NEWS RELEASE
For Immediate Release
Contact: Steve Halvonik 717-787-1381
Audit Text

Auditor General Jack Wagner Finds Deficiencies
In Department of Public Welfare’s Administration of LIHEAP

HARRISBURG (June 27, 2007) – Auditor General Jack Wagner said today that a special performance audit found serious deficiencies in the Department of Public Welfare’s administration of the state’s Low Income Home Energy Assistance Program.

Inadequate policies and procedures, insufficient supervision, and inadequate oversight resulted in potential applicant and employee fraud and abuse in all six counties (Philadelphia, Allegheny, Lancaster, Lehigh, Perry and York) examined during the audit period of July 1, 2000 through June 30, 2006, Wagner said.

The Department of the Auditor General has forwarded its findings to the Office of Inspector General for further review, Wagner added.

“LIHEAP is a vitally important safety net that helps keep thousands of Pennsylvania families warm during the winter,” Wagner said. “As auditor general, I want to make sure that the millions of taxpayer dollars invested each year in this program are not being wasted. Every dollar wasted is a dollar that could have been used to reduce a needy family’s heating bill. It is the hope of the Department of the Auditor General that the Department of Public Welfare will use our findings to fix LIHEAP so it can better serve Pennsylvanians who need it.”

Wagner made 25 recommendations to DPW for improving LIHEAP. They include:

• Improving LIHEAP’s information system immediately to ensure every Social Security number entered into the system is valid.
• Developing appropriate edit checks to detect irregularities or potential fraud and abuse on applications submitted with similar addresses, names, and Social Security numbers.
• Requiring county assistance offices and crisis contractors to independently verify Social Security numbers before application approval.
• Ensuring county assistance office personnel who administer the LIHEAP program receive training to properly process cash applications, are properly supervised, and have access to a manual that adequately details application processing procedures, including the safeguarding of records.
• Improving methods used to monitor the LIHEAP application process. Auditors noted that the Department of Public Welfare employed only one statewide monitor and permitted county assistance office personnel to select which LIHEAP applications the monitor could review.
  

LIHEAP provides grants to low-income households that meet eligibility limits of 150 percent of federal poverty income guidelines, meaning a family of four earning up to $29,025 can receive benefits. LIHEAP consists of cash benefits to help pay for home heating fuel crisis payments to resolve emergencies; energy conservation; and weatherization measures to address long-range solutions.

LIHEAP is administered through the Pennsylvania Department of Public Welfare’s county assistance offices. It received 689,970 applications and disbursed about $157 million during the 2005-06 program year, with the commonwealth providing $19 million.

Auditors identified situations that indicated potential fraud and abuse of LIHEAP benefits in all six counties tested.

In Philadelphia County, auditors found 23 situations that LIHEAP representatives validated as potential fraud. Auditors also found other instances that warranted further investigation, including
429 applicants who received more than $162,000 in benefits using Social Security numbers associated with deceased people, and 549 applicants who received more than $182,000 for questionable water/sewer bills.

In Allegheny County, auditors requested documentation for 230 applicants to review for potential fraud or abuse after identifying systemic weaknesses similar to those detected in Philadelphia. The Allegheny County crisis contractor confirmed that some applications appeared to contain potentially fraudulent information.

County assistance officials in Lancaster, Lehigh and York also validated instances of potential fraud; and Perry County assistance officers provided inadequate responses to the use of deceased persons’ Social Security numbers by five applicants.

“With the home heating season only 10 to 12 weeks away, the Department of Public Welfare should not wait until applicants start walking through the door to address LIHEAP’s systemic weaknesses,” Wagner said.

The full audit text, with detailed recommendations, can be found on the auditor general’s Web site at www.auditorgen.state.pa.us.

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the Commonwealth’s elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts approximately 5,000 audits per year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department’s Web site at www.auditorgen.state.pa.us.

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