Georgia Vendors Receive Over $100M In Incorrect Federal Payments

The state of Georgia is in some hot water after failing to correctly manage its WIC program—a public assistance federal food initiative that helps provide balanced nutrition for mothers and young children. According to reports, Georgia’s myriad errors in running the statewide WIC program resulted in over-payments to vendors totaling around $115 million, according to a new federal audit.

At the heart of the error is sloppy categorization – vendors were not correctly classified, nor were vendors that received more than half their annual revenue from the program identified. Both factors can impact payment levels.

Grocery stores were the big winners in the overpay lottery, taking in more than $65 million in fiscal 2011, and nearly $50 million in fiscal 2012, according to the federal Department Of Agriculture.

The DoA oversees WIC.  The federally backed program functions by awarding grants to states for supplemental foods, health care referrals and nutrition education for low-income women who are pregnant or who have children under the age of 5.

The IG report focus was wider than Georgia alone and on the whole indicted the DoA for having a program that lacked a sufficient system for “monitoring state agencies’ food costs to ensure federal resources are being used efficiently.”

Moreover, the federal oversight did not consistently identify which state-based programs are actually run locally.  When problems were identified, follow-up was not a sure thing, corrective action was not usually taken and problems persisted well after they were known according to the audit.

Apart from money that was simply misspent, WIC nationally “missed cost-saving opportunities,” which on the whole lower the department’s reach to the under-privileged community it aims to serve.  The report noted  that WIC “could generate savings it could use to provide benefits to more participants and help further the program’s mission.”

In the Agriculture’s report, the federal department did note many efforts aimed at cost savings are actually under way.

The state of Georgia made a similar defense, though commissioner of the Georgia Department of Public Health, which oversees WIC on the state level,  head Brenda Fitzgerald, did acknowledge the issues.

WIC was broken,” she said. “It was broken for a long time.”

She further that though the endemic problems with the state’s administration of the WIC program were evident, she is committed to revamped and fixing the broken system.

“WIC was indeed a problem. We absolutely acknowledge that Georgia had not been doing well. We set about to fix it.”

Among the main fixes was to hire inspectors to crack down on fraudulent vendors. The state’s new eye toward efficient management is particularly keyed into three issues identified by the federal audit of WIC.  Georgia has had the highest foods costs per participant in the nation in 2012.  Further, in 2011 and 2012 Georgia was among the leading states for spending per participant. The latter trend has started to ease off- by 2013 it was down to 17th nationally in spending per participant.

However, some problems do persist.

Since 2008 Georgia had been on notice from the federal government for not identifying stores that got more than half of their sales from the WIC program.  That is a requirement to ensure such vendors don’t cause higher food costs because of their WIC decency. That issue remained unresolved by 2012, though after a threat from the federal government to recover some of the money, a settlement was reached in 2014.

The state also was slow to disqualify certain vendors from the program. Even after learning that a vendor was no longer allowed to take SNAP (food stamp) payments, Georgia took between five and eight months to disqualify some vendors from WIC.

Nine vendors were able to redeem $1.8 million in WIC benefits after they had been disqualified from the food stamp program, the audit said.

The IG audit sprang from a concern about the wide variations in food costs across the WIC program—and thus undertook at review of 8 states.