UNTANGLING FRAUD, WASTE AND ABUSE

Many states, counties and city leaders are regularly raging against “fraud, waste and abuse.” This is hardly a new issue but inspired by the efforts in Washington D.C. – whatever you think of the administration’s approach – there’s been refreshed action at other levels of government to tackle this triad of governmental ills.

Here’s the problem. These three words are generally comingled as if they were one thing. But they’re not. And mixing them together as a single phenomenon can easily cause governments to lose a clear vision as to exactly what they’re trying to fix.

 Fraud, at least, has a clear and specific meaning. When it comes to the other two, things get kind of mushy. As Don Kettl, professor emeritus at the University of Maryland, told us the other day when we were talking about this column with him, “I’ve never seen a good definition of abuse” And waste – which we’ll carp about subsequently – is even more opaque.  

Let’s start with fraud, which is simple to define, as it has a pretty straightforward, legalistic meaning. It is a white-collar crime, which victimizes the government, through deceitful practices in which people engage to enrich themselves. A whole variety of activities fit into this definition, including purposefully billing states or localities improperly for goods or services provided; lying about the quality of products or services provided; or using governmental funds for personal benefit.

One big differentiator. Fraud is the only one of the three that, by necessity, is purposeful.

(It’s probably worth noting here that the idea that there is ubiquitous fraud in government may well be an exaggeration. A few weeks ago, we wrote about a report by KFF that pointed to a White House statement about fraud in the Medicaid and Medicare programs and made the point that many improper payment estimates, which are sometimes identified as fraud “are not a measure of fraud or abuse and most improper payments are the result of missing documentation or missing administrative steps and are not necessarily payments made for ineligible enrollees or services.”)

Now let’s talk about abuse. The clearest definition we were able to find of this came from the Environmental Protection Agency, which defines it as “behavior that is deficient or improper when compared with behavior that a prudent person would consider reasonable and necessary business practices given the facts and circumstances.”

The problem to us is that once you start talking about a “prudent” person there’s a lot of leeway for interpretation.  For example, unnecessary overtime is sometimes described as an abuse. But we’ve written enough about overtime to know that it’s a complicated issue and the decision of whether or not to use it is subject to a lot of variables.

For example, fire departments sometime are attacked for abusing overtime expenses. But as we wrote in a white paper a few years ago, “Although overtime may be expensive, it is critical to distinguish the instances where it is both necessary and useful from those where it is unnecessary and possibly even risky. Useful overtime allows departments to quickly deal with unexpected events and short‐term vacancies. Says Troy Valenzuela, (now retired) battalion chief for the East Fork Fire Protection District, located in the valley next to Lake Tahoe, “The reason overtime is unavoidable is that we have to fill those seats in the fire engines every day. The seats just can’t be empty. That’s the real reason why [most] fire agencies take heat for their overtime expenses.”

Unnecessary travel is also sometimes considered an abuse. But, when we attend conferences, we see that frequently the best and highest benefit achieved by attendees is the opportunity to learn from others over lunch or in the hallways between sessions. We can’t think of any way to measure that, but it’s our opinion that if someone goes to a conference and comes back with three or four ideas that can help their entity run more effectively or efficiently, that may well have been money well spent – hardly an abuse of taxpayer dollars.

Now we’ll come to the word that we find potentially pernicious: Waste. When we hear politicians use that word, it’s often tied more to their personal values – and the perceived beliefs of the voters – than to anything with clarity.

To take an extreme example, let’s say that an elected official doesn’t believe in a particular expenditure, then it’s wasteful. Is it wasteful for states to expand their university systems? We’d say it’s a terrific investment, but we know others who think there’s little need for improved facilities. What they call waste, we’d call investment.

Investments at the local level in affordable housing are sometimes described as wasteful. This description, naturally enough, comes from people who have easy access to a pleasant house or apartment. It’s the “I’ve got mine” syndrome. Money spent on something people themselves don’t need is labeled by them as wasteful.

If we were asked to provide a definition of the word waste as it’s sometimes used in the public sector, it’d be this: Waste is money spent on something that benefits someone else, but doesn’t do you any good yourself.

#StateandLocalGovernmentManagement #StateandLocalGovernmentFraud #StateandLocalGovernmentWaste #DefiningGovernmentFraudWasteAndAbuse #StateandLocalGovernmentHumanResources #DefiningGovernmentAbuse #StateandLocalGovernmentOvertime #CityGovernmentFraud #CountyGovernmentFraud #CityGovernmentWaste #CountyGovernmentFraud  #StateandLocalGovernmentEfficiency #StateandLocalGovernmentPerformance #CityGovernmentPerformance #CityGovernmentEfficiency #CityGovernmentWaste #CountyGovernmentWaste #GovernmentEfficiencyAndEffectiveness #StateandLocalEfficiencyaAndEffectiveness #StateandLocalGovernmentTravelExpenses #CityGovernmentTravelExpenses #BandGReport #BarrettandGreeneInc