Auditors criticize controls on welfare debit cards
September 20, 2012
Legislative auditors Wednesday criticized the lack of controls on welfare division debit cards issued to food stamp and welfare recipients saying dozens continued to be used even after the recipient was dead.The so-called Electronic Benefit Transfer cards are automatically reloaded each month with the client’s cash benefits and can be used at stores for authorized purchases or even at ATMs.Auditor Stephany Gibbs said a comparison of the card records with those of the state Office of Vital Statistics revealed 749 cards shown as still alive in the welfare computer system but deceased according to Vital Statistics.“More than $11,500 in benefits were paid to 27 of the 50 clients tested after their dates of death,” she reported in the audit presented to the Legislative Audit Subcommittee Wednesday.Most of those benefits, however, some $7,225 in all, were swept back into the state’s accounts after a period of inactivity by the client.In addition, the division issued a new EBT card to a client through a third party eight days after the client died.Assemblywoman Maggie Carlton, D-Las Vegas, said that, considering the total food stamps budget alone is nearly $500 million, that $11,500 amount is a tiny percentage of error. Acting Welfare Administrator Steve Fisher agreed but said after the meeting his staff would be checking those more than 700 other client records to see how pervasive the problem actually is. He also pointed out that the benefits go to the family of the household, not just the single recipient and that some after death use of the money may be legitimate by family members.Lawmakers also were told that, if there is evidence of any fraud, the division’s investigations unit goes after the perpetrators to get the money back and works with district attorneys to file charges where appropriate.Fisher said his staff is already moving to improve controls over the cards and working with Vital Statistics to make sure they are informed when a client is no longer alive.Gibbs pointed out in her audit presentation that the division has seen massive growth since the recession began in 2007 with caseload increases of more than 100 percent in several of the programs.Auditors also had some criticism of the Department of Business and Industry Division of Industrial Relations, reporting that they had identified $180,000 in past due administrative fines and penalties not yet turned over to the Controller for collection and serious delays in getting demand letters out the door once investigations were completed. Auditors were told some of those demand letters were 16 months overdue but division officials said much of that has been cured by giving investigators more leeway to work with insurance providers instead of bottlenecking those decisions on the desk of a single supervisor.They also objected to the fact that personal identification information including Social Security numbers of claimants were not protected, included in unencrypted emails and in databases that unauthorized people could get access to.Division officials said those issues are being resolved as well and that efforts will be made to ensure that Social Security numbers of claimants are protected.