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After embezzlement arrests, TANF block grants come under scrutiny in search for accountability

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The Woolfolk Building in Jackson houses the office of the State Auditor.

The Mississippi Legislative Black Caucus is among the Mississippi lawmakers looking for reform and accountability in how federal dollars are distributed to the poorest people in the Magnolia State.

MLBC Chairwoman Angela Turner Ford called the actions of former Mississippi Department of Human Services Director John Davis and five others “utterly disgusting.” The State Auditor’s office arrested the six Wednesday for embezzling millions in federal funds meant to feed the state’s neediest families. The exact amount they stole is still under investigation, but it is expected to exceed $4 million.

“I shudder to think of the families, programs and services that went unaddressed and unfunded while those involved took government dollars for themselves,” Davis said in a statement Friday. “It is a shame and disgrace for them to have lined their pockets with money set aside for our families and children.”

Arrested in embezzlement scheme: Top row, left to right – John Davis, Brett DiBiase, Anne McGrew; bottom row – Nancy New, Zach New, Latimer Smith (photos via Hinds County Sheriff)

The way federal funds for programs such as Temporary Assistance to Needy Families, or TANF, flow to the states may be to blame for making such embezzlement relatively easy. The funds are awarded through block grants, and the states decide how to manage and spend the money.

Prior to 1996, the federal government matched half or more of every state dollar of cash assistance to needy families. That changed with the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Since then, states receive fixed amounts under block grants along with broad discretion on how to use the funds.

Block grant proponents say the grants allow states to shift funds into programs that help families get away from cash assistance through work programs and support for work such as child-care subsidies, but the reality is far different.

“In TANF’s early years, when the economy was strong and cash assistance caseloads were shrinking, states did use their flexibility to take some of the funds that had gone for benefits to families and redirect them to child care and work-related programs or supports,” wrote the authors of a February 2019 report from the Center on Budget and Policy Priorities. “But over time, states redirected a substantial portion of their state and federal TANF funds to other purposes, to fill state budget holes, and in some cases to substitute for existing state spending. Even when need rose during the Great Recession, states often didn’t bring the funds back to the three core areas of basic assistance, child care, and work programs, and instead cut them.”

The block grants also allow the state to give money to “sub-grantees” such as the Mississippi Community Education Center run by Nancy New and her son, Zach New, both of whom were among the group arrested Wednesday on embezzlement charges.

“That’s where there’s no accountability and loopholes can be created, and that’s exactly what has happened,” Rep. Jarvis Dortch (D-Jackson) told WLBT.

“I think the general public should understand this is one of the problems with block granting, when they hear about how states can benefit from being untied from rules to use block grant dollars for healthcare or TANF or welfare.

“This is the kind of stuff that happens when people don’t pay attention.”

Sen. John Horhn (D-Jackson) put it succinctly.

“The department privatized a lot of the delivery of services, and they still spent a lot of that money,” Horhn told WJTV, “but they spent it for bogus purposes.”

State Auditor records dating back to 2014 show the need to strengthen accountability for block grant funds. In a July 2019 audit, the office noted that “Failure to properly monitor subrecipients could allow noncompliance with federal regulations to occur and go undetected, potentially resulting in questioned costs.”

The State Auditor noted that MDHS didn’t even have a full, comprehensive list of grant fund recipients.

“The taxpayers deserve to know that money is being spent appropriately, in accordance with the law, and that the proper safeguards to prevent fraud are in place,” State Auditor Shad White said in a release at the time.

Nonetheless, in Mississippi, legislative efforts to curb fraud in the welfare system have focused on recipients, not administrators. On Thursday, less than one day after the embezzlement arrests, the state Senate passed a bill to give the State Auditor’s office the authority to examine income tax returns of applicants to benefits programs including TANF, but especially Medicaid.

Medicaid is one of the state’s largest expenses, using roughly 25% of the general funds available.

“If there’s one part of our budget that seems to expand every year, and eats away at all parts of our pocketbooks, it’s the Medicaid budget,” Sen. Chris McDaniel, R-Ellisville, said during the meeting discussing the latest bill, adding that the state must “make sure the people who are receiving it are those who deserve it and should be receiving it. And those that are not, well, they shouldn’t be getting it.”

In past sessions, lawmakers added drug testing and work requirements.

“This is not about compliance. This is about terror. We’re going to use this law and we’re going to terrorize a bunch of folks,” Sen. Horhn said during the Thursday committee meeting. “What the history of our Medicaid compliance tells us is that it ain’t the recipients. It’s not the recipients, it’s providers. And in recent cases, it’s employees of the state of Mississippi.”

Last year, the Office of the Inspector General in the State Auditor’s office, which was established in 2018 to identify fraud in MDHS, identified 27 intentional TANF violations totaling $14,224, about one-hundredth of one percent of the program, Mississippi Today reports.

“We need to make sure people are complying with the laws,” White said last summer.

Mississippi TANF block grant distribution. Source: U.S. Department of Health and Human Services (click to enlarge image)

In 2018, Mississippi received about $135 million in TANF block grants from the U.S. Department of Health and Human Services. About 5.4% of that, roughly $7 million, was distributed to needy families so they could buy food—what HHS considers “basic services.”

Mississippi’s allocation to basic services is one of the lowest in the nation, down from 22% in 2006, and it assists only about 10% of the 15,000 children living in poverty in the state. In 2017, only nine states allocated less than 10% on direct financial distributions.

Mississippi also has some of the most stringent requirements to receive direct financial assistance. Childless adults are not eligible, and a family of three must not have any income over $680 a month, although work requirements are in place as well.

“Direct financial assistance for the nation’s poorest families with children has weakened significantly under TANF, with potentially devastating long-term consequences for children growing up in families with little or no cash income to meet basic needs,” the CBPP report said. “In 2017 states provided cash assistance to just 23 families for every 100 families in poverty, down from 68 families when the TANF block grant was created. And states engage few recipients in work activities, leaving most unemployed low-income parents to find work on their own.”

Additionally, “state TANF spending choices can exacerbate racial inequities and unequal access to TANF cash assistance. In fact, black families are more likely than white families to live in the states that spend the least on basic assistance, and thus black children face a particularly high risk of growing up in families with little or no access to basic needs,” the report states.

In a statement released Sunday on his Facebook page, White said he was “calling on the Legislature to immediately require a full forensic audit of DHS by a competent private CPA firm. My office cannot do an audit of that magnitude any time soon and still handle our normal duties. This is the only way we will be able to know how every dollar was spent in the programs that were abused.”

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Key education groups call Gov. Reeves’ budget priorities hypocritical, ‘extremely disappointing’

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Gov. Tate Reeves during a March press conference. (Photo by Eric Shelton, Mississippi Today, used with permission)

As COVID-19 cases in students and teachers hit their highest point yet and schools across the state are forced to close their doors, educators received an additional blow this week from Gov. Tate Reeves.

Reeves released his first fiscal year budget recommendation as governor on Monday and, despite promising to raise teacher pay during his 2019 campaign, made no mention of a salary increase. He did, however, recommend limiting funding to schools that do not teach in-person during the pandemic, and setting aside $3 million for a “Patriotic Education Fund” to combat “revisionist history” that is “poisoning a generation.”

During the 2020 session, it appeared Reeves and legislative leadership were poised to provide teachers a $1,000 salary increase, but those plans were put on hold by an anticipated decrease in state revenue because of the COVID-19 pandemic.

The average salary for a public school teacher in Mississippi in 2019 was $45,105, according to the Mississippi Department of Education, and Mississippi’s average salary is the lowest in the nation, according to the National Center for Education Statistics.

When Mississippi Today reached out to Reeves’ press secretary after his budget recommendation was released publicly, she said in a statement: “We believe strongly that we can still find the funds to administer teacher pay raises.”

Reeves’ budget recommendation also stated that schools that do not offer in-person learning during the COVID-19 pandemic should have their funding limited. He said that because their budgets include funds to support services geared to in-person learning such as food service and transportation, school districts providing traditional learning are at “a financial disadvantage.”

“For this reason, I propose limiting funding for school districts unwilling to provide the option of essential classroom instruction,” the recommendation stated. 

State Superintendent of Education Carey Wright said districts were given three options for operating this school year in an effort to allow each district to respond specifically to what was going on in their communities during the pandemic. She also pointed to the $200 million allocated by the Legislature to ensure every student in the state has access to a device and connectivity in order to be able to learn remotely. 

“There is no replacement for a good teacher; however, districts that provide distance learning in accordance with public health guidelines cannot afford to have their funds limited,” Wright said in a statement to Mississippi Today. 

The state’s teachers union released a lengthy statement pointing to what they say is hypocrisy on the part of the governor.

“When we requested statewide COVID reporting standards and guidance on how to address teacher absences during the pandemic, we were told unequivocally that districts best knew how to handle their response,” the statement from the Mississippi Association of Educators read. “Now that some districts have elected to keep buildings closed because they do not have the staff and resources to safely serve their district’s students and families, the governor has decided that they can no longer be trusted to do what’s best.”

The group references the Greenville Public School District, where schools were operating virtually at the beginning of the semester and just this month, after the death of a teacher, announced it would return to virtual learning.

“Following an outbreak, they have decided to return to virtual instruction. And now, after being assured that the state government would play no role in their district’s COVID plan, Governor Reeves is threatening to withhold critically-needed funding when districts need it most,” the statement continued. 

The governor also recommends spending $3 million to create a Patriotic Education Fund. The fund would be used to pay for teaching that combats what Reeves says is “indoctrination in far-left socialist teachings that emphasize America’s shortcomings over the exceptional achievements of this country.”

The fund is reminiscent of the 1776 Commission, an executive order by President Donald Trump establishing a commission to promote “patriotic education” in the United States. This came about in response to the 1619 Project, an initiative launched by the New York Times Magazine in 2019 which “aims to reframe the country’s history by placing the consequences of slavery and the contributions of black Americans at the very center of our national narrative.”

On Wednesday, Bailey Martin, a spokesperson for Reeves, said the idea was original though the mission is similar to Trump’s. She said the funds could be used as an “addition” to students’ education, though in the budget recommendation Reeves said the program is necessary because “We need to combat the dramatic shift in education.”

“Field trips, after-school clubs, the development of new interesting lesson plans, and more could be funded with these dollars — we are hoping teachers, administrators and non-profits are creative in their ideas of how to take advantage of the opportunity,” she said in a statement. “It would be a great bonus for Mississippi’s youth, in addition to their typical education.”

In response, officials at the Mississippi Department of Education pointed out that the social studies standards, or grade-level goals for learning, were developed by Mississippi teachers and adopted by the State Board of Education in 2018.

“The standards take an unbiased look at U.S. History that allows students to examine multiple viewpoints of a historic event or period. Students explored the pride and resilience of the American spirit through study of civics, democracy, capitalism and major events that have shaped our country,” a statement from the department said. 

Kelly Riley, executive director of the Mississippi Professional Educators, called the governor’s budget recommendation and the statements made to support the creation of the Patriotic Education Fund “extremely disappointing.”

“Mississippi educators are teaching the curriculum standards adopted by the State Board of Education, members of whom Governor Reeves appoints,” Riley said. “Such unfounded generalizations that attack the pedagogy and character of teachers across our state are certainly not an encouraging way to begin the upcoming (legislative) session.” 

Reeves also recommended: $3 million for math coaches across the state; $2 million to train teachers in computer science and coding; and fully funding the School Recognition Program, which financially rewards teachers in A-rated schools and schools that improve a letter grade. 

The 14-member Legislative Budget Committee will make its budget recommendation in December.


This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

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Blood donations needed from former COVID-19 patients

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Mississippi Blood Services is asking people who have fully recovered from COVID-19 to donate convalescent plasma to help those who are now seriously ill with the virus.

For information and qualifications, please call MBS at 601-368-2692 or email [email protected].

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Make your Christmas tree a ‘Genuine Mississippi’ tree

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As the holidays approach, Andy Gipson, Mississippi Commissioner of Agriculture and Commerce, encourages those celebrating to make this year a “Genuine Mississippi” Christmas by purchasing a Mississippi Christmas tree.

The Department of Agriculture and Commerce has made it easy for shoppers to find the perfect Mississippi Christmas tree this holiday season at MSChristmasTrees.com online. The website, part of the “Genuine MS” state branding program, provides a guide to the types of Christmas trees grown in the state and the locations of Mississippi Christmas tree farms where locally grown trees can be purchased.

“As families prepare for the holidays, I encourage them to visit one of the 32 Christmas tree farms in the state. It’s an experience the whole family will enjoy, and selecting a Genuine MS Christmas tree supports our Mississippi farmers, as well as the local and state economies,” Gipson said in a release. “Consumers can also find an array of other Mississippi products for the holiday season from stocking stuffers and gift ideas to ingredients for special holiday meals at GenuineMS.com online.”

For those who have never owned a Christmas tree or need tips for caring for a tree, MSChristmasTrees.com explains how to select the best Christmas tree for your family, how to safely care for a Christmas tree and how to dispose of your tree after the holidays.

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