Five years after Mississippi officials were exposed for raiding the state’s cash welfare program for the poor, the department in charge of cleaning up the mess does not employ an expert in the program or enough workers to improve its on-the-ground operations, the agency’s top leader said Tuesday.

“We have a sore need for TANF expertise in this agency,” Mississippi Department of Human Services Director Bob Anderson said in a legislative hearing Tuesday, referring to the federal cash assistance program Temporary Assistance for Needy Families. “Like every state agency and every business, we have lost a wealth of institutional knowledge. We don’t have a TANF expert at MDHS. I’ll be the first to admit it. We’re looking for a TANF expert. And we need more PINs (budgeted positions) in our county offices to train people to run the TANF program better.”

The Mississippi Legislative Democratic Caucus held its third hearing about ongoing issues in the federal assistance program Tuesday — a four-hour meeting that, because of the Republican supermajority, is not likely to result in any reforms.

Even Anderson, an appointee of Republican Gov. Tate Reeves, acknowledged necessary changes that the Legislature has failed to enact — though the agency can make some improvements on its own with the governor’s approval. Today, less than 10% of people applying for the assistance make it through the application process each month.

“There are barriers. I’ve talked to you about barriers. I’ve talked to the Legislature about barriers. I’ve advocated for some legislative changes around the program at times,” Anderson said as he displayed a complicated flowchart his agency created to illustrate the eligibility determination process. “Just looking at it, it is unbelievable what is required of an applicant and at every turn, you have ‘case denied’ hanging in the balance every time something doesn’t go as it should for that person who is applying. So it is very difficult.”

Part of the problem is a law the Legislature passed in 2017 called the HOPE Act, which created a maze of bureaucratic red tape that is expensive for the department to administer and arbitrarily kicks people off of its programs. Anderson has said the Legislature should repeal the act but lawmakers have not seriously considered his recommendation. 

The amount of the monthly TANF check — a max of $260 a month for a family of three — is also too low to make a meaningful dent in household necessities. In recent years, the state has been spending such a small fraction of its TANF funds that it has accumulated an unused balance of at least $145 million.

“Mississippi has this money stockpiled to misspend because it spends so little on cash assistance,” Sonya Williams Barnes, the Mississippi policy director for the Southern Poverty Law Center, said during the hearing.

Lawmakers and witnesses who testified on Tuesday referred to the TANF program as broken.

“I’m going to disagree with you. Our system is not broken. Our system is designed against the poor. If it was designed for them, we would not have poverty. Poverty is by design, and it profits industry leaders immensely in the state of Mississippi,” Rev. Dr. Jason Coker said during the hearing. “… We create this kind of poverty by the policies we create in this very building and the policies we hang out to dry in this very building.”

Republican leadership has not held a similar hearing to discuss improvements to the TANF program. Several pieces of legislation introduced by Democrats in recent years to significantly increase the amount of monthly assistance, require more TANF spending on child care, and remove burdensome requirements for applicants died without consideration.

In 2021, Anderson secured from the Legislature a $90 increase to the monthly amount, which had been stagnant since 1999, and he said he will be requesting another $60 increase next year. Asked by Rep. Zakiya Summers, D-Jackson, why he didn’t request more, Anderson said, “The governor appointed me. The governor can disappoint me by telling me to go home. So I have to operate within a certain framework.”

Since the state only approves about 125 applications, or 9% of those who apply for assistance each month, most of the money goes elsewhere. Mississippi currently only spends about 5% of its roughly $86.5 million annual TANF award on cash payments to needy families, making it one of just 14 states that spend less than 10% of their grant on direct assistance.

The rest of the state’s TANF spending — anywhere from $32 million (2021) to $107 million (2018) depending on how much of the money Mississippi chooses to use in any given year — is what caused trouble in recent history.

From 2016 to 2020, subgrantees — organizations that receive TANF funds to provide programs like workforce development, teen pregnancy prevention, and parenting initiatives — misspent or stole at least $77 million after receiving political blessing and large up-front cash advances.

Headline-grabbing purchases included a $5 million payment towards the construction of a volleyball stadium at University of Southern Mississippi and $2 million in investments in a pharmaceutical startup called Prevacus that claimed to have found a cure for concussion. 

Former NFL quarterback Brett Favre asked welfare officials to fund these projects, and according to text messages first published by Mississippi Today, the athlete communicated about both to former Gov. Phil Bryant, who had authority over the department during the scandal. Favre continues to face a civil lawsuit, but not criminal charges, over these alleged schemes, while Bryant has faced neither.

Seven people have pleaded guilty in the scheme since 2020, including former welfare director John Davis and nonprofit operator Nancy New. None are in prison as they all await sentencing.

On its own without changes to state law, the welfare agency has implemented several reforms designed to reduce favoritism and theft, including reinstating a bidding process for subgrants, removing the director from any decision-making in the awards, switching payments to a reimbursement-only model and requiring more financial and participant data from the organizations.

“I want to tell you it’s a new day in TANF,” said Randy Kelley, director of the Three Rivers Planning and Development District, which currently holds a TANF subgrant. “He (Anderson) demands two things that are high on my list, and I’m proud to tell you this about him. Fiscal accountability. If you don’t have fiscal accountability, you don’t have anything. That’s what happened to the Nancy News and the things y’all are seeing. And he demands program integrity.”

“They look at us so many times, I think I’m in prison,” he joked.

Today, the welfare department awards TANF grants to 21 organizations, including some of the 1960s-era quasi governmental economic development districts such as Three Rivers, which runs a $2.6 million career advancement program.

Three Rivers, located in Northeast Mississippi, began receiving a TANF subgrant in 2020 shortly after officials arrested the former welfare director John Davis and nonprofit operator Nancy New for allegedly stealing $4 million in TANF funds, which marked the beginning of the still unfolding welfare fraud saga.

The day it received the contract, Kelley said the organization’s in-house lawyer walked into his office and shut the door, waving the paperwork in his hand.

“He said, ‘Have you lost your blankety blank mind?’ I said, ‘No, why?’ He said, ‘Do you not keep up with the news?’” Kelley said in Tuesday’s hearing, referring to publicity around the welfare scandal. “I said, ‘I have.’ And he said, ‘Why would you take this money?’ and I said, ‘Our people need it.’”

Three Rivers boasts a 27-county wide training and job placement program, administered through contracts with local community colleges and the state unemployment office, for low-income Mississippians struggling to find work or who are stuck in low-wage positions, under 200% of the poverty line.

According to a budget Mississippi Today retrieved through a public records request, the bulk of Three Rivers’ program funding in the federal fiscal year ending last month went to the Mississippi Department of Employment Services, Itawamba Community College, Northeast Mississippi Community College, Northwest Mississippi Community College and East Mississippi Community College. According to ledgers Mississippi Today retrieved, Three Rivers lists these payments as sub-expenses and does not provide additional documentation of how its partners spend these funds. 

It budgeted another $100,000 for supportive services, but little of that had been spent by the end of August, and $218,000 for administration, mostly salaries.

Three Rivers reports serving between 600 and 700 people a year, but the participant data it is required to submit to MDHS includes numerical codes instead of written descriptions for the services it provided, according to the submitted spreadsheets retrieved by Mississippi Today. Additional reports are not made available to the public. MDHS and Three Rivers did not respond to requests for additional information about the data. 

Currently, Kelley said his organization is serving 83 TANF-eligible clients and four of them are in truck driving school with the opportunity to increase their income to $80,000.

“This program started with Mr. Anderson. Y’all need to recognize, he’s done away with the volleyball courts,” Kelley said.

Beyond the roughly $4.5 million in direct cash assistance payments and $26 million spending on subgrants annually, Mississippi allocates $29 million in TANF to the Mississippi Department of Child Protection Services and transfers $25 million to supplement the Child Care Payment Program that provides vouchers to working parents.

Sen. David Blount, D-Jackson, acknowledged that TANF is supporting some good programs in Mississippi, but that more of it should be used on direct cash assistance — the more efficient option.

“The TANF money is the only money in the budget that we can put into the hands of poor people. The state budget is $31 billion dollars. And this is the only money that can directly help poor people,” Blount said. “There’s a massive bureaucracy, and RFPs, and ten-step process, and fiscal management, and all that bureaucratic crap, where you could just send people checks, and they can spend it, and pay rent, and buy food with it, and that, to me, is more efficient.”

U.S. Congress created TANF in 1996 to replace the former Aid to Families with Dependent Children entitlement program known as welfare. TANF was primarily considered a work program intended to provide a small stopgap while parents — 99% of whom are single mothers in Mississippi — seek new or better employment. Yet, the majority, 80%, of families on the program are child-only cases, meaning they do not have a work-eligible parent in the home. This includes caregivers with disabilities or homes where a grandparent is taking care of the children.

An average of just 307 Mississippi adults were on the program each month in 2023.

Because the household income limit to qualify for TANF is so low — less than $10,000 a year for a family of four — it is very difficult for a parent who has a job to enter or remain in the program. This helps explain why just 1.4% of adult recipients are employed.

Only about 5% of families experiencing poverty in Mississippi receive cash assistance compared to almost 40% of those families in 1996 at the start of the program.

One of the biggest barriers to parents seeking the assistance is that they must provide information about their child’s noncustodial parent, so that the state can pursue them for child support, in order to qualify. Any child support it collects in excess of $100 each month is seized to reimburse the state for the cash assistance it provided the family. 

The state imposes a “family cap,” meaning that if a parent is receiving TANF assistance and then births another child, that child would not qualify to receive assistance — a policy that only five other states still have on the books.

Mississippi also requires TANF applicants to complete a substance use disorder questionnaire and, if suspected of drug use, a urine test — a policy opponents say is based on racist stereotypes about the poor. The state spent $50,000 TANF funds on this test in 2022, according to state expenditures available online, though out of thousands of applicants in roughly the last year, Anderson said only 59 were drug tested, and of those, just 6 tested positive.

All of this is compared to the workforce programs offered with the same federal funds by the subgrantees, which serve people who make up to about $50,000 for a family of three and do not impose child support requirements or drug testing.

“I’ll say again, it’s not Bob Anderson’s drug test requirement, it’s in the statute,” Anderson said. “I can’t take it out of the statute. I have to comply with what’s in the statute.”

The former professional wrestler Brett DiBiase, who pleaded guilty within the welfare scandal in 2020 for receiving $48,000 in TANF funds through a contract he could not perform because he was in rehab, which was also paid for with TANF funds, has not been sentenced. 

Despite the frustrating red tape and low approval rate, Mississippians in need continue to seek assistance. In 2015, before the alleged scandal occurred, the department received 13,517 TANF applications. In 2023, it received 16,376 applications.

When Congress adopted TANF, it turned one of the nation’s primary safety net programs into a block grant and allowed states to spend the money on other goals, such as reducing out-of-wedlock births and promoting two-parent families. But while it created strict requirements for poor parents attempting to receive the assistance, it provided little accountability for organizations receiving the funds for programming.

States began using the funds to plug budget holes in other areas of government, like the nearly $30 million Mississippi currently allocates to the Mississippi Department of Child Protection Services, which conducts investigations into abuse or neglect. 

Subgrantees receiving the largest amount of TANF funds in 2024, according to the state’s expenditure database, were the Mississippi Department of Child Protection Services ($15 million), MS Alliance of Boys & Girls Clubs ($6.5 million), Canopy Children’s Solutions ($4.5 million), Save the Children ($2.4 million), Three Rivers Planning and Development District ($1.8 million), the Mississippi Department of Employment Security ($1.4 million), Institutions of Higher Learning ($1.3 million), and South Delta Planning and Development District ($1 million).

But nonprofit or government subgrantees providing TANF-related services are not the only vendors who received the funds. Jones Walker, the law firm bringing the civil litigation against Favre and others, received nearly $1 million in TANF funds in 2024, and the Office of the State Auditor, which conducts an annual audit of MDHS spending on behalf of the federal government, received $162,000. The state also recorded some payments under the TANF Work Program to private contractors and vendors such as Guidesoft Inc. ($160,000), Horne LLP ($124,000), Staffers ($57,000), Cronus Consulting ($20,000), Dell Marketing ($13,000), Office Management Systems ($11,000) and various hotels.

In response to emailed questions about these expenses, the Mississippi Department of Human Services provided only the following explanation: “Each of these expenditures are in compliance with the TANF administrative policy and statute. MDHS adheres to federal guidance to the percentage of the annual state grant that is utilized for administering the TANF program and the guidelines for which expenditures qualify as administrative costs.”

During the scandal, TANF subgrant recipients did not receive proper auditing and officials accused Davis, the former director, of forcing employees to look the other way when they suspected a problem.

MDHS says it now does conducts subgrantee monitoring and when it flags an issue with a subgrantee’s expenditures, such as unbudgeted purchases or missing documentation, it sends a finding letter to the subgrantee, and if the subgrantee cannot account for the spending, the agency requires repayment. 

From late 2021-2023, the welfare agency questioned nearly $660,000 in expenditures from 13 subgrantees, most of which were cleared, though four grantees were ordered to return $95,000. The largest error MDHS found was $65,000 in spending by the Mississippi Department of Employment Security, which the MDHS said failed to provide proper documentation for payroll expenses.

From 2020-2021, the agency questioned $4.5 million in expenditures and demanded $1 million returned.

The ongoing civil suit, which attempts to claw back a whopping $80 million in misspending, including from nonprofits that are now defunct, has so far resulted in settlements of $1.7 million. The state has yet to recoup the $7 million lost to the volleyball and pharmaceutical projects.

While MDHS has decided generally how it’s going to divvy up most of its annual TANF grant in future years, it has not answered questions from Mississippi Today about how it plans to use roughly $150 million in accumulated TANF funds.

The agency has instituted better controls and continues to sue the alleged fraudsters. But some advocates suspect that the TANF program — no longer operating as a criminal enterprise — remains a scandal of another kind.

“If we wanted to reduce poverty in a serious way, we wouldn’t be ending any federal fiscal year with tens of millions of federal assistance dollars unspent,” said Matt Williams, longtime TANF researcher with Mississippi Low-Income Child Care Initiative. “... So why are the leaders in our state so silent on the obvious big issue, the obvious elephant in the room, which is widespread persistent poverty and what to do with the TANF program?”

The post If you count unspent millions, high denial rate and mysterious outcomes, the TANF scandal persists appeared first on Mississippi Today.