Copyright 1999 Federal News Service, Inc.
Federal News Service
SEPTEMBER 29, 1999, WEDNESDAY
SECTION: IN THE NEWS
LENGTH:
7668 words
HEADLINE: PREPARED TESTIMONY OF
VIRGINIA
L. THOMAS
SENIOR FELLOW IN GOVERNMENT STUDIES
THE HERITAGE FOUNDATION
BEFORE THE HOUSE JUDICIARY COMMITTEE
SUBCOMMITTEE ON
COMMERCIAL AND ADMINISTRATIVE LAW
BODY:
Thank you for holding this oversight hearing on the Legal
Services Corporation (LSC), Mr. Chairman. With your permission, I will
make only a short oral statement and would ask that my entire statement be
entered into the record. I must stress, however, that the views I express are
entirely my own, and should not be construed as representing any official
position of The Heritage Foundation.
Everyday Congress makes decisions on
how much scrutiny, how much money or how much reform is needed for existing
federal programs within this $1.7 trillion dollar federal government. Many
people don't know that when Congress is not passing laws or spending money it is
or should be holding hearings and conducting investigations that ask tough
questions of federal agencies and their use of taxpayer dollars.
These
hearings and investigations, known as congressional oversight, are perhaps the
single most important feature of the "checks-and- balances" envisaged by the
Founders to guide the direction and therefore the accountability of the federal
government and its many agencies and endeavors. And when oversight is conducted
properly, oversight of federal agencies can lead to real and positive change.
LSC's Performance Data Collapsing Under Scrutiny
If ever there was a
compelling need for improved accountability for the use of taxpayer funds, LSC
is such a case at this point in time. Since 1974, taxpayers have spent $6
billion on legal aid to the poor. Thanks to the courage of a few principled
individuals who worked at LSC only until they realized that they were part of a
numbers charade, we all now know more about LSC's real performance.
With new
scrutiny, Congress found that LSC served less of the nation's poor than LSC had
previously boasted to the public. As recently as March of 1999 when it was
requesting a $40 million increase in its budget, LSC claimed to have served
1,932,613 poor in 1997. Yet, every program or grantee that has been audited has
demonstrated serious miscounting or over-counting of cases.
* Information
from the LSC's Inspector General's office found that of 6 programs reviewed,
nearly two-thirds of their reported cases were inaccurate.
* GAO reported in
a June, 1999 audit that one third of reported cases were overstated in five of
the largest grantees.
* This month, the IG released 3 more audits. Grantees
in Philadelphia, Monroe County, New York and Maryland continued double- counting
cases, omitting verification of citizenship or eligibility in case files and
even reported phantom cases.
And, the 1998 figures are still not public
although they typically would be published in May, 1999. These figures are now 4
months late to the Congress. We know LSC didn't serve 1.9 million people in
1997. One would assume that the 1998 figures would be below 1.9 million as well,
but Congress should have that information prior to additional appropriations
being made to LSC from the taxpayer.
One might be able to chalk the errors
up to bureaucratic bungling had we not seen LSC take quiet remedial steps to
solve their case statistics problem in late 1998. At the same time, no mention
of this over-counting problem was made to Congress until publicity intensified
after a March 1999 House appropriations subcommittee hearing and an Associated
Press story broke on April 8, 1999.
My lengthier Backgrounder that is
attached (in the form of my written testimony) for the record documents the
unchallenged facts and timetable as to when LSC knew they had a problem, and
when they revealed it to the Congress. It would appear that there remains much
to find out about the 1997 and 1998 case statistics and the use of taxpayer
dollars; however, as stated earlier, every case audited has revealed significant
over-counting and mis-reporting. Performance-based Governing is a Bipartisan
Effort
When Congress passed the Government Performance and Results Act in
1993, it codified the desire of the Congress to hold federal programs
accountable for their actual performance (not the good intentions or the process
measures that can easily distract decision-makers). The Results Act's
implementation has triggered a quiet but fundamental change in the way
Washington is making decisions. The Results Act has provided the Congress with
the tools needed to comprehensively evaluate federal programs to determine
what's working, what's wasted, what needs to be improved and what needs to be
rethought. Pursuant to this law, existing federal programs are designing five
year strategic plans, annual performance plans and annual performance reports.
The Results Act calls for objective, reliable data to define and measure
program performance and it seeks to hold programs and managers accountable for
performance. This may be a novel concept for the federal government; but states
and local governments are increasingly using performance measures to ensure
taxpayer money is wisely used.
As a colleague of mine said, "While the
Results Act does not generate immediate excitement, it will if properly
administered deliver the most significant level of government accountability for
tax dollars in American history. For the first time, taxpayers will know how
federal agencies are spending their money, which of them are doing it
effectively and which of them are wasting taxpayers' money." Performance based
government, a non-partisan initiative, is about restoring Americans' trust in
government based on the results of government programs.
LSC has chosen to
abide by the Results Act and be accountable for its performance using the same
reporting mechanisms that other federal agencies have imposed upon them.
Congress Must Respond when Data is Misleading or Inaccurate
Two things
can render the move towards performance based governance null and void. First,
the Results Act is useless unless Congress can rely on the information it is
provided. Without a doubt, there is an early indication that data reliability is
not only a problem at LSC. The General Accounting Office recently issued a
report that said that 20 of the largest 24 federal agencies expect to have
problems verifying their performance data to the Congress next year when the
Results Act requires a Performance Report in March of 2000.
And second, the
Results Act will be completely ineffectual if Congress provides increased money
to non-performing agencies. If Congress does nothing in the face of poor or
misleading performance, cynicism is likely to increase and the opportunity to
restore public trust will be missed.
So, whereas LSC's misleading
performance data is only the beginning of many data problems likely to present
themselves to Congress, many are watching Congress's handling of LSC as an early
case of whether all agencies need to take their own performance seriously or
not.
Now that the facts are clear, the ball is in Congress's court. What is
to be done now that LSC has been caught misleading the Congress about what it is
doing with taxpayer dollars? Summary
No one would deny that the less
privileged in our society benefit significantly from legal assistance. But it is
entirely unacceptable for Congress, the states or private entities to continue
to provide funding to LSC programs without having credible and accurate
information on how current funds are being spent.
Just as you or I would
alter our donations to a charity if we learned the charity had misrepresented
its activities in its annual report, so too should Congress be equally vigilant
with taxpayer dollars in the face of gross overstatements by an entity entrusted
to serve the poor.
Thank you for your time and attention. I look forward to
any questions you may have for me.
***** Written Testimony
TIME FOR
CONGRESS TO HOLD THE LEGAL SERVICES CORPORATION ACCOUNTABLE
VIRGINIA L. THOMAS
The views I express are entirely my own, and should not
be construed as representing any official position of The Heritage Foundation.
The Legal Services Corporation (LSC) is a federally funded
agency with 269 grantee offices around the country that have provided over $6
billion of free legal aid to the eligible poor since 1974. For fiscal year (FY)
2000, the LSC is requesting a $40 million increase, to bring its funding level
to $340 million. This represents about a 13 percent increase in agency funding
at a time when the U.S. General Accounting Office (GAO), the LSC's own inspector
general, and the press have uncovered serious problems with the agency's case
reporting statistics and performance numbers. Audits of the LSC's 1997 caseload
data for 11 grantee offices--which reported handling 370,000 cases--determined
that only 198,000 were valid. (1)
Until Congress receives accurate
information about the performance of the Legal Services
Corporation's grantees, it cannot hold the agency accountable for its
performance and its use of taxpayer dollars. Congress should demand that all LSC
programs supply timely and accurate data on program performance; it also should
require independent audits and conduct investigative hearings. In addition,
Members of Congress should ask whether it is even appropriate for the federal
government to be funding this program. If it is not, they should consider
closing down the LSC by transferring its funding to the Department of Justice,
with a strict formula for block granting those funds to the states based on the
number of poor in each jurisdiction. The responsibility for providing legal
services to the poor belongs more appropriately to state and local officials and
to private-sector institutions--those closest to the people in need of
assistance.
THE TROUBLE WITH THE LSC'S NUMBERS
The LSC Factbook is a
benchmark of LSC performance figures not only for Congress, but for states and
private funding sources as well. In its 1998 Factbook, (2) the most recent issue
available to Congress, the LSC reported that a total of 1,932,613 poor people
were aided. (3) (See the Appendix for the 1998 Factbook's 1997 case statistics
for specific congressional districts.)
After egregious errors in the 1998
Factbook numbers were reported in the press, however, the LSC was compelled to
admit that it had not served as many clients as it had reported. An April 1999
LSC press release noted 400,000 fewer cases closed in 1997 than were reported in
the 1998 Factbook.(4) The agency also amended its 1998 projections, revising
them downward. The LSC soon will deliver its 1998 data to Congress in the 1999
Factbook. Until additional audits are completed, no one can know with any
certainty what the agency has accomplished with the taxpayer dollars that
Congress has appropriated in the past.
The LSC's representation of its open
and closed cases is important, because it is the only tangible information
currently available to Congress on the agency's overall performance. Until this
year, Congress has never seriously questioned the accuracy of LSC's numbers.
As Congress considers funding for the LSC within the Commerce, Justice,
State, the Judiciary, and Related Agencies appropriation bill, it should seek
credible, factual performance information that justifies the Administration's
substantial budget request, especially in light of the LSC's previous
misreporting of data. The Search for Accurate Performance Information
Congress relies increasingly on performance measures, such as the number of
clients served by the Legal Services Corporation, to decide
whether funding for the agency's programs should be increased or decreased.
Congress should specify better performance measures that would include credible
data on the quality, and not simply the quantity, of the services the LSC
provides to the poor. Indeed, Members of Congress--especially
appropriators--look at the performance of programs to determine whether a
program is working efficiently and achieving its goals. As Representative Harold
Rogers (R-KY), chairman of the House Appropriations Subcommittee on the
Departments of Commerce, Justice, and State, the Judiciary, and Related
Agencies, told the LSC in March 1999, "We want accurate information.... We do
make our judgments based on the volume of the load that is represented to us."
(5)
In December 1998, the Congressional Research Service (CRS) produced a
study that examined the extent to which the past two Congresses had used the
1993 Government Performance and Results Act, a tool for measuring the success or
failure of government programs and holding agencies accountable for their use of
taxpayer funds. The study, requested by House Government Reform and Oversight
Committee Chairman Dan Burton (R-IN), examined provisions in public laws enacted
during the 104th and 105th Congresses. According to the CRS:
There
are...indications that committees are interested in using performance-related
information in the appropriations process and associated budget documentation.
Over a third of all the committee reports identified in (our study) contained
provisions linking performance measures and the budget process. Such provisions
either stated the intent of the committee to consider the agency's progress in
articulating outcome goals and measures during the appropriations process,
suggested that the agency's budget submission include Results Act-related
information and measures, or referred to realignment of program and budget
structures in an agency's budget submission.... In addition, many reports
included language that noted that future funding for an activity or program
would be contingent upon establishing goals and measures or upon future
performance against established goals. (6)
Even the LSC recognizes the
linkage between performance and funding. Its president stated recently that
Case statistics play an essential role in the budget request and performance
plan submitted by LSC to the United States Congress each year. Therefore, the
reliability of case statistics submitted by programs to LSC is vital to
obtaining continued Federal funding for Legal Services.... We believe this type
of information...holds great promise for securing increased federal funding for
legal services. (7)
Congress appears to base its funding of the
Legal Services Corporation on the agency's reported caseloads.
The LSC then distributes the money to grantees based on a formula that takes
local poverty statistics into account. ACCOUNTABILITY VS. SPIN CONTROL
As a
key funding source and manager of taxpayer dollars, Congress must have access to
trustworthy LSC data about caseloads, clients, and agency operations. If the LSC
cannot provide dependable information on even the quantity of cases handled by
its offices, there is little hope that Congress can obtain more sophisticated
and meaningful quality performance information on this government service.
The demand for accountability pressures government officials to
define and then demonstrate their performance, particularly when programs are
seriously deficient. As one former LSC employee recently lamented, for example:
For more than 20 years I worked at a small Legal Services
Corporation-funded program and the work was immensely rewarding. But in
1996, when I was the program's litigation director, I quit due to the many
practices and policies which, to my mind, had all but destroyed the program's
ability to render competent legal assistance to people unable to afford counsel.
One of these practices was the counting of virtually every telephone call as a
"case" in order to build up numbers to report to LSC and other funding sources.
Consequently, hundreds if not thousands, of reported cases were nothing more
than referrals or other responses given by paralegals or secretaries. (8)
The LSC chose to use case statistics as a measure of its performance. On
February 25, 1998, for example, LSC President John McKay testified:
For FY
1999, LSC seeks an appropriation of $340 million. We estimate that this amount
will enable local legal services programs funded by LSC to resolve over 1.6
million cases involving critical legal problems for eligible clients and their
families.... Because of limited resources, local programs are forced to turn
away tens of thousands of people with critical legal needs. (9)
Although
Congress did not know about the caseload reporting problems, appropriators
approved a $17 million increase for the LSC on October 21, 1998, bringing its FY
1999 budget to $300 million. Congress provided the funding with an expectation
that the additional money would enable the LSC to serve 1.6 million clients in
calendar year 1998. According to the LSC president, this new funding represents
the strong bipartisan backing that LSC has developed, and signals a renewed
confidence that LSC is carrying out the will of Congress and is a vital part of
the justice system. The increase will allow LSC- funded programs to serve a
greater number of poor and disadvantaged clients more effectively in 1999. (10)
Uncovering the LSC's Reporting Problems Concerns about the LSC's
misrepresentation of its actual caseloads began to build after the agency's
inspector general began in March 1999 to release the results of several audits.
Since the IG has a dual reporting responsibility--both to the LSC Board and to
Congress--the IG should have informed Congress of the seriousness of the errors
found in the data. For example, of 149,589 cases reported for 1997 by six
grantee offices, two-thirds were found to be invalid (see Table 1).
The
inspector general's findings include the following examples, among others:
*
The Legal Aid Society of San Diego claimed it closed 33,096 cases for 1997, but
the IG audit revealed that only 10,787 of these cases were legitimate. (11)
* Florida Rural Legal Services admitted in August 1998 that 39,471 of the
cases it reported were invalid. This reduced the actual number of legitimately
reportable cases to 13,922 out of 53,393 reported. (12)
* Legal Services of
Miami claimed to have closed 23,800 cases in 1997; only 7,607 were found to be
valid. (13)
* Of the 16,490 cases reported by the San Francisco Neighborhood
Legal Assistance Foundation, only 4,134 were valid; the program's director
submitted a revision when the increased scrutiny of caseload data began. (14)
* Legal Services of Northern Virginia reported 9,115 cases; only 5,156 were
deemed valid. (15)
* The Houston office reported 13,695 cases, but in a
preliminary report yet to be finalized and released by the IG, only 9,995
potentially were valid. (16)
WHY THE LSC'S PERFORMANCE NUMBERS WERE FLAWED
The reporting problems found in every program audited by the LSC's own
inspector general and the U.S. General Accounting Office since the 1997 case
statistics were reported raise concerns about systemic LSC performance
deficiencies and reporting abilities. According to the IG (17) and GAO (18)
audits, LSC performance numbers included:
Repeat reporting of old "open"
cases; Phantom or non-existent cases; Telephone contacts reported as cases when
eligibility was not determined and the applicant was not accepted into the
program; Inclusion of non-LSC-funded cases in reports; and Double counting of
cases.
Upon learning of the inspector general's preliminary audits,
newspapers and editorial pages began to report on the LSC's problems. On April
8, 1999, for example, the Associated Press released a story documenting the
problems that the IG had begun to acknowledge in March 1999. The news story
indicated that some Members of Congress were concerned that the LSC might have
misrepresented the number of cases it handled intentionally in order to secure
additional funding. (19) Following the AP story, several editorials in
newspapers across the country criticized the LSC for its errors.
On March 3,
1999, during an annual appropriations oversight hearing, Representative Tom
Latham (R-IA) began to ask questions about the LSC's veracity in reporting its
caseload. The hearing was significant not only because it was the first time
that LSC's numbers had been challenged by a Member of Congress, but also because
it established clearly the committee's interest in linking the budget request to
the agency's performance. In a follow-up written response to Latham's questions,
the LSC's IG admitted that the agency's reported caseload figures are used for
the annual budget request submitted to Congress.(20) This admission heightened
concerns in Congress and eventually precipitated a congressionally requested GAO
audit of LSC grantees.
GAO Confirms Serious Data Problems
On May 3,
1999, five Members of Congress 21 asked the U.S. General Accounting Office to
continue to conduct random audits of LSC programs to collect additional facts
before this year's allocation of tax dollars to the LSC. Congress asked the GAO
to provide preliminary results of audits on five grantees by June. (21) On June
25, 1999, the GAO reported that all five grantees audited had problems
accurately reporting the number of cases handled. This reinforced the findings
of the IG's own audits.
As Table 2 shows, the grantees overreported closed
cases, and four of the five grantees overreported open cases. The operations of
all five grantees included cases in which the eligibility of clients was not
verifiable. In addition, the GAO reported that four of the five offices reported
closed cases in which no activity had occurred during the past year, and five
reported open cases where no activity had occurred during the past year. (22)
Clearly, the LSC's reported caseload figures did not stand up to independent
review and auditing.
THE LSC'S RESPONSES TO THE FINDINGS
Officials of
the LSC, including the agency's president, were aware of the grantee reporting
errors months before Congress was informed. In the summer of 1998, the LSC's
president was informed of the audit findings of case reporting problems. (23) In
September 1998, the inspector general informed some of his staff that "the
numbers provided to Congress were inaccurate." The LSC, however, did not plan to
release this information until March 2000, when its first Performance Report
under the 1993 Government Performance and Results Act is due. (24) By late 1998,
the LSC should have viewed the audit findings as serious enough to bring to the
attention of Congress, especially since Congress at the time was debating
whether to increase LSC funding for FY 1999 by $17 million. The IG, knowing that
the LSC did not plan to inform Congress of significant errors in its reported
data, should have informed Congress of what the auditors were finding. Instead,
the semiannual report issued by the inspector general on September 30, 1998,
reported "no significant problems, abuses or discrepancies" in LSC programs.
(25)
At a recent public debate at The Heritage Foundation, LSC
President John McKay admitted that his inspector general had advised him of the
seriousness of the reporting problems in the summer of 1998:
Our Inspector
General is here in the audience, and I would hesitate to speak for him, but it
was very clear that, based on the strength of oral advice, from him to me,
beginning actually in the summer of 1998, that we (the LSC) had a problem
concerning the accuracy of the cases. (26)
Why this serious problem was not
reported to Congress is the heart of the issue. Indeed, in April 1999, the LSC
revised downward its public estimates of the numbers of clients served in 1997
using taxpayer dollars, (27) even though it was asking all grantee offices to
increase the types of cases they report for the next Factbook. (28)
The LSC
sent new guidance to all grantees to modify future methods for reporting cases.
(29) One of the many changes required would have the effect of helping each
program to report more cases. This subtle yet important change requires each LSC
program to report cases on which it has worked regardless of funding sources.
Since 40 percent of the funding for most LSC grantees typically comes from
non-federal sources--states, bar associations, or other private or public
sources--this change not only will have the effect of inflating some of the
future caseload numbers, but also will make it difficult to compare data
relating to LSC's performance.
In May 1999, following congressional
inquiries and the April AP story, the LSC sent out another letter advising all
grantees that, among other things, a GAO audit was underway concerning the data
they already had reported for 1997. (30) It asked program directors to affix
their signatures attesting to the accuracy of their case statistics for 1998
because these figures would be compiled for the 1999 Factbook (which, because
the LSC Factbooks typically are published in May of each year, is now overdue).
Unacceptable Excuses
Official denials of systemic reporting problems by
the LSC have involved the following claims: (31) LSC CLAIM #1: The scope of the
problem is overstated; only five grantees overstated their cases, which is less
than 3 percent of the LSC's caseload.
FACT: Each of the 11 LSC programs
reviewed by an independent auditor--either the LSC's inspector general or the
GAO--showed false case reporting problems. Specifically, the IG identified
problems at Northern Virginia, Houston, San Diego, Miami, Florida Rural, and San
Francisco. (32) The LSC self-identified similar problems at Alameda, Central
Michigan, Los Angeles, and Western Carolina. Of 25 randomly selected cases
audited at Farm Workers Legal Services of North Carolina, nearly all lacked data
critical to determining whether the clients helped were indeed eligible for
federal aid. (33) The GAO reviewed five additional programs, each one of which
involved similar errors. (34)
LSC CLAIM #2: If anything, the LSC is
underreporting its caseload.
FACT: Because each new review of the LSC's 1997
data reveals broad miscounting and overreporting, all numbers provided by the
LSC are now viewed with skepticism. The LSC has taken steps to change the method
for developing caseload estimates for Congress by asking offices to increase the
types of cases handled, even if they are not funded by federal tax dollars. This
will make annual comparisons of LSC caseload data, as well as performance
measures for federally funded programs, nearly impossible.
LSC CLAIM #3:
There is no evidence of fraud.
FACT: The LSC has not engaged in candid
self-disclosure of problems with its 1997 case statistics. The gap in time
between when the IG and the LSC leadership learned there was a problem and when
Congress was advised of that problem is unacceptable. Moreover, the LSC's
request for a $40 million increase in its FY 2000 budget--based on the same
overinflated estimates from the disputed 1997 case statistics, and after LSC's
president had been informed of the problem--is itself nothing short of
fraudulent.
LSC CLAIM #4: The Inspector General Act prevents the IG from
informing Congress before his semiannual report is due.
FACT: Nothing
prevents the LSC or its IG from advising Congress of discrepancies found in data
used to award taxpayer funding. In fact, compliance with the 1994 Government
Auditing Standards requires the IG to advise Congress and management whenever
there is a need for timely reports. (35) These standards encourage interim or
oral reports to stimulate, not stymie, information flowing to policymakers.
LSC CLAIM #5: The LSC itself uncovered the problem through self- initiated
audits, brought it to Congress's attention, and took steps to correct it.
FACT: The timeline shows that the LSC and its own inspector general knew of
the emerging case reporting problems and did nothing to inform Congress. In late
1998, Congress voted an increase in federal funding for the LSC by relying on
information the LSC knew to be false, and on its exaggerated claims of its
performance. As late as March 1999, the LSC was still using these unreliable
data in its requests for additional funds from Congress.
LSC CLAIM #6: Case
numbers and performance information have no bearing on funding levels. Specific
allocations are based on the eligible populations living in each service area,
not on the number of cases handled or referred. Therefore, there is no incentive
to inflate numbers.
FACT: The LSC, Congress, and even LSC grantees use
performance or caseload numbers to influence funding from federal and
non-federal sources. The agency's own five-year strategic plan for 1997-2002
established as an annual goal "(to) seek to provide high-quality legal services
to the greatest number of eligible clients that our appropriation will support."
(36) According to the LSC's president: Case statistics play an essential role in
the budget request and performance plan submitted by LSC to...Congress each
year. Therefore, the reliability of case statistics submitted by programs to LSC
is vital to obtaining continued Federal funding for Legal Services.... (T)his
type of information...holds great promise for securing increased Federal
funding.... (37)
Moreover, inaccurate case numbers from the LSC can:
Attract additional non-federal funding (in 1997, over $200 million in
revenue came from non-federal funding); Skew evaluations for various competitive
grants; Discourage competition from more cost-effective providers of legal
services; and Mislead Congress and the public into believing that the LSC is
performing better than is actually the case.
WHAT CONGRESS SHOULD DO
No
one denies that the less privileged in society benefit significantly from free
legal assistance. However, the LSC services only about 5 percent of the eligible
poor. The lives of thousands of people have been improved by the efforts of pro
bono attorneys and the ad hoc network of organizations and people, such as
private foundations, churches, and synagogues, that have stepped up to assist
the poor when they are in need. Unfortunately, however, the federal program to
help the poor with legal assistance--the Legal Services
Corporation--has shown itself to be deceptive in measuring its
performance and impervious to efforts to institute accountability.
For this
reason, the first question Congress should ask is whether the federal government
should be running this program at all. If it is decided that providing legal
services to the poor is not appropriately a federal function, Congress should
consider devolving this responsibility to the states, local governments, and
private-sector institutions and putting the LSC on a clear path toward eventual
shutdown. (38)
To accomplish this, Congress should transfer funding for
legal services for the poor to the Department of Justice, with a strict formula
for block-granting funds to the states based on the number of poor in each
jurisdiction. Block grants not only would eliminate federal overhead, but also
would permit states to institute their own accounting standards for grantees and
allow them to conduct their own audits. Recent strides in welfare caseload
reduction at the state level--driven in large part by the autonomy of the states
to design appropriate welfare-to-work transitioning programs--have emboldened
Washington to return to the states the responsibility for other federal programs
once thought too large or cumbersome for states to handle.
Washington
should acknowledge that state and local leaders who know best how to serve the
legitimate and critical legal needs of the poor are in a better position to
design the most efficient system and provide quality services to those in need.
Alternatively, if it is decided that the Legal Services
Corporation does represent a proper federal function, Congress should
establish the criteria for evaluating the LSC's performance, including case
statistics. In the short term, Congress should:
1. Demand that the LSC issue
its 1999 Factbook with 1998 caseload figures as soon as possible. Congress and
the public need to review how the LSC has spent taxpayer money--and what, if
anything, it has accomplished--before deciding how much (if anything) should be
appropriated for FY 2000. The 1999 Factbook may not be published until late
July, giving little time for appropriators to study changes from the disputed
numbers in the 1998 Factbook.
2. Verify the accuracy of information Congress
receives from the LSC in the future. To ensure that federal tax dollars are not
wasted and that those most in need are being helped, and to hold accountable
those LSC officials who are responsible for providing inaccurate information to
Congress, Congress should:
Require an annual independent audit of LSC case
statistics, either by the GAO or by an outside contractor, to obtain a
verifiable and accurate accounting of LSC performance. Audits should begin by
verifying 1997 and 1998 data, since only 11 of the 269 grantee offices have been
audited for their 1997 caseloads to date.
Prevent the LSC from
administratively changing the definition of "reportable" cases to avoid accurate
assessments of performance. The LSC's new administrative guidance to grantees in
November 1998 will do just that. Congress should specify how it wishes the LSC
to track federal funds and performance data.
Apply the Federal False
Statements Act to the LSC and its grantees to prevent future misrepresentation
of facts during the appropriations process. This act would allow penalties for
misreporting data about caseloads or clients served with federal taxpayer
dollars.
3. Reduce FY 2000 funding. Congress should reduce the LSC's annual
appropriation, or make its funding contingent on the release of accurate data,
to offset the overfunding provided in the past from LSC's provision of
inaccurate data. Since federal funding is premised on delivery of services to a
certain number of poor people and LSC's data have been questioned, federal
funding should not be increased to the requested $340 million. Congress must
send a strong message that deception will not be tolerated or rewarded with
larger budgets.
4. Conduct new oversight hearings to determine what LSC
officials knew and when they knew it. The information that comes to light in
these hearings could set the stage for future legislative changes to ensure that
such misreporting does not happen again. (39) Such hearings would establish a
benchmark for LSC performance and would demonstrate that Congress is serious
about performance data and the accuracy of the information upon which it bases
appropriations.
5. Highlight the need for reform in each state. As further
scrutiny of the LSC and its 269 grantees' caseload data continues, Members of
Congress can encourage local oversight efforts by state legislatures and local
media. In Virginia, for example, heightened press attention to the reporting
errors in one LSC program triggered new reporting and oversight by the state
legislature. (40)
CONCLUSION
In 1993, Congress passed and the President
signed the Government Performance and Results Act with bipartisan support and
the Clinton Administration's stamp of approval. The act codified Washington's
desire to hold federal programs accountable for their performance and use of
taxpayer dollars.
This law is useless, however, unless Congress can rely on
the information provided by federal agencies. Until Congress receives accurate
information about the performance of Legal Services Corporation
grantees, it will continue to be unable to hold the LSC accountable. Congress
should demand that all LSC programs supply timely and accurate data on program
performance, and it should require independent audits and hold new investigative
hearings to determine the reliability of information supplied by the LSC.
In
the LSC's case especially, Members of Congress must be tenacious in seeking and
obtaining the facts before spending more taxpayer dollars. The LSC's functions
are carried out better and more appropriately by the states, localities, or
private organizations. Until Congress can eliminate funding for this agency,
however, enhanced congressional oversight is needed. With better information
about the LSC's performance, Congress can assess the cost-effectiveness of the
agency's delivery of services compared with other options to improve legal
assistance to the poor.
APPENDICES
1. Table: Claimed LSC cases vs.
Actual LSC cases in 1997
2. Table: GAO Audits of LSC Caseloads in Five
Offices Show Mis- reporting Problems
3. Table: Federal Funding History and
Cases Reportedly Handled
4. Timeline: What Did LSC Officials Know and When
Did They Know it?
5. Table: What Members of Congress Should Ask in Oversight
Hearings
6. LSC Grantee Caseloads; State and Grantee Information for 1997
7. Select newspaper articles on Government Performance and Results Act
Endnotes
1. U.S. General Accounting Office, Legal Services
Corporation: Substantial Problems in 1997 Case Reporting by Five
Grantees, GAO/GGD- 99-135R, June 25, 1999, and associated material included in
"Briefing to Congressional Requesters," June 21, 1999; Karen Gullo, "Legal Aid
Programs Overstated Cases," Associated Press, April 8, 1999. See also
Legal Services Corporation, Office of the Inspector General,
Review of Case Statistics Report, AU99-012, March 1999; Review of Case
Statistics Report, AU99-013, March 1999; General Review of Selected Parts of the
Legal Services of Northern Virginia's 1997 Grant Activity Report and Timekeeping
System and Its Compliance with Selected Regulations, AU99-001, October 1998.
2. Legal Services Corporation, 1998 Factbook & Program
Information, at http://www.lsc.gov/fbtoc98.html. Each year, the Legal
Services Corporation provides Congress with a Factbook which includes
data on the number of clients served, the number of private attorneys
participating in LSC-sponsored programs, the amount of federal and non-federal
funding, and the number of full-time staff. Figures included in any given
Factbook represent data for the previous calendar year. The 1998 Factbook, for
example, reports figures for calendar year 1997. The 1999 Factbook is not yet
published.
3. The Legal Services Corporation's 1998
Factbook, issued in May 1998, claimed that 269 grantees had 471,600 cases open
and 1,461,873 cases closed at the end of 1997, serving a total of 1.9 million
poor people with $283 million in federal funds. Eligibility for assistance is
found in Section 1007(a)(2) of the Legal Services Corporation
Act, which requires the LSC to establish maximum income levels for individuals
eligible for legal assistance. Section 1611.3(b) of LSC's regulations
establishes a maximum income level equivalent to 125 percent of the federal
poverty guidelines. Since 1982, the Department of Health and Human Services has
been responsible for updating and issuing the poverty guidelines.
4.
Legal Services Corporation, Office of Public Affairs, press
release, "Statement on Case Reporting System," April 8, 1999, available at
http://www.lsc.gov/prcsr.html.
5. Statement of Representative Harold Rogers,
Chairman, Subcommittee on the Departments of Commerce, Justice, and State, the
Judiciary, and Related Agencies, Committee on Appropriations, U.S. House of
Representatives, at FY 2000 appropriations hearing, March 3, 1999.
6.
Genevieve J. Knezo and Virginia McMurtry, "Executive Summary," Performance
Measure Provisions in the 105th Congress: Analysis of a Selected Compilation,
Congressional Research Service, December 1998, at
http://www.freedom.gov/results/crs/getsresults-sum.asp.
7.
Legal Services Corporation, "A Message from LSC President John
McKay," February 2, 1999. This document originally was available at
http://www.lsc.gov/fl1298jm/html, but no longer is posted on the LSC Web site.
8. John T. Hand, letter to the editor, Investor's Business Daily, June 18,
1999 (emphasis added).
9. Statement of Douglas S. Eakeley, Chairman, John N.
Erlenborn, Vice- Chairman, and John McKay, President, Legal Services
Corporation, before Subcommittee on the Departments of Commerce,
Justice, and State, the Judiciary, and Related Agencies, Committee on
Appropriations, U.S. House of Representatives, February 25, 1998, p. 1.
10.
Legal Services Corporation, "A Message from LSC President, John
McKay."
11. Legal Services Corporation, Office of the
Inspector General, Review of Case Statistics Report, AU99-012.
12. From
information provided by the Florida office to the LSC.
13. Legal
Services Corporation, Office of the Inspector General, Review of Case
Statistics Report, AU99-013.
14. Robert P. Capistrano, Director of
Litigation, San Francisco Neighborhood Legal Assistance Foundation, in a letter
to the Legal Services Corporation concerning revised 1997 case
service reports, December 30, 1998.
15. Legal Services
Corporation, Office of the Inspector General, General Review of
Selected Parts of the Legal Services of Northern Virginia's 1997 Grant Activity
Report and Timekeeping System and Its Compliance with Selected Regulations,
AU99-001.
16. Legal Services Corporation, Office of the
Inspector General, "Preliminary Draft Report of Gulf Coast Legal Foundation,"
August 7, 1998.
17. Legal Services Corporation, Office of
the Inspector General, Review of Case Statistics Report, AU99-012; General
Review of Case Statistics Report, AU99-013; General Review of Selected Parts of
the Legal Services of Northern Virginia's 1997 Grant Activity Report and
Timekeeping System and Its Compliance with Selected Regulations, AU99- 001. See
also Gullo, "Legal Aid Programs Overstated Cases."
18. U.S. General
Accounting Office, Legal Services Corporation: Substantial
Problems in 1997 Case Reporting by Five Grantees.
19. Gullo, "Legal Aid
Programs Overstated Cases."
20. Answer No. 8 given by Legal Services
Corporation management to a question posed by Representative Tom Latham
(R-IA) following March 3, 1999, House Appropriations Subcommittee hearing on
LSC's funding request for FY 2000; submitted to select chairmen in the House and
Senate on March 31, 1999, by E. R. Quatrevaux, Inspector General, LSC.
21.
Representatives Richard Armey (R-TX), Dan Burton (R-IN), Tom Latham (R-IA), Dan
Miller (R-FL), and Charles Taylor (R-NC).
22. U.S. General Accounting
Office, Legal Services Corporation: Substantial Problems in
1997 Case Reporting by Five Grantees.
23. John McKay, remarks at Heritage
Foundation forum, "Assessing LSC's Performance at Their 25th Anniversary," July
6, 1999.
24. "LSC Inflated Workload While Demanding More Tax Funding," Human
Events, May 7, 1999; e-mail to a few IG staff from LSC Inspector General Edouard
Quatrevaux, September 23, 1998; responses to questions submitted after March 3
House Appropriations Subcommittee hearing by Representatives Tom Latham, Dan
Miller, and Charles Taylor.
25. Legal Services Corporation,
Office of the Inspector General, Semi- Annual Report to Congress, September 30,
1998. 26. McKay, remarks at Heritage Foundation forum, July 6, 1999.
27.
Legal Services Corporation, "Statement on Case Reporting
System," April 8, 1999.
28. Karen J. Sarjeant, Vice President for Programs,
Legal Services Corporation, "Revised CSR Handbook," Program
Letter 98-8, November 24, 1998.
29. Ibid.
30. Karen J. Sarjeant, Vice
President for Programs, Legal Services Corporation, letter to
all LSC Program Directors concerning self- inspection procedures and case
service reporting, May 14, 1999.
31. John Erlenborn, Vice Chairman Board,
Legal Services Corporation, letter to the editor, The
Washington Times, May 1, 1999; Legal Services Corporation,
"Statement on Case Reporting System," April 8, 1999. 32. Legal Services
Corporation, Office of the Inspector General, Review of Case Statistics
Report, AU99-012; General Review of Case Statistics Report, AU99-013; General
Review of Selected Parts of the Legal Services of Northern Virginia's 1997 Grant
Activity Report and Timekeeping System and Its Compliance with Selected
Regulations, AU99- 001.
33. John McKay, President, Legal Services
Corporation, in letter to J. Donald Cowan and Melissa Pershing, Legal
Services of North Carolina, September 18, 1998.
34. U.S. General Accounting
Office, Legal Services Corporation: Substantial Problems in
1997 Case Reporting by Five Grantees.
35. Standard 7.6 states: "Auditors
should appropriately issue the reports to make the information available for
timely uses by management, legislative officials and other interested parties."
See U.S. General Accounting Office, "1994 Revision by the Comptroller General of
the United States," Government Auditing Standards, GAO/OCG- 94-9, June 1994. An
interactive version of the document, called The Yellow Book, is available at
http://www.ignet.gov/ignet/internal/manual/yellow/yellow.html#index.
36.
Legal Services Corporation, Strategic Plan, 1997-2000, p. 9, at
http://www.lsc.gov/spv01.html.
37. Legal Services
Corporation, "A Message from President John McKay," February 2, 1999.
38. For more information on devolving and privatizing Legal Services
Corporation functions, see Edwin Meese III, "Legal Services
Corporation," in Scott A. Hodge, ed., Balancing America's Budget:
Ending the Era of Big Government (Washington, D.C.: The Heritage Foundation,
1997), pp. 389-390; Kenneth F. Boehm and Peter T. Flaherty, "Why the
Legal Services Corporation Must Be Abolished," Heritage
Foundation Backgrounder No. 1057, October 18, 1995; Kenneth F. Boehm, "The
Legal Services Corporation: New Funding, New Loopholes, Old
Games," Heritage Foundation Backgrounder Update No. 276, May 17, 1996.
39.
Possible forums would include the House Judiciary Committee or its Subcommittee
on Commercial and Administrative Law; the Senate Health, Education, Labor and
Pensions Committee; the House Government Reform Committee or Senate Governmental
Affairs Committee; and the House Appropriations Subcommittees on Commerce,
Justice, State, and Judiciary or Senate Appropriations Subcommittee on Commerce,
Justice, State, and Judiciary.
40. Jeremy Redmon, "Legal Clinic in Virginia
Again Under Scrutiny: Service Suspected of Padding Clients," The Washington
Times, April 20, 1999. END
LOAD-DATE: September 30,
1999