 This is Sync Tech. We're talking tax with Tom this morning. That's Tom Yamachika, President and Tax Foundation of OIA. We're talking about acronyms today. We'll be discussing acronyms, and I'll make him tell you what those acronyms stand for. The first one is in the title of our show. It's TANF, T-A-N-F, hoarding. Oh, this is hoarding and tax and whatnot. Good morning, Tom, how are you? Morning, Jake, glad to be here. So the title of our show is TANF Hoarding, and we have a bunch of other acronyms. Maybe you can take a moment and give us the acronym environment of our discussion. Sure. One of the ways our government provides a safety net for those less fortunate is through a program called Temporary Assistance for Needy Families. That's what TANF means. You may have heard of a federal matching program called AFDC, or Abe to Families with Dependent Children. That's what the program used to be. It used to be welfare, but in 1996, AFDC, which is a federal match, was replaced by TANF, which is a block grant program. And that's going to be very important in the discussion that's going to follow. OK, well, then you have to tell us what MOE is. The MOE is another acronym we're likely to encounter in this discussion. What is that? OK, so let me explain how this works. I mentioned that TANF is a block grant program. So what that means is the federal government provides a certain amount of money authorized to the states. It's about $100 million a year. And that is then made available to the states so they can run their programs that are consistent with the federal goals. But not only are the states supposed to spend the federal money to achieve those goals, they're supposed to spend their own money too. And that's what MOE comes from. MOE means maintenance of effort. So the feds expect the states to spend MOE monies and have their own skin in the game, not just the federal money. And again, it always used to be that way. Under AFDC, it was a matching program so that the states had to spend their own money before the feds would kick in. Now, the states get a block grant, but they still have to spend a certain amount of money. And the certain amount of money is based on a historical, I think it's 1994, level of spending on their welfare and other homeless programs. The comment on that is 1994 might have well been 1500. I mean, that's a long time ago. If that's supposed to be informative about what's going on now, it's a long way off, isn't it? Right. But it still means that we have to spend about $100 to $150 million a year. Let me show you on a graph. And this is graph number one, what we actually do spend. So on this graph, the blue represents the amount of federal money that we spend, and the orange represents the amount of state money. So the maintenance of effort level is around $150 million. And that's what we spend pretty much every year. And we're authorized about $100 million a year from the federal government. So we can spend that money, again, to further the goals of the federal program. And they're very broad goals, OK? Assisting needing families so children can be cared for in their own homes or the homes of relatives. Reducing the dependency of needy parents by promoting job preparation, work, and a marriage. Preventing pregnancies among unmarried persons and encouraging the formation and maintenance of two-parent families. So I mean, those are pretty broad goals, right? Well, the proof is in the pudding. Yeah. How do you do that? Good question. So you can do it by block grants to people. You can, after they've proven that they are able and willing to work but are kind of unable to for one reason or another, you can have educational programs. You can have employment services like job coaching and placement. All that stuff counts, OK? But the issue that we're going to be talking about today is, well, we're authorized for $100 million a year, roughly. But look how much we're actually spending. So let's go back to that first graph. And you see the blue bars there. Hover around $50, $60 million a year, OK? And I mentioned that we're authorized for about $100 million a year. Now, what happens to the amount that we don't spend? Well, it gets carried over. And that brings us to our second graph, which shows the unobligated balance of the federal monies that is available to the state of Hawaii. What do you mean, unobligated? What does that mean? That means it's sitting around in some federal account earning interest for the feds and not doing anything for us. Because we haven't done our matching. No, it has nothing to do with matching. We have to. I mean, the MOE, I'm talking about the MOE. We have to spend our maintenance of effort, which we've done. Because if we don't do that, we don't get anything, right? So have we spent sufficient MOE to justify getting the whole $100 million? Right. Have we? Yes, we have. Because they're very substantial penalties if we don't make the MOE. But what's been happening here is that the balance has been building up and building up and building up so that in 2021, as Hawaii News now reported, we have crossed the $400 million mark of money that is available to the state of Hawaii, but is sitting somewhere else. Just help me on this. Why is it not being distributed to the state of Hawaii? Because we didn't ask the feds for it. OK. Just a matter of a request. Yeah, what we have to do is we have to come up with programs that meet the federal guidelines. We basically have to start spending the money and ask the feds to reimburse the monies that we've spent. That doesn't sound like rocket science to me. Of course not. The problem is we need to come up with programs and we need to do something about making them work. Now, the base story on this that led to today's discussion was basically found out by a national nonprofit called ProPublica. They investigated several states and they found that a lot of money was being built up and hoarded. And primarily, Hawaii, Tennessee, and Maine hoarding the most cash per person living at or below the federal poverty line. So we are hoarding about $3,000 per person living in poverty. And that $3,000 is sitting in some bank on the mainland that we don't have access to unless we tell the feds, OK, we want to do it on this program. If I got this right, they give us some money. We're supposed to develop programs in those certain areas, those mission areas you read off. And if we don't develop the program, we just keep the money, we hoard the money. That's right. And there's going to be a price to pay for that down the line, maybe in a way of penalties or something about future distributions from the federal government. Am I right so far? Up to the last part, it's not really clear what the penalties are. But in practical terms, we have $50, or we have $100 million that the feds have authorized for us. We're spending 50 of it. We're supposed to use the other 50 to alleviate poverty in Hawaii, and we're not doing it. OK, so the next question is, who is supposed to do that? We are the Department of Human Services. Department of Human Services, DHS here in Hawaii. That's correct. The state agency. And are they aware of this? I mean, did ProPublica contact them? Probably did, eh? They did. They know the problem. They've probably known about the problem for a long time. How come they didn't develop these programs? Well, when they replied to ProPublica, they said they have a lot of ideas. Oh, let's extend employment services like job coaching and placement for non-custodial parents, where have children receiving TANF. And we want to provide diaper assistance to families that are eligible for the program. And they're also considering increasing benefits and offering monthly housing assistance. Well, those are a lot. There's a lot of thoughts, right? There's been no action. This is over a period. What was that chart cover? Five to six or seven years, something? The chart covers, I believe, five years. Five years. But it goes back, I think, a bit further than that. But let me offer you some of those missions that you read off. And maybe you could read them off again. Those missions are pretty vague. As you said, they're very broad. Is that a good thing or a bad thing? It seems to me that it's really hard. Just my reaction is it's very hard to establish programs that accomplish very vague purposes, because you don't know where to put the money. You don't know who to hire. You don't know what kind of functions you want to establish or cause a contract to establish. And so it's, you see, it's like. I mean, I would beg to differ with the broad goals like that. It's easy to establish something, because it's tougher to say it's not going to qualify. These are missions that are, I mean, they're rebuilding the family. They're rebuilding lives. They only apply to people who are in poverty, people whose families are broken in some way, people whose houses broken in some way. I mean, they're really for the disadvantage. That's clear. Yeah, no, the excuse that DHS has given is, oh, geez, well, this is a matching program. And there's stuff that we have to provide for that can't, that's not eligible for federal matching, like when they provide for immigrants from the compact of free association states. Right, the, you know, the Palau truck and Micronesia. Why is that not qualified? Because you have to be a citizen. OK, but the problem is it's not a federal matching program. It hasn't been since 1996. OK, and if they're thinking, if their mindset is, well, we can't spend any more because, you know, we need the legislature to authorize us to spend more, that's just wrong. Why do you say they can do it without legislative imprimatur? No, they have their own budget. OK, but when they budget, this is going to be from federal funds. You know, it's going to be whatever symbol that is, but it's not a funds. A funds is from our own tax dollars. You know, the thing is that they probably have a lot of programs already, right? In the, let's say, the 50 million they're spending. And they probably have other programs too. I mean, this isn't the full coverage of DHS. They do a lot of stuff. They do a lot of stuff for this. They spend $150 million of our money. Yeah, and $50 million of defense. Yeah. OK, so they have a program for the hundred. If they have a program for, what did you say, a hundred million, say, of our money, state money. $150 million, yeah. $150 million for our state money. They have various programs and all addressing problems for the disadvantaged and the poor. OK, now you say, well, you need to spend another, what, 50 million beyond what you spent already out of the federal money. They really have to find new programs, don't they? They have to find new ways, new, you know, new organizational ways to spend that money. They can't be spending it on what they're already spending it on, right? Right. So that requires a little creativity. Yeah, it requires some brain damage there, you know? You have to actually use those brains to come up with ideas and actually implement them, not just, you know, put the ideas down in the paper. Maybe we'll do this, maybe we'll do that. So you're saying that they can do this without the legislative approval. I suppose they have some relationship with the governor's office on this. I mean, they work for the governor, their state department and all that. So what's the bureaucracy involved? What's the bureaucracy that has them give you vague answers or give the public a vague answers and not do anything? Why is this stuck? It seems to me that if the money's hanging on a tree out there, they can just, you know, it's low-hanging fruit. All they've got to do is think of something. Yeah, that's why we're having this discussion today, Jay, because I think there is low-hanging fruit. I don't think they can hide behind the excuses that, oh, we got to spend more state money because that's not true. They just have to come up with, you know, ideas and the implementation of it. What about putting more money into existing programs? In other words, can you read that list of the mission points again so we can talk concretely? Sure. States can use the TANF and state MOE dollars to meet any of the four goals set out in the 1996 federal law, which are assisting needy families so children can be cared for in their own homes or the homes or relatives, reducing the dependency of needy parents by promoting job preparation, work, and marriage, preventing pregnancies among unmarried persons, and encouraging the formation and maintenance of two-parent families. OK, so there must be, boy, that sounds like it's really elusive, actually. There must be programs that are within the state budget that at least touch some of those things. Why can't DHS, and we're talking today about DHS, that's what it's about. Why can't they just take an existing state program and put the federal money in it? Does this have to be a brand new program unrelated to existing state programs? Well, that part I'm not sure about. But I think the way it works is the states have to come up with the program. They have to spend the money and they ask for reimbursement check from the feds. OK, and it has to be within the authorized limits of their block grant, which we know that they're already authorized for it. Like you were saying before, that it's cumulative. So if they're, say, $400 million behind in making their requests, they can make lots of big requests and get $400 million now. Is that the way it works? I believe so, yeah. So we're losing ground, but we're not losing the prospect of taking that money for other projects. So it's a matter of DHS waking up on this, and frankly, establishing huge and ambitious projects right now and doing enormous work with $400 million to help the disadvantaged in our state. And we all know from the newspapers that there are many disadvantaged living below the poverty line in our state that we could help a lot with $400 million. So what is their excuse, actually, for not building the programs and not asking for the money? Is that they ever advance an excuse of any meaningful sort to ProPublica? Not to ProPublica, but when Hawaii News now covered the same topic, they said, well, we have to expend monies for COFA migrants. That's the Compact of Free Association states. That's not an answer. Well, and again, their excuse is they need more appropriations from the state to go out and spend the money. And that's not an answer. And they quoted Ryan Yamane, who is, I think, the chair of the House Health Committee or Human Services Committee. And he said, well, jeez, there's a lot of requests for more money this year. But that is not the point. They have $400 million of low-hanging fruit. They do. That's my point. They don't have to spend more state money. They just have to come up with a program, make a dent in our homeless crisis or our poverty crisis, and pull that money down from the feds. It's not doing anything for us if it's stuck in the federal agency doing nothing. Well, we scrimp and we save. We have such trouble with state revenues and the diversification of the economy. And we worry about every penny. And we've been so careful in COVID. And here's $400 million that they're not spending. Where's the governor on this? I mean, they work for him. I don't know what the governor's position on it is. I don't think he's made that known yet. I mean, is there something I'm missing here, Tom? What is it for a position? They have the money. That's federal law. They have the money. They're not doing anything with it. Well, I think it's just too much work for them. You know, if they gave you $10 million to tell them how to do it or me, we could do it. I know we could. And then that would leave $390 million to spend, wouldn't it? I think it sure would. This has happened in the past, hasn't it? I don't know if you can pull an example out of your memory, but I recall in general that we have often left money federal money on the table. It happened with Department of Hawaiian homelands. It happened with Department of Transportation. We were actually in danger of losing federal monies because, oh, what you guys are doing with the monies that we authorized, but we didn't do anything with it. Oh, well, I guess you don't need it then. What about the state auditor? Seems to me the state auditor could look into this and find, not only in DHS, but other agencies, where they're leaving the low-hanging fruit. Oh, he did. He did. You know, he came up with a report, I think in the summer of 2020, where he looked at the question of, well, do we have unobligated balances sitting in the state accounts somewhere? And he listed a whole bunch of them. And I think he found like $700 or $800 million. It's scandalous, I'm sorry. Yeah, and my point to the legislature has been, look, before you come to us taxpayers for more money, spend the money that you have. Why can't you spend the money that you have? Well, if I appoint you and you get confirmed by the Senate as a director of an agency that is absolutely responsible to take down the low-hanging fruit, take the money. And you don't do that. That's scandalous. Yeah, I believe that's right. And so what's the remedy of the public? First of all, I mean, it sounds like letters sort of go out from the public to the officials involved at DHS and the other agency and to the governor. What are you guys doing? We pay you to handle this. And all these high-priced executives in government who ostensibly could get in there and make this happen, but they don't. And as a result, we, think about it, we the taxpayers are covering the shortfall, aren't we? Of course we are. That's the plain and simple truth. Any shortfall that comes up in government operations is guess who's got to pay for it? Well, I think of all the bish-bash over the state budget and the council on revenues and the possibility of tax increase, the reality of tax increases and all that. And then I think of all this Christmas tree full of money. I just don't understand it. So what does an ordinary taxpayer do to make his will known? What does an ordinary taxpayer do to woke this up? Well, what an ordinary taxpayer can do is, do some phone calling, talk to your elected representative. Your district is represented by somebody. Let them know what your concerns are. Okay, even though you can't go into the capital, you can still call or email and hopefully get some traction, at least with the office staff, even if you can't talk to the elected official himself or herself. But this is a problem. I think it does demand attention. And now I think is a very good time to do it because the legislative committees are in the process of grilling the departments and agencies over how much money they're going to spend in the coming fiscal biennium. But the budget hearings are now, man. So now's a good time to bring some of this stuff up. Are we missing something? I mean, it seems like there's a whole state apparatus out there with this headless sand. Do they have the slightest reason to defend this inaction? Like I said, what they have been telling people and they told the Hawaii news now is, we can't afford the additional money to pull down the federal match. But I say again, this is not a matching program. It hasn't been since 1996. Get your desks updated or something because somebody should have gotten the memo that we got block grants now and not matching programs. So they just don't know, they haven't kept up. That's what I think. Yeah. Well, I want them to prove me wrong. Okay. You know, I hereby invite them, the department heads and the governor come on and tell us if we're missing something here because what it certainly seems like is that we're throwing away hundreds, many hundreds of millions of dollars that can endure the benefit of the state, the state agencies, the state effort to help the homeless and the poor and the disadvantaged. And I may never read an article about the homeless and the poor and disadvantaged without thinking of this discussion with you today. Well, we should invite them to come on. We hereby do invite them to come on and the governor and explain if we're missing something because in the absence of a good excuse, there is no excuse. There you go. Well, Tom, thanks for bringing this to our attention. I think it's very valuable that there be a gag flying like you and the tax foundation to bring this to the attention of the public. And I hope the word gets out and somebody looks into this, especially now, as you say, in the context of these various hearings and various committees around the legislature, somebody should be asking about this. Absolutely. Well, thank you for having me in your show. Thank you, Tom. Tom Yamachika, president of Tax Foundation of Hawaii, enlightening us on what goes on, enlightening us on what the fiscal policies are and in this case, the fiscal failure is in the state of Hawaii. Thank you so much. And so it's a public service for short time.