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Review: Most payments to dead farmers legal

By Staff | Jan 27, 2011

MINNEAPOLIS – A 2007 report that the federal government had paid $1.1 billion in subsidies to dead farmers sparked an outcry and has been frequently cited by critics who considered the payments a blatant example of wasteful spending. But a follow-up that found no fraud and determined nearly all the subsidies paid on behalf of dead farmers in recent years were proper has received little attention.

According to the U.S. Department of Agriculture’s Farm Service Agency, just a little over $1 million out of the billions of dollars paid in subsidies in 2009 went to estates or business entities that weren’t entitled to them.

“Very little money is going to individuals who have not earned that money. Very little is being paid in error because a farmer has passed away,” FSA Administrator Jonathan Coppess told The Associated Press.

The Government Accountability Office produced the 2007 report at the request of Sen. Charles Grassley, R-Iowa. It found the USDA had sent $1.1 billion to more than 170,000 dead people from 1999 through 2005, and the FSA’s weak verification procedures meant the agency, which administers farm payment programs, couldn’t be certain those payments were proper.

Grassley said then that it was “unconscionable that the Department of Agriculture would think that a dead person was actively engaged in the business of farming.”

Sen. Tom Coburn, R-Okla., has frequently criticized the checks sent to dead farmers. Last October, he issued an 18-page report decrying the $1.1 billion in farm payments as the biggest of several examples of “Federal Programs to Die For – American Tax Dollars Sent Six Feet Under.”

When then-Senate candidate Rand Paul, a tea party favorite from Kentucky, insisted he was a moderate on farm subsidies during a June interview with WHAS-AM of Louisville, Ky., he added, “Let’s start out by eliminating farm subsidies for dead farmers.”

Despite the concerns raised about lavishing taxpayers’ money on the dead, the government is legally obligated to make payments to farmers’ survivors, estates, partnerships and other business entities they were involved in if the farmers qualified for the benefit before they died. FSA officials said the agency has gone to great effort to make sure all its payments were legal and recover those that weren’t.

FSA spokesman Kent Politsch said the agency began making changes even before the GAO report came out. It began matching payment information against Social Security death records for the 2007 fiscal year. The agency flagged 121,527 payments totaling $108 million in that fiscal year that were sent on behalf of people who had died.

It found that in nearly every case, the dead farmers’ estates or other entities were legally entitled to the money.

That review looked only at the 2007 payments, not those made in the years covered by the GAO report. Coppess said he would “hate to guess” how a similar analysis covering 1999 to 2005 would turn out, but he thought the mistakes would be few.

The Farm Service Agency published rules in December formalizing its tighter procedures. In its announcement, the agency said the changes brought its error rate down from 2 percent to 0.008 percent within one year and to 0.007 percent within two.

Out of $18.6 billion in total farm program payments in 2007, $2.11 million were made in error. And out of $16.6 billion in total payments in 2009, $1.22 million went out in error, according to agency figures.

“Where we find there are errors in payment, we go out and recover that money,” Coppess said.

Overall, however, the effort has not saved the government much money. While the Farm Service Agency said it might recover $1 million or less each year, the cost of doing the checks and recovering the money could offset that.

Grassley sent a statement to the AP suggesting the amount of money recovered was less important than fixing the flaws in the system.

“Regardless of whether there were 1 or 1,000 improper payments, the Department of Agriculture wasn’t following the law or their own regulations in overseeing the money going out the door to estates and dead farmers,” Grassley said. “The GAO report helped us identify where improvements could be made, and changes were included in the last farm bill so the agency could better manage the process.”

Coburn’s spokesman, John Hart, said the senator is “cautiously optimistic” about what the FSA is doing to guard against improper payments, but the senator planned to ask the USDA inspector general to confirm the FSA’s findings.

“Hopefully, FSA is making a step in the right direction,” Hart said.

David DeGennaro, an analyst with the Environmental Working Group, which is critical of farm subsidy programs, said a bigger problem is the lack of transparency in farm programs overall.

He said less and less information is available on who’s getting subsidies, which makes it harder for his group and the public to evaluate whether those payments are good public policy.

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