TANF Designed to Be a Slush Fund, Say Officials

U.S. Rep. Bennie Thompson said he voted against converting the nation’s welfare system into a block grant 25 years ago because he feared state officials could not be trusted to spend it responsibly. Photo Credit: Sesthasak Boonchai

An ongoing investigation by Mississippi Today reporter Anna Wolfe and state auditor Shad White continues to uncover one incriminating possibility after another of greed and collusion. Former Mississippi Gov. Phil Bryant appears to have conspired with former MDHS head John Davis to use the state’s welfare program as a personal slush fund to enrich themselves and others. 

White initially announced an investigation into reports of Davis funneling Temporary Assistance for Needy Families (TANF) funds into a personal location, but possibly did not foresee the case expanding into a sprawling wash of corruption surrounding his former employer Phil Bryant, whose political campaign he managed. 

Wolfe nabbed texts exchanges between Bryant and his implicated cohorts, including Davis, suggesting the former governor’s willingness to direct TANF funds to personal projects and political allies, such as New Summit Charter School owner Nancy New, who is currently under indictment with her son for spending millions of dollars the federal government intended for impoverished families. In addition, Bryant has revealed through these publicized texts his intent to accept stock options from a pharmaceutical company that profited from the same money. Bryant’s relatives also personally benefitted from the intervention by companies profiting from Smith’s and Bryant’s efforts.  

Instead of handing the investigation over to federal authorities, White gave his findings to a Hinds County district attorney to prosecute, but the evidence represents the kind of expansive mess that will inundate the tiny DA’s office unless local prosecutors narrow the focus to one or two individuals. Critics fear this could possibly spare peripheral players, like Bryant, from investigation. The NAACP has asked the federal Department of Justice to also investigate the rambling mess, since Bryant and his cohorts allegedly funneled federal tax dollars to friends and relatives.  

NAACP President Derrick Johnson wrote: 

I write on behalf of the NAACP … to urge the U.S. Department of Justice (DOJ) to aggressively investigate and prosecute those responsible for the massive theft of federal funds that apparently took place in Mississippi in fiscal years 2017 through 2019. These apparent crimes were ignored by DOJ under your predecessor Attorney General, and we are calling on you to take action that is long overdue….Failure to investigate may lead to the impression that DOJ is continuing the previous administration’s pattern of looking the other way when laws are broken by white state officials, especially when the wrongdoing disproportionately harms minorities.  

At the end of his statement, Johnson refers to the urgent requests U.S. Rep. Bennie Thompson, D-MS, made to the Trump administration to investigate allegations of TANF-related fraud in Mississippi. 

“’We’ll get back to you,’” Thompson recalls Trump officials telling him years ago. They didn’t. 

Thompson said he’d predicted fraud to be an issue with TANF at the onset of the program primarily because TANF was tailored to encourage fraud. President Bill Clinton converted the national welfare program into a series of state block grants in 1996 as a scheme to appeal to the burgeoning neoliberal movement within his party, and to ward off attacks from the right by conservative extremist House Speaker Newt Gingrich and his powerful “Contract with America” congressional coalition. Thompson says Clinton was eager to reform the program and reduced it to blind payments to states with minimum oversight. The setup allowed corrupt governments like Mississippi to erect a series of racist and sexist barriers against families who would otherwise be eligible for TANF-related assistance. In Mississippi white officials installed prohibitive work requirements, child support enforcement demands and even an expiration date that cuts recipients off after five years, regardless of whether their income improves. 

Officials tailored the barriers to be nearly impassable in Mississippi. Work requirements in the largely rural state, for example, demand recipients search for employment in areas where farms, empty fields and forests are simply not hiring. Many of those same jobs also require childcare, but recipients can only qualify for childcare assistance through Mississippi’s TANF system if they are already employed. Additionally, the system’s child support enforcement policy turns a single mother’s partner into a legal target—at a time when she’d probably prefer him to be a baby-sitter. By criminalizing the father, the mother also risks losing pivotal support from the father’s side of the family, all for a few hundred dollars a month. 

“Go on the Department of Human Services website and it’ll tell you there’s less than 300 adults on welfare in this state,” said Oleta Fitzgerald, director of the Southern Regional Office of the Children’s Defense Fund. “We’ve been following this for a while and just before the pandemic we’d met with the folks at (the Mississippi Department of Human Service) about what was happening with that money and where the families were, and as we learned more and more about the low numbers of people participating in TANF the figures were really horrendous.” 

But keeping people off the TANF rolls creates a bigger pile of federal cash for people like Bryant and Smith to award to wealthy personal friends like Nancy New and her family, as well as former professional wrestler Brett DiBiase and retired football star Brett Favre, among many others. It also allows officials like Smith and Bryant to steer millions of dollars to pharmaceutical companies like Prevacus and help nonprofits finance expensive ranches and volleyball centers in Hattiesburg. 

“I don’t know how many welfare families are participating in the volleyball stadium at USM but that was money intended for people on welfare,” said Thompson. “I’d love to see the statistics and the report that justified that kind of expenditure.” 

Thompson added that in 1996, he was the only Mississippi congressional member who voted against reforming the national welfare system, primarily because he feared corrupt state officials would target the vulnerable block grant system. 

“I voted against my Democratic president because I said it wouldn’t work,” Thompson told The Lighthouse. “Many of the people in charge of those agencies saw this as an opportunity to get all this money and create new organizations, make new friends, help family, and get invited to all kinds of parties, but you’re using money for poor folk. I hate to say, ‘I told you so,’ but I voted against it because of that concern.” 

Fitzgerald, who was employed with the Clinton administration at the time of the TANF conversion, said she’d also hated the idea of converting it. 

“We were all part of the (Clinton) network, and we were very much opposed to what was happening,” said Fitzgerald, formerly a White House liaison and executive assistant to the Secretary of Agriculture. “Welfare reform got caught up in politics, as policy does, around the president’s reelection and wanting to be ‘middle of the road’ and more conservative. … But we knew by the way southern states were going that there was a setup for people to not have a lot of recourse in terms of time limits and work requirements, and as it rolled out, we were seeing more and more people being dropped from the rolls and more and more cash staying in states. … So, it became a slush fund and it left too much to a few people to decide how to spend the money.” 

Fitzgerald added that she was hearing “horrible stories” about where money was going long before the state auditor launched his investigation. Even before Phil Bryant was governor, she said rumors circulated about Bryant allegedly steering TANF money to certain private schools he was involved with. Those schools involved institutions “beyond Nancy New,” Fitzgerald said. 

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