OIG reviewed FSA’s implementation of emergency assistance for honeybee claims for PY 2017.
The mission of the United States Department of Agriculture’s (USDA) Farm Service Agency (FSA) is to serve the Nation’s farmers and ranchers professionally, efficiently, equitably, and in a manner that is customer-, taxpayer-, and employee-friendly. In pursuit of its mission, FSA works to ensure that the American agriculture industry is competitive by providing farmers and ranchers with financial capital, risk management assistance, and recovery support in times of economic distress or disaster.
The 2008 Farm Bill established the Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP) to provide financial assistance to eligible producers of livestock, honeybees, and farm-raised fish. FSA provides this assistance to eligible producers who incurred losses due to disease, certain adverse weather events (such as hurricanes), or other loss conditions (such as colony collapse disorder), as determined by the Secretary. The 2014 Farm Bill authorized up to $20 million for each fiscal year (FY) from 2014 through 2018; however, effective program years (PY) 2017 onward, the Bipartisan Budget Act of 2018 removed the funding cap.
The FSA national office oversees ELAP in accordance with Federal regulations and establishes policies and guidance, which are issued in a series of handbooks. State and county offices relied on the Livestock Disaster Assistance Program (1-LDAP) Handbook prior to PY 2019 and the 1- ELAP Handbook thereafter. The FSA State executive director (SED) is responsible for ensuring that county offices follow the ELAP honeybee provisions and that the district director conducts yearly oversight reviews. The district directors have some of the same responsibilities, but they also provide their review results to the SED, including their review of the status of ELAP implementation at the county office.
The FSA county offices, under the direction of the county executive director (CED), are responsible for accepting and processing applications for ELAP honeybee producers. CEDs are required to “take all steps necessary to ensure that program and payment eligibility requirements have been met before issuing any payments.” Under the application process, an eligible honeybee producer who has suffered a loss submits a manual application, including a notice of loss, along with supporting documentation, to the county office. For honeybee colony or hive losses, the producer must provide proof of both beginning and ending inventories of honeybees immediately after the loss, and documentation supporting that the producer followed best honeybee management practices.
After an FSA county official accepts a honeybee producer’s application, the county office provides the application to the county committee (COC). The COC must approve or disapprove all completed and signed applications, unless approval authority for routine cases is delegated to the CED. A producer’s application includes colony inventories, but FSA allows honeybee producers to submit late-filed colony reports after the due date of January 2 of the program year. To ensure the accuracy of late-filed colony reports, FSA requires the COC to review those colony reports as an additional oversight measure.
FSA’s payment calculations are based on PY inventory amounts, expressed as the equation:
PY inventory amount = beginning inventory + inventory additions – inventory reductions
A honeybee producer’s colony loss is reduced by the normal mortality amount (PY inventory x 15 percent). The net colony loss is then multiplied by a payment amount of $140 and multiplied by a 75 percent payment factor (or 90 percent, depending on honeybee producer certifications). This is the gross payment amount. FSA county officials calculate the gross payment in a payment calculation worksheet, which is then entered in its Common Payment System to determine the net payment amount, and its National Payment System to disburse the net payment.
For PY 2017, FSA calculated gross payments, but limited those payments to $125,000, which were then reduced by 6.6 percent, which was the sequestration amount in PY 2017. For example, in PY 2017, if FSA calculated a gross payment of $135,000, the agency limited the payment to $125,000 and then reduced that amount by 6.6 percent, which it calculated to be $116,750 as the maximum payment per honeybee producer. Beginning in PY 2019, the $125,000 payment limitation was removed, allowing honeybee producers to receive payments closer to the gross payment amount. While the payment limitation was removed, sequestration reductions will still apply. Based on input from FSA’s national office, for purposes of this audit report, monetary payment amounts are expressed as gross payment amounts.
The objectives of this audit were to determine if FSA: (1) approved ELAP applications for honeybee losses for eligible applicants; and (2) accurately calculated payments to ELAP honeybee recipients and applied payment limitations.
WHAT OIG FOUND
Through the Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP), the Farm Service Agency (FSA) provides financial assistance to eligible producers of livestock, honeybees, and farm-raised
fish in the event of losses due to disease, certain adverse weather events, or other loss conditions. Our audit focused on honeybee producers’ applications and payments, since they represented nearly 80 percent of all ELAP commodity payments for program year (PY) 2017.
In two of three States we visited, county officials did not include inventory additions in ELAP payment calculations for 18 of the 60 honeybee applications we reviewed, resulting in more payments than allowed. Further, one of the two States continued its miscalculations in subsequent years. We also questioned payments that FSA approved for two ineligible honeybee producers. At one county office, we found that 18 ELAP applications contained late-filed inventory reports that the county office committee did not review for accuracy, as required. Finally, four out of the five district directors responsible for the counties we reviewed either did not perform the required oversight reviews or did not report the results of these reviews to the State office. As a result, State officials were unaware of the county offices’ implementation of ELAP, thus increasing the agency’s risk of erroneous payments. For the one State and district that did not conduct the required reviews, we questioned all payments due to a lack of oversight. In total, we questioned costs of over $10.1 million.
Despite these issues, OIG recognizes FSA’s accomplishments in ensuring its staff properly applied payment limitations, as well as in updating policy improvements to the honeybee portion of ELAP and in taking corrective action in response to this audit. The recommendations in this report should assist in furthering those improvements. FSA generally agreed with our recommendations and we accepted management decisions on all 14 recommendations.