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Recent Arrests Make the Case for Block Grants

The Mississippi State Auditor recently busted a slew of bigwigs stealing millions of dollars of welfare money and people are understandably furious. They are also missing the point.

John Davis, former executive director of the Mississippi Department of Human Services. Photo courtesy of the Mississippi Department of Human Services

Auditor Shad White announced the arrest of six people involved in an alleged embezzlement scheme including a Mississippi business owner and talk show guest, and the former head of the Mississippi Department of Human Service. White calls it “the largest state embezzlement case on record” and alleges former MDHS head John Davis and MDHS employee Latimer Smith funneled multi-million-dollar contracts to Mississippi Community Education Center owner Nancy New and her employees so they could be millionaires and ship cash over to Californian ex-wrestler, Brett DiBiase.

The stolen money was from Mississippi’s federal Temporary Assistance for Needy Families (TANF) fund, and the thieves were wealthy people who were, by no means, needy. In fact, these were some of the most politically-connected grifters in the state. White said as much himself.

“I don’t care how politically connected a person may be,” White told reporters. “You do not have the right to treat taxpayer money as your own or to lie to the taxpayers about what you’re doing with that money. Others doing this kind of thing are on notice: This will not be tolerated now.”

Well, no. Actually, you do, Mr. White. You can do precisely that, so long as you are a state manager of a TANF program. The federal government, more or less, agreed to those terms when it first converted the federal welfare system into a series of block grants for states to spend at their own discretion.

Eligibility The fact of the matter is former President Bill Clinton essentially helped Republicans kill welfare as we know it in 1996, when he signed a rule converting the Aid to Families with Dependent Children (AFDC) to TANF. This reduced AFDC from a federally managed disbursement system helping low-income parents to a block grant program managed by individual states. This means TANF allows wide latitude on how to spend TANF money for individual states, including states run by greedy rednecks Republicans people apparently.

Mississippi is the nation’s most impoverished state and the people in charge of it impose countless obstacles to families’ eligibility in their rush to exclude them from TANF. This includes a mandatory number of hours of weekly work and an impossible poverty-level income cap, for starters. Does your family of three make more than $3,538 in a year? Too bad, kid. You’re too wealthy according to the Mississippi Division of Medicaid. In addition, Mississippi requires single parents verify either the existence of child support from an absent parent or that the parent is taking advantage of MDHS’ Child Support Services to recoup those funds. If you’d like to maintain some kind of relationship with the kid’s some-timing father, mom (for example), you can probably flush that right down the toilet as MDHS workers chase him all over the state like Liam Neeson pursuing a kidnapper.

Fewer and fewer families qualify for help under these arbitrary requirements. The Center on Budget and Policy Priorities says the share of children living in deep poverty has increased and “research suggests that the loss of TANF benefits contributed to that growth.”

“While TANF benefits are too low to lift many families out of poverty, they can help reduce the depth of poverty, yet TANF has proven far less effective at lifting families out of deep poverty than AFDC, mostly because fewer families receive TANF benefits than received AFDC benefits,” CBPP states. “… While AFDC lifted almost 3 million children out of deep poverty in 1995, TANF lifted only 287,000 children out of deep poverty in 2016.”

While people, like former MDHS head John Davis, are throwing up countless barriers to TANF’s poverty-stricken targets, they are only too happy to hand out TANF-funded contracts to their wealthy friends, like that nice lady indicted by the state auditor.

A New GOP Deal In addition to being the owner and director of a suspected TANF-guzzling Mississippi Community Education Center (MCEC), Nancy New is also the founder of New Summit School, one of the charter schools sucking precious resources from the impoverished, majority-Black Jackson Public School District.

Tate Reeve’s Plans For Mississippi Teachers Source

Her friends don’t stop at Davis, either. In fact, New has friends in all the right places. Late last year, during the run-up to the gubernatorial election, Gov. Tate Reeves filmed one of his false ads touting the importance of public schools at New Summit (which is not technically a public school. Be astounded as Reeves finds the only school in Jackson full of white women!)

During the 2019 legislative session, Reeves also helped New’s school industry by sneaking language into an unrelated bill that diverted $2 million in public money to private schools. The bill slithered through both the House and Senate before many members even knew what it was. Lawmakers were understandably furious.

Photo courtesy of Super Talk Mississippi

New is a darling of the Mississippi GOP scene. She makes frequent visits to conservative SuperTalk radio to sound smart for the rest of us. We expect SuperTalk to scrub her presence off their website fairly quickly, so we’ve included an image of one of their links before it’s gone. (In case you didn’t know, New is the wealthy, blonde off to the right.)

Former Gov. Bryant, the state leader of the conservative movement, also tied himself to New, having declared her Families First program to be “a model of success for thousands of Mississippians and one that is being emulated all across America” in his 2019 State of the State address.

Several reporters complain that New’s friend at MDHS, Davis, was likely able to funnel gobs of money meant for impoverished people to her thanks to the closed MDHS bidding process, and the administration’s secretive nature and its refusal to respond to information requests. Mississippi Today reporter Anna Wolfe is eager to tell you how MDHS buries and ignores info requests with impunity.

This, sadly, is what can happen when you hand off federally overseen money to states run by careless, greedy people. And this is precisely what our current president and the Republican Party is now trying to do with Medicaid.

They’re pretty far along already, actually. Terrified House Democrats just passed a resolution disapproving of the president’s rules for block-granting Medicaid, which would allow corrupt states like Mississippi to finagle how they run their Medicaid programs.

“The Trump administration should immediately withdraw its illegal block grant guidance and cease its campaign to undermine and weaken Medicaid,” the resolution states. It also declares the Trump administration has “waged an unrelenting war on Medicaid,” and it demands the administration “uphold its responsibility to faithfully execute the law, including the Medicaid Act, and cease any and all efforts that threaten the care of the millions of Americans who rely on Medicaid.”

Trump appointee Seema Verma, who is the administrator of the Centers for Medicare and Medicaid Services, claimed in an editorial that Trump’s block granting plan, The Healthy Adult Opportunity, “does not cut Medicaid funding.”

“Unfortunately, it hasn’t taken long — even by Washington’s standards — for talking points with a dubious relationship to reality to start circulating among defenders of the status quo,” Verma wrote. Trump’s program, she claims, “continues federal funding to states based on their historical spending with a reasonable growth rate.”

But the amount of money allocated through Trump’s new program isn’t really the point. The point is who has control over it, and New and Davis and their wealthy cohort make clear what’s at stake when you open the door to block-granting a program like Medicaid, upon which millions of Americans depend.

The Mississippi auditor’s indictment actually puts Verma’s own words in discomforting light. She argues Trump’s program provides “a historic level of flexibility for states to design a Medicaid program tailored to the unique needs of their adult beneficiaries, while holding states accountable for improving quality and ensuring access.”

We see the “accountability” places like Mississippi can muster, and we know now what they do with all that “flexibility”: They enrich their friends.

We know, we know. Yes, it probably helped Tate Reeves tremendously that the Republican auditor did not indict Reeves’ and Phil Bryant’s close friend and her comrades prior to Reeves’ successful election last November. Seeing his little buddy and her pals get dragged off over millions of dollars of alleged fraud would not have played well in the days leading up to the vote. But, to be honest, these arrests could not have come at a better time.

In fact, thanks to Davis and News, we can probably rest our case on block grants.


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