes. Well, I am--again, do we have a time
frame in which there will be a final rule published?
Ms. Hagen. Well, we are still working on the final version
of the rule at the Department. When it goes to the Office of
Management and Budget, they then have 90 days to review it,
coordinate interdepartmental review. They can ask for an
extension. So that is the part of the process that we do not
control.
Ms. DeLauro. And what about substantial changes to the
proposal, based on public comment?
Ms. Hagen. As with any notice and comment rulemaking
process we get some information that is really helpful, as we
go forward and think about what the final version of a rule
should be. So some of it has been incorporated. All of it will
be addressed. Whether it will impact the final regulatory text
or not is not something I can really talk about.
POULTRY SLAUGHTER RULE--WORKER SAFETY
Ms. DeLauro. You know, it is--well, anyway, the proposed
rule indicates one facility would participate in a NIOSH study
that is not complete. Will FSIS wait until that study is
complete before moving forward? And are you amenable to
including a requirement that is similar to that from SIP that
plants that opt into this modernization open their doors to
NIOSH?
Ms. Hagen. Well, we are happy to be working with NIOSH, and
we are happy to be consulting with OSHA on the worker safety
concerns. As I think the subcommittee probably well knows, our
statutory authority does not extend to rulemaking for worker
protection. So we are happy to be working with the entities
within the executive branch that have the ability to do that,
and have the expertise to study the issue----
Ms. DeLauro. But my question is are you amenable to a
requirement that plants who opt into this modernization of the
increased speed lines, that they open their doors to NIOSH?
Ms. Hagen. We don't think that we have the authority to
require any non-food-safety--to place non-food-safety
requirements on the----
Ms. DeLauro. What if we gave you the authority?
Ms. Hagen. We do what Congress gives us the authority to
do.
Ms. DeLauro. But you don't have a view as to whether we
ought to take a look at what is happening with these increased
speeds?
Ms. Hagen. We absolutely--that is why we have been working
with NIOSH. We are delighted that they are started on their
study. We have been consulting with OSHA for the better part of
the last nine months about what we can do within the limits of
our authority to ensure that this rule doesn't have unintended
consequences.
I will say that, you know, I spent my entire professional
life trying to figure out how to reduce risk and protect
people. And I would never put forward a rule that I thought
would increase risk or reduce protections for anybody.
Ms. DeLauro. That is what my hope is. And without the
opportunity to be able to get a sense of what is happening--
there are all kinds of views that it is not going to do
anything with regard to worker safety, that workers are not
going to be in jeopardy, and yet there appears to be,
potentially not on your part, but an unwillingness to allow for
any evaluation, observation process by which, in fact, we
changed these efforts, that we are going to see increased risk
for workers.
There are--it would just seem to me that there would be an
openness to a process that allows for some structured
evaluation of the outcome of a change in any kind of a rule.
Thank you, Mr. Chairman.
Mr. Aderholt. Mr. Valadao.
SEQUESTRATION PLANNING
Mr. Valadao. Thank you, Mr. Chair. Dr. Hagen, you mentioned
earlier--well, a couple of times today--that the 52.8 million
is a lot to handle this late in the game. Most of my
constituents in different agencies in my district have all
planned in advance for sequestration, planned their budgets
accordingly. I'm curious, did you plan for this? Did you budget
for this accordingly, or did you wait for the last minute and
kind of take a wait-and-see approach?
Ms. Hagen. Thank you for your question, Congressman. There
are certain things that we couldn't do until the Act went
through, until the President signed the order. We couldn't talk
about furloughs with our employees. They certainly knew this
was a possibility, but we couldn't give a notice to bargain,
and things like that. So this is--you know, this is five
percent of our budget six months into the fiscal year. So I
think to characterize it as not having planned for it is not
accurate and isn't fair. We have been taking a very aggressive
approach to managing our spending, really, for the last three
years, at least during the time that I have been in this job.
And, as I mentioned already, we took a lot of proactive
steps. We have reduced travel spending by 16 percent to the
tune of $5.4 million from fiscal year 2011 to fiscal year 2012.
We reduced conference spending by 33 percent. The Administrator
and I directed that the fiscal year 2013 allocations for the CR
be decreased because we knew that this was potentially coming.
We have had hiring restrictions in place for our non-frontline
staff for several years. We have actually eliminated over 150
positions at headquarters. We have had process improvements
from everything from how we do sampling in the laboratories to
how we educate consumers. We have been holding frontline
vacancies, we have been doing non-permanent hires. We have been
taking, I would say, very aggressive steps to prepare for this.
But no amount of preparation can put us in a position to still
be able to get the work done with this kind of a hit at this
point in the fiscal year.
Mr. Valadao. Well, the cuts are permanent, unless something
changes here in Congress, obviously. How do you plan on
handling this in the future?
Ms. Hagen. Well, we will obviously be having a lot of
discussions about this. But as we have discussed already this
morning repeatedly, plants cannot operate if we are not there.
We have to be able to pay our people to do their work. We
cannot compromise food safety. So this is going to take a lot--
these are tough decisions that we are going to have to make.
Mr. Valadao. All right. Thank you.
Mr. Aderholt. Mr. Yoder.
EFFICIENT SPENDING
Mr. Yoder. Thank you, Mr. Chairman. Dr. Hagen, I appreciate
you coming here today. Certainly Americans are very concerned
about the result of some of the pending sequester changes here
in Washington, D.C. And so it is important that we have an open
conversation about the best way to implement what is federal
law in a way that is least impactful on our constituents.
And I would like to follow up a little bit on the questions
that Mr. Valadao was asking related to how we implement these
changes.
I guess, first of all, do you believe that there are any
wasteful uses of resources in your department?
Ms. Hagen. As I have just outlined, we have been very
aggressive about taking a look at everything that we do, from
not just an operations standpoint, but from a policy
standpoint. I have--people have heard me say hundreds and
hundreds of times, ``We need to do things better than we have
done them before,'' and that means the way that we spend money,
and that means the way that we achieve results for the people
that we are here to serve.
So, we have found just innumerable opportunities to be able
to do our business better than we have done it before. And even
though these have gotten us a lot of results--and, in fact, we
have been able to cut the number of necessary furlough days
almost in half because of the work that we have been doing over
the last year--it still doesn't get us to where we need to be
at this point in the fiscal year to be able to absorb this.
Mr. Yoder. You described some of the steps you have taken
in your testimony today, travel, various items. Can you
describe other things you have done, hiring freezes, those
sorts of things? How many folks have you hired in the last
year?
Ms. Hagen. Sure. And actually, if I can have Mr. Almanza
help me with this, because he really manages the day-to-day for
the agency, but I will say that for the last couple of years we
have very conservatively managed hiring, particularly what we
call non-frontline, or headquarters personnel, and eliminated
over 150 positions. We have always hesitated to put any kind of
a hiring freeze on frontline employees, for obvious reasons.
I don't know if you want to give some more details.
Mr. Almanza. One of the steps that I have taken is that any
position above the front line, it is kind of very structured in
that I have to approve it. And I realize that--and, quite
frankly, it takes a lot of time having to have people explain
to me why that job is important, and we have eliminated a
number of jobs. Probably over the last three years, somewhere
closer in the neighborhood of 230 non-frontline jobs. We closed
five district offices as well. That realized us a bit of
savings, as well.
So, yes, it is a little bit backwards in that me having to
approve positions as they are filled, but we just felt that we
were taking every step that we could to try to eliminate our
overhead.
Mr. Yoder. So your testimony, then, would be that we have
taken, just to use your words, every step that we could to
eliminate overhead, to reduce costs, and essentially, that the
budget in your agency is operating at essentially the minimal
amount necessary to carry out its functions?
Mr. Almanza. Well, there is always room for trying to
improve, and that is why we are looking at a number of
different ways of--even in our headquarters staff--of
reorganizing our headquarters staff, and looking at
streamlining some of our program areas, possibly even
eliminating some program areas, and looking at how we can do
things more efficiently.
But yes, we are always looking for those efficiencies, sir.
Mr. Yoder. I note that in fiscal year 2009, the FSIS spent
approximately $10.6 million for 1,525 vehicles and in fiscal
year 2013 the request was nearly $14 million for 2,147
vehicles. And yet the amount of facilities that the FSIS
inspects has been relatively flat over those years. Are there
other areas of your budget that have gone up over those years?
I know this question was asked earlier by Mr. Fortenberry in a
more broad sense. Are there specific areas of your budget
beyond the vehicles that have gone up dramatically over those
several years, while facilities have remained flat?
Ms. Hagen. Well, I would point out that the fleet is used
for frontline travel, so we have inspectors traveling around,
inspecting products.
I mean there are always ups and downs in every budget. And
one of the things that has been really important to us for the
last few years is to make sure that we always have offsets for
anything that we want to do that is new. So you really haven't
seen our budget increase very much at all over the last couple
of years.
We have spent money on implementation of the Public Health
Information System, because we think we need to do things in a
modern way if we are going to have a modern system. That is one
example. So, yes, there are places where we have spent more
money. And, to the extent possible, we have always tried to
offset it with savings somewhere else.
Mr. Yoder. Well, I guess if I might just conclude, Mr.
Chairman, I think the American people are very concerned that
the implementation of the sequester is being done in a way that
is a greater impact on the daily lives of our citizens, as
opposed to a way that might reduce the cost of an agency that
is less impactful: reducing vehicles, reducing positions that
are not frontline. And I think there is a healthy dose of
skepticism in our country that a five percent reduction in any
agency would result in the types of reductions that would have
such a potential dramatic impact on the daily lives of
citizens.
And so I guess it is my hope that you could provide us with
additional alternatives and look long term at how we can
implement these reductions in a way that have less of an impact
on the American people. Thank you, Mr. Chairman.
FURLOUGH TIMELINE
Mr. Aderholt. Mr. Almanza, let me follow up. We were
talking about the furloughs a little bit earlier. Of course
mentioned that the unions were, of course, looking out for
their members. Would they want to start the furloughs earlier
in the fiscal year, or would they want to move that back to
later in the fiscal year?
Mr. Almanza. Well, I certainly cannot speak for the unions,
Mr. Chairman. I would say that it really depends on whether
they decide to engage in bargaining or not. And that will
either move the time frame up for the notification of
employees, or delay it, depending on what--how long the
bargaining sessions are.
Mr. Aderholt. But one would think they would probably want
to start the furloughs earlier than later, would be my
assumption.
Mr. Almanza. I would assume that, but I certainly would not
want to speak for them.
FURLOUGH IMPACT ON INDUSTRY
Mr. Aderholt. The impact of the furloughs alone has been
estimated somewhere around $10 billion. I don't want to
minimize the impact to the industry, but certainly not being an
economist, could you give us some idea of how you came up with
the $10 billion figure and how that was derived?
Ms. Hagen. We can certainly give you a more detailed
explanation for the record. But as I understand it, we looked
at, you know, what we would be losing in production on a daily
basis, and we went from there. I think the regulated industry
would have an even more accurate estimate of what the impacts
may be, since they are the ones that are really keeping track
of their production.
Mr. Aderholt. If you could submit that for the record, it
would be helpful----
Ms. Hagen. Sure.
[The information follows:]
Furlough Impact on Industry
FSIS utilized published data from the Census Bureau's 2011 Annual
Survey of Manufacturers to determine the annual dollar value of the
meat industry ($192.2 billion). The activities included in the dollar
value are: meat slaughtering, meat processing, poultry slaughtering and
processing, and meat byproduct processing. The estimated impact on the
meat industry was calculated by dividing the estimated annual value of
the meat industry ($192.2 billion) by the 260 workdays in a year, times
the number of projected furlough days (11-13 workdays). This equals $8
billion to $10 billion.
Mr. Aderholt [continuing]. For us to know that, exactly how
you come up with that number.
POULTRY SLAUGHTER MODERNIZATION RULE
Mrs. DeLauro had asked about the poultry slaughter
modernization rule. We--there are several Members that are new
to the committee this year. If you could, just maybe go--just
briefly do a little bit of outline and discuss about the
poultry slaughter modernization rule and just the impact that
is, and just give a little bit--a quick overview.
Ms. Hagen. Sure, thank you for the question. As I said, as
our knowledge evolves about what makes people sick, our tools
have to evolve to keep up with that. And we have a lot of
people in the field working very hard, but looking for visible
defects in poultry. We know that it is what you cannot see that
actually makes people sick.
So, this rule is about focusing the bulk of our resources
in poultry slaughter inspection on those things that are most
likely to impact public health. This is a very well-supported
piece of rulemaking. I think that this is a win for
stakeholders across the board. When you look at the number of
illnesses that we can--at a minimum, we think we are going to
reduce illnesses by 5,000 per year. When you look at the
savings for taxpayers, $90 million saved over the course of 3
years because of the way that we are going to manage our
resources, and when you look at the savings and the flexibility
that the regulated industry will gain and will be able to pass
on to consumers in the form of lower prices, we really think
that this is a win across the board.
Mr. Aderholt. Last December you reported to the committee
that you would have to negotiate with the unions and work with
the industry to arrange a conversion of the plants to this new
system. And the date I think was mentioned--April 2013, which
is upon us. Has FSIS started negotiating with the union and
working with industry to arrange this conversion to the new
system?
Ms. Hagen. We don't have a final rule yet. And so we would
not be able to implement a new system until we have a final
rule. And we are not at that point yet.
Do you want to add anything?
Mr. Aderholt. So once that rule is--you get the new rule,
then you will start working on those negotiations. Is that
correct?
Ms. Hagen. That is correct.
Mr. Aderholt. Mr. Farr.
STAFFING SHORTAGES
Mr. Farr. Thank you, Mr. Chairman. I wanted to follow up an
observation the OIG made, kind of shocking, that they found out
that you had gaps in inspections--inspections were missed,
nationwide, on a daily basis--that they had to tell us, rather
than the Department telling us, or admitting it.
And then, also with the fact that you have a vacancy rate
as high as, say in Chicago, of nine percent. If you are going
to have a hiring freeze, what do you do about filling those
vacancies in areas where you have a high percentage of vacancy?
And then I want to add on to that. I want to talk to you
about what you are doing in adding a new requirement, a new
workload, in approving application for a New Mexico horse
slaughter plant. But I will--if you could answer the first
part, I want to ask more questions on the horse slaughter.
Ms. Hagen. I am going to ask Mr. Almanza to address the
vacancy issue, and either one of us can talk about the horse
slaughter.
Mr. Almanza. The vacancy issue is one that fluctuates, and
there are some parts of the country that just have higher
vacancy rates. But they fluctuate. And certainly we try to do
everything to fill those jobs. In fact, the only jobs we have
posted in USA Jobs are frontline positions. And we do
everything that we can. It is just simply getting qualified
available applicants to apply for those positions. We have
absolutely no hold or freeze at all on any frontline positions
within the Chicago district or any other district.
Mr. Farr. Are a lot of those positions required to be
doctors of veterinary medicine for inspection purposes?
Mr. Almanza. No, sir. The vacancies that we currently have
are CSI, consumer safety inspector, positions. We actually are
having a lot of success with veterinary hires right now. And we
are just not--we are not seeing a whole lot of vacancies in
that area.
Mr. Farr. So when the OIG pointed out this problem, of
missed inspections and--which is another problem that they can
see--but you think you have plugged--are you on top of that?
Mr. Almanza. Yes, sir.
HORSE SLAUGHTER
Mr. Farr. Okay. Now, if there is a hiring freeze, and there
is a shortage, and we are going to have to furlough people,
what the hell are we doing approving an application for a New
Mexico horse slaughter plant with Valley Meats, that has had an
incredibly bad history of environmental animal welfare
offenses, when 80 percent of Americans oppose horse slaughter?
What are we going back into this business for?
Ms. Hagen. Well, first, I will clarify that we have not
approved any grant of inspection application for any facility
at this point. The hiring burden would not be significant if we
were to move forward with the resumption of horse slaughter
inspection in the United States. We are talking about a handful
of inspectors. So I don't think it is so much the resource
burden.
But we have a statutory obligation. Horses are considered
to be livestock under the FMIA, the Federal Meat Inspection
Act. There was an appropriations ban on the use of our budget
for years. We could not inspect horse slaughter. That ban was
lifted. We have an obligation to uphold the law. So we are
moving forward with trying to develop a program that would
protect public health to the greatest extent possible if we
find ourselves in that position once again.
Mr. Farr. And where does the meat from horse slaughter go?
Ms. Hagen. Currently, most of that meat goes to Europe.
Mr. Farr. And do we have a requirement under that, that we
do the drug testing, like we have to do for cattle and
chickens?
Ms. Hagen. Well, again, there is no--currently there is no
domestic slaughter of horses for food in this country. But we
would take into account every public health concern that would
be associated with this type of product. And it is part of what
we have been doing for the last year, is developing
methodologies for an extensive array of drug use, of drug
residues.
Mr. Farr. Well, that leads me to a concern I have--in this
situation there are horses coming from different situations
than just operational cattle ranches. You have horses coming
from pets, you have horses coming from show horses, from racing
horses, from draft horses, working horses. You have all kinds
of different handling practices and medication given to those
horses, particularly race horses, show horses.
Have you and FDA developed protocols to determine what kind
of tolerance levels for all the different medicines and drugs
that could be used in horses in those different scenarios?
Ms. Hagen. Well, any inspection program that we would begin
for domestic horse slaughter would take into account all the
public health hazards that we feel could occur. And, as you
correctly point out, the main concern from a public health
standpoint with horse slaughter is drug residues, as opposed to
pathogens.
I think you are correct, and----
Mr. Farr. Have you identified those drugs? Is that your
responsibility, or FDAs?
Ms. Hagen. Well, the national residue program together
looks at drugs of concern that we think should be targeted and
identified in food for human consumption. But we have developed
a pretty extensive array of testing methodology, or of--I
shouldn't say an extensive array. We have developed testing
methodology for quite a number of potential drug residues that
could be found.
Mr. Farr. So those protocols are in place if you licensed
the horse slaughter plant?
Ms. Hagen. We are just about finished, but we have been
working on validating not only the methods that we had used
previously when we ran a horse slaughter program prior to the
2006 appropriations ban, but adding quite a number of
additional drugs that we would have the capability to test for,
as well. We wouldn't move forward with the program until we
were ready with those methods.
Mr. Farr. And I guess, lastly, how can you afford to do
that if you are--if you cannot--if we don't have the personnel,
with hiring freezes, as you have indicated, and furloughs? Why
are we opening up a whole new line of inspections and
requirements?
Ms. Hagen. Again, this is work that has largely already
been done. We have a statutory obligation to consider here. It
is not something that we are advocating, it is something that
we have a mandate to do, to inspect horse slaughter.
I will say you are correct in that public opinion and
perception has changed, I think considerably since 1906. The
public level of discomfort about horse slaughter is
significant. And the Administration recognizes that and thinks
that that is a point of view that Congress should hear. But we
are also very respectful of the fact that only Congress can
change the law, and we intend to uphold the law if that is what
we need, if we need to move forward with the program.
Mr. Farr. Thank you.
Mr. Aderholt. The gentleman from Nebraska.
BUDGET HISTORY
Mr. Fortenberry. Thank you, Mr. Chairman. Dr. Hagen, you
had kindly offered to get the last five years of budgets, but I
have since obtained that information. I know you have got a lot
going on, and so I don't want to overburden your agency, but
let me just review this with basically some rough calculations
that I have made.
If you look at a 10-year baseline, your budget has
increased approximately 30 percent over 10 years ago. Five
years ago it is approximately eight percent. The last three
years it has actually gone down. So that, I think, should give
us all some perspective on where we are.
FURLOUGH OPTIONS
I do want to return to your earlier comment that--regarding
a complete shutdown for a certain period of days is the only
way that you could accommodate these reductions while meeting,
to the best of your ability, the twofold goal of safety, as
well as uninterrupted supply.
Talk to me about the flexibility that you have between
slaughter and processing. It is my understanding that you are
consistently present for slaughter; processing, you have more
flexibility. And I think that goes to your earlier comment as
to where you have tried to creatively, in the past, look at
reducing certain types of budgeting. I am just trying to unpack
this for you.
We all have the obligation here to try to meet that dual
goal of the uninterrupted supply that is delivered in a safe
manner. So speak to that possibility as one area of flexibility
that you have to implement these reductions.
Ms. Hagen. I am not sure I understand the question, I am
sorry. So you----
Mr. Fortenberry. The distinction between your mandate
regarding slaughter and processing----
Ms. Hagen. Correct, that is correct.
Mr. Fortenberry. You have to be present for slaughtering.
Ms. Hagen. Yes.
Mr. Fortenberry. You don't have to be present for--or you
can manage that----
Ms. Hagen. We need to be there once per shift. And
processing inspectors generally work on patrols, where they go
to a number of different establishments in the same day.
Mr. Fortenberry. But again, you are the experts here. We
are trying to unpack the best way in which we can meet multiple
objectives that are held in tension, a reduction of budgets
without the disruption of food supply. Are there options there
that would allow, again, the food supply to continue without
the disruption that you referred to earlier?
Ms. Hagen. Well, I think it is important to remember that
all of these things are related. So what happens in slaughter
impacts what happens at processing. That impacts the flow of
live animals through the system. It impacts what happens in
further processing and retailing. So simply tweaking one part
doesn't necessarily have the desired impact on the remainder.
I will tell you that we have examined--this is the last
thing we want to be doing. The last thing we want to be doing
is having all of our employees out of work for 11 days and
having the regulated industry impacted in this way. This is not
something that--it is not a position we ever wanted to find
ourselves in. I think we have looked at all of the options, and
I think we have come up with, really, the only viable set of
options for us.
We are going to continue to look for additional savings. If
there is any way that we can reduce that number of days, we are
going to do our best. But I think that we have really examined
this from multiple different perspectives, and this is where we
are.
Mr. Fortenberry. It is my understanding that you had
previously developed contingency plans for the potential
reduction of--or a 5 percent potential reduction, 10, or even
15 percent reduction. Are those plans available?
Ms. Hagen. I would have to take your request back to the
Department.
Mr. Fortenberry. That is my understanding. So if they are,
we would like to see that, if possible.
Ms. Hagen. I will certainly take that request back.
[The information follows:]
FSIS Reduction Scenarios
FSIS looked, and continues to look for additional ways to reduce
costs, and attempted to develop 5 and 10 percent reduction strategies.
However, FSIS' options to reduce costs at these levels are limited due
to statutory requirements for FSIS to be present at all times for
livestock and poultry slaughter operations and once per shift per day
for meat and poultry processing operations. Given these statutory
obligations, to ensure food safety and fairness to industry, funding
reductions at the levels in the Budget Control Act would have required
furloughs across the board. Only the number of furlough days would have
varied.
CHINESE POULTRY
Mr. Fortenberry. Let me change the subject a little bit and
talk about overseas inspections.
Ms. Hagen. Sure.
Mr. Fortenberry. I would just like to learn exactly how
that--not exactly, but in broad terms--how that process works,
and your level of confidence that the products under your
jurisdiction that are being imported in the United States are
safe. In specific regard, what are your plans in terms of
opening up inspections of poultry in China?
Ms. Hagen. So the way that we handle import safety is
through a three-part, three-component system. First, a
country's system has to be determined to be equivalent. And
that takes quite some time. That can take a year or more,
because we have to ensure that the statutory and regulatory
framework allow for the safe production of food in an
equivalent fashion to what we do here, in the United States.
We then have reinspection of product at the border, both
physical, organoleptic inspection, and we have reinspection
testing of a certain percentage of the products that come
through at the border. And, as well, we do repeat audits of
countries, once their initial equivalence has been determined.
So, we are confident in our system, we think that this is a
good way to approach it.
We have been in the process of looking at whether China can
have equivalency for processed poultry for some time now.
Actually, for several years we have produced regular reports to
Congress about our progress there. We actually have an audit
team in China right now. They started their audit on March the
5th, looking at processed poultry for equivalency.
Mr. Fortenberry. This would only be food safety. It
wouldn't be other environmental standards, labor standards,
basic business structure.
Ms. Hagen. This is food safety.
Mr. Fortenberry. Thank you, Mr. Chairman.
Mr. Aderholt. Mr. Bishop.
FURLOUGH OPTIONS
Mr. Bishop. Thank you very much. I would like to go back to
where Mr.--the line of questioning Mr. Fortenberry was
exploring with regard to the lack of other options. I think I
am understanding that you are saying that it is fairer and it
will produce, in the long run, more safety to furlough all of
the employees on a particular day, and just have less
production in the overall system than it would be to try to
keep it going and reassign individuals who may or may not be
well trained for that particular job, because that could, in
all likelihood, compromise safety.
Could I just get you to just sort of slowly walk through
why that is the best option or the only option, as opposed to
doing it sequentially or any other way? The other options that
you eliminated. I think you kind of said, ``Well, we have been
through the options and we have looked at it and this is the
only viable option.'' But can you kind of just go through that
reasoning process, you know, for--I think I am following why
you are doing that, but can you sort of go through that
reasoning, step by step?
Mr. Almanza. Sure, I----
Ms. Hagen. You know, I am going to let Mr. Almanza take a
crack at it, in case I haven't been clear enough. A little tag
team here.
Mr. Almanza. So just for example, I will just kind of
highlight one of the bigger plants that we have staffing of,
say, 38 employees that are on the slaughter line. So we have
half of them on the day shift, half of them on the night shift.
So, if we chose to shut that plant down, we simply do not
have 38 inspectors just to plug right in behind them. And so,
if we start at any one part of the industry, I think, say the
poultry industry or the beef industry, and try to replace the
number of folks that are currently assigned to those
assignments, we simply do not have the resources to do that,
and never mind if we had to travel people. First of all, I do
not know where we would get those people, but even traveling
them would incur----
Mr. Bishop. Expense.
Mr. Almanza. Yes, quite an expense.
Ms. Hagen. I mean I would agree, and I just think that
there is an essential fairness issue here for the regulated
industry about who gets the hit first, or----
Mr. Bishop. What about the safety?
Ms. Hagen. And I think once you start--as I said before,
when we are shut down and nothing is getting the mark of
inspection, this is a huge economic hit, but we are not
concerned about the safety, because we believe in the integrity
of our mark of inspection.
I do have concerns, once you start moving people around
into assignments they are not familiar with, product classes
that they may not be familiar with, about whether we are really
doing the best that we can do. And I think we start to worry
about compromising our mark.
WORKER SAFETY
Mr. Bishop. Okay. Let me go back to--thank you very much--
go back to the conditions. I think that was a study by the
Southern Poverty Law Center about conditions at the poultry
plant. I think it is called ``Unsafe at These Speeds,'' which I
think Ms. DeLauro referred to. And while worker safety is under
the jurisdiction of OSHA, don't you have a very, very vital
role to play in identifying potential problems? Because, as I
understand it, because of the consequences of some of the speed
at some of these processing plants, there is some
contamination, some tuberculosis, staph infections for workers,
which obviously could bleed over into the product.
So, I mean, do you not really have to be on top of that,
and won't this, the sequester, impair your ability to do that?
Ms. Hagen. Well, thank you for raising the report by the
Southern Poverty Law Center. I think that the report points out
something that we all know and we need to be reminded of, that
the conditions are tough, that these are very difficult jobs in
the poultry industry, and we do not dispute that.
We do not think that our modernization of poultry slaughter
will make those conditions worse. I think that there is an
incorrect assumption about individual worker pace and what will
happen under this proposal. We have been doing this in 25
plants for over a dozen years, and our experience has been that
plants handle the opportunity for increased line speeds through
either staffing or through increased automation.
So--and as you point out, we do not have the authority to
set worker safety standards, but we are working with OSHA, we
have been consulting with them, we have taken their advice,
tried to incorporate it to the extent possible. In the final
version of the rule that we are doing we are trying to increase
training for our own employees to be able to recognize
workplace hazards. We are very happy about the study that NIOSH
is doing to look at the impact of line speed on worker safety.
But I would point out that we are talking about line speeds
at slaughter here. And most of the data cited in numerous
reports has to do with line speeds in processing, which is not
impacted by this proposed rule.
Mr. Bishop. Thank you. I think my time has expired.
Mr. Aderholt. Mr. Yoder.
FURLOUGH OPTIONS
Mr. Yoder. Thank you, Mr. Chairman. Dr. Hagen, if Congress
were to pass legislation that would say that no frontline meat
inspectors could be furloughed as part of the--what is it,
9,000--how many employees are in your----
Ms. Hagen. Right now we are looking at furloughing 9,212
employees.
Mr. Yoder. How many of those are considered meat
inspectors, or frontline employees?
Ms. Hagen. That number, I have it written down just so I
did not get it wrong today, I want to make sure that I gave you
consistent numbers.
Mr. Yoder. That that might come up?
Ms. Hagen. Right, 8,136 is the number that we are using
currently.
Mr. Yoder. That are frontline?
Ms. Hagen. That are frontline employees, yes.
Mr. Yoder. The inspectors.
Ms. Hagen. Not just meat inspectors. That includes people
who run the samples at the lab, investigators who go out and
are in commerce, folks that make sure that product is under
compliance in commerce. So those are all frontline people. No
administrative staff, no office workers, et cetera.
Mr. Yoder. If Congress were to tell you that those
individuals could not be furloughed, or that you had to--let me
ask this question a different way--you had to continually
operate meat inspection, regardless of the 95 percent budget
that you are facing, roughly, going forward, how would you do
that?
Ms. Hagen. Well, we would have to have the resources to do
it, first of all. And if Congress told us this is something
that we would have to do, we would do what----
Mr. Yoder. You would have to do it with existing resources.
Let's say that is what Congress passed legislation, signed by
the President--or, let's say the President comes in and says,
``Dr. Hagen, we cannot have meat processing facilities backing
up, we cannot have the flow of meat not being processed in a
timely manner, this is going to cause untold, you know,
unforeseen consequences in the economy, you have to figure out
a way to do this,'' how would you do it?
Ms. Hagen. So I will just remind you we still cannot spend
money that we don't have, so we still have to operate within
fiscal law.
Mr. Yoder. So you have got 95 percent of your budget, and
you are told you have to figure out a way to do it. What would
your response be to the President or to Congress?
Ms. Hagen. If Congress tells us that we have to do
something, we do what we are authorized to do. I would
certainly remind everybody that it is 2013 and we have an
integrated system. So inspectors are not out there just working
on their own without the support of policy and scheduling and
administrative staff and, you know, scientific interpretation
and sampling and all these other things that have to be done.
Mr. Yoder. Sure.
Ms. Hagen. So it is not----
Mr. Yoder. It is a complicated process.
Ms. Hagen. Yes, one part does not--cannot operate without
the other. But, you know, I would have to look at what was
proposed. I don't really want to speculate on how exactly we
would address the proposal----
Mr. Yoder. Well, I think it is, obviously, a very relevant
question, because we are trying to determine how to move
forward. And if this is the new reality, which is going forward
the--you know, FSIS has to operate at a 95 percent budget while
doing 100 percent of the facilities it used to do, and if
Congress, you know, passed legislation that said those
operations have to continue, how would you do that?
Ms. Hagen. We would have to figure that out, I suppose.
Mr. Yoder. Yes. What sort of things would you do?
Ms. Hagen. At this point in the fiscal year, I don't know
what else we would do. I think giving us the opportunity to
plan--and that is one of the things that is so hard about this
scenario, is, you know, given enough time, you can absorb this
kind of a hit more easily. So, given enough time to plan, we
would have to come up with a way to handle that.
SEQUESTRATION PLANNING
Mr. Yoder. Is it your testimony that when this passed in
August of 2011 that there was some thought it might occur, but
there was sort of a hope that Congress would somehow resolve
this prior to the sequester being imposed, and so we were not
operating as if it was a matter of fact?
Ms. Hagen. I do not think it is just my testimony, I think
it was everybody's hope that this would get resolved. I think
everybody in America hoped that this would get resolved, and we
would not find ourselves in the position that we are in now.
So, if you are asking if we had our fingers crossed and
just, you know----
Mr. Yoder. Right, sure.
Ms. Hagen [continuing]. Hoped this wasn't going to happen,
we still believe that there can be a solution to this problem.
We still believe that Congress can solve this problem. We can
plan, we can reduce, we can cut to the bare bones. But in the
end, we have to have the money to be able to do our work. And
we have to be able to pay our employees to do our work.
So, as I have said, you know, no amount of planning and
process improvement and cost efficiencies can prepare us to be
able to handle something like this six months into a fiscal
year.
Mr. Yoder. Well, I know it is a foreign concept that we are
in a position where we are actually dealing with less resources
in one year than the next in an agency. It is different to the
Federal Government. I will tell you that in state governments,
city governments, we have had folks in our office all week from
municipalities that have figured out a way to reduce spending
and live within their budgets. And for some reason in
Washington, D.C. that is a foreign concept. So, it doesn't
surprise me that yourself and others have been assuming that
this would never actually occur.
Knowing that it has occurred, and knowing that it might be
the law of the land that FSIS operates on 95 percent of its
expected resources going forward, what are the long-term
solutions to make your agency work more effectively and more
efficiently so that you can continue to operate and provide the
services the American people expect in a more cost-effective
manner?
Ms. Hagen. Well, I think that it is really hard to know
where to begin with that. It is certainly not that we did not
anticipate that this might happen. It is one thing to plan and
to be fiscally responsible and to assume that budgets are going
to get tighter and tighter. And I think what I outlined in my
testimony is that I believe and Mr. Almanza believes that
government can deliver more, and can deliver better, and do a
better job for the American people than it has done before. So
we certainly have taken that attitude all along.
In terms of long-term planning, I think it has to do with
some of this kind of phase two planning that Mr. Almanza
outlined before, looking at whether we are really structured
the way we need to be structured, and whether all the jobs that
we have are jobs that need to be done, and whether there are
nice-to-haves that can be eliminated. And we have really--we
have been engaged in that process for the better part of three
years. We will continue to engage in that process. But I don't
have a specific, long-term plan to lay out for you today, but I
would be happy to work with you on any ideas that you have.
Mr. Yoder. Be happy to work with you on that, as well.
Thank you, Mr. Chairman.
Mr. Aderholt. Ms. Pingree.
Ms. Pingree. Thank you, Mr. Chair. Thank you again to the
panelists.
I would say one of the tragic consequences of the unplanned
sequester, or the sequester that is not the best way to go
about cutting our deficit, is that we spend a relentless amount
of time trying to figure out, now what should we do, and how to
do it better, and how did we get to this position without
planning.
And I have to reinforce this. This was a bad way for
Congress to go about doing it, and I, with all due respect to
my colleagues, just am disappointed how much time we have to
spend, as Members of Congress generally, or here in this
Subcommittee, on something that now appears to be inevitable.
And I appreciate how hard it is to figure out how to run a
vital service like the food safety inspection without the
resources that you were anticipating.
I personally want to ask some of the questions that have
been critically important to the farmers and the processors in
my state and in New England, and I just want to ask you about a
couple more. And I look forward to continuing the dialogue,
even outside of this Committee.
COOPERATIVE INTERSTATE SHIPMENT PROGRAM
As I think I have mentioned to you earlier, I am very
interested in the interstate sale of meat, and what some of the
complications are in making that possible. On the one hand, so
many of our food safety issues and some of the poultry rules
you are updating reflect what goes on in, really, the big
facilities and some extremely serious concerns that have to be
dealt with, so that the majority of the meat supply in this
country is safe and dependable.
But I also see enormous growth in the number of people who
want to buy food from a farmer who lives down the road, a
farmer who lives down the road who wants to have processing
facilities, huge shortages in small facilities and a lack of
infrastructure in many places to adequately process that meat.
So I know you are working on a lot of things around the rules
and promotion of more of that.
But I am interested in this concept of the interstate sale
of meat, because it seems to be met with so much resistance,
even when there is oversight by FSIS of state inspection, there
seem to be ways to go about doing it, but I continually hear
about how complicated it is. And even under the current
program, there are very few states who are able to do it.
So, can you just, with what time I have available, talk
with me a little bit more about it, and I will engage in some
other concerns I have?
Ms. Hagen. Sure. As I mentioned in my testimony, we did
sign agreements in the past year with Ohio, North Dakota, and
Wisconsin. And we think this is a good program. I think that
the major impediments--well, at least as we perceive it--is
that states have to be not only on an equal-to, but at a same-
as status as the federal program. And that can be a big burden
for some states, because it costs money to be able to do that,
particularly when it comes to lab capacity and other kind of
infrastructural details.
So, you know, we hope that the states that have opted to
participate will share their experience and share their
knowledge with other states that are interested. I know that
Maine has expressed some interest in participating in the
interstate program. This is a real win for processors, for
slaughterers and processors in these states, because they get
to open up entire new marketplaces by being able to ship their
products across a state line with a federal mark of inspection.
So anything that we can do to help facilitate that process, we
are happy to talk. We have a whole office of outreach that is
available to states and to processors in these areas to be able
to look at what it takes to comply with the program.
FEDERAL/STATE INSPECTION REQUIREMENTS
Ms. Pingree. I am sure we can take an opportunity to dig in
a little further on this and this whole issue, the complexity
of equal-to and same-as.
So, I mean, one thing that was brought forward to me is
that a federally-inspected product only has to be equal to. And
I would project that perhaps it is harder to determine what
comes in federally. But we have different compliance with
states. So why would we have that difference, when you can
bring something in from a foreign country that is equal-to, but
a state has to be same-as?
Ms. Hagen. Because that is what the law says. That is how
the provision was written into the farm bill.
Ms. Pingree. Well, that is--okay. And similarly, you--just
in thinking about what the future of that is, there is a lot of
oversight already of how state inspection works. So it is not
as if states are operating without a considerable amount of
USDA and FSIS oversight on how they currently operate.
Ms. Hagen. Correct.
Ms. Pingree. Got it. All right. I will yield back. Thanks.
Mr. Aderholt. Ms. DeLauro.
BUDGET HISTORY
Ms. DeLauro. Thank you, Mr. Chairman. I would just like to
say one word about sequestration and FSIS. I have a long
experience with FSIS, having served on this Committee for at
least 16 years, and I have never known the FSIS budget to be a
padded budget. In fact, I would just say that, quite frankly, I
think the budget has not been adequately--has had adequate
resources to carry out its mission, in terms of protecting our
domestic food supply and the amount of product that we get in,
with regard to meat and other products, from overseas.
So, I think that, while agencies have to live and deal with
the effects of sequestration, quite frankly, I think that
Congress ought to re-evaluate the madness of sequestration, and
the havoc that it is wreaking on the American people. It is not
about our ideology; it is about what are the services that we
provide to the American people, and keeping a food supply safe.
We don't talk here about roads and bridges. We talk about life
and death issues.
BEYOND THE BORDER INITIATIVE
With that, let me ask you about--because you know that this
is a very big concern of mine--the status of the Beyond the
Border pilot program. What food safety purpose does the
initiative serve?
Quite frankly--and you know this, that I do not see why the
agency would seek to reduce or change an import inspection
program that appears to be working, for the most part. It was
import inspection at the border that found the E. coli in the
product from XL Foods that, in fact, led to the largest meat
recall in Canadian history. What is the status and the purpose
that it serves? And I have a couple of other questions with
regard to that.
Ms. Hagen. Thank you for your question. The Beyond the
Border initiative is a larger initiative. Food safety has a
small part in that. It is looking at ways to streamline all
kinds of operations that go on between Canada and the United
States.
So the Beyond the Border initiative, as it pertains to food
safety, has to do with a pilot in which we would have one beef
and one pork establishment on either side of the border that
would be allowed to ship product essentially directly between
those two establishments and complete the reinspection at the
border inside of the United States.
The status of the pilot is that it has not started yet. We
are still in the process. We have identified one pork plant,
but we have not started. We have not even identified the beef
plants. It will be a pilot. And our role at FSIS in all of
these discussions is to make sure that food safety stays front
and center as we talk about the potential opportunities here.
CANADIAN EQUIVALENCY AUDIT
Ms. DeLauro. You have another audit with regard to the
Canadian food safety, the equivalency audit that was conducted
by FSIS in December----
Ms. Hagen. Yes.
Ms. DeLauro [continuing]. Of 2012. When will that audit
report be posted on the website?
Ms. Hagen. The audit was completed in November, and we
expect to have the report posted within the next couple of
weeks, I think, next couple of months. I am sorry I do not have
a specific date for you.
And then, as you know, there is a 60-day----
Ms. DeLauro. Weeks or months are we talking about?
Ms. Hagen. I think months.
Ms. DeLauro. Was the XL Foods plant that implicated in the
fall of 2012 in that largest meat recall in Canadian history
part of the audit?
Ms. Hagen. Yes.
Ms. DeLauro. Will, then, the plant's individual audit
report be posted, as well?
Mr. Almanza. Yes. The ultimate one, the final one will.
Ms. DeLauro. The final will have the specifics about --it--
we have so much difficulty with product coming in to the United
States.
And the shortage, I understand the shortage of inspectors.
I have, from day one, wanted to increase the number of
inspectors, both for domestic purposes and international
purposes. But to look at a--this Beyond the Border, this pilot
program, which lessens the opportunity for inspection of a
supply, when we have information that led to the largest
Canadian meat recall in history, that we would be looking at a
way to somehow shortchange this process--and I would--I say it
because it will be for trade reasons. This is one more time
where our trade begins to trump our public health interests.
And I won't go back to Chinese poultry and processing. I have
spent years at that business. But that is the fact here, is
that this is about trade, rather than about food safety as a
part of it.
Mr. Chairman, I just have one question. I will leave to go
back to Labor HHS.
INTERNATIONAL AUDITS
I just want to know how many planned in-person
international audits have been canceled as a result of
sequestration.
Ms. Hagen. We plan to complete 14 audits this fiscal year.
Ms. DeLauro. And how many were you?
Ms. Hagen. That has been our plan.
Ms. DeLauro. And you are going to be able, with the
sequestration, to----
Ms. Hagen. We think so.
Ms. DeLauro [continuing]. To deal with the international
audits? Okay. Thank you, Mr. Chairman.
FUNDING ANOMALIES
Mr. Aderholt. Dr. Hagen, OMB and the Department submitted
some anomalies to the committee for consideration in the full-
year CR. Those anomalies were submitted to provide some relief
for certain programs throughout the Department. Just curious.
Did FSIS submit any anomalies to the Department or to OMB for
their consideration?
Ms. Hagen. We did not, Mr. Chairman.
Mr. Aderholt. Mr. Farr.
LOCALLY-SOURCED MEAT
Mr. Farr. Mr. Chairman, I want to follow up on
Congresswoman Pingree's questions. There is a movement in this
country, and particularly in California, to try--where the
cattle ranchers are raising their own--they are not sending
them to feed lots. They want to be able to process them
locally. The problem you have now is the consolidation of
slaughter plants and package meat wrap are, for economy of
scale and what other reasons, costs, are very few. And so the
distance to travel is extremely long and costly.
We have, with the Department's help, certified a mobile
slaughter unit. It has not been cost effective to operate
because we cannot get the inspectors. We have some interest
with some of the ranchers, being the Hearst Corporation and the
Packard families, and things like that, who have ranches that
are now kind of interested in creating an organic market for
meats with a local slaughter plant.
And the question is, with sequestration, can we--because we
have been trying to develop the cost-effectiveness of getting
an inspector. Obviously, you are going to have to ride circuit.
But we do have inspections, and I think I, in my district, have
about a dozen places now where meat is included in a product,
so they--Monterey Pasta, and things like that--they have to
have an inspector.
Is it a different inspector that goes into a facility that
is adding meat to a product than a slaughter inspection? And
could--is there a way of working out--because we do not have
any fees for service in this industry, do we? You do not charge
user fees like the restaurant--like local governments do for
inspecting restaurants, and things like that.
Ms. Hagen. We do not.
Mr. Almanza. For non-amenable species we do.
Mr. Farr. For non----
Mr. Almanza. Non-amenable.
Ms. Hagen. Things that are not covered under the act.
Mr. Farr. Mm-hmm.
Ms. Hagen. But did you realize that is the congressman's
question?
Mr. Farr. I am asking this question kind of very broadly
because it is really part of a rural strategy which I think the
Secretary has been very interested in trying to take rural
America and bring business to it, rather than having every
young person flee because of not having the infrastructure, and
sort of rebuilding, reinvesting in rural America and I think in
a way--not that our area is hurting, is a poverty area--but
what it is trying to create is these new market niches in
organic.
My cattle ranchers have said, ``Look, the guy next door is
growing grapes and putting them in a bottle with is own name on
it. I grow cows, cattle, and I want to butcher them and wrap
them. I can serve them on my ranch, but I cannot sell them to
the customers on my ranch to take home.'' And I want to be in
that process of being able to have a continuum of kind of local
meat, just like you have local produce and local wines, and
things like that.
Ms. Hagen. You want to address the congressman's question
about inspector resources there?
Mr. Almanza. So we have a number of flexibilities with our
inspection personnel. Basically those are CSI positions,
consumer safety inspector positions, that can perform both
processing and slaughter inspection procedures. We have a
number of them. In fact, some of them that we currently have
are assigned to the mobile slaughter positions that we have, or
the facilities that drive around.
Probably the--one of the things that we have to work with
the mobile slaughter unit is that where they are going to be on
a given day and kind of in order for us to use our resources
appropriately, to be able to plan ahead so that if they are
going to be in a certain part of the county, then we will have
an inspector that is available----
Mr. Farr. Well, that is just scheduling. That is something
we could work out.
Mr. Almanza. Yes----
Mr. Farr. But the problem we are having is just sort of the
inability to get those inspectors, because it is kind of a
rural area. It is not in an urbanized setting.
Mr. Almanza. Oh, I--when I started my career, I started in
Dalhart, Texas. There is not much more rural than that. I mean,
so we have them all over the place, in one-man operations and,
like I said, 38 plant operations. So the rural piece of it,
that really doesn't matter. We can accommodate those.
Mr. Farr. All right. Well, I would like to work with you,
and I know Ms. Pingree is interested in this in the northeast,
to do the, you know, organic and farmers markets, and things
like that.
Mr. Almanza. Sure.
Mr. Farr. I think it is opening up a new market opportunity
for business people, and that is what we are all about.
Thank you, Mr. Chairman.
Mr. Aderholt. Ms. Pingree.
LOCALLY-SOURCED MEAT
Ms. Pingree. Thank you, Mr. Chair. I know we are wrapping
up, so I will just reinforce what the ranking member said, and
say I would like to follow up with you. I know today has really
been so focused on, how are you going to deal with the imminent
cuts and how you are going to just keep surviving and keeping
food safe during a really complicated financial time.
But again, going back to the concerns I hear from my
district, my region of the country, and really from people
around the country, is this growing new market that USDA, in
its 2012 ERS report on slaughter processing options and issues
for locally-sourced meat, said that there is 20 percent growth
in this market. But, as we know, there is a lot of challenges
out there for smaller facilities, some of the rules around
custom processing.
I would just love to spend a little more time sitting down
with you and seeing how the Department is assisting with that,
thinking about ways, we can, to any extent possible, be
creative, or any of the things I should know that is not
functional in legislative language, so we can be of assistance
to those people who want to do it.
I will leave it there for now, because I think it is time
to end up for the day. But I appreciate your being here today--
--
Ms. Hagen. Happy to be here.
Mr. Aderholt. Thank you. Well, Dr. Hagen, Administrator
Almanza, thank you for being here today and for your testimony.
We look forward to working with you. I know there has been some
request for follow-up on some answers, and we----
Ms. Hagen. Sure.
Mr. Aderholt [continuing]. Look forward to getting those as
we move forward in the process.
So, again, we appreciate your presence here today and
shedding a little bit of light on the sequestration and how it
impacts the food service and inspection service--Food Safety
and Inspection Service. And again, we appreciate your
testimony. And so, at this point, the hearing is adjourned.
[Questions submitted for the record:]
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Thursday, March 14, 2013.
FOOD AND NUTRITION SERVICE
WITNESS
AUDREY ROWE, ADMINISTRATOR
Introduction of Witness
Mr. Aderholt. The subcommittee will come to order. I want
to welcome everyone to today's hearing. This morning we will
examine USDA's Food, Nutrition and Consumer Services mission
area. Our witness is Ms. Audrey Rowe, Administrator for the
Food and Nutrition Services at USDA. Welcome Ms. Rowe, glad to
have you here this morning.
We are pleased to hear from you, but of course, it is
unfortunate that Under Secretary Concannon could not be here
due to the decision by the department, but one day when the
administration gets a budget for fiscal year 2014, we look
forward to having the Under Secretary testify, but again, we
are glad to have you here this morning and look forward to your
testimony.
Opening Statement
It is critical that we conduct oversight to USDA's
nutrition programs, since this mission area accounts for 77
percent of the total resources of the agriculture
appropriations bill. In fiscal year 2012, the Federal
Government spent over $106 billion to fund and operate the
nutrition assistance programs. The Supplemental Nutrition
Assistance Program, better known as SNAP, formerly known as
food stamps, is a mandatory program. However it is an
appropriated entitlement program that receives its annual
allocation through this very bill. In fiscal year 2012, SNAP
served an average of 46.6 million people per month. SNAP
program level totaled $80.4 billion as compared to $40 billion
in fiscal year 2008. This is a 100 percent increase in SNAP
spending during President Obama's first term and is indicative
of the Nation's uncontrolled spending on the mandatory side.
While the administration claims that they are cracking down
on fraud, waste and abuse in this program, there is a wide
agreement that much more needs to be done.
The Special Supplemental Nutrition Program for Women,
Infants and Children or WIC, accounts for the single largest
discretionary program in this bill. In fiscal year 2012 WIC's
program level totaled $6.9 billion and served an average of 8.9
million participants each month. This program has maintained a
fairly high level of bipartisan support, but as this program
continues to consume a larger share of the smaller
discretionary budget, we need to ensure sufficient oversight at
the Federal level as eligibility for the program has expanded.
And States need to be monitored more carefully in their efforts
to manage the program.
Child nutrition programs in total are expected to approach
$20 billion this year. The National School Lunch Program,
serving over 31 million school children each day, had a fiscal
year 2012 program level of $11.6 billion. USDA has issued new
school meal regulations as directed by the Healthy, Hunger-Free
Kids Act, and more proposed rules are underway. Despite some
increased flexibility allowed in the program, we continue to
hear the challenges facing schools in implementing these new
regulations. We all agree the USDA's food and nutrition
programs were designed to provide a vital safety net for those
in need. However, I am sure there will be a disagreement among
us on how these programs are managed and operated on a daily
basis. My goal is to assure the integrity of these programs and
to make sure taxpayers dollars are spent wisely, as wisely as
possible.
Before I recognize Ms. Rowe for her opening statement, I
would like to recognize the ranking member of the subcommittee,
the distinguished gentleman from California to see if he has
any opening remarks.
Opening Statement
Mr. Farr. Thank you, Mr. Chairman.
This is one of the programs that I think is most important
for this Nation. Indeed, we had a huge debate about health care
in America and the cost of health care, and we learned very
quickly that the biggest cost was because of people not taking
care of themselves; too many people getting sick because of bad
eating behaviors, and inactivity. We pointed out that the
military is having a problem recruiting. Kids today aren't
getting access to healthy foods. WIC--Women, Infants and
Children--enrollees, essentially get access to preventive care.
This is the place where we deal with that.
And in light of your remarks about the integrity of
expenditures, the wise expenditure, the wisest expenditure
would be to grow healthy kids by getting them access to healthy
foods, and this is the place that we do it.
I think if we are going to really invest in an ounce of
prevention for health care, sort of the first responders to a
new healthy America, it has got to be in the government feeding
programs. And when you look at what we do, we spend about $65
billion a year, two-thirds of this budget, on buying food. And
we ought to be leading by example that the guidelines we
develop for nutrition are implemented, and I don't think they
are. I think we say one thing, and then we go out and buy the
wrong things and feed them, whether it is to the military,
whether it is to the people who are housed in other Federal
institutions, hospitals, jails, so on, where the government is
involved with the feeding.
And so I have looked forward to seeing how we can use the
power of this committee to make sure that that ounce of
prevention really is reaching every child who is in need of
food in order to have a healthy education.
Thank you for your leadership.
Mr. Aderholt. Thank you, Mr. Farr.
I will now turn it over to you Ms. Rowe. Without objection,
your full testimony will be included in the record and
following your statement, we will then go into questioning.
So thank you and you have the floor.
Opening Statement
Ms. Rowe. Thank you, Mr. Chairman, and members of the
subcommittee, for this opportunity to speak to you today.
As you know, we are facing great challenges. Food and
nutrition assistance remains critically important to millions
of Americans. And although the economy is recovering and more
people are finding jobs, many still struggle to put nutritious
foods on their tables. In 2011, nearly 17 million American
households had difficulty getting enough food, and in over 6.8
million households, one or more people simply did not get
enough to eat; they had to cut the size of the meals, they had
to skip meals or even go a day without food at some time during
the year.
Programs like SNAP, the school meals program, and WIC are
essential to many American families still facing economic
disruption and hardship. The positive impact of these programs
is felt in communities across the country and reflect the
dedication of the State and local agencies that operate them in
partnership with USDA. We must continue to work together to
keep these programs strong and effective.
At the same time, Federal resources are constrained, and we
must ensure that each hard-earned tax dollar is used
responsibly. Americans expect and deserve nothing less. This
has been a priority at FNS, where we have reduced
administrative costs while staying focused on our mission under
the Secretary's Blueprint for Stronger Service to modernize
service delivery, while improving customer experience.
I am particularly proud of our effort to reengineer the
SNAP retailer operations. We created a single, national
integrated structure, resulting in enhanced oversight, greater
consistency and efficiency, improved communication and better
quality service. These changes maximize our resources and
improve our ability to fight fraud.
Program integrity is even more critical. While the vast
majority of those involved in our programs are honest, any
dollar lost or misused due to integrity problems cannot help
feed a family in need. And waste or fraud can undermine public
confidence in these vital programs.
So we do not tolerate fraud or abuse. We take strong action
against the small minority of bad actors who break the rules.
Our approach looks across programs to focus on the greatest
risk and takes advantage of best practices in one program to
improve oversight of others.
Our record today reflects real achievements. We have
reduced SNAP payment error from 8.9 percent in 2000 to 3.8
percent in 2001, avoiding more than $3.6 billion in improper
payments alone--for 2011. In trafficking, the illegal sale of
SNAP benefits has dropped from 4 to 1 percent over the last 15
years. Preventing the misuse of about $2 billion in 2012 alone.
At the same time we are pursuing new policies to combat misuse
of benefits and penalize violators more strongly.
We are focused on reducing errors in the school meals
program, without compromising access for low-income families or
increasing burdens for the school. Our State partners have
greatly expanded direct certification, preventing errors and
reducing paperwork for schools and for families. And we are
aggressively implementing new integrity tools, clarifying
requirements and helping schools who are in trouble correct
problems.
We have reduced improper certification in WIC to about 3
percent and sustained the low rate of improper vendor charges
at about 1 percent, but we must remain vigilant. We recently
took decisive action to investigate and deal with vendor
management problems in a few States.
FNS programs also address problems of poor diet, which
often coexist with food insecurity. Today, more than one-third
of adults and 17 percent of children are obese.
We are implementing the Healthy, Hunger-Free Kids Act,
including updating our school meal standards, which are tied to
Federal funding, increased Federal funding. We are
implementing--implementation can be challenging and we have
provided flexibility in key areas to help schools be
successful. Other reforms are underway, including proposed
standards for other school foods. We continue to listen and
provide assistance and support.
Almost all Americans need help to improve their diet. The
Center for Nutrition Policy and Promotion motivates Americans
to eat better and be more physically active through their
dietary guidelines, MyPlate and SuperTracker. FNS aligns its
programs with the Center's guidance and education efforts. In
sum, FNS programs will fill our Nation's commitment to
nutrition for millions of American low-income children and
families every day. To achieve this, we use every tool to
manage effectively, efficiently and with great integrity. I
would be happy to answer any questions that you may have.
[The information follows:]
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BROAD-BASED CATEGORICAL ELIGIBILITY
Mr. Aderholt. Thank you, Ms. Rowe.
I think it is important--by the way, let me say, we will go
by the 5-minute rule, so we will each have a round with 5
minutes so we will proceed under normal proceedings.
I think it is important that Congress protects the
integrity of the nutrition program so that they can serve those
who need assistance. I think everyone on this dais would agree
with that. But also I think participants need to meet the
eligibility requirements established by law. I think a lot of
Americans are very concerned right now about the exploding
participation and cost of the SNAP program over the past 4
years.
In fiscal year 2008, as I alluded to earlier, there was an
average of 28.2 million participants compared to the average of
46.6 million participants in fiscal year 2012. Of course, the
economy has certainly been a factor in the increase, and we
cannot deny that other policies have contributed to that
growth. There are 43 States that have implemented a policy
called a broad-based categorical eligibility or automatic
eligibility for SNAP. Under this policy, most households are
automatically eligible for SNAP primarily because they qualify
for a noncash benefit from the Temporary Assistance for Needy
Families program. It also means households may not be meeting
the assets or gross income limits eligible by the SNAP law.
Can you describe the type of noncash benefits that these
households are receiving in order to become automatically
eligible for SNAP?
Ms. Rowe. Well, broad-based categorical eligibility, as you
know, is an optional policy that allows States to align their
income and asset limits with other means-tested programs. That
would be TANF, general assistance, Social Security Income. It
is available--or SSI, I should say. It is available in 43
States. It is a program simplification. It makes it easier for
States to manage their eligibility process. The contribution to
people who have come in through the broad-based categorical
eligibility is about 2.3 percent, and we see this as a--and
that is less than 1 percent of the benefits. So we see the
continued flexibility that this program, that this option,
provides the States is the reason that they are very interested
in continuing it.
Mr. Aderholt. What about the aspect of the households
receiving the informational brochures on marriage counseling
courses or having access to an 800 number hotline for pregnancy
prevention, that aspect of it?
Ms. Rowe. Well, when I was State administrator of these
programs, that was something that you provided to people as
part of the education and information, but they still had to
meet all of the eligibility requirements to participate in the
program.
Mr. Aderholt. So if a taxpayer or--I am sorry, if an
individual received an informational brochure or was given
access to a hotline number, that would in no way--their
eligibility would come into play there, is that what you are
saying?
Ms. Rowe. Yes, sir. They would still have to go through all
of the eligibility requirements for the State.
Mr. Aderholt. Well, under this policy, it is my
understanding that there is no limit to the amount of assets a
household can have to be eligible for SNAP. How many States
have no asset limit?
Ms. Rowe. I am not quite sure.
Yeah, we can provide that information to you, sir.
[The information follows:]
Broad-Based Categorical Eligibility
Thirty-six (36) States have no limit on assets for households that
receive or are eligible to receive a non-cash Temporary Assistance for
Needy Families (TANF) or State maintenance of effort (MOE) funded
benefit. These households are categorically eligible for SNAP under a
State option referred to as broad-based categorical eligibility (BBCE).
In total, 43 States have adopted BBCE policies.
Mr. Aderholt. All right. Would you say that there is a
substantial number of States that would fall in that category?
Ms. Rowe. Yes.
Mr. Aderholt. More than half of the States maybe?
Ms. Rowe. Very well.
Mr. Aderholt. Do you think Congress should change the laws
or reduce USDA, change the regulations to ensure fairness
across the States on the issues of assets and gross income
limits?
Ms. Rowe. Well, I think we certainly would look forward to
working with Congress and identifying ways in which we could
ensure that there was consistency across all the States.
Mr. Aderholt. And I assume you would agree that also if
someone certainly their assets accumulated quite a bit of gross
income, then they would not qualify, correct?
Ms. Rowe. That very well could be, yes.
Mr. Aderholt. I think my time is up.
Mr. Farr.
ASSET LIMITATIONS
Mr. Farr. Thank you, Mr. Chairman.
Let me just follow up on that, on asset limits, you are
talking about all the assets, if you own a car.
Ms. Rowe. Yes.
Mr. Farr. The value of that car?
Ms. Rowe. Yes.
Mr. Farr. What has that got to do with hungry kids?
Ms. Rowe. Well, it is an asset limit that gets factored
into your eligibility requirement. So these are all issues that
I certainly think we can discuss as we try and look at ways in
which to have consistency across all of the States with regard
to assets.
Mr. Farr. Well, one of my criticisms of this program in
visiting a lot of schools and coming back from a background of
being a Peace Corps volunteer and dealing with a culture of
poverty, is you are dealing with parties that aren't like
people sitting in this room. They are not college graduates.
Many of them are not high school grads. Many of them can't even
read and write. And the old program had a form that you had to
fill out to prove that you were poor, listing all your assets.
You didn't even know what the word ``asset'' meant, much less
being able to fill out these forms, which the people said here
are kids in our school that are so poor that their parents
cannot fill out the forms, and therefore, we cannot make them
eligible. That form was larger than the tax form. It was
ridiculous.
NUTRITION EDUCATION
So this idea of grandfathering in children because their
parents have qualified for social benefits that are eligible in
those States, it seems to be a wise thing. If we are going to
go back and try to knock them off the rolls because of some new
asset requirement, I think that is missing the purpose. The
purpose here is to reduce hunger and improve diet. And part of
the thing of improving diets is education; education is so
important. We are being educated in the wrong way in this
country. We are being educated to eat all the fast foods, and
look at what problems Bloomberg had just trying to limit the
size of drinks in New York.
There is a war against nutritional education. And we have
got to fight that war, and we are not fighting it well. We cut
28 percent of the education programs, $109 million in the
fiscal year 2013 budget going back to fiscal year 2012 levels.
Mr. Chairman, I am a little concerned if we are going to
try to go back and make it harder for kids to qualify. I think
what we need to do is start making the diets that we tell--the
education--and you know what Colorado did, is that they waived
the payment requirement for those kids that could afford it,
just saying, look, if you are in school you ought to all get--
and a lot of nutrition counselors tell me that, in the program,
you have kids from wealthy families who have dysfunctional
parents; they don't get up and give their kids a breakfast in
the morning. They just send them to school, and they are
hungry. And they would never qualify because their parents have
too much of an income to get access to these food programs,
unless they have--carrying money or are getting qualified.
And I think that if we are really going to try to grow
healthy kids in this country and give people in poverty access
to food, it is not a problem, I think, too many people are
asking for food stamps. My God, we have been in a recession;
there are so many people out of work. Even people in the
military, even with the good payments and benefits you have in
the military, there were still families of such size that their
parents had to go down and ask for food stamps in order to make
ends meet.
So I am interested in making sure that there is not this
big rip off of fraud in the providers, but I don't think we
ought to do it at the expense of kids in need of food.
And there is a little bit of time left.
What I would like to know is, since we cut back on the
education, how are we going to--the basic assumption of the
American health care act is that we can grow healthier people
in America, by changing, and this is a cultural pattern. I grew
up without any fast food; the first McDonald's came to my
district in 1962. I had graduated from college, had never seen
fast food, never heard of it. So our lifestyle growing up was
sort of fresh, living in a place where you could get access to
stuff. We were just beginning to get into fresh frozen;
everything was--remember, World War II, everything was still in
cans.
It seems to me, with the fast food industry, we have been
able to give the wrong message, getting a lot of the wrong
foods. That is why school districts are rebelling and taking
soda pops out of schools and things like that. What are we
doing in the national level to enforce a good healthy lifestyle
in school? It is not just the school lunch program, but all of
the other programs, the snack programs and things like that.
Ms. Rowe. Well, clearly, we have undertaken a major public
information, public awareness campaign, not only associated
with our schools programs but through CNPP and the work that
they are doing for the dietary guidelines and SuperTracker and
MyPlate, the work that is going on with the First Lady and
Let's Move, and the activities that are going on in the
schools, the Healthy, Hunger-Free Kids Act--I mean, the Healthy
U.S. School Challenge, where we have worked very hard with over
3,000 schools and families, associated with schools to provide
information.
Nutrition education is a high priority. If we are going to
change people's behavior, not only do we need to educate them,
but we need to give them access. And that is the other part of
the equation, we work very closely with the other parts of USDA
to look at farmers' markets, to look at programs that will
increase access. That is why I am so very interested in
programs like the Corner Store Program that is in Philadelphia.
Philadelphia is starting to see some changes because of some
mix of strategies that they are using, but access, once you
educate folks, make sure they have access and then the
resources to be able to purchase the food is also very
important.
Mr. Farr. Thank you.
Mr. Aderholt. Mr. Valadao.
WIC FOOD PACKAGE
Mr. Valadao. Thank you.
I am sorry, I don't fully understand the reasoning behind
the WIC program using an outdated set of dietary guidelines,
the 2005 dietary guidelines, for example. For the basis of this
recommendation to exclude fresh white potatoes from the WIC
program while this allows every other fresh vegetable and fruit
in its produce aisle, it seems to me that the USDA would want
to use the latest available science, which is the 2010 dietary
guideline, as the foundation for the operation of the WIC
program. So, at this point, I would appreciate you explaining
this.
I have another question before, while fresh white potatoes
cannot be purchased with WIC benefits at a grocery store or
supermarkets, those same potatoes can be purchased with those
same benefits at a farmers' market, what is the nutritional
science behind this?
Ms. Rowe. Well, first of all, the WIC food package, it was
the result of the work of the Institute of Medicine. And we
took the results of the Institute of Medicine recommendations
and looked at them, published them, had feedback on them.
One of the things that the research demonstrated was that
the most widely consumed vegetable, in this case starchy
vegetable, was white potatoes. What was not consumed for
pregnant women and young children was access to fruits,
vegetables, whole grains. So that became the focus of our food
package, because we knew that the access to white potatoes or
other starchy vegetables, individuals would be able to purchase
on their own.
But the package is to look at the health needs of the
individual, of things that they may not have normally purchased
and made a part of their diet, to get them into their diet so
it becomes a part of their behavior, so while they are pregnant
and in the early stages of breastfeeding and the growth of the
child we are able to have healthy options.
Mr. Valadao. So why the difference between the farmers'
market and the grocery store?
Ms. Rowe. The grocery stores are--the farmers' market is a
voucher, cash-value voucher, an individual can use that cash-
value voucher to purchase any products that they want available
at the farmers' markets.
Mr. Valadao. All right, thank you.
Mr. Aderholt. Ms. Pingree.
Ms. Pingree. Thank you, Mr. Chair.
Thank you very much for your testimony here today and to
the conversation my colleagues have had previously. I
appreciate the mention of the white potato coming from Maine.
We have weighed in on the potato controversy several times. And
so, you know, we have an interest in the availability and
access to potatoes.
WIC CASH VALUE VOUCHER
I want to follow up a little bit on some more technical
things about farmers' markets and some of the other things you
are dealing with. I am really happy to see the recent update in
the WIC package includes access to fresh fruits and vegetables.
I know it increases the amount available for children and
adults. And the way I understand it, under current WIC rules,
State agencies are able to make the determination about
farmers' markets, whether they are permitted to accept the
fresh fruit and vegetable coupons. It seems like a win-win: It
is good for our farmers, and it is, obviously, good for the
nutrition of our children and families. And it is just doing
everything we think should be happening with the growth of
farmers' markets and more interest in local food.
I guess one of the things I don't understand is why don't
the WIC rules treat this more uniformly? Why don't they require
every State to allow WIC to be accepted at farmers' markets? Is
this an issue that FNS can deal with? Does it have to be
addressed in statute? Can you make what I think is a very
commonsense change on your own? Can you talk a little bit about
that?
Ms. Rowe. Well, I mean, clearly we want to see the use of
our cash-value vouchers as widely as possible because that is
the purpose of getting additional healthy foods available to
individuals. It is a State option currently. We have worked
with States and encouraged them to have as broad a definition
for use of those cash-value vouchers as possible. It is
something that I would be happy to have further conversations
to determine whether we should have more of a uniformity
mandate. Coming as a former State commissioner, I like to be
encouraged to do things and to become aware of the most
important thing to do and why it is important to do something
than to have it mandated to me all the time, but it certainly
would be something that we could have a conversation about.
Ms. Pingree. So just clarify for me, and I would be happy
to have a further conversation. And I understand that people
like to be encouraged, not required, but we require a lot of
things.
Ms. Rowe. True.
Ms. Pingree. In the food programs, and many of them that
people push back on, and some of them are hard to administrate.
Is this a statute change, or is this something that you can
change?
Ms. Rowe. I believe that it would be something that would
require--and I----
Ms. Pingree. You can get back to me.
Ms. Rowe. Okay. It is a regulation so it is something that
we could----
Ms. Pingree. I would be interested in talking to you about
that further. I think it has a lot of positive benefit. It also
allows people to buy more potatoes.
WIC ELECTRONIC BENEFIT TRANSFER
By law, WIC is required to transition to EBT by 2020.
However, no funds were provided for WIC EBT transition in 2012,
and as a result of the current CR, there are no funds for 2013.
Can you update us a little bit about the current status of the
WIC EBT implementation?
Ms. Rowe. Well, we have currently about 10 States that are
fully implementing WIC EBT. We have a number of States with the
funding that we have who are in the developmental stage of
implementing or designing a WIC EBT technology for their
program. There are a number of other States that are in some
planning stages. We have been encouraging States to talk to
other State agencies within their geography, who are looking at
changes in technology to determine whether there is some way to
leverage what already is in place to allow for a use of WIC
EBT, but until we have additional funding, we can't take it
further than where we are right now.
Ms. Pingree. So it is going to stay stalled until we move
beyond the CR?
Ms. Rowe. Leverage funding in States where States are
starting to look at software development and replacing legacy
systems and where the health departments are looking at
changes, if we can incorporate WIC EBT into those conversations
that would be possible.
FARM TO SCHOOL PROGRAM
Ms. Pingree. I am going to run out of time in a minute, but
just quickly I am very interested in the Farm-to-School
program, and I had a chance to meet with the Farm-to-School
director, and I am really impressed with the vision and the
direction that is going.
Do these programs have the resources that they need to
continue to expand technical assistance to schools? Again, I
think they are a great win for our schools. Every school I have
seen participating has been enthusiastic with their stories
about how much more kids want to eat, how much they like
learning where their food comes from. It is obviously good for
the farmers in our communities. I think it is good for
communities overall. And the families who hear about the food
that kids eat at school, and then they come home and say hey,
can we go to the farmers' market and try buying that or can I
get it in the grocery store. So I think it's a great pathway to
healthy nutrition and good for farmers. I am curious about the
resources and what assistance you are able to provide.
Ms. Rowe. Well, first of all, let me thank you for the work
that you were doing in Maine in bringing together participants
in the farmers' market. That has been very--I mean the Farm-to-
School program; that has been very, very important. I think we
have current funding. We anticipate funding in our fiscal year
2013 budget that will allow us to continue. I am right now
confident that with the vision that we have, that we can
generate more participation in the Farm-to-School program.
Ms. Pingree. Thanks.
Thank you Mr. Chair.
Mr. Aderholt. Mr. Nunnelee.
SNAP BUDGET
Mr. Nunnelee. Thank you, Mr. Chairman.
Thank you, Administrator Rowe, for being here with us. Food
stamps are growing at a rate we can't sustain. We were spending
$18 billion a year in 2001. We are spending $80 billion today
and rising. Now I understand we have gone through a recession,
and we have had families on tough times, but now, even while
unemployment is going down, our spending on food stamps is
continuing to go up. While the percentage of people living in
poverty are going down, what we are spending on food stamps is
going up.
As a member of the Appropriations Committee, I am telling
you we can't continue to spend this kind of money, we can't
continue to grow this. So I need recommendations. What can we
do to save money and not spend as much money on food stamps?
Ms. Rowe. Well, Congressman, first of all, I mean you did
acknowledge that growth in the food stamp program has to do
with where our economy is today, but as we are seeing the job
market improve, there is a lag time between seeing the impact
of that improvement on the SNAP program. However, I was
encouraged today in reading a couple of articles that we are
seeing decreases in places like Arizona and parts of Florida,
where there is starting to be a decrease in participation.
Having jobs, helping people who are in the program who are
working who still don't have sufficient resources and meet our
Federal guidelines, having them have jobs that will then
provide a living wage for their families so they don't have to
participate in the program is the way, the only way that I see
that we can continue to decrease the rolls.
Mr. Nunnelee. So you are telling me, short of seeing the
economy improve, there is nothing we can do administratively to
change it?
Ms. Rowe. Well, there are things that we are doing
administratively, looking at certainly fraud and any
trafficking activities to make sure that we are spending the
dollars that are in the program appropriately and efficiently,
but the real answer is to have a more robust economy so that
people can have sufficient resources to put food on the table.
BROAD-BASED CATEGORICAL ELIGIBILITY
Mr. Nunnelee. Let's talk about categorical eligibility.
Now, your testimony before the chairman's question, 2.3
percent of the people that are qualified for food stamps come
in under categorical eligibility. Can you give me a dollar
amount for the number of people--what are we spending for
people who would otherwise not be eligible for food stamps that
come in under categorical eligibility?
Ms. Rowe. I will need to get back to you on the exact
dollar amount, but it is about 1 percent of the benefit.
[The information follows:]
Broad-Based Categorical Eligibility
In 2011, less than 5 percent of SNAP participants lived in
households that exceeded the SNAP Federal gross income limit. These
households received about 3 percent of SNAP benefits, an indication
that these households receive fewer benefits. The Government
Accountability Office (GAO) found in a 2012 audit that participating
households that were eligible only through broad-based categorical
eligibility were more likely to have: children, earned income, higher
shelter expenses, and higher dependent care costs. In order to receive
benefits, all SNAP households must still have income low enough to
received benefits and meet all other SNAP eligibility criteria.
Mr. Nunnelee. One percent of $80 billion are people that
otherwise wouldn't qualify but come in through the door of
categorical eligibility?
Ms. Rowe. Well, they--yes, they would--they come in through
that vehicle if they come into the program, yes.
Mr. Nunnelee. My question math says----
Ms. Rowe. But they meet all of the other requirements to be
in the program, let me be clear about that.
Mr. Nunnelee. And so in response to the chairman's question
about States with no asset test, this would allow someone who
wins the lottery, for instance, to continue to get food stamps
by coming in the door through categorical eligibility with no
asset test?
Ms. Rowe. States have the ability to design their policies
to prevent individuals who would win a lottery. For example,
Michigan has done that, so that they have a limit that they
have established for an individual in terms of assets. So
States do have some flexibility to look at their policies.
Mr. Nunnelee. But still we say there is nothing we can do
administratively to change the program to help us save money.
Ms. Rowe. As I have said, Congressman, the way that I see
this program saving money or reducing its expenditures is
having a more robust economy.
Mr. Nunnelee. Thank you, Mr. Chair.
Mr. Aderholt. Mr. Fortenberry.
Mr. Fortenberry. Thank you, Mr. Chairman.
Ms. Rowe, good morning.
Ms. Rowe. Good morning.
Mr. Fortenberry. You have one of the most powerful jobs in
the United States Government. Did you know that?
Ms. Rowe. I love my job, I know that.
Mr. Fortenberry. I don't think many people would
acknowledge or recognize that, but the amount of budgeting that
goes through your auspices is enormous.
SNAP FRAUD AND TRAFFICKING
Just a couple of questions for you. I would like to have a
deeper understanding as to how fraud actually still happens in
the SNAP program. Now, to your credit, there has been a very
aggressive and successful reduction in the amount of fraud,
which has saved us billions of dollars. But explain for those
of us who don't have criminal minds how this actually can occur
and then what steps are now underway to tackle it.
Ms. Rowe. Well----
Mr. Fortenberry. One of the major ways, as I understand it,
is complicity with the retailer.
Ms. Rowe. Right. And that is trafficking, and it is the
area where we concentrate a great deal of our resources, both
in terms of the technology that we have in place, where we are
constantly reviewing the sales that go on in real time in
stores, we are able to identify anomalies when we see anomalies
in the purchases in a particular day.
Mr. Fortenberry. So the retailer would be complicit with
the individual?
Ms. Rowe. Right.
Mr. Fortenberry. Saying you take this amount, and I will
give you cash back.
Ms. Rowe. And I will give you cash, 10 cents on the dollar,
50 cents on the dollar, those kinds of things. When that
happens, when we identify that and we disqualify a retailer, do
an investigation, disqualify a retailer, we send that
information to the State so that the State can then look at the
client, because it takes two to participate in a trafficking
event. So the States can then take action with respect to the
clients.
We have bad actors. Some of the things that we are looking
at, for example, is we have 236,000 retailers in the program.
They set, by law, the retailer definition of who can
participate. We have some concerns about that, because we are
able to identify those stores in those places where it is more
likely to have trafficking, and if we had some greater, higher
level, a definition with higher standards, then we would be
able to take some of those stores out, and we would see less
trafficking.
Mr. Fortenberry. How do we get that done?
Ms. Rowe. It has to be done by Congress.
Mr. Fortenberry. I would appreciate your recommendations on
that, because I think that is important, an ability to
prosecute more quickly and ban a person, and that ban follows
them around, because apparently these things open up,
particularly maybe smaller retailers open up on the fly, as I
understand it.
Ms. Rowe. Well, what happens quite often is the retailer
will attempt; we find them; we will disqualify them; they will
attempt to sell it to someone else that they know. We have
changed our policies and become more aggressive in that area so
that once a new retailer is coming in from a disqualified
store, we actually do more collateral checks to make sure that
there isn't still going to be some arm's length relationship.
We catch as many as we can, and those that we still have a
belief but can't catch, we refer to OIG so they can do the
investigations.
Mr. Fortenberry. Would you give me those recommendations?
Ms. Rowe. I certainly will.
Mr. Fortenberry. That would be helpful.
[The information follows:]
SNAP Fraud and Trafficking
Last year's House Committee Farm Bill action included several
provisions that we believe would have improved the quality of stores
that could be authorized to participate in SNAP and, at the same time,
limit those types of retailers that are more likely to act
fraudulently. These provisions included limiting stores that have
significant sales of liquor, cigarettes/tobacco products, or hot foods.
As the Farm Bill and these related provisions were not enacted, we
would look forward to again working with the Committee on options for
enhancing the type of retailers that participate in SNAP to improve
integrity in the program.
SNAP RETAILER ELIGIBILITY
This also brings up the next point, we have vastly expanded
the number of retailers, just based on anecdotal evidence, I
see people hanging signs out front of certain kinds of shops
that would previously not have been EBT eligible. Is that in
conflict with food and nutrition goals? We have two sets of
standards here in which we are trying to achieve that are
seemingly that are in tension: One is to bring people who are
in vulnerable circumstances the right amount of caloric intake
but also move us toward a system where we are actually
promoting healthier foods. But then we are setting up the
ability to buy foods that are not consistent with that
nutrition goal.
Ms. Rowe. We are constrained by the definition that is in
the law, and we are concerned about it. I mean, I--we talk
about, this is one area that we discuss a lot. We have had some
relief in the farm bill discussions that were going on, so when
we get a farm bill it is my hope that----
Mr. Fortenberry. I just came off the Ag Committee by the
way, so all of this is fresh, and I know it is a tension, but
if have you recommendations in that regard that would be
appropriate for this committee as well, that would be helpful
because this is a problem. I mean, we have got broad health
care goals. We know that health care is inextricably tied to
the type of food you intake, and we have set ourselves up for
conflicting situations, I think, in terms of not incentivizing
the right types of nutrition on one side of the aisle, and on
the other side of the USDA corridor, we are trying to achieve
that goal. So----
Ms. Rowe. We would be happy to give you some
recommendations.
[The information follows:]
SNAP Retailer Eligibility
Last year's House Committee Farm Bill action included several
provisions that we believe would have improved the quality of stores
that could be authorized to participate in SNAP and, at the same time,
limit those types of retailers that are more likely to act
fraudulently. These provisions included limiting stores that have
significant sales of liquor, cigarettes/tobacco products, and prepared
foods. The current statutory requirements for stores to be authorized
to accept SNAP benefits are minimal and may allow stores that have low
food stock, few healthy choices, and a higher risk of trafficking. As
the Farm Bill and these related provisions were not enacted, we would
look forward to working with the Committee on these and other standards
that would promote healthy eating.
Mr. Fortenberry. Okay. Mr. Chairman, do I still have time
for a couple more questions?
Mr. Aderholt. On our next round.
Mr. Rooney.
Mr. Rooney. Thank you, Mr. Chairman, and I apologize for
walking in late.
SCHOOL MEAL NUTRITION STANDARDS
I will switch gears a little bit if I could here because
the district that I represent in South Central Florida has
about as many oranges and cows as they do people, so I do need
to ask some questions specifically with regard to school lunch
and our programs there.
We have a lot of family farms, as I mentioned, and a lot of
kids who grow up helping out on these farms. And when updating
the lunch and breakfast program standards, it seems like you
kind of took a one-size-fits-all approach. I am concerned that
some of the guidelines you are promoting overlook the
importance of protein as part of a balanced diet. Could you
please elaborate on how the USDA came to the decision of
putting maximum requirements on meat for the school lunch and
breakfast programs? Specifically, who at the USDA was involved?
Did you work with any other agencies?
Ms. Rowe. Well, first of all, the recommendations, the
initial recommendations were a result of the work that we did
with the Institute of Medicine. They did a study for us, gave
us a series of recommendations. Those recommendations ended up
into our policy recommendations, which we then sought public
input. We had an extensive number of public comments. We
reviewed each one of those comments and made a determination of
which calorie limits we would leave in the program and why
those calorie limits were important. We had a lot of support
for limits on certain calories in the school meal program and
we made a determination.
Now we also determined, after the final rules were
implemented and schools were trying to implement this program,
that there needed to be some flexibilities. And so we went back
and looked at our policy and allowed for some flexibility both
in this school year and in the next school year, and we will be
looking to determine whether it should be some permanent
flexibility that would allow schools to increase the use of
grains and meats within their school lunch programs and within
the menu.
Mr. Rooney. Was it based on calories almost exclusively? I
mean, after the study and the comment period, was the decision
just based on caloric intake, or were things like proteins and
grains considered?
Ms. Rowe. Yes, it was to create a balanced meal for a child
at lunch. For many children, this is the only balanced meal
that they get. And so we were trying to create a balanced meal
that would be available for all children, and then, where
needed, allow for some flexibility for different school
districts to design their meal pattern so that it met their
needs.
Mr. Rooney. If I could just ask one more part to this, many
of my constituents support the 1-year elimination of the
maximum requirement for meat. Are there any plans to make that
elimination permanent after the year is done? And if not, do
you plan to ensure these kids are getting enough protein? If
you consider what foods have the highest amount of proteins, my
constituents will tell you that they won't touch tofu nor would
our school children, and the allergies to dairy, nuts, seafood
and eggs seem to be increasingly common, so what is left, and I
would say that is beef. I am just wondering what your next
steps will be.
Ms. Rowe. Our next step is that we currently have extended
the flexibility for this school year and next school year, and
we are looking at the options for moving forward. We are also
looking, and I should have mentioned this earlier when I talked
about IOM, is dietary guidelines for Americans was part of our
consideration as we looked at what the school meal patterns
recommendations would be.
Mr. Rooney. Thank you, I appreciate you being flexible as
we move forward.
Thank you, I yield back.
Mr. Aderholt. Ms. DeLauro.
Ms. DeLauro. Thank you very much, Mr. Chairman.
I want to welcome our witness this morning and say, thank
you, to you very, very much. It is a pleasure to see you back
here today. I always have to say thank you for the great work
that you did in Connecticut. We were really sorry to lose you
but glad you are sitting here today. And I also want to say
that the great work you are doing with food safety through the
Produce Safety University is really first rate. Thank you.
I understand that there was a comment before I came in
about how we might be able to reduce SNAP, usage of SNAP, food
stamps program. If we grow our economy and we put people to
work, we will reduce the need for food stamps in the United
States.
SEQUESTRATION IMPACT ON WIC
My first question relates to a topic we heard about
extensively yesterday, and that is sequestration. Can you
detail for us the impact of sequestration on the programs that
you are responsible for, specifically the WIC program? I am
concerned about the long-term implications of sequestration and
the Budget Control Act on WIC, because my understanding of
sequestration 600,000 to 750,000 eligible women, infants and
kids will not receive the good nutrition that they need between
now and October 1st.
Given the spending caps in the BCA, there will be
tremendous pressure to reduce all discretionary spending,
including WIC, in 2014 and in future years. What would be the
consequences if we break our longstanding commitment to serving
all eligible women, infants and kids who apply for WIC?
Ms. Rowe. Congresswoman, if we just apply the way the
sequestration was constructed, if we just apply the 5 percent
to that account, it is about 600,000 individuals--women,
infants and children that would be affected. However, we have
been working continuously in this program to look at ways to
contain costs. We are identifying and working with States now
to determine the best way to mitigate the impact and try and
understand what the exact impact will be on each State. We are
looking at moneys that haven't been expended just yet, so
whether some of those dollars can be reallocated. So we are
working very aggressively with our States to determine what the
final impact will be, and clearly, with the discussions that
are going on at the budget level, we hope those, too, will help
mitigate.
But if nothing happens, if everything remains and we can't
find additional funding, we can't find any way to mitigate the
impact, the 5 percent in that account would be 600,000 women,
infants and children.
Ms. DeLauro. And that is between now and October 1st.
Ms. Rowe. October 1st.
Ms. DeLauro. In terms of the 600,000 and let's say your
attempts to use other areas, other resources, what you can
cobble together, are there people who are going to be
jettisoned, are there women infants and children who will be
jettisoned from that program, given the 600,000 number, which
is a substantial number of people?
Ms. Rowe. Well, again, given the critical nature of this
program and what it provides to pregnant moms and to infants
and to children, and its longstanding bipartisan support in the
Congress, we believe that if working together with our State
partners and with the Congress, that we can find ways to
mitigate this impact. It is our, you know, fervent desire to
ensure that we do not have to see a single wait list develop,
which would end up with perhaps probably those women who are
postpartum participating on wait lists, those kinds of things.
But right now, we are doing everything we can to mitigate the
impact.
Ms. DeLauro. I appreciate that.
And I also think it might be important, Mr. Chairman, for
the members of the committee to know that within WIC, when we
would begin to restrict funds, they have a listing of who goes
first, and it really is pretty incredible. This is a priority
list, the WIC priority list. If we don't have the funding,
pregnant women, breast-feeding women and infants determined to
be at nutritional risk is a first priority; infants up to 6
months of age whose mothers participated in WIC could have--in
any case, they have got a list of what the priorities are, the
flip side of who will be able to continue that service are the
people who will not be, and it is not like you are sent out a
notification 30 days in advance for a furlough. These folks
will come one day, and they are not going to be able to
participate in the program because if you are postpartum and
you are not breastfeeding, you are going off the list. And that
word gets around, people will not come. This will be a major,
major setback, to women, infants and children and their health.
And this has been a program that has had extreme bipartisan
support.
And I thank you for what you are trying to do to mitigate
against the loss.
BROAD-BASED CATEGORICAL ELIGIBILITY
Mr. Aderholt. Thank you.
Let me--I want to return back to what we were talking about
earlier about the noncash benefits of the broad-based
categorical eligibility. And I had mentioned to you earlier
about the example about the households receiving the
informational brochures on marriage counseling courses or
having access to an 800 number hotline for pregnancy
prevention. It is my understanding and I want to get it
clarified because of some--I may not have asked the question
exactly right, but what my question is if, in some States, if
an individual qualifies for a TANF program, then do they--and
such as receiving these informational brochures on marriage
counseling courses or the 800 hotline, are they automatically
eligible for the SNAP program?
Ms. Rowe. They can apply for the SNAP program, but they are
not automatically eligible for the SNAP program.
Mr. Aderholt. There was a letter that was sent out by USDA
to all the original administrators that--in one portion of the
letter, it says, from this time forward, we will use the term
broad-based categorical eligibility to refer to the policy that
makes most, if not all, households categorically eligible for
SNAP because they receive a noncash TANF-funded benefit or
service, such as an informational pamphlet or 800 number.
Ms. Rowe. Yes. I mean, I know the letter went out, but an
individual still has to meet the eligibility requirements--the
benefit requirements, I am sorry, the benefit requirements to
participate in the program. You may get the brochure; you still
have to sit down with an eligible worker, and there still has
to be a determination that you meet the benefit requirements
before you can participate in the program.
Mr. Aderholt. Okay, so you are saying, just receiving those
things in the mail it does not automatically qualify you to----
Ms. Rowe. No.
SNAP OIG AUDITS
Mr. Aderholt [continuing]. Get in the program. Okay, all
right.
In September, an OIG report reviewed SNAP fraud and found
that in one State almost 7,000 households were participating in
SNAP who had assets exceeding the limits set by law. Another
State found that more than 61,000 households with income
exceeding the limits set by law. What my question would be and
what I think has concerned a lot of people is with that out
there and if that is--if these numbers are wrong, please, let
me know, but what our concern is, is hurting the integrity of
the program when you have these kind of numbers of households
that are exceeding the income limit.
Ms. Rowe. Well, Congressman, what I would be happy to do is
to take that information and do some additional checking on it.
I mean, 99 percent of the individuals who participate in the
program are eligible to participate. So I am not sure where
those numbers, you know, how those numbers were derived by
those States, but would be more than happy to take a look at
it.
Mr. Aderholt. If you could check into that.
Ms. Rowe. I will.
[The information follows:]
Broad-Based Categorical Eligibility
This data is drawn from the OIG Audit, ``Analysis of FNS'
Supplemental Nutrition Assistance Program (SNAP) Fraud Prevention and
Detection Efforts--27002-0011-13.'' In the report, under a paragraph
titled, ``Income limitations exceeded in SNAP,'' it states that in one
State, ``we found 6,970 households that exceeded the asset limit of the
SNAP program.''
These households were determined to be eligible under broad-based
categorical eligibility (BBCE). As the report acknowledges, this is
``not a program violation or a case of questionable payments.''
SNAP rules provide State agencies with a number of policy options
that provide States with the flexibility to tailor SNAP to meet the
needs of the low-income population in their States. BBCE is one of
these allowable policy options. BBCE allows States to align SNAP income
and asset limits with those of a Temporary Assistance for Needy
Families (TANF) program. Under BBCE, a household may be considered
categorically eligible for SNAP because they qualify for a non-cash
TANF or State maintenance of effort (MOE) funded benefit. The Gross
Income Limit of the TANF/MOE varies by State but is no greater than 200
percent of the Federal Poverty Guidelines (FPG). Therefore, to say that
these households exceeded income limitations is incorrect. In order to
receive SNAP benefits, households must still have income low enough to
receive benefits and meet all other SNAP eligibility criteria.
OIG identified no improvements needed and provided no findings or
recommendations regarding these 6,970 households.
Mr. Aderholt. I think everybody at this dais realizes the
importance of this program for the people who need it. I think
it is what the American public and what so many individuals in
Congress and what we hear back from our constituents is the
frustration of the program for those who do not need the
program and who would not qualify. And like I said, it hurts
the integrity of the program because we want to see the people
who need the help receive it. And for those people, it is a
great program, and it can serve a real purpose. But to have the
fraud and the abuse, it really hurts the integrity of the
program, and it hurts the integrity of the work that you are
doing. That is why I think we really need to look at this.
We often hear that part of the reason for allowing
households to qualify for one low-income program is to qualify
for SNAP program is to reduce the burden on the case workers.
Now, again, we can dispute whether that is the case or not, but
if there was--say there is such a policy does--is
administrative costs saved in that in any way?
Ms. Rowe. No, I mean, once again, having worked in
Connecticut as a commissioner and the District of Columbia as
commissioner, administering these programs, you don't have a
savings as a result--you have a savings is when you streamline
the process for individuals that come in. It gets to the
Congressman's comment with regard to the application process
and how--what information you actually need to make a
determination based on the law, what information is nice to
have. We need the information that is needed to make a
determination against the rules set by the legislation.
The other is creating options for people to do online. Even
if you apply online, there is still a review that is undertaken
by a case worker. Even though technology has predictive
intelligence and you should be able to do these things
automatically and make a determination, the worker still needs
to be involved. So our administrative costs, our administrative
costs reductions, States are trying to grapple with reduced
budgets, has more to do with how we streamline the process than
anything else that we are trying to achieve.
Mr. Aderholt. All right my time is up.
Mr. Bishop.
Mr. Bishop. Thank you very much.
WIC IN GEORGIA
Ms. Rowe, it is a pleasure to see you and have you back
before the subcommittee again. I would like to spend a little
time on a situation we are having down in Georgia, which I
believe you are familiar with, with respect to the WIC program.
Can you give us an update on the status of the Food and
Nutrition Service moratorium on the Georgia WIC program? I
understand that your agency has only recently received the
State's response to the original communication where the State
was informed of your intent to place a moratorium on the WIC
program and the particular approval of any new vendors
statewide. Do you have any idea when you will be able to have a
resolution to this matter so we can sort of move forward?
Ms. Rowe. Well, as you know, Congressman, we have made some
great progress with the leadership in the State, with the
agencies, et cetera. We have asked for some specific
documentation to help us with the remaining issues and findings
that we have outstanding. Actually, as of March 15th, the
absence of having that information in, then we will issue a
letter of moratorium for adding new stores into the program
until such time as we have the resolution and know the vendor
management in the State is being handled in an efficient
manner. And we certainly will keep you abreast of the next
steps that we are going to engage in.
Mr. Bishop. I am very, very frustrated with what has become
really a major challenge within our State. There is no question
that Georgia has for some time faced some challenges in
administering the WIC program. But the real victims are really
not the bureaucrats at the State and Federal level, who are
bickering and bickering back and forth over the compliance with
regulation, whether it was filed correctly or not; the real
victims are really our constituents, who, throughout the State,
will be negatively impacted by this impasse.
You may or may not know that Bell Foods acquired 15 major
grocery stores in Georgia, and having received some bad advice
from the previous State administration, WIC officials, during
the certification process, they are now barred from accepting
WIC vouchers because they accepted them when they took over the
new stores before it was finally approved. Unfortunately,
because of these larger issues with the moratorium, I have a
lot of constituents who now don't have access to grocery stores
that accept WIC. So it is a real problem, and it is frustrating
because the people who need the programs are the ones that are
suffering while the bureaucrats bicker.
Ms. Rowe. Well, we have been working very aggressively, and
we, too, are concerned about access, and we want to make sure
that all of our participants have access to the food products
they need. I am not familiar with the Bell Foods, but I will
take a look at that. We have, all the way up to our under
secretary, have been engaged in looking at this issue in
general. But I can assure you, Congressman, that we will do
everything we can if we need to put in place a moratorium to
have that moratorium lifted as quickly as possible. We have had
to do this in other States and it gets people's attention, and
we are able to resolve the issues much more quickly, but we
will do everything we can so that people are not adversely
impacted.
[The information follows:]
Georgia WIC Program
Belle Foods acquired 15 stores in Georgia, most operating as Piggly
Wiggly stores, in July 2012. All 15 of the newly-acquired stores
applied to become WIC vendors, as required, but prior to authorization
by the Georgia WIC State Agency, these stores accepted $300,000 in WIC
food instruments, thus violating WIC Program regulations. Georgia WIC
requires vendor applicants who accept food instruments prior to
authorization to wait 1 year before seeking WIC authorization again.
The 1-year period can be waived if the store is needed for participant
access. One store (Piggly Wiggly #745 in Gordon, Georgia) received a
waiver and was authorized because there was no other authorized WIC
vendor within a 10 mile radius, per Georgia WIC's approved participant
access policy. The authorization became effective on January 3, 2013.
A moratorium stops a WIC State Agency from approving any additional
vendors for WIC; vendors that have already been authorized can continue
to accept WIC. Under the FNS moratorium that was made effective on
March 18, 2013, Georgia WIC cannot authorize any new vendors. FNS has
met with Georgia WIC leadership and has accepted corrective action
plans (CAPs) for 19 of the 20 findings from the Management Evaluation.
To date, only three of the CAPs have been closed. The moratorium will
remain in effect until additional corrective action plans that address
the findings from the Management Evaluation are completed. The 1-year
waiting period for the remaining 14 Belle Food stores expires in July
2013, at which time they can seek WIC authorization. However, if the
moratorium is still in effect, Georgia WIC cannot authorize any stores,
Belle Foods or otherwise, other than those needed for participant
access.
Mr. Bishop. As I understand it the current administration
has just recently taken over, and they inherited this problem
from the previous administration, and they are working
aggressively to try to correct it, but in the mean time, you
know, it is the recipients who are suffering.
Ms. Rowe. And we are providing technical assistance, and we
will, if necessary, provide even more technical assistance
because we just--you have heard our conversation; this is a
critical program, and we don't want to see recipients not have
access to the benefits that they can receive from it, so we
will do everything we can to ensure that Georgia's residents
are not adversely affected.
Mr. Bishop. Thank you very kindly. I appreciate that.
I yield back.
Mr. Aderholt. Mr. Fortenberry.
SNAP PARTICIPATION
Mr. Fortenberry. Ms. Rowe, can you tell me the average
amount of time a person spends receiving SNAP benefits?
Ms. Rowe. You know, the average amount of time that--it is
about 10 months that individuals come in and then are able to
have sufficient income through job promotions or changes in
their circumstances and are able to meet their basic needs.
Mr. Fortenberry. Is there a group of persons who are
generally on the program for longer term because of certain
incapacities, and so what percent of those SNAP recipient
population does that represent versus this other group of
persons, who, because of job circumstances or some temporary
vulnerability become, eligible but then move off? You
understand the intent of the question?
I am trying to get a broader understanding of the nature of
the need, because it goes to the heart of what we have been
discussing earlier. If we would see economic improvement,
certainly there would be a correlation to dropping off of SNAP
benefits as well as the time spent on the SNAP benefits, but
there is probably a population with a significant vulnerability
that remains stable versus a population that we could correlate
to the potential of the declining use of the program if
economic circumstances were different.
Ms. Rowe. I can get you the exact number, but there is a
population of individuals who remain on the program for about 7
years, those individuals are folks with chronic needs. One of
the things that needs to happen for many of these individuals
is, are there other services in programs outside of SNAP that
they need to benefit from? So it may be individuals with major
mental illness problems, major drug, substance abuse problems,
major disabilities. They may be chronically homeless
individuals. So there are a variety of circumstances in terms
of chronic needs that these individuals have. So the exact
number--the average length of time that they remain is about 7
years, but the exact percentage of that, I will get back to you
on.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] 82566A.051
Mr. Fortenberry. That would be helpful to know, whether it
is 20 percent of the program or 5 percent, I would assume it is
not the majority of the program.
Ms. Rowe. No, no.
SNAP STUDENT ELIGIBILITY
Mr. Fortenberry. Explain to me the eligibility of students
for SNAP benefits.
Ms. Rowe. Currently, and I am going to need some help on
this one, I believe, because we have gone backwards and forth,
students have to be categorically eligible to participate in
the program, and they have to be working. So there are some--
they can be categorically eligible, and they have to be
working, which is the way the program was, and I will admit
before members of this committee, I was a student and found
myself in a situation where I needed to participate in the SNAP
program. I was in the SNAP program for about 4 months until I
graduated. I had some working income, but it was not sufficient
as a pregnant mom and with a family to be able to put food on
the table. But as you can see, I benefited from the program,
because that is why it was there, and now I am sitting before
you today. There are many individuals like myself, who were
students who have participated in the program, used it for what
it was designed for, who were married, had children and needed
that help for that short period of time. And so, as we have
worked on this, because of my own circumstances and experiences
and understanding, I want to make sure that students who need
the program in order to sustain themselves and their families
can avail themselves.
[The information follows:]
SNAP Student Eligibility
Section 6(e) of the Food and Nutrition Act provides that no
individual who is a member of a household otherwise eligible to
participate in SNAP shall be eligible to participate if that individual
is enrolled at least half-time in an institution of education, unless
the individual is:
Under 18 or is age 50 or older;
Not mentally or physically fit;
Assigned to or placed in a college through:
a program under the Workforce Investment
Act,
a program under Section 236 of the Trade
Act of 1974,
part of an employment and training
program under the SNAP act, or
part of an employment and training
program operated by a State or local government;
Working at least 20 hours a week or participating in
a State or Federally financed work study program;
A parent responsible for the care of a dependent
household member under the age of 6;
A parent responsible for the care of a dependent
household member over the age of 5 but under age 12 and does
not have adequate child care to enable them to attend school
and work a minimum of 20 hours;
Receiving public assistance benefits under title IV-
A of the Social Security Act; or is
Enrolled as a result of participation in the work
incentive program under title IV of the Social Security Act; or
is
A single parent enrolled full-time in college and
responsible for the care of a dependent household member under
the age of 12.
If a student enrolled at least half-time does not meet one of the
above requirements, he or she is not eligible for SNAP benefits.
Mr. Fortenberry. I understand what you are saying, student
is not some sort of a static, easy-to-define concept. You don't
want to be in a situation where you have someone in an
undergrad college who has received scholarships and may not
have an income level and is at a substantial university taking
out students loans, who is using money in the program for their
own needs, because again, that takes away money and undermines,
as the chairman rightly points out, the integrity of the
program and takes away the funds that we do have for persons
who are in significantly vulnerable circumstances.
Ms. Rowe. Students are generally not eligible, but--unless
they meet certain conditions.
Mr. Fortenberry. Okay.
SNAP ASSET LIMITATIONS
Let's go back to this question of asset test, because there
is no cost share by States except in the administration of the
program, you think that is a lack of incentive for States to
actually ensure that people who don't have--who have
significant assets but maybe a lower level of income aren't
eligible for the program. I mean, if someone has a million
dollars of assets and they are eligible for SNAP benefits,
again to the question of the integrity of the program and
really our priorities, again, we want to ensure that this is
readily available for persons who are either incapacitated by
something temporary or maybe chronic, as you suggested, it
helps get them through.
Ms. Rowe. Well, one of the things that assets, allowing
some level of assets is that it does promote savings and for
those who have little or no income.
Mr. Fortenberry. I understand, again not a static concept.
Ms. Rowe. Yes.
Mr. Fortenberry. It would be interesting to know if you
have the statistic, have you done any studies on this? What are
the assets of person who are receiving this? And are there some
outliers, where you are getting people with very high levels of
assets but would be peculiarly qualified based upon the way in
which we have written the standards.
Ms. Rowe. We haven't done any studies, but if you would
like for us to take a look at that question----
Mr. Fortenberry. Do you think it is a wise idea, Mr.
Chairman?
Mr. Aderholt. We will be happy to try to entertain. We will
work with the staff and see if something can be done.
Mr. Fortenberry. Because, again, please understand, I think
the chairman very well said it; it goes to the heart of the
integrity of the program and what its core mission should be.
And of course, we are all dealing with constraints, and we want
this targeted to persons really in need. So just because we
haven't defined something precisely enough and allowed for
people who, when considering the totality of their
circumstances, probably shouldn't be in it, actually impedes
our ability to deliver it to the right people so----
Ms. Rowe. You are absolutely right. And as I said, we would
be happy to take a look at this.
SCHOOL MEAL STANDARDS IMPLEMENTATION
Mr. Fortenberry. One more question, going to Mr. Rooney's
comment, we had to do some aggressive amount of research on
this problem of mothers writing to me, kids writing to me,
school persons--persons involved with school lunch programs
saying, the kids are hungry, you have to do something about
this. Now I come from Nebraska; we tend to eat a lot,
particularly beef. And we had a lot of difficulty a few months
ago unpacking exactly what the problem is. Now could you go
back and re-explain where we are in terms of the new
guidelines, the attempts that you are making currently to
implement flexibility? I would like a broader understanding of
that so we can write back to people with some good information
directly from the top.
Ms. Rowe. Well, first of all, let me say that a lot of
those calls, letters, which I received as well----
Mr. Fortenberry. Should I just send you mine?
Ms. Rowe. I have my own set. The initial implementation of
the program, and I was on the road all the time, just trying to
understand what was going on. And there were a number of issues
that we were beginning to identify. One, for school districts,
just the complexity of how to plan the meal, how to ensure that
they were providing sufficient options for students, that some
schools did not have an option versus serve process in their
school. We have encouraged schools to do that and have provided
a lot of technical assistance as we found issues.
One of the things that I should mention is that we did make
the flexibility in meats and grains and the calories. The
difference in the meals that students have now in terms of
calories, not much different than the calories that they had
before the implementation of this program. What is different is
the mix of what is on the tray. So students may see less of one
product--of one food that they really like and a lot of
another, and that has resulted in----
Mr. Fortenberry. You don't want to see a young person going
to a vending machine an hour later. I mean, again, it conflicts
with our earlier nutrition goals. Thank you.
Mr. Aderholt. Mr. Farr, I think we may have skipped over
you in that last round, so we will give you a little bit of
extra time on this. Go ahead.
NUTRITION PROGRAM ACCESS
Mr. Farr. Thank you, Mr. Chairman.
I think this discussion is really important because you
don't want to have rip offs when you have essentially what we
call help programs. I hope that the committee would really
focus on what we are talking about, particularly with school
lunch programs and school snack programs.
I have spent a lot of time studying education in California
and visit a school a week. One of the things I try to do is
also go through the lunch rooms. What I have learned from the
food service providers is that essentially the most regulated
part of the entire school day is the feeding program, far more
regulated than the classroom. And we have made it so regulated,
and that is one of the problems. The reason people didn't get
access is because it is difficult--we have made it difficult to
prove that you are poor. Some don't even know how to answer
these questions. I will bring in the long form of the SNAP
program. I think you probably have a lower error rate under the
EBT program than you do under the old coupon rate. So going to
technology is one way, and the savings are much greater.
I think, when you look at health programs, we ought not to
have means tests so strict that we fail to carry out the
intent. The program is here to get food to people who need it,
not deny them necessarily because their parents have two or
three cars. In my district, I have poor people living in real
estate that is literally worth a million dollars; their annual
income is $12,000. So what do you tell them in a means test?
You have to sell your house; you are an elderly person, you
know, people are going after them to get reverse mortgages and
those things. There are other programs out there. But you know,
we don't means test the kid when he wakes up in the morning and
gets on the school bus and say, well, your parents are too
wealthy, they could drive you to school. We don't means test
the kid when he goes into the library and say, your parents can
afford enough to buy you a book. Yet we means test it when they
go into the lunch program. And the bureaucracy of that means
test is part of the big cost to the program. And that is why
some States have just said, look, we will make up the
difference, Colorado has done this. I don't know if other
States have done it. We are going to pick up every kid. And I
think if we are going--this is where the school providers,
because you have free and reduced meals and then the other kids
have to pay. And they tell me, look, these kids parents can
afford to pay, but they are not feeding the kids, and they are
hungry. I say, what do you do? They say, we just take the money
out of our pockets and give it to them.
And you should see the bureaucracy of monitors. They have
to monitor every single child; does this one qualify or not?
And then they have to monitor which foods that child picked up;
were they the right foods on the tray, for each child? It is a
huge thing. And I am trying to get bar coded, bar code the kid,
bar code the lunch and let it all be done by computers, it
would save us billions of dollars. So, in our desire to try to
cut the costs, let's go to the administrative side of it,
rather than knock the kids out from the feeding side.
HEALTHY, HUNGER-FREE KIDS ACT OF 2010 IMPLEMENTATION
Let me ask this one question, I understand that under the
new meal pattern that we have to develop and schools have been
implementing, you have a section 209 of the Healthy Hunger-Free
Kids Act of 2010 requires that local education agencies report
information about school nutrition environment. Under this
provision, the Secretary is required to provide guidelines to
help these local agencies know how to properly provide
information for nutritional quality of school program meals. I
understand you intend to publish the proposed rule this summer
to implement section 209. What can you tell me about how you
are proceeding and what kinds of items that might be required?
And let me just throw all of this into one big question. Given
that you now have the authority to set the nutrition standards
for competitive foods, not just reimbursable meals, is it
reasonable to expect section 209 standards will also apply to
competitive foods.
And lastly, private vendors have been required to get FNS
approval before being able to offer systems to schools getting
certified for menu compliance required to get the additional--
in order to get the additional 6 cents provided by the HHFKA.
The FNS has also required vendors to have nutritional analysis
tools certified before they can be offered. Since you have
already established these requirements, do you anticipate
requiring a similar certification process for any system used
in schools to rate the nutritional quality of food items in
meals sold to schools? And would you expect these systems to be
compliant with recommendations made by the Institute of
Medicine report on nutrition and rating systems, including the
IOM's primary recommendation that such systems provide a
nonproprietary transparent translation of nutritional
information into the health meeting? I can give you this all in
writing if you want.
Ms. Rowe. Well, let me just say that we probably need to
have a conversation with you and sit down with you and your
staff on several of the points that you made in your question,
but there are a couple of things. One, we are moving forward
with the regulations. We expect to have them out this summer.
One of the--we are in the process of meeting with stakeholders,
talking to them and getting their input into what they think is
important that we include in the regulations, and after we have
gone through that process, we will then move to publish those
regulations.
With regard to various systems, I would like to just better
understand for myself the questions that you are asking and how
we can be responsive to it.
ADMINISTRATIVE COSTS
The one thing I should mention that I should have before is
direct certification; about 86 percent of the children who were
participating in the program are participating as a result of
direct certification. That is a significant increase. We will
continue, because that takes down a lot of that administrative
paperwork and misunderstanding the parents may have about
filling out the form or the form being in the backpack, and
they never see it. So we are certainly working with direct
certification to expand that in schools to reduce the
administrative burden. And only about 8 percent of the cost of
running this program goes into the administrative side. The
rest is into the food side.
Mr. Farr. But you have two administrative sides; you have
the Federal administrative side, and then you have the State
administrative side, and then the local administrative side,
does that 8 percent include all of those levels of
administration?
Ms. Rowe. It is coming from the Federal administration.
Mr. Farr. Just the Federal side. So there are still a lot
of costs, particularly in the compliance because that has
really got to be done at the local level.
Ms. Rowe. And we provide the oversight to that compliance
that goes on at the local level. So the administrative side and
I think we can certainly again sit down and talk to you about
the State level, and the Federal level, and the local level,
school district level and breakdown how the administrative
costs, what administrative costs go toward the operation of the
program. But as I said, when we get to direct--as we expand
direct certification the aspect of the application and
information being--education and information being shared with
parents will be significantly reduced.
Mr. Farr. I will end with this, I want to say Mr. Chairman,
I think that the Secretary of Agriculture, Secretary Vilsack,
has done more to cut administrative costs within his agency
than any other Secretary and done the things that we and all of
us across political boundaries would agree needed to be done.
Nobody likes waste and duplication and unnecessary spending. I
think he has done an incredible job.
At the same time, I am furious that the White House sends
the President over here but won't send the budget over here. We
need to have a budget. That is what we are working off. That is
our base document. We are going to be making decisions this
year in Congress appropriating funds for next fiscal year
without ever having seen the President's budget. And that never
in history has this happened. So you can tell the Secretary
that I am pleased with his work but disappointed in his lack of
ability to send Mr. Concannon and the other Secretary, and you
are doing a wonderful job.
Ms. Rowe. Thank you, sir.
Mr. Aderholt. Ms. Pingree.
Ms. Pingree. Thank you, Mr. Chair.
I have a whole host of questions, if I don't get to all of
them today, I know you and I will find another time to talk
about some of the interests I have in my own district about DOD
fresh and geographic preference, which I would love to talk to
you some more about.
SNAP NUTRITION EDUCATION
As you know, the State of Maine chose a new vendor to
administer our SNAP education program. And my understanding is
there has been some difficulties in the transition, and I am
just hopeful that FNS will make a concerted effort to work
directly with the State of Maine and the new vendor at UNE to
ensure that Maine continues to have a strong and very impactful
SNAP education program. It is such a good idea, and I think it
is helpful to the families who are receiving SNAP benefit to
have that nutrition education. So I would appreciate at some
point to get an update from you about that. And just make sure
this transition works well.
SNAP RECOVERY ACT BENEFITS
You know, we have so much focus here on the growth of the
program, the challenges that people are experiencing right now
in just balancing the budget, working families who just don't
have enough money to put food on the table. I not only hear so
much about the need for SNAP benefits, but our food pantries
are emptying out every week because people aren't finding their
SNAP benefits sufficient. And it is hard to feed a family. As
all of us know, it is a limited amount of money, and virtually
everybody who tries the challenge of feeding yourself for $1.30
per meal per day or feeding your children and family for that,
it is a stretch. And I think I can confidently say most of us
in Congress spend more money on ourselves every day to eat or
feed our families.
It is my understanding that, in November, for a whole
variety of budgeting reasons, including how we funded the
Healthy, Hunger-Free Kids Act, there is going to be a $25
reduction per month for families in their SNAP benefits, unless
we find funding somewhere else. So I know we are talking about
the growth of the program and what people see as excesses or
people who are getting it who shouldn't. I am actually worried
about those families who are going to see the $25 cut in
November, unless we find that funding.
I hear from people all the time. We have had issues around
how LIHEAP funding has decreased some of the funding we have in
our home State. And people often think, okay, $25, no big deal,
but I get a lot of calls when people with children can't just
make it stretch; that is a lot of money when it is $1.30 per
meal, per person, per day. So can you talk a little bit about
what you think the impact of that is going to be and your
concerns around it, if you have any?
Ms. Rowe. Yes, I do have concerns. Clearly, that is a
result of the ARRA increase that families have been able to
enjoy. I think the impact is going to be that more people are
going to be food insecure. We know from some program pilot
projects, programs that we have initiated, that increased
availability of resources decreases food insecurity, and we can
show a direct link. The Economic Research Service has looked at
that same issue and that same question. People who are not
going to receive this benefit are going to find themselves--we
are going to find more people who are going to be food
insecure.
Ms. Pingree. Well, I just want to have that out there
because I think we spend a lot of time worrying about the
growth of the program and are really forgetting that people are
about to see a cut, and that, in this economy, could be a real
challenge.
DOD FRESH
Since I have a little more time, let me just make sure I
put this out on the table, about DOD Fresh. I think you know
that, in the last several years, there has been growing
criticism about delivery of DOD Fresh. There have been stories
about rotten, unusable produce arriving at schools because
supply chains are so long from farm to table. You may not get a
chance to answer all of this, but I would like to hear more
about whether you think or there is continuing belief that DOD
is the best way to administer the school nutrition program? Are
there efforts for FNS to work more collaboratively with DOD to
ensure the program is carried out with the goals of FNS to
deliver fresh healthy foods? And I am also very interested and
have had some experience in my own district around this
geographic preference issue. It seems to me that there is still
confusion about it, I hope you can provide me with some
clarity. I would like to think and I would like you to clarify
that, is the intent to have geography or the ability to provide
food locally more important than the cost? Is that the intent?
And could it be clarified if cost is the most important factor,
where does the geographic preference fall? I am interested on
the side, of course, of schools getting healthy food, but also
from farmers, who need to be able to plan, but I think they
encounter a lot of road blocks and some confusion. I am out of
time, but it is an issue I am deeply concerned about and I hope
you can talk about it more.
Ms. Rowe. Well, clearly, we are promoting aggressively
local sourcing. We are encouraging schools as they work with
farmers to work locally, so that we can increase local produce
coming into the schools. We are working with DOD. We have made
it clear to them that their customer is getting some feedback
from our customers that there are some challenges in their
product, and so we are going to be sitting down with them. We
have had some previous conversations. We will have follow-up
conversation with them.
We are also--you know, schools have the ability to use some
of their cash to purchase locally, and that is where we are
encouraging them to do local sourcing. We will soon be
providing, for the produce that will be going into schools for
the USDA foods, we will soon be providing origin of source so
that schools will know where the food is coming from that they
are purchasing as they look down the list. We will be reaching
out more to local farmers and local geographic areas to get
them into the program.
I have learned a lot more about farming since I have been
engaged in this area, and I know it is very difficult for
farmers to be able to plan and understand what they are going
to need to plant and when it is going to be harvested and how
much they are going to need. So we are working very closely
with school districts so that they can understand that this
planning has to go on. And we need to have some guarantees for
farmers, so they understand what their yield will bring to them
in terms of new revenue.
So we would be happy to have some more conversation with
you on it, but it is one that I have become very much aware of
and have been very much an advocate in working with our schools
and working with our farmers and understanding how to work with
the schools, which is the other side of the equation.
Ms. Pingree. Great, I am happy to hear that. And I will be
glad to talk to you further. Thank you.
Mr. Aderholt. Mr. Nunnelee.
Mr. Nunnelee. Thank you, Mr. Chairman.
SNAP PARTICIPATION
Ms. Rowe, I understand while I was gone, there was some
discussion about the length of time that people are on food
stamps. And I will tell you, last year, I asked Secretary
Concannon that question, and his response was that roughly half
the people that are on food stamps are on 7 years or longer.
And it is not fair to ask him or ask you to respond to a
question like that off the top of your head, so I am just
asking for the record. Can you submit some type of aging
information? Let's get a snapshot, whether it is the close of
the calendar year or the close of the fiscal year that shows
how long how many people are on food stamps. If you could do
that, that would be helpful.
Ms. Rowe. I would be happy to do that, sir.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] 82566A.052
SNAP TRAFFICKING
Mr. Nunnelee. Thank you. Now I do still stand in amazement
that your response was there is virtually nothing we can do to
improve the rising costs other than improve the economy. So I
have just got to ask you a couple of questions in that area.
When I go to the grocery store and I use my debit card, they
seem to go through elaborate hoops and hurdles to make sure
that I am the owner of that debit card. Is there nothing we can
do to make sure that when somebody uses an EBT card, that it is
the one who has been issued that card that is using it and not
somebody else?
Ms. Rowe. Well, when the card is issued, there are a number
of people in the household who may be approved to use that card
when they go shopping. There is a PIN, and that is the unique
identifier that someone has to enter into the system, just as
you or I enter our PIN number so that we know that Audrey Rowe
is the person that is making this purchase.
Mr. Nunnelee. I will make me be the bad guy, not Ms. Rowe.
But there is nothing in the system that prohibits me as an EBT
recipient from getting cash from somebody and allowing them to
go use my EBT card if I give them that PIN?
Ms. Rowe. Well, that is trafficking. And that is when you
set yourself up for disqualification from the program, both the
trafficker, the person that is making the purchase and
yourself; that is a different situation, but if you are, which
a majority of our people are, honestly giving your card to your
daughter, son, representative, payee give them your PIN, they
go in. But yes, if someone does that, that is trafficking.
Mr. Nunnelee. How do we uncover that trafficking?
Ms. Rowe. Usually, in a number of ways. We are able to look
at the vendor transactions, usually trafficking when someone
goes in, there are some anomalies in the kinds of purchases
that that card has made previously and what they are purchasing
now. When we see those anomalies, we take some immediate
action. We may actually go and do an undercover. We may do a
variety of things to try and identify, is this store or is this
person--is this store allowing those transactions to take place
because they are colluding with the individual, or if this is
an individual who has passed their card on? And we catch those
all the time. We aggressively go after them. We turn them over
to OIG. We will prosecute someone. I mean, we make it real
clear that, within the program, that kind of activity is
illegal, and you will be prosecuted.
Mr. Nunnelee. And I have got in front of me applications
from my home State. The thing that jumps out at me, we have
gone to great lengths as a Congress to make sure that if a
person takes out a loan or a credit card application, that
there are certain disclaimers that are in very large print and
in much more bold font than the rest of the application. And I
don't expect you to be familiar with those type of regulations,
but it jumps out at me that the application for food stamps in
my home State, there is the disclaimer that says, ``if you
commit fraud, you are personally responsible,'' but it is
blended in with all the other font. The thing that does jump
out says, ``you can get benefits within 7 days.'' That is in
big bold font.
Can we not require large font on the applications
concerning fraud, concerning trafficking, as you described, so
that we can make it much more plain to individuals applying,
that if you commit fraud, you will be personally liable for
this?
Ms. Rowe. Well I can say, yes, we can look into and
determine whether we can do that. For someone who is applying
as a retailer, there is big font on there, that if we determine
that you are trafficking, you can be prosecuted or immediately
disqualified. That is part of our new very aggressive program
to address trafficking and fraud in the program. So, yes, we
can look into that and suggest to States that they make some
change with regard to the font that they have on their program
for trafficking, for illegal use as well.
[The information follows:]
SNAP State Applications
Each State Agency develops its own SNAP application. Under SNAP
regulations, States must include prominent and boldface lettering that
explains:
That the applicant may be subject to criminal
prosecution for knowingly providing incorrect information; and
The civil and criminal provisions and penalties for
violations of the Food and Nutrition Act, which includes those
provisions against fraud and trafficking.
As States have implemented online applications, FNS has built these
requirements into guidance and checklists for conducting State reviews.
Mississippi has not developed an online application to date. We will
work with the State to ensure all requirements are met.
Mr. Nunnelee. For individuals.
Ms. Rowe. For individuals as well, yes.
Mr. Nunnelee. Thank you, Mr. Chairman.
Mr. Aderholt. Mr. Bishop.
SEQUESTRATION IMPACT
Mr. Bishop. Thank you very much.
I kind of want to turn my attention now to veterans, hunger
and sequestration. I have been very encouraged to find out that
the Food and Nutrition Service has worked very hard to make
sure that veterans and their families are informed about
potential benefits, particularly since less than 1 percent of
all of the nutrition benefits go to veterans. For example, FNS
has developed a Web site, which can help veterans navigate the
network of services, including SNAP, food stamps, collaborated
with the Veterans Affairs Readjustment Counseling Service to
distribute a brochure, which I think you prepared, entitled,
``How to Get Food Help.'' And you have done that in 300
adjustment centers and 70 mobile veteran centers around the
country. And you are working with the Department of Veterans
Affairs to cross promote benefits and resources to disabled
veterans and their families and to identify new areas of
collaboration.
And I congratulate you and thank you very much for that.
Can you tell us, though, what, if any, impact sequestration
and the other proposed reductions in the food nutrition
programs will have on these initiatives aimed at veterans?
Ms. Rowe. Well, I don't believe that--as I think about, I
am thinking about how the work that we do with veterans is our
staff going in and training individuals who are working with
vets who are reentering back into their homes. We have been in
this process with regard to our staffing. We will not be
furloughing any of our staff as of right now. So I anticipate
that those kinds of requests to continue to work with veterans
and veteran agencies we will be able to continue.
Mr. Bishop. So you don't anticipate a staff shortage to
make that collaboration more difficult?
Ms. Rowe. Well, sir, we have, starting in 2011, we started
experiencing reduction in our budget. Our current staff level
is at the 2003 staff level. One of the reasons we have taken so
much action and focused aggressively in reengineering our
processes is so that we can reallocate staff to target into
working in areas that we have targeted as high priority. So, in
that sense, no, I do not see any change in the work that we are
doing with veterans today.
Mr. Bishop. And the utilization of your IT upgrades, that
will facilitate some of the things that will allow you to do
more with less?
Ms. Rowe. Yes, absolutely. We have upgraded our IT systems.
We have been reengineering our contracting systems. We have
reduced our footprint around the country. We have many more
workers who are engaged in telework, appropriately stationed.
We have done a number of things within the agency to allow us
to work within the availability of resources that we have.
PROGRAM OUTREACH
Mr. Bishop. Okay. According to a recent Gallup poll, more
than one in six Americans said that, in 2012, there have been
times over the last year they didn't have enough money to buy
food that they and their families needed. We also know that the
rate at which SNAP eligible people are enrolled and receiving
benefits vary substantially by State and locality. For example,
less than 75 percent of people in Georgia who are eligible to
participate in SNAP actually receive benefits. How many States
have SNAP outreach plans, and what is FNS doing with respect to
helping States optimize their participation of SNAP programs?
And the same thing goes for the school lunch program, where,
according to reports, less than half of the poor children that
are eligible for breakfast are not participating in a program?
And of course, the only ones who arrive who get breakfast are
those who come early, and the others--many don't want to own up
to the fact that they are poor and they need it. What
strategies do you have in place to increase the number of
eligible children and to increase the outreach?
Ms. Rowe. Well, again, clearly, with regard to our overall
outreach that we are engaged in, all States are required to
have a State plan for outreach, which regional offices review
very carefully. We look for a number of things to ensure that
they are properly targeted to populations of people who are not
participating in the program but who would be eligible. We work
with our schools, some of the outreach that we encourage our
schools to do is through PTAs and other forums that exist in
the school environment, that information is made available to
the breakfast programs. We work with schools through the State
agencies, and States have primary responsibility, but to the
extent we know of best practices that are working in another
State, we share that. We use our Web site to convey a great
deal of information that would be technical support to States.
So we aggressively look at ways to educate individuals about
the program and the eligibility requirements.
Mr. Bishop. So you encourage the States and the local
school districts and the localities to visit your Web site
and--so that is stressed.
Ms. Rowe. Absolutely.
Mr. Bishop. Before the electronic age, they would have to
depend on the State to transmit that information, but now they
can get it directly from your Web site.
Ms. Rowe. They can go to our Web site. There is something
called the Food Service Management Institute, located in
Oxford, Mississippi, which does a great job at training,
information. That is directly available to the food service
staff and the food service directors in the States, but we do
look carefully because of the feedback that we have gotten that
everyone is not necessarily--the kind of communication that
that we would like to see, it is not necessarily taking place.
So we zero in to make sure that nonprofit organizations,
organizations that are what I consider to be the boots on the
ground, organizations that really touch people who need these
programs are given the information that they need.
[The information follows:]
Nutrition Assistance Outreach
In FY 2012, FNS approved 42 State outreach plans.
Mr. Bishop. Thank you.
Mr. Yoder [presiding]. Ms. Rowe, I am Congressman Yoder
from Kansas. I am taking the seat of Chairman Aderholt. He had
to step out for a minute.
Welcome to the committee.
WIC INCOME ELIGIBILITY
I had a few questions for you. I wanted to particularly ask
you about the GAO report from February 2013, entitled ``WIC
Program Improved Oversight of Income Eligibility Determination
Needed.'' Are you familiar with this report?
Ms. Rowe. Yes.
Mr. Yoder. I noted just some conclusions of the report and
wanted to get some information and feedback from you. In
particular, the report questions integrity of the WIC program
and identifies potential improvements in program administration
to strengthen the WIC program for the future. Among its key
findings, the GAO concluded that FNS has not monitored States'
compliance with Federal regulations on income eligibility
determinations, that FNS allows too much discretion to the
States and local WIC agencies, and that adjunctive eligibility
is no longer in line with WIC program goals, stating that many
States have increased their eligibility thresholds beyond the
185 percent poverty level. And as a result, more than half of
all U.S. infants are now enrolled in the WIC program. Have you
responded to this report yet, and how do you respond to the
assertions made?
Ms. Rowe. Yes, we have responded to the report. With regard
to the income eligibility, we have income guidelines, which
have been in existence for some time; we have updated them with
policy guidance over the years. What we will be doing this
April is issuing new updated eligibility income guidelines for
all States to follow. Then we will be going out to make sure
that States are trained and understand what is expected of them
with regard to these new guidelines. I have asked staff to do
management evaluations of all of our State agencies to ensure
that they are adhering to the guidelines that we not only have
for income, but any of the other management guidelines that we
have issued that States are adhering. So we will start that
management evaluation next month, and we will run those until
we have looked at every single State.
WIC ADJUNCTIVE ELIGIBILITY
With regard to adjunctive eligibility, which is what you
were referring to, I do, you know, I think the big--the program
itself is well targeted to those who are most vulnerable; 76
percent of the participants in the WIC program are eligible.
However, Federal law allows those individuals who are eligible
to participate in SNAP, Medicaid and TANF to be deemed eligible
adjunctively to participate in the WIC program. It, again, is a
small percentage; it is about 2.9 percent of our participants
who exceed the 185 percent of poverty level. We continually
monitor that data, but that is, of course, a State option, and
it is Federal law.
Mr. Yoder. Do we know how many children that affects?
Ms. Rowe. I can get you that information. I don't have it.
[The information follows:]
Nationwide, WIC certification errors were approximately 3 percent
in 2009. FNS regularly provides technical assistance to WIC State
agencies regarding income eligibility determinations, which are a part
of the certification process. The guidance we plan to issue will ensure
consistent use and application of income determination policy across
State agencies.
The Child Nutrition Act confers adjunctive (or automatic) income
eligibility for WIC for categorically eligible persons participating in
the following programs: Supplemental Nutrition Assistance Program
(SNAP), Medicaid or Temporary Assistance for Needy Families (TANF). In
addition, if you are a member of a family that includes a pregnant
woman or infant who participates in Medicaid, any categorically
eligible family member is adjunctively income eligible for WIC.
In some States, individuals with incomes higher than those
established for WIC participation (185 percent of the federal poverty
level) are eligible for Medicaid. Therefore, by law, such individuals
are eligible for WIC and State agencies cannot deny benefits based on
their income level. Our guidance to States will be consistent with the
law. We do not have data on how many participants, including how many
children, would be affected if adjunctive eligibility was not in place.
Mr. Yoder. Certainly, not having a uniform system when we
are dealing with the thresholds and income levels and certainly
those things affect families in one State differently than
other family; that is obviously a concern you addressed as
well. Do you know if you move to retraining and refocusing our
State folks to ensure they are following the rules and the
thresholds, et cetera, in a consistent way, how many children
that would take off the rolls?
Ms. Rowe. Well, let me just say the rules or the training
that we would provide would be targeted to ensuring that all of
those who are on the rolls are eligible to be on the rolls. I
cannot tell you how many will be affected until we go through
the entire process, but the intent would be to ensure that
anyone who is participating in the program either participates
as a result of adjunctive eligibility or through the regular
application.
Mr. Yoder. And what we don't know is how many people
qualify who don't qualify under one of those two measures are
receiving benefits who don't qualify under adjunctive or income
eligibility?
Ms. Rowe. Under adjunctive or--it is about--I think the
number is about 3 percent.
Mr. Yoder. That don't qualify under one of those two
criteria but are still receiving benefits.
Ms. Rowe. Correct.
Mr. Yoder. So they may be taken off the system them.
Ms. Rowe. They may be impacted.
Mr. Yoder. Follow the GAO report. Okay. And do we know how
many children that is?
SCHOOL NUTRITION FLEXIBILITY
Mr. Yoder. And I just wanted to echo some of the comments
of my colleagues that have been made earlier regarding the
nutrition programs. Many of our local schools are obviously
having challenges with this uniform system. And do we have
opportunities to create flexibility in what we could look at
that would help schools tailor the needs towards local
communities?
Ms. Rowe. We created some flexibility. We continue to
listen and are willing to create flexibility, where
appropriate, so that we can make it easy for the schools to do
what we want--what we all want to see happen, and that is a
healthy environment for our children. We will evaluate, and we
want to get through the first year. We are going to evaluate
the impact. We are going to look at what worked, what didn't
work, what changes we may need to consider for future years.
And so nothing is static, as far as I am concerned. We all
have--it is a dynamic process, but the bottom line of what we
are trying to achieve is ensuring that our children have access
to healthy food from the time they enter the school day until
the time they leave.
Mr. Yoder. Thank you, Ms. Rowe.
Ms. DeLauro.
IMPROPER PAYMENTS
Ms. DeLauro. Thank you very much, Mr. Chairman.
There has been a lot of talk about SNAP and waste, fraud
and abuse, and error. I think it is interesting to note for the
record that the SNAP error rate is about 3 percent. I wish we
could go to a variety of other Federal programs and look at
their error rates. Case in point, and I want to ask the
chairman to see if this is a committee that can look into the
issue of--before I say that, let me just say this, we have in
other farm programs with direct payments, we continue to send
direct payments to people who are dead and who have been dead
for several years. We ought to try to take a look at that in
terms of what the loss is in that area as well, in terms of
waste.
But I want to specifically mention the Crop Insurance
Program. I will just try to do this very, very quickly. I don't
know how much is known about the Crop Insurance Program. I
support it. I wish it applied to my part of the country in the
way that it does in other parts of the country. However,
Federal Government picks up 60 percent of the cost of the
premiums in the Crop Insurance Program; that does not even
include administrative costs.
Secondly, there are 26 beneficiaries, 26, who receive at
least $1 million in a premium subsidy. There is no income
threshold. There is no asset test. There is nothing that says
you will get your million dollars, and you know what? We can't
find out who they are. We can't find out who the 26 are,
because we are forbidden by statute; transparency is forbidden.
So I want to ask this committee to let us look into the
Crop Insurance Program. Let us take a look at the waste in that
program that is there and figure out how the Federal Government
can save money, in addition to the direct payments that we are
paying to dead people in this Nation.
SNAP RECOVERY ACT BENEFITS
With that, Ms. Rowe, let me move and ask you, I want to
follow up on something my colleague, Ms. Pingree, was
mentioning. A cut in benefits this fall when ARRA ends, the
average household, and SNAP receives $281 million in SNAP
benefits, $413 a month for a household with kids. Eighty
percent of SNAP benefits are used in the first half of the
month, and yet starting in November, every SNAP recipient will
lose about $25 a month in food assistance for a family of four.
I share your concern and my colleague's concern about the
impact of that reduction.
SNAP PARTICIPANT CHARACTERISTICS
Can you, Ms. Rowe, discuss the make up of the SNAP case
load? It is my understanding that 55 percent of the case load
lives below half the Federal poverty line, not in the case of
the folks who are getting at least a million dollars in the
premium subsidy--I suspect they are eating well, probably more
than three meals a day. Folks below half the Federal poverty
line, that is below $9,500 per year for a family of three, and
that more than 90 percent of SNAP recipients live below 100
percent of the Federal poverty line. Can you discuss how SNAP
has been effective at targeting resources to the poorest
Americans?
Ms. Rowe. Well, let me talk about the characteristics of
the participants. Nearly 75 percent of individuals on the SNAP
program are under the age of 18, or 60 or older, or disabled,
so it is children, seniors or disabled. If you look at the data
between SNAP households that had, in 1991, 41 percent of all
SNAP households received cash welfare and only 20 percent had
earnings; if you look at 2011, 8 percent of the households
received cash only, and 31 percent have earnings. And so even
though people are working, they are still needing to
participate in this program. In 2011, 43 percent of recipients
had a gross income at or below 50 percent of the poverty line,
and so that would be, for a family of three, $763 would have
been the gross income that was available. For participants, in
terms of diversity, 35 percent are White, 23 percent are
African American, 15 percent are Hispanic, 3 percent Asian, 4
percent Native Americans. And the balance, we do no have that
data because they did not report, but for those who reported,
that is the data that we have available.
Ms. DeLauro. I want to thank you for that, and I also just
want to say to you, I would ask you to explain it, my time is
going to run out, but the system that USDA uses to make sure
that only people who are truly eligible receive the assistance
from this program, I think it is really incredible what has
been done, and that has an error rate at 3 percent. I defy
you--and I come from a State that is defense dependent, so I do
make a case here, but I will tell you, let's take a look at
what 99 percent of the defense contractors are getting and
let's take a look at the waste, fraud and abuse that exists
there, before we begin to talk about people who live well below
the poverty line. And these days, in my district, Connecticut,
richest State in the Union statistically, one in seven, one in
seven don't know where their next meal is coming from, and it
is not food insecurity. They are going to bed hungry. And that
is kids going to bed hungry in this Nation. And it is not
something that we can afford, and if we do create jobs, if we
do grow the economy, we can allow for them to move forward.
Thank you for the great work that you do.
Ms. Rowe. Thank you.
Mr. Yoder. Thank you, Ms. DeLauro.
Any other questions?
That concludes our hearing.
Thank you so much.
Ms. Rowe. Thank you, sir.
[Questions submitted for the record:]
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Thursday, March 21, 2013.
U.S. DEPARTMENT OF AGRICULTURE
WITNESSES
PHYLLIS K. FONG, INSPECTOR GENERAL
KAREN L. ELLIS, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS
GIL H. HARDEN, ASSISTANT INSPECTOR GENERAL FOR AUDIT
Introduction of Witnesses
Mr. Aderholt. The subcommittee will come to order.
We have before us today USDA Inspector General Phyllis
Fong, and Assistant Inspector General for Investigations Karen
Ellis, and the Assistant Inspector General for Audit Gil
Harden.
We welcome all of you to the Subcommittee, and thank you
for being here this morning. This Subcommittee has always
appreciated the work of the Office of the Inspector General.
Ms. Fong, thank you and your staff for the work to combat
fraud, waste, and abuse within the USDA's programs. We are
especially interested in your work on the Supplemental
Nutrition Assistance Program, known as SNAP, and also the
department's longstanding challenges with security over its
information technology infrastructure and processes. So we look
forward to your testimony here this morning.
Before you begin, I would like to ask the Subcommittee
ranking member, the distinguished gentleman from California,
Mr. Farr, if he has any opening comments.
Mr. Farr. Well, thank you very much, Mr. Chairman.
And it is always one of our annual meetings that I look
forward to. Unfortunately, we are not addressing you with any
budget. We have got to make--with these hearings, we have got
to make budgetary decisions based on zip. And it is very
difficult to do that.
So, as I told the last panel, I wish that the White House
would send the budget up here rather than the President up
here, because appropriators need a budget to work with. But
hopefully, we will do the right thing, and we look forward to
your testimony. I have a couple questions I would like to ask
on specifics, and we will get to that at the Q and A period.
Thank you very much.
Mr. Aderholt. Thank you, Mr. Farr.
Subcommittee members, we will proceed with the usual of the
hearing under the 5-minute rule. We may have several rounds. It
is my understanding we will be having votes within the next
probably 20 minutes, and we will be called away. What we will
do is, when the votes are called, we will take a recess. And
then we will return, reconvene after the vote, and continue
with the questions from the members.
But I think, Inspector General, we will be able to get your
testimony in this morning. And so you go ahead and start with
your remarks. And your written testimony will be included for
the record. So I would recognize you now for your oral
statement, and then, as we proceed with time, before the votes,
with questions; if not, when we return. Thank you.
Opening Statement
Ms. Fong. Okay. Good morning, Mr. Chairman, Ranking Member
Farr, and members of the Subcommittee.
We thank you for the opportunity to come today and testify
about the OIG's oversight work at USDA. We certainly appreciate
this Subcommittee's longstanding support for our office and
your interest in our work. And as always, we welcome the chance
to address your interests and concerns. As you know, our
mission at the IG's office is to help USDA deliver its programs
effectively and with integrity. We do this by providing
independent, professional audit and investigative services, and
by keeping you and the Secretary informed of our findings.
As you know, our audits can result in recommendations to
improve program operations, while our investigations can lead
to criminal sanctions, disqualification from USDA programs, and
disciplinary actions. We do not have programmatic or operating
authority, as you know. Instead, it is the responsibility of
USDA agencies themselves to take appropriate corrective
actions. As we plan our work, we look at four key areas within
the department's portfolio as a framework for prioritizing how
we do our efforts.
Our first area of focus is to support the department in
ensuring the wholesomeness of the U.S. food supply. In this
area, we recently reported on APHIS's smuggling interdiction
activities and FSIS testing for E. coli in beef trim, as well
as FSIS meat inspection activities. As summarized in my full
statement, our findings led to several significant
recommendations. Currently, we have in process work on E. coli
testing in boxed beef products, as well as FSIS inspection
procedures at swine slaughterhouses.
Our second area of focus is to help USDA safeguard and
effectively deliver its benefit programs.
Mr. Chairman, you mentioned the SNAP program. That is
certainly the biggest program within the USDA portfolio, and as
such, we have devoted a significant portion of our
investigative and audit resources to this program. Last year,
we reported over $57 million in results and 342 convictions
from our investigative activities. We have also issued a group
of audits addressing eligibility and fraud detection in the
SNAP program. We have issued audits on soil rental rates in the
Conservation Reserve Program, and we have looked at the crop
insurance program from the perspective of new producers and
organic programs. We have significant work ongoing right now
vis-a-vis vendor management in the WIC program, as well as RD's
business and industry guaranteed loan program.
Our third area of focus deals with assisting the department
in improving its own management systems. Again, Mr. Chairman,
you mentioned the department's IT security challenges. We have
certainly spent quite a bit of time on those issues, as well as
the department's financial statements and its efforts to reduce
improper payments. All of those audits are statutorily
required, and we are in process again this year looking at all
of those areas.
We have also focused on the grant management process within
the department. Specifically, we issued a report on OAO's
grants management activities. And we have ongoing work to
assess FAS' trade strategies, as well as the settlement claim
process for the so-called Pigford litigation.
Finally, in the area of helping USDA improve its
stewardship of natural resources, we issued a number of audits
regarding NRCS' efforts in the area of oversight and compliance
activities, floodplain easements, and migratory bird habitats.
That was all within the last year. We have ongoing audits on
the EQIP program and the rehabilitation of flood control dams.
As you know, we are also working to finish our remaining
oversight concerning USDA's $28 billion in Recovery Act funds.
And we view these audits and investigations as very
significant, because even though they apply to the money that
was provided under the Recovery Act, the recommendations that
we make will go to how the programs function moving forward
with their regular appropriations. And so we believe that our
recommendations for action can have a lasting impact on the
management of those programs. We issued recently an audit of
RD's Business Enterprise Grant Program, as well as loss claims
in the Single Family Housing Program. And I think you all are
very much aware of those audits.
Significant work that we have ongoing involves reviews of
the broadband initiative program and Forest Service grant
making activities. In conclusion, Mr. Chairman, I want to thank
you again and just point out that we within the IG's office are
very cognizant of the need to improve our own activities. We
have been engaged in streamlining our activities. And we
appreciate the support that you have given us over the years.
Thank you.
[The information follows:]
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DEPARTMENTAL CHALLENGES
Mr. Aderholt. Thank you for your testimony and for giving
us an overview of what you are doing there in your department.
And as I mentioned in my opening statement, we will probably
have votes here shortly, but we will go ahead and proceed with
the questioning aspect of the hearing.
And I will begin this morning, and then we will go as far
as we can before the votes are called. Your office is uniquely
situated within USDA and has a view of the greatest challenges
and the ways in which it performs very well. What would you say
that right now is USDA's biggest challenges that you see from
your standpoint?
Ms. Fong. Well, that is a very good question to ask. I
think what we are seeing overall department-wide is that, as
with every other Federal department, the challenge for the
department is to continue to deliver its mission and its
programs in an era of constrained resources where the demand
for programs is increasing. And as the department moves to
deliver its programs, it faces challenges in providing an
adequate level of oversight. And I know that we have discussed
this among our team.
Frequently, managers view their priority as delivering the
program. Because they have perhaps a limited amount of
resources available, the oversight and effectiveness of that
delivery may not be their top priority. And so we see that it
is important to increase the emphasis on the need for really
delivering the program as efficiently as possible in accordance
with rules and regulations, bringing integrity to the program.
And that is where we believe that our value lies.
Mr. Aderholt. What would be the top three recommendations
that you would make to USDA? Or I say top three, or as many as
you----
Ms. Fong. Well, okay. We have made a lot of recommendations
over the years. I think increased emphasis needs to be placed
on improper payments, eliminating and reducing improper
payments across the board. The department has engaged in these
activities. We need to continue to work in FNS. The school
lunch program and school breakfast programs deserve some focus.
The SNAP program improper payment rate has been reported to be
decreasing, which is terrific. But increased focus can be
placed on identifying the level of fraud on the part of both
retailers and recipients. And I think we have made
recommendations to the SNAP program management, to really focus
on those issues. Obviously, if the department can reduce its
rate of improper payments, more money will be available to
provide to eligible recipients. And so I think that is a goal
that all of us share.
Mr. Aderholt. Which programs or processes within USDA do
you see as doing a good job and being a leader?
Ms. Fong. Well, I want to start by saying that I see an
increased emphasis from the Secretary on down through the
management ranks in terms of emphasizing the need to play by
the rules. And so whenever we issue an audit report or an
investigation report and we point out areas where changes need
to be made, we do see a commitment on the part of program
management to make those changes.
I think, you know, one good example is in the SNAP arena.
We have been working very closely with the FNS officials
because we all share the goal of eliminating or reducing
trafficking and fraud. And we believe that we have a very good
working relationship with that agency. Now, much more needs to
be done, of course, but they are open to our recommendations.
Mr. Aderholt. Okay.
Since the vote is coming, let me go ahead and recognize Mr.
Farr. And why don't we do for 5 minutes? And then we will
recess for a vote, and then we will come back.
Mr. Farr. Thank you, Mr. Chairman.
It seems that some of the questions rise on whether the
extent of what you have to do, you have enough budget to do it
in these investigations. And the second thing I just wondered
is how do you respond to an agency when you make
recommendations and yet they don't have any money in their
budget to fill them out? I always found when I was in local
government, we had grand jury reports criticizing agencies of
local government. And it was easy to criticize, but to fix it
was always a monetary issue. And maybe it would be really--I
mean, this is probably a bigger discussion for your IG
association is to figure out how do we use those
recommendations also to build into our appropriation process so
that, indeed, if these are things that need to be cleared up,
cleaned up, and they don't have enough resources to do it, some
of that judgment of whether there is enough money to do it. Can
they do it within internal--or could you just make them, and
then the heads of the departments have to make sure that they
are doing something about it, right? I mean, there is really no
enforcement tool other than the transparency of your report. Do
you understand the question?
Ms. Fong. I do.
Mr. Farr. And also let me just--part of that, too, would be
that I think that the issue on food stamps--not food stamps, I
mean school lunch, when I got into the details on it, it was
probably one of the most regulated programs we could ever do in
giving out benefits to people. More regulated than anything
else. And we are talking about kids in a setting like a school
cafeteria. And yet proving that every kid who received a meal
every day was poor enough to receive it and that what was on
their plate met all the incredible, it is a huge bureaucracy.
And it just seems to me that some of these rules we make
probably are dumb rules, that the amount error is so de
minimis. Yes, again, there are some violations of law because
we made the law so tight. Do you ever get into recommending
that there is--that Congress ought to be cleaning up, revising
some of their standards to make them more practical?
PROGRAM RECOMMENDATIONS
Ms. Fong. Well, let me offer a few comments on your
questions. And I appreciate your message here. Let me just talk
generally about how we go about making our recommendations and
how we view that process. As you know, when we go in and look
at a program, we spend a lot of time talking with the program
officials to get their viewpoints as to how it is operating,
what they believe to be their challenges, where they believe
they have obtained some successes. And we try to document all
of that in our reports. And as we go through the process of
formulating recommendations for the program officials, we are
very cognizant of the fact that many times they are operating
without additional resources. We know that this is a difficult
time for all agency managers. And so we view the recommendation
process in many ways as a dialogue, where we try to come up
with suggestions that we believe could work. We are very open
when they come back and say, you know, that is really not going
to fix the problem, or that is going to create other problems,
or we have resource issues here. And if you are asking us do
that, it is just not going to work with our current level of
staff or the expertise that we have. We do not want to be in a
position where we are making recommendations that really are
not practical, that an agency manager will say, I can't agree
with this. Because that doesn't help anybody. We are really
here to help the agency move forward. And so that is the
philosophy with which we approach these recommendations. I
think if we look at our statistics on recommendations, most of
the time we have reached agreement with the agency managers. By
the time we issue our audit reports, they will say, yes, we
agree with the approach you are recommending, and we will
commit to take action on that. And that, to me, is an indicator
that it is a practical recommendation.
Mr. Farr. How about feedback to Congress that we have
enacted some laws that are not practical?
Ms. Fong. I am going to defer to my colleague here.
Mr. Harden. We don't have as many of those type of
recommendations. But if we are working on something and see
that the legislation is not working, we will make
recommendations to the agency for them to bring that forward as
part of their legislative process, or as I understand the
process to work, for the Secretary to bring that forward.
Because our recommendations go to the agency. And it is what
they are able to get on the plate for a legislative change.
Mr. Farr. I am excited to hear that. I don't think I have
ever seen it since I have been in Congress. I wish we had
ability to have reviews, revisions of the law, essentially is
what you need, is to look at law that has been enacted over
many, many years ago, and it is now not practical to try to
carry out to that detail, and that there is better ways of
doing it so that we can get back. But I am glad there is a
system there that allows for that feedback. My time is up.
Mr. Aderholt. What I would like to do at this point, we
will go recess for the vote and then come back, and we will
start back with Mr. Rooney. You will be the first one up when
we come back from the vote. So if you will bear with us, we
will go cast our votes, and we will resume here very shortly.
Thank you.
[Recess.]
Mr. Aderholt. Okay. The subcommittee will resume.
And at this point, we will recognize Mr. Rooney for any
questions that he may have.
Mr. Rooney. Thank you, Mr. Chairman.
FSA OFFICE CLOSURES
Thank you, Ms. Fong, for your testimony and for answering
our questions. My district is in South Central Florida. It is
what is sort of locally called Florida's heartland. If you look
at Lake Okeechobee and go north almost to Mickey Mouse,
everything in between not on the water is my district, and it
is oranges, grapefruit, sugar, and beef cattle and dairy. And
one of the things that I have heard about most often from my
ranchers, farmers and growers over the last couple of years,
one of the biggest issues for them, has been the closures and
consolidations of the Farm Service Agency offices.
I don't really have a question with that, but there seems
to be a lot of strife and possible management issues. I have
just heard a lot of negative things with regard to FSA
closures. Those offices are supposed to help these people
navigate USDA rules and regulations; everything that your
office would support them in trying to do the right thing
with--and to be able to operate their property. So, I would ask
you to look into that. I don't know what is going on, but it
literally is the biggest issue that I hear about on a continual
basis.
[The information follows:]
Because we have not performed work related to the recent office
closures by FSA, we asked FSA to provide us with summary information
related to office closures in Florida's 16th District.
According to the Farm Service Agency (FSA), one FSA office in
Florida's 16th District was closed and its operations were consolidated
into an adjacent county office as part of the agency's 2012 office
consolidation plan. This office was located in Highlands County,
Florida, and was closed because it had zero full-time permanent
employees. In addition to the criteria provided by Congress in the 2008
Farm Bill directing FSA to first close offices that are located within
20 miles of another office and having two or fewer employees, FSA
notified Congress that it was going to recommend for closure all of its
county offices that had zero full-time permanent employees regardless
of their proximity to another FSA office. In total, 31 offices were
identified as having zero full-time permanent staff and were outside
the 20 mile radius of another FSA office. Of those, 28 were identified
for closure and 3 were maintained in order to continue part-time
service delivery to limited resource and socially disadvantaged
farmers.
According to FSA, some producers and community members in Highlands
County expressed their desire to retain the Highlands County FSA
office. These viewpoints were conveyed at the public meeting held in
that county and through written public comment. While FSA considered
and reviewed this feedback prior to the finalization of the
consolidation, Highlands County was still found to meet the criteria of
having zero full-time permanent employees. FSA producers were provided
the option of receiving service from a different FSA location than the
one proposed by the State FSA for their convenience. They will continue
to have the opportunity to vote for representation on the local FSA
committee that oversees the office serving them.
WETLAND RESERVE PROGRAM
Now, specifically, I wrote a letter to Secretary Vilsack on
March 27th of last year commending the Wetland Reserve Program,
which greatly helps Florida's ranchers and growers. The letter
recommends and I obviously hope that it continues, because it
allows them to bridge the gap in tough times, to be able to use
the money that they get for the easement, also to be able to
store water north of the lake, not going to go into the whole
Everglades restoration, but you understand it, and so we think
it is a win-win, and obviously, we hope that that continues.
But, my question to you is, in 2008, you audited the
Agency's WRP, the Wetland Reserve Program, and you found
numerous cases of financial mismanagement. In fact, your audit
found a number of cases where mismanaged easements had
destroyed the restoration process all together. This was very
disturbing to me because the farmers and ranchers rely on this
to supplement their land use, and if there are problems with
regard to what the easements are supposed to be for, which is
water storage and the ability to help the environment, and
audits show mismanagement of those easements, it kind of
appears that the farmers are behind the eight ball, so to
speak, in what they are trying to do.
Do you believe that the mismanagement of funds has diverted
resources from individuals who need it the most, and will you
continue to monitor the NRSC's management of these conservation
programs?
Ms. Fong. Let me make a few comments, and then I am going
to defer to Mr. Harden for more specifics. We, clearly, and I
appreciate your question, are very aware of the conservation
programs and how NRCS is managing them, and as you point out,
we have issued a number of audits over the last number of years
on different aspects of the conservation programs, and we
continue to watch these programs because we think that there
are many actions that the agency can take to improve the
management.
With respect to the specific audit, Gil, I don't know if
you know whether the actions have all been implemented yet?
Mr. Harden. I know we would have reached agreement on all
of the recommendations, and that particular one, I would have
to go back and check on it, the implementation of them, but
given the age, I would assume that they are moving on those.
But more recently, I mean, we are finding similar type problems
in other conservation programs, so yes, as Ms. Fong says, NRCS
and their management of their easement programs and the
different conservation programs is definitely something that we
are looking at on a routine basis in trying to work with them
to strengthen their oversight and control of those programs and
how they implement them.
Mr. Rooney. Well, I would appreciate if you have any
further information, if you can let our office know. There is a
perception out there that farmers are out to injure the
environment, and this program demonstrates that we want to be
good partners with those that are trying to do the right thing,
and so the sooner that we can figure out how to rectify this
mismanagement, I think, the better for everybody.
Mr. Harden. I guess one thing I will add to what I was
saying before. A lot of our recent work has not shown farmers
to be doing incorrect things. It has been more on the agency's
side in terms of how they are implementing their programs.
Mr. Rooney. I understand that. I don't want the whole thing
to blow up just because, you know, the government is having
problems, but anyway, thank you very much.
Mr. Chairman, I yield back.
Ms. Fong. We will be happy to provide that information for
the record.
[The information follows:]
OIG audit report 10099-0004-SF, Natural Resources
Conservation Service (NRCS) Wetlands Reserve Program (WRP)
Wetlands Restoration and Compliance, was issued August 2008. In
reviewing payments for wetland restoration, we found that NRCS
was obligating expired funds. We determined that NRCS incurred
obligations for new easements and restoration work because NRCS
had assumed that 1996 Farm Bill funds-like 1990 Farm Bill
funds-were no-year funds and were available for obligation in
subsequent fiscal years. However, this changed with the 1996
Farm Bill, which restricted the period of availability for WRP
funds to FYs 1996 to 2002. Upon the advice of the Office of the
General Counsel, NRCS found available unobligated WRP funds and
adjusted its accounts, avoiding the necessity of reporting an
Anti-Deficiency Act (ADA) violation to Congress and the
President.
Concerning the monitoring of restored WRP easements, we saw
opportunities for improvement. We recommended that NRCS develop
a monitoring system to prioritize the easements and optimize
monitoring resources by implementing, for example, a risk-based
system. In the management decision process, OIG and NRCS agreed
that NRCS would create and implement a risk-based monitoring
system for WRP easements. NRCS agreed to create the Agency
Conservation Easement Management Plan which was designed to
outline actions to prioritize site visits of potential
violations. Additionally, NRCS agreed to utilize high-
resolution aerial photography and trained remote sensing
specialists to complement on-site monitoring activities of all
WRP easements annually. On March 4, 2009, NRCS and USDA's
Office of the Chief Financial Officer, agreed that NRCS had
achieved final action and closed the recommendation. http://
www.usda.gov/oig/webdocs/10099-4-SF.pdf
Mr. Aderholt. Thank you very much.
Mr. Bishop.
Mr. Bishop. Thank you very much.
OFFICE OF ADVOCACY AND OUTREACH
And welcome, Ms. Fong and your associates. Let me just
explore the audit of the 2501 Program. Just a couple of weeks
ago, you completed and released an audit of the Office of
Advocacy and Outreach, and of course, OAO is an office within
the department management of USDA and was established by the
Farm Bill of 2008 to assist farmers and ranchers who have
moderate size operations, have recently begun operations or
classified as socially disadvantaged. And it is designed to
help them gain access to USDA programs. And of course, the
Office of Advocates and Outreach uses outreach and assistance
for Socially Disadvantaged Farmers and Ranchers Program to gain
and improve that access. And of course, as a very strong
supporter of the 2501 program, I want you to know that I
welcome all of the internal efforts aimed at improving the
administration and effectiveness of that grant assistance
program
My question is, your audit cited a number of missteps in
administering the program on the part of some of the OAO
employees as well as a general lack of management controls of
the grant-making process. Assuming that your recommendations
are put in place and carried out fully, and I noticed that they
accepted all of your recommendations, are you confident, moving
forward, that the program will be managed in a proper manner?
Ms. Fong. Well, let me make a few comments and then I will
turn to Mr. Harden. I appreciate your question
Mr. Bishop. I do have some follow ups on that, too
Ms. Fong. We did start that audit because, as you point
out, the whole purpose of our audit was to help the department
deliver that program as effectively as possible, and you know,
we are very happy to say that the department took our
recommendations and implemented them immediately, even as we
were doing our audit work, to ensure that the final recipients
of that program were properly looked at in terms of eligibility
and the funds.
My understanding is that for that program, I am not sure
that there is money moving forward. I think 2013 is the last--
2012 is the last year with funds, and so it is still being
implemented. So, I think, you know, for future years, if
Congress appropriates additional money, then there would be a
future for that program, but right now, we are not aware that
it is going to move forward.
I also should note that----
Mr. Bishop. And the Senate----
Ms. Fong. Go ahead.
Mr. Bishop. In the Senate farm bill draft, I think they did
include it, but they also added some additional groups, an
additional group in particular, veterans, for that program,
which would again stretch the eligibility, to some extent, but
it is my anticipation that it will continue if we get a farm
bill. I am sorry. Go ahead if you want to continue.
Ms. Fong. And to address one of your other questions. We
are very encouraged by the fact that the department did take
our recommendations and put into place a good grant-making
process once we had our audit work presented to them.
Mr. Bishop. How will sequestration impact the program for
the remaining life of it, as well as, are there any additional
administrative costs that were associated with carrying out the
recommendations that you made?
Mr. Harden. I don't know the specific administrative costs
associated--I don't know of specific administrative costs for
carrying out the recommendations. It is like you mentioned, if
it is reauthorized with the Farm Bill, we think it will be a
stronger program going forward.
FOOD AND NUTRITION SERVICE
Mr. Bishop. Okay. Let me go to SNAP right quick. I think
you are pretty familiar, Ms. Fong, with some of the challenges
that we are facing in the State of Georgia with our WIC
program, and it is clear that FNS was fully aware for a number
of years that the State of Georgia didn't have the resources or
the expertise to appropriately manage and operate the WIC
program. In fact, you issued a report in 2006 which said as
much.
But from a national perspective, it seems like the Food and
Nutrition Service should have some way to red flag State SNAP
and WIC programs which are facing administrative and management
issues. Do you think that there are adequate management flags
or safeguards in place at FSN which would assist in identifying
issues before they become major problems, particularly at the
regional level?
Ms. Fong. I think that the WIC program does present a
number of administrative challenges for the Department. That
has been pointed out through work that we have done, as well as
work that GAO has done. And as the WIC program starts moving
toward an electronic delivery system, we anticipate that they
will face similar challenges to what they had with the movement
of the SNAP program when it went to the EBT delivery program.
You know, on the fraud side, we are seeing some significant
fraud schemes where people seek to take advantage of the
program improperly. On the management side, there are some
issues with respect to vendors and whether those vendors are
being properly overseen. We do have some audit work planned.
Mr. Harden. And another way to approach your question. I do
believe that FNS has the right type of oversight or control
structure. It is a matter of how well they implement that. In
talking, because I can't specifically talk about the WIC
program right now, but similarly, in the school lunch program
and work that we recently completed, we found that they had a
management evaluation process in place. They just were not
following it at either the Federal level or the State or local
level, so we would have to watch and see how they use that
process, which would be able to flag States that have problems.
Mr. Bishop. Do you have adequate technical assistance
training or other target assistance to make sure that the
States can rectify any issues or problems that come forward?
Are there any specific training programs, technical assistance
opportunities that the department has for the States to
eliminate or to ameliorate or to reduce those kinds of
problems?
Mr. Harden. I am generally aware that they have those for
all those types of programs. I am generally aware that they
have those types of programs for--those types of training in
all of their programs. Specifically, I know we looked a little
bit at what they have set up for the school lunch program as
far as recent work we did, so some of it is available to them.
Mr. Bishop. Yeah. We heard from the school lunch program
and some of the provisions that are being implemented there to
help local lunchroom folks through the Web site and other
electronic means, but I was wondering if the same thing was
available for WIC and for SNAP.
Ms. Fong. We can certainly reach out to the program
officials and provide that information for the record.
[The information follows:]
Yes. We discussed this issue with Food and Nutrition
Service (FNS) officials who provided the following information.
WIC. FNS has an automated WIC management evaluation tool as
discussed under training programs above.
SNAP. FNS continues to provide technical assistance to
enhance the effectiveness of State integrity oversight through
electronic means and automation. For example, FNS provided
States with a tool to automate the monitoring of social media
websites so that when an individual attempts to buy or sell
SNAP benefits online, a State fraud investigator is notified
via email and can evaluate the situation for potential
investigation. In addition, FNS is conducting a data mining
project to devise guidelines and technical assistance for
States to better detect recipient fraud consistently, as well
as to audit the integrity of data systems in order to establish
standards for data management and input controls.
Our audit work has identified several electronic tools used
by FNS to identify and reduce problems. The primary tools are:
The Anti-Fraud Locator Using Electronic Benefits
Transfer Retailer Transactions (ALERT), maintained by FNS,
analyzes patterns in States' EBT transaction data to identify
suspicious patterns most commonly associated with SNAP retailer
fraudulent behavior such as benefit trafficking.
The Watch List compiles retailer data that meet
predefined parameters (generally, retailers with the highest
ALERT scores) into a single list. Investigators use the Watch
List to identify stores for investigation.
The Store Tracking and Redemptions System (STARS)
helps FNS manage data on participating retailers. It contains
information about the retailers and identifies their
investigative history.
Mr. Aderholt. All right. Mr. Fortenberry.
Mr. Fortenberry. Thank you, Mr. Chairman.
STATE DETECTION OF FRAUD
Ms. Fong, nice to see you again. Thank you for coming
today. As you recall, several years ago, I had been the
Subcommittee chairman on department oversight and operations on
the Agriculture Committee, and we had a very forthright hearing
in which we discussed the delays in your audits as well as the
problems of a lack of enforcement mechanisms that the State
could engage--States could engage with in order to detect
fraud.
Since then, I have noticed that you stated in direct
response to that hearing that you have expanded your audit
scope and you have made specific recommendations in this
regards to potentially help stop fraud by stating what tools
are available that should be more aggressively used as well as
identifying which tools are not available and how the
department should move forward in that regard.
I think it would be helpful to everybody if you explain
what your recommendations are. You said the department has
accepted those recommendations, and what do you envision as the
timeline on the implementation of the recommendations?
Ms. Fong. Well, thank you, Congressman, and I appreciate
your interest in these issues. You know, based on your interest
and your encouragement, we were able to complete a group of
audits on the SNAP fraud issues that you mentioned, and we
issued the 10 State audits as well as a roll-up report late
last year, basically finding that FNS needed to do a little
more work in order to nail down the level of fraud in the
program, both on the part of retailers as well as on the part
of beneficiaries. And what we pointed out was that currently,
there is no good methodology for calculating the percentage of
fraud at either of those levels in the program.
Our audits also pointed out that numbers of beneficiaries
were possibly ineligible for benefits because the States were
not doing the kinds of data matching activities that they
should have been doing. We found that in a number of States,
there were people who were receiving benefits from more than
one State. They had bad Social Security numbers, and they were
receiving benefits that way, and so we pointed out to FNS that
there were things that FNS could do to fix this problem.
Now, I believe that FNS has agreed to all of our
recommendations. In terms of the timeframes, I don't know
specifically what--we would have to provide that for the
record, I think, on the timeframes
Mr. Harden. Overall--I want to get back to the specific
timeframes, but overall they were reasonable or else we
wouldn't be at agreement on the recommendations.
Mr. Fortenberry. Do you have an estimate of how much that
could potentially save the system?
Now, again, all of this is said in the spirit of ensuring
the integrity of the program because this is an important
program for many Americans who are vulnerable and particularly
those who need temporary transitional types of assistance as
well as those who have longer-term needs. When we have a system
that is not ensuring that those who need the help are getting
it in a timely fashion, we are potentially wasting it; we are
undermining our own mission here. So you have a very important
mission, and I, again, I appreciate your aggressive response to
the earlier hearing where it was a forthright conversation
about some of the gaps that we have here.
Do you have an estimate of what that could potentially save
if implemented?
Mr. Harden. What we identified in the 10 States that we
looked at, we identified about 13.9 million average recipients
who were possibly ineligible, and that equated to about $3.7
million a month. Now, because of differing circumstances, it is
not exactly right to extrapolate that over a period of time,
but that is what it was.
Mr. Fortenberry. That is extrapolated nationwide or is that
a subsample?
Mr. Harden. That is just for those 10 States that we
sampled.
Mr. Fortenberry. So extrapolating that nationwide, roughly
you are looking at maybe close to half a billion dollars? It is
simple math.
Mr. Harden. It is simple math. If you are going to apply it
that way, you could, but that is not something we can
extrapolate.
Mr. Fortenberry. Well, one of the difficulties here is
again, because of the great expansion of the program,
particularly in our difficult economic times and those finding
themselves in need of this type of assistance, the numbers have
grown so substantially, so even when there is a small amount of
fraud, the numbers are actually very large.
So, if you could find out what the timeline is for
implementation and then the specifics as to which States
perhaps are leading in their efforts to implement these
recommendations along with FNS guidance, that would be helpful,
and perhaps which States are lagging.
Thank you, Mr. Chairman.
Ms. Fong. Be happy to look into that.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] 82566A.198
[GRAPHIC] [TIFF OMITTED] 82566A.199
[GRAPHIC] [TIFF OMITTED] 82566A.200
Mr. Aderholt. Ms. DeLauro.
FOOD SAFETY
Ms. DeLauro. Thank you, Mr. Chairman.
And I want to just say welcome, and it is always wonderful
to have you here before the Subcommittee, Ms. Fong. I want to
thank you for your testimony. You mentioned several food safety
issues, which I would just like to follow up on.
First, I wonder if you can provide us with an update of
your November 30th, 2012, report on oversight of shell egg
inspections. In the report you found that USDA did not have a
unified approach to ensure the safety of shell eggs either
internal within the department or external in coordination with
the FDA. Has FSIS provided you with the information that you
requested regarding recommendations? There are the
recommendations 1, 2, 3, 9, and 10, and they essentially
develop a plan coordinating--coordination of USDA, FDA related
to shell eggs; develop and plan to share information within
USDA and FDA on shell eggs; develop and implement a data
collection plan re-sanitation at egg processing facilities;
develop and implement a science-based policy for shell egg
storage temperature; and develop implementation enforcing
policy for violations that are a risk to consumers. If you have
that information, I don't know if you have that information. If
you do not, I would love to have the information for the
record.
Mr. Harden. We can definitely provide it for the record,
but just for your information, either late last week or early
this week, we reached management decision on all of those
recommendations that were outstanding, so there is agreement on
them moving forward and how they are going to move forward and
it does address the points that we made in our recommendations,
but we can get the specifics on that for you.
Ms. DeLauro. Terrific. Appreciate that.
[The information follows:]
Our audit on USDA Controls Over Shell Egg Inspections
(50601-0001-23) was issued November 30, 2012. We recommended
that the Food Safety and Inspection Service (FSIS) coordinate
with the Food and Drug Administration (FDA) to implement a
seamless farm-to-table approach to shell egg safety, and ensure
that crucial information related to shell egg safety is
collected and shared between USDA agencies and with FDA. We
also recommended that FSIS implement a scientific policy on
shell egg refrigeration, and that AMS take the necessary steps
to prevent the USDA grademark from being placed on shell eggs
that are potentially contaminated with Salmonella. AMS and FSIS
agreed with our findings and we have reached management
decision of all of the report's recommendations. USDA has taken
action to implement 4 of the 10 recommendations
(recommendations 4, 5, 6, and 8). According to OCFO's records
as of April 2, 2013, AMS has one recommendation (recommendation
7) that needs to be implemented. Five recommendations made to
FSIS (recommendations 1, 2, 3, 9, and 10) also remain
unimplemented.
And in an April 2012 report, you identified multiple
shortcomings related to the inspection of meat and poultry
processing facilities. Your note that you were unable to
determine the efficiency of the FSIS staffing level because of
inadequate data was of particular concern to me. I wonder if
you could talk a bit more about your findings and any action
taken by FSIS since, specifically related to the first and
third recommendations. Now that the U.S. is relying more on
PHIS, P-H-I-S, when do you expect to conduct a followup to the
audit?
Mr. Harden. Well, they did respond favorably to our
recommendations in terms of thinking of putting in mitigating
factors for if inspectors are not able to get do their
processing plants when they are assigned, so, you know, we had
a very good response on that.
And I would say that we would probably follow up on that
after a period of time and give them a chance to implement it.
But with regard, just for informational purposes, in regard to
the public health information system, we currently have work
ongoing because, in response to a number of reports we have
issued in the last several years, FSIS' response was always, we
will take care of that when we implement the public health
information system, we will make sure that is included, and so
we are following up on several of those recommendations right
now.
Ms. DeLauro. Question is I know they have agreed but they
are actually working at doing this? Okay. If there is any
update on that, I would be happy to know that.
RISK MANAGEMENT AGENCY
And then, Ms. Fong, I was interested in your work related
to the risk management agency and crop insurance. I know the
statistics were somewhat breathtaking: 154 of the 176 new
policies you sampled, a staggering about 87-and-a-half percent
were sold to ineligible producers, yet the taxpayers footed a
reinsurance bill for companies as if all 176 policyholders were
eligible. Between this report and the GAO report on data
mining, it is clear that RMA needs to evaluate its data
collection analysis. Can you tell us more about your findings
or related to RMA's database and the use of data validation to
ensure accuracy in this program?
Mr. Harden. In response to that question. Part of the
answer goes back to things that the IG mentioned in the opening
statement in response to some of the major challenges at the
department. With the new producer program, we found that the
AIPs were not carrying out their role in the----
Ms. DeLauro. The AIP----
Mr. Harden. The Approved Insurance Providers, the private
sector providers that are supposed to be doing checks, and they
were relying on information from RMA in a way that they should
not have been relying on it.
Ms. DeLauro. Was the information not accurate from RMA or
was it--why wouldn't they----
Mr. Harden. They were trying to use an audit check that RMA
kept in its system as a check for eligibility when that is not
what it was designed to do.
Ms. DeLauro. Okay.
Mr. Harden. They were just not carrying out the
responsibility that they were supposed to. In addition to that,
RMA was not doing enough oversight of the insurance providers
to make sure they were doing what they needed to be doing.
Ms. DeLauro. Okay. But let me ask you this. Was RMA dealing
with, in terms of this program, looking at eligibility and
their mechanism for determining eligibility as well as the
insurance companies not doing what they are doing, do we have a
problem both within the agency and with the insurance companies
in terms of accuracy of data and how are we going to address
it? Well, my time is out, so----
Mr. Aderholt. Mr. Nunnelee.
Mr. Nunnelee. Thank you, Mr. Chairman.
IMPROPER PAYMENTS
As I understand it, the Office of the Inspector General is
charged with the responsibility of reviewing the agency under
the Improper Payments Elimination Recovery Act. And in that
process, you identified some high-risk programs, so maybe to
start with, so that we will be on the same page, how do you
identify a high-risk program? What is that?
Mr. Harden. Actually, we do not identify the high-risk
programs. The agency, the department and its agencies have to
apply criteria coming out of OMB as to what would be decided is
a high-risk program, and then we look to see how they carry out
the responsibilities with regard to that.
Mr. Nunnelee. All right. So how do they identify a high-
risk program?
Ms. Fong. Well, OMB issues guidance to all Federal agencies
that says if you have got a certain level of improper payments
totalling a certain dollar amount that kicks you into the high-
risk category. So each agency has to go through its programs,
identify which ones have that level of improper payments in
that dollar range and identify it. And what happens then is
that once they are designated as a high-risk program, then they
have--the agency has certain obligations to identify how they
are going to address the problem, mitigation that they can do
to bring the improper payment rate down. And our role, as the
IG's office, is to go in every year and to audit what the
agency is doing in terms of whether there are actions to lower
the improper payment rates, are they successful, are the rates
coming down, are they identifying the right things?
Mr. Nunnelee. Okay.
Ms. Fong. So that is the overall scheme.
Mr. Nunnelee. So what has been your experience in recent
years with this agency? Have they identified the right areas;
are they addressing them; and are the rates coming down?
Mr. Harden. I will start by saying they are making
progress. Last year our fiscal year 2011 report noted that they
weren't meeting four of the seven requirements, and this year's
report, which we issued on time last week when it was required,
they are not meeting three of the seven requirements. Last
year, when we went in, because of the problems, because it was
new, the Department did not have all the processes and controls
set up to know that it could collect the information to really
monitor it.
They are making progress on that so we didn't make
additional recommendations this year to them, but what we did
find was the sub-agencies that have the high-risk programs did
not have all the controls in place to get their information to
the Department, so we made specific recommendations to them.
They have not responded to those recommendations yet just
because they didn't have time to in us issuing the report by
the mandated time, but I do expect to hear from them. So they
are making progress to get it done.
Because the Department has not made the progress it needs
to or is not compliant for 2 years, two consecutive years, they
have to talk to OMB about what they are going to do now to
rectify the problem. Our recommendation to the department this
year was to have that conversation, document that conversation
so we can see what was done as we look at it next year.
Mr. Nunnelee. All right. So these sub-agencies you have
identified that aren't headed in the right direction, which
sub-agencies are those?
Mr. Harden. The six agencies that are involved are FNS, and
those are big programs like SNAP and school lunch and the Child
and Adult Care Program. You have got CCC and some of the farm
payments, Forest Service, Natural Resource Conservation
Service, the Risk Management Agency is one, and rural
development is the last.
Mr. Nunnelee. All right. Is that in any particular order?
Did you go from best to worst or----
Mr. Harden. No, I wouldn't say that I put them in any
particular order. I was just working from my notes.
Mr. Nunnelee. All right. And of these agencies, the six
that you identified, how would you compare your report this
year to last year? Are there new problems that have come in, or
are they still failing to address the same old problems?
Mr. Harden. Well, the three areas that they were
noncompliant in this year are three of the areas they were not
compliant last year, so there is consistency in terms of--but
we did know that the improper payment rate overall went down,
so they are making progress, but you know, it is just a big
problem to address.
Mr. Nunnelee. All right. Thank you, Mr. Chairman.
IMPLEMENTATION OF OIG RECOMMENDATIONS
Mr. Aderholt. In the semi-annual report to Congress for
April to September 2012, you note that for this period, OIG
issued 176 program improvement recommendations and that USDA's
managers agreed to implement 174 of them. When an agency
implements a program improvement, it reports the action to the
USDA's chief financial officer. OIG does not oversee the
implementation of the recommendation.
My question would be, is this the most effective way to
ensure the agencies adopt an OIG recommendation?
Ms. Fong. Well, it is the process that is envisioned
through the Inspector General Act, which created our offices,
and sets forth the roles of the various parties within an
agency. Basically, it requires us to report, to work with
agencies to reach decision on recommendations, and then it
requires the Secretary to report on actions taken to implement,
and so that is the overall structure.
Now, within that structure, once we reach agreement with
the agency as to what it is going to do, we don't just walk
away from it. We do keep an eye on what the agencies are doing
as they implement their recommendations, and frequently, as we
develop our audit plans every year, we are watching to see
whether it is time to go back in to look at a program again to
see if the implementation has been working or if actually it
occurred or if there are still issues that need to be
addressed. And so we view our oversight and relationship with
the agency as sort of a continuous ongoing relationship.
Mr. Aderholt. And so speak again about the follow up on the
reports to an agency and how that works again, the follow up?
Ms. Fong. Well----
Mr. Aderholt. And how often that occurs.
Ms. Fong. When we issue a report, we are engaged very
deeply in discussions as to whether or not the agency is going
to agree with our recommendations, and so that is one level of
discussion that occurs in great depth through our audit
process.
Once we reach an agreement, then the agency has to report
to the CFO's office its progress on implementing its actions,
and there is a mechanism there under the Inspector General Act
that says that if the agency does not implement its corrective
action within a certain period of time, I think it is 6 months,
a year, then the Secretary has to report that, as do we, that
these actions have not yet been implemented. So we have ongoing
dialogue with the CFO's office as well as with the agencies to
keep track of the progress of those actions.
Mr. Harden. And one other granular part of that. As they
are implementing a recommended action, we provide the agency
and OCFO with a document that says, okay, to reach that final
action, to know that it has been adequately resolved, we expect
the agency to do A, B, C, and provide this information to OCFO.
If OCFO gets that information and it doesn't look like it
matches, they send something to us saying, `hey, is this doing
what you intended for it to do or not?', so they don't accept
final action on an audit recommendation that they shouldn't.
And so that is another way that we are part of that process.
And depending on the sensitivity of the recommendations and
the programs involved, we will kind of gauge our planning
process as to when we will go back in. Some we may have to go
back in sooner because of the sensitivity; some we may, due to
other priorities, may need to pick up later.
Mr. Aderholt. Have you ever encountered a case where an
agency didn't do what it said it was going to do or made a
change that didn't meet the intent of the recommendation?
Mr. Harden. I would have to go back and find a specific
example, but yes, when we go in and do follow up, we do
sometimes find it didn't quite fix the problem, and so we--and
we may have an additional recommendation to make at that point
in time or we--it is rare, but you can reopen a recommendation
and say, you didn't finish it, so you got to go back and fix it
the way we originally talked about.
Mr. Aderholt. How can we find out whether an OIG
recommendation and then a related management decision has been
implemented?
Mr. Harden. I would say you would need to work with the
CFO's office. I mean, they keep that data, and we could
definitely work with you in getting it, but they maintain the
data as to the documentation that it was done, and we go to
them as we start audit work to make sure, you know, if we are
following up on a recommendation, that they did what they said
they were going to do. We would first go to OCFO and say, okay,
what did they provide you? We can see documents match. Now
let's go in the field and see if they actually did it. Did the
retraining of people, did the instruction that was given, was
it clear, and did people follow it the way that it was intended
to be followed?
Ms. Fong. You can also contact our office, have your staff
reach out to us, and we would be very happy to brief on what we
know about the status of any audit recommendation.
Mr. Aderholt. Mr. Farr.
Mr. Farr. Thank you, Mr. Chairman.
HORSE SLAUGHTER
There has been a big controversy in this country about
horse slaughter. We banned it, and now the Congress has lifted
that restriction on the ban, and I understand that USDA is
thinking about licensing a company in New Mexico. You have
investigated the USDA's Food Safety Inspection Service, and in
your 2010 audit of the National Residue Program, you pointed
out that the Food Safety Inspection Service should at least
annually assess the risk of drug residues by canvassing drug
industry experts and private practitioners about the veterinary
drugs that could end up in the food supply and also that the
FSIS should subject every shipment of livestock coming from
unknown producers to additional residue testing.
What is interesting about horses is that they are not
raised for commercial meat purposes. They come from all kinds
of backgrounds, you know, racehorses, show horses, pet horses,
the list goes on and on, you can imagine, so that there is
really no known process of what each one of those handlers has
done in using drugs with them. And so, because they aren't
raised for food, every shipment of horses will come from
unknown producers and will have been exposed to a huge variety
of unknown drugs.
It seems like the Food Safety Inspection Service is posed
to disregard your advice of 2 years ago by resuming horse
slaughter without giving sufficient consideration to food
safety. Are you prepared to investigate whether the food safety
inspection service has the appropriate systems and protocols in
place to ensure the safety of horse meat?
Ms. Fong. We are aware that this is a very sensitive issue,
and that the agency is engaged in making decisions as to how it
is going to go about implementing its program, if it does. I am
not aware that they have yet approved any process.
Mr. Farr. They have not approved, but they are considering
it. I think an application has been filed, at least that is
what I have heard
Ms. Fong. And I agree that that is my understanding as
well. We, as you pointed out, we did issue a very significant
audit on residues in meat last year, and I believe we reached
management decision with FSIS on that. We would be very happy
to go back to FSIS and just reiterate the findings that we had
in that audit just to make sure that they are fully aware and
cognizant of those findings.
Mr. Farr. I think the Committee would appreciate it
generally. I mean, the other side of it is we have just seen
that they were going to cut back meat inspectors. They were
going to rift them, and you know, the Senate bill we just voted
on the floor restores that, but in their testimony here, they
are faced with sequestration. And it seems a moment when food
safety and particularly with drugs in animals is at an all-time
concern, that this is the last place that we ought to be--as
pointed out, these are first responders, and first responders
shouldn't be cut back to responding to concerns.
Why don't I yield to you.
Ms. DeLauro. I would just add the one thing that we know,
what just happened in Britain and finding out all over the
world that horse meat is being used in products in which it is
not supposed to be used, and that has been happening. So I
think we opened a door here that really would put our food
safety in that--it would put it at risk.
Mr. Farr. I mean, obviously, if the department doesn't have
the funds, then they ought not to be giving the permit to start
this new enterprise that has got all kinds of risks and high
controversy.
Ms. Fong. Well, I didn't know if that was a question. I
understand your concern. We will certainly engage in dialogue
with FSIS on our residue audit, just to make sure that that is
at the forefront of their minds.
Mr. Farr. Can you report back to this Committee on what
your judgment is, whether they are equipped to handle it?
Ms. Fong. We will be happy to gather our thoughts on that
and provide something for the record.
Mr. Farr. Appreciate that. Thank you.
[The information follows:]
To date, FSIS' inspection program for horse slaughter is
not in place, and they have not approved any facility for horse
slaughter. From FSIS' appropriations hearing testimony (before
this Subcommittee) on March 13, 2013, OIG learned that FSIS is
working within the National Residue Program framework to
develop its horse slaughter inspection program. As FSIS' horse
slaughter inspection program is in early development, we do not
anticipate performing a review at this time. However, we may
consider a review of such processes at a later date.
Mr. Aderholt. Mr. Fortenberry.
USDA IMPLEMENTATION OF OIG RECOMMENDATIONS
Mr. Fortenberry. I would like to follow up a little bit
more on how the culture and interaction between your agency and
the department is structured, and then go into the specifics of
how the CFO, the chief financial officer, contains or controls
the data as to how well implementations are going or being
implemented and what type of timelines, and your comment, where
you said, well, contact the CFO's office. I heard you adjust
that slightly to say, we are also available to do that.
I think it is important to recognize that we depend upon
you to bring us the results of your audits and in a timely
fashion, that are substantive and clear. So if the CFO has
information that perhaps is not transparent to us, us going to
the CFO, I would think, would be a circuitous route to try to
get to the heart of the matter, which you are charged with.
So, in that regard, it is my understanding that they keep
basically some type of scorecard as to how well these
recommendations have been implemented. Could you report that to
us as a part of your general findings?
Ms. Fong. We would be happy to do that.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] 82566A.201
[GRAPHIC] [TIFF OMITTED] 82566A.202
Mr. Fortenberry. I think that might be an improvement, and
it would get us out of this entanglement as to the centralized
authority in this regard to find out how well program missions
and clarifications of implementation are actually being
followed in a timely manner.
So, again, we are looking--sometimes some of this can turn
into gotcha, a gotcha type of hearing, and that is not the
intent here. The intent here is to again ensure the integrity
of the missions of the programs, and our substantive way of
doing that is through you being the basic watchdog. Do you have
sufficient autonomy and independence from the agencies in which
you are charged to audit to effectively carry that out? Again,
I am unpacking a little bit from the nuance of what you said
regarding the CFO's office to ensure that you answer my
question, yes, absolutely.
Ms. Fong. Yes, absolutely.
Mr. Fortenberry. All right. Thank you, Mr. Chairman.
Mr. Aderholt. Mr. Bishop.
Mr. Bishop. Thank you very much, Mr. Chairman.
EMPLOYEE BUYOUTS AND EARLY RETIREMENTS
Ms. Fong, in your testimony, you indicated that your office
is offering voluntary early retirement authority and voluntary
separation incentive pay payment to 39 employees. I noticed,
however, that last year, you testified that during the first
quarter of fiscal year 2012, your office had approved voluntary
buyouts and early retirement for 21 employees and that you were
implementing plans to approve similar measures, including
offering 30 additional employees buyouts and early retirements
by the end of December of last year.
What is the status of those buyouts and those retirements
that you spoke of last year, and does the 39 employee figure
include or exclude any of those employees that you spoke of
last year? And can you give us an indication of who those folks
are in terms of positions and grades and years of experience?
And given the apparent institutionalization of our continuing
resolution process here in Congress and the added burden of
sequestration, have your staff reductions had any impact on the
ability of your office to complete the audits and the
investigations with which OIG is tasked? And have you
experienced a brain drain with all of your staff departures?
Ms. Fong. Okay. Let me go ahead, and I appreciate your
question. We should definitely clarify what we did in terms of
buyouts for our staff. Bottom line is that in fiscal year 2012,
last fiscal year, we offered three buyout opportunities because
looking forward to 2013, we saw that we would need to bring our
staff down, the numbers of our staff down, so we offered three
buyout opportunities.
Mr. Bishop. Was that because you didn't have enough work
for them to do?
Ms. Fong. I wish I could say that. And basically, 39
employees, during those three buyouts, a total of 39 employees
left our rolls. That includes the 21 that we testified about
last year, plus an additional 18.
I will note as a matter of interest, we offered three
buyouts. In the third offering, no one accepted a buyout, and
so we concluded that we had pretty much offered a buyout to
anybody who was interested in doing that. So, coming forward
into fiscal year 2013, the staff who we lost through buyouts
ranged from extremely senior auditors and investigators and
managers at career levels, who had 30 years of experience, all
through our ranks, all the way down through our ranks. Most of
the people that we lost were in our audit and investigative
offices.
Needless to say, because we are a staff-intensive
organization, we depend on human resources to carry out our
mission, and so this year, we are operating at a much lower
staffing level. The impact of sequestration for us is that we
have had to reduce travel funds. Every time we have a request
for an audit or an investigation or an allegation of
wrongdoing, we have to assess where that falls in our
priorities and whether it will require us to spend money that
we may not have. So that is the impact of sequestration on our
operations.
Mr. Bishop. Do you have a brain drain such that it will
limit your capacity to carry out the responsibilities with
which you have been tasked by this Congress?
Ms. Fong. Well, because we have lost so many experienced
people, and under the rules of the buyouts, we are not allowed
to fill those vacancies, generally speaking. Once you lose a
very experienced person, you can't really replace that. That
being said, we have a very dedicated workforce of people around
the country. And we are committed to doing the very best that
we can, given our resources.
Mr. Bishop. Okay. So I take that as a maybe?
Ms. Fong. It is a practical reality I think.
Mr. Bishop. Thank you.
Mr. Aderholt. Ms. DeLauro.
Ms. DeLauro. Thank you, Mr. Chairman.
ELIGIBILITY IN RMA
I want to follow up on where we left off in the last round.
But let me make this point, as I understand it. OIG found that
nearly two-tenths of 1 percent of SNAP participants in New York
were potentially ineligible for the program, compared to the
87.5 percent of new policies that OIG found were sold to
ineligible producers. Clearly, it would seem to me that we have
work to do to ensure a proper--appropriate oversight by RMA of
insurers, which was my last point at the last round. So that
where are we with regard to RMA? And whatever database, if they
are using the wrong database to make some conclusions, do they
have a database that deals with eligibility criteria, et
cetera? Are they following that protocol? Or do they not have
one at all and they make a determination by some other alchemy?
And then where is the safeguard on the insurance side of this?
And where are you making your recommendations to deal with this
kind of 87.5 percent that are going to ineligible producers?
Mr. Harden. In terms of the database, as I understand it, I
may have to correct this if I get it wrong, but approved
insurance providers, the private sector folks are the ones that
are making the eligibility determinations for particular
farmers or policies. That is overseen by RMA, similar--to make
an analogy, it is like FNS overseeing a State operation for
SNAP or school lunch. Where we have seen problems is at the AIP
level, the insured provider level, that they are not doing an
adequate job, and where we find significant, you know,
problems, eligibility, as you are pointing out here, policies
that shouldn't have been paid, we are making recommendations to
RMA to go back and----
RMA OVERSIGHT
Ms. DeLauro. What should RMA be doing?
Mr. Harden. They should be providing better oversight of
the providers.
Ms. DeLauro. Okay. So they need to provide better oversight
of providers. Do you have a dollar amount attached to, you
know, what it cost us in terms of not having a better oversight
mechanism? Do they have a mechanism now or are they just, as I
said, are they not dealing with it? Is it not tight enough?
What exists? Because you have a very stringent requirement on
the SNAP program, which has over the years been put into place,
so you are looking at an error record underpayment, overpayment
of about 3.8 percent. And we go through this all the time. But
what I want to find out is what is the similar process that we
deal with, with RMA and with insurance companies to make sure
that we don't get an 87.5 percent rate of ineligible producers
getting an advantage?
Ms. Fong. You make some very good points.
Ms. DeLauro. And is there a dollar amount attached to any
of this? And if you don't have that, I really want to know what
we are doing here in terms of dollars as well.
Ms. Fong. We can certainly provide information for the
record----
Ms. DeLauro. Please.
Ms. Fong [continuing]. On RMA's improper payment rate,
which is an issue we are working with very intensely, as well
as a number of audits we have done in the last few years that
pinpoint dollar recoveries.
[The information follows:]
In USDA's FY 2012 Agency Financial Report, RMA reported
that Federal Crop Insurance Corporation improper payments were
approximately $173 million, a 4.08 percent error rate. We have
not audited this improper payment error rate; therefore, we
cannot attest to the validity or accuracy of the rate. In 2009,
OIG issued an audit report on RMA Compliance Activities (05601-
0011-At) that determined that RMA's sampling methodology to
estimate improper payments was statistically inadequate because
RMA evaluators excluded certain payments, such as premium
subsidies and denied claims. OIG's recommendation to include
all payment types in its sampling methodology has not been
resolved; therefore, OIG believes RMA's reported estimated
improper payment rate of 4.08 percent may have been
understated.
Ms. DeLauro. Tell me how often has RMA been audited to see
about these efforts?
Ms. Fong. We have done a number of audits of RMA in the
last 3 or 4 years. I am thinking of the citrus work that we
did.
Ms. DeLauro. But the last 3 or 4 years. So the last 3 or 4
years.
Ms. Fong. And we have a long history of audit work in RMA.
And we have a very significant audit that made significant
findings about RMA's oversight of the insurance industry,
saying that they really need to do a better job. We can provide
you with a number of dollar results on that.
Ms. DeLauro. Sure.
[The information follows:]
[GRAPHIC] [TIFF OMITTED] 82566A.203
[GRAPHIC] [TIFF OMITTED] 82566A.204
Ms. Fong. And as you may know, there have been some very
significant investigations and fraud in the crop insurance
program. Most recently, the tobacco industry in North Carolina.
Ms. DeLauro. Right.
Ms. Fong. Multimillion dollars where the producers and the
insurance agents both defrauded the government, many, many
convictions and sentences, which highlights the need for
oversight, I think.
Ms. DeLauro. With my time just about up, I would appreciate
that information and the recommendations and the structures
that are in place that really address this issue and what needs
to be done to tighten them up. Thank you.
Thank you, Mr. Chairman.
[The information follows:]
RMA has three major divisions--Product Management,
Insurance Services, and Risk Compliance. Insurance Services is
responsible for program delivery, and local program
administration and support. Product Management is responsible
for overseeing product development. Risk Compliance monitors
compliance with program provisions by both producers and the
approved insurance providers (AIPs) that sell and service
policies.
Risk Compliance looks to its National Program Operations
Reviews (NPOR) as its primary tool for monitoring and oversight
of the AIPs. An NPOR is a review conducted approximately once
every 3 years by a designated Lead Regional Compliance Office,
along with other assigned regional compliance offices, of
selected operations of an AIP, to determine their compliance
with laws, regulations, the Standard Reinsurance Agreement,
and/or associated Appendices, and/or approved FCIC policies and
procedures. Risk Compliance, Strategic Data Acquisition and
Analysis (SDAA) uses data mining as a tool for monitoring and
oversight of AIPs and indemnity payments. Through data mining,
Risk Compliance identifies policyholders for possible onsite
spot check inspections, which are conducted by Farm Service
Agency field personnel. Risk Compliance, through its field
compliance offices, initially follows up on referrals that may
involve potentially fraudulent payments; Risk Compliance also
works closely with (and refers to) OIG's Office of
Investigations on any referrals or other incidents involving
potential fraudulent payments.
Under the Standard Reinsurance Agreement between RMA and
the AIPs, and AIPs are required to conduct a number of quality
control reviews involving their agents, policies, and indemnity
claims, and forward the results of their quality control
reviews to Risk Compliance. Risk Compliance monitors and
collects the results of these quality control reviews conducted
by the AIPs. Risk Compliance also requires the AIPs to notify
RMA upon receiving notice of a potential claim on an eligible
crop insurance contract where the production loss of indemnity
is likely to exceed $500,000, or such other amount determined
by RMA. RMA may elect to participate in the loss determinations
and review the actions of the AIP taken in the settlement of
the claim before agreement is reached with the producer and
before the AIP makes payment. These are called Large Claims
Reviews. Conversely, RMA may elect to decline participation or
review of the claim.
Mr. Aderholt. With our time concluding at almost the noon
hour, I am going to go ahead and recognize Mr. Farr. I think he
has got a couple more questions.
APHIS OVERSIGHT OF INVASIVE PESTS
Mr. Farr. I just have one more question, Mr. Chairman, and
I appreciate it. And it is this oversight issue. We have spent
hundreds of millions of dollars trying to detect and eradicate
invasive pests. In the area in California that I represent,
probably California as a State probably has more issues than
anyone because of the amount of travel in and out, the amount
of transshipment of goods, everything. It is really a problem.
Because when we do have an invasive pest, it can wipe out the
wine industry or multibillion dollar industries, any of the 400
industries that we have in agriculture, especially crops and so
on.
And I know every year, we appropriate millions of dollars
each year to the Animal and Plant Health Inspection Services,
APHIS, to trace and eradicate these pests once they are in the
country. The Department of Homeland Security has personnel from
the Ag Department now moved over to DHS who are responsible for
protection of the ports of entry. And huge sums have also been
allocated from the Commodity Credit Corporation to fight
invasive pests. So I was really disturbed to learn that in a
report last August, you found that from fiscal year 2008 to
2011 there was virtually no management accountability in the
smuggling, interdiction, and trade compliance unit of APHIS.
That group has the front line responsibility at APHIS for
closing the pathways by which pests get into this country.
As a result, there was an extremely low success rate in
finding these pests and tracing how they got here in the first
place. To paraphrase your testimony, 90 percent of the surveys
that APHIS undertook did not result in a seizure or trace back
of a prohibited product, and APHIS did not take action to stop
further shipments on 96 percent of the surveys that did result
in seizure and trace back.
I mean, these figures are shocking. And, you know, I can
understand that APHIS has taken your recommendations to heart.
But how does the management of a program get so bad in the
first place that it takes your shop to uncover it? What is
going on in there? And when they take your recommendations, do
they fix it for good, or is it you are going to come back and
discover stuff that they ought to be doing under their watch,
under their responsibility to detect the gaps and the lack of
strong, effective management?
Mr. Harden. When we brought this to their attention during
the field work, they immediately started taking action. But
oversimplifying the cause of what they told us as why this got
to the state it was, was the managers higher up trusted their
people to do the right thing. Now, this is a very sensitive
matter, and it is something that we will follow up on. But they
took very seriously what we brought to them.
Mr. Farr. The question is why did those managers let it get
that bad? You as an outsider, this is not your expertise, this
is what they are hired to do.
Mr. Harden. I don't know that I can answer why they let it
get that bad, because when we asked them, why is this going on,
the answer we basically got was, well, we trusted them to do
the right thing. That is not a good answer, but that is the
answer that we were able to get.
Mr. Farr. Are they still around?
Mr. Harden. Yes, but one of the deputy administrators, as I
understand it, that was new to this program area in terms of
the management of that area.
Mr. Farr. So does your recommendations, I mean, sometimes
it seems it is just such gross mismanagement that people ought
to be held accountable for it.
Mr. Harden. I understand that. And if it were at that
level, then there would be that recommendation, or if we felt
there was something----
Mr. Farr. You can make those recommendations?
Mr. Harden. If we feel like there is something criminal, we
would refer it to investigations. If we found like----
Mr. Farr. Criminal is pretty secure--I mean, pretty
difficult to prove in these things. It is just malfeasance and
lack of professional oversight, things like that. But does your
report bring that to the attention?
Mr. Harden. We can when we feel it is appropriate to bring
that type of recommendation forward, yes.
Mr. Farr. Did you feel so in this situation?
Mr. Harden. That wasn't part of our recommendations because
of how they were reacting to it. It was different players. So,
I mean, it is hard to--to generalize, it is hard to take
somebody out if they are very new to the game, and they are
looking at you and saying, I am going to try and fix this.
Mr. Farr. Yeah, but 96 percent of their surveys where they
found problems they did not take any action on. Well, I hope we
can plug that hole, Mr. Chairman, with your help. Thank you for
your testimony. Thank you for being here today.
Mr. Aderholt. Thank you, Mr. Farr.
And certainly, we will be glad to follow up on that to see
what the Subcommittee can do. Thank you, Ms. Fong for being
here. Ms. Ellis, Mr. Harden, thank you for joining us here
today for the testimony. And we look forward to working with
you. We do have some questions for the record that I know that
I have that we will submit for the record, and other members
may do as well. So, again, we thank you, and the Subcommittee
is adjourned.
[Questions submitted for the record:]
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W I T N E S S E S
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Page
Almanza, A. V.................................................... 1
Ellis, K. L...................................................... 267
Fong, P. K....................................................... 267
Hagen, Elisabeth................................................. 1
Harden, G. H..................................................... 267
Rowe, Audrey..................................................... 83