Auditor Urges Safeguards as USDA Pays 6,336 Dead People

The U.S. Department of Agriculture may have improperly paid as much as $36 million in aid to 6,336 dead people, according to government auditors who recommended stronger safeguards.

Random sampling of USDA’s program rolls with the Social Security Administration’s master list of dead individuals found that 6,336 people got conservation aid, crop-insurance subsidies or disaster assistance more than one year after they had died from 2008 through 2012, the Government Accounting Office said today in a report.

Payments to the dead “may call into question whether these farm safety net programs are benefiting the agricultural sector as intended,” according to the study of three USDA programs that paid beneficiaries a total of $18.7 billion in 2012. “Given their cost and continuing nationwide budget pressures, these programs have come under increasing scrutiny.”

The government auditor recommended the USDA strengthen verification procedures and step-up data mining to guard against potential fraud and improper spending. The USDA programs subsidize income, protect against weather hazards and improve the environment, benefiting over 1 million participants, according to the GAO.

The study, which looked at three department offices, found payments to 4,537 dead recipients by the Natural Resources Conservation Service and the Risk Management Agency that administers crop insurance. The agencies lack procedures to make sure any of the payments were proper, according to the GAO.

Improper Payments

At the Farm Service Agency, the report found that more than 28,000 individuals had received payments after their dates of death in 2011 and 2012, with 1,799 made improperly. The agency has adopted procedures to check Social Security death records quarterly to determine when payments are proper, according to the report.

The USDA’s director of operations review and analysis, Philip Sharp, in a June 4 letter responding to the GAO said the USDA agrees in general with the findings and has begun tightening procedures, including using Social Security’s master death file to cross-check crop-insurance recipients.

Crop insurance subsidies reached a record after last year’s Corn Belt drought, the worst in the U.S. since the 1930s. Government aid accounts for about 62 percent of the premiums farmers pay to companies including Wells Fargo & Co. and Ace Ltd., and cover much of those companies’ operating costs, and share in underwriting gains or losses by insurers.

Industry payouts for last year’s crops are $17.4 billion so far, according to the department.

-- Editors: Steve Geimann, Jon Morgan

Before it's here, it's on the Bloomberg Terminal.