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Executive Summary #1312es on Legal Issues

July 22, 1999

July 22, 1999 | Executive Summary on Legal Issues

Executive Summary: Time for Congress to Hold the Legal Services Corporation Accountable

The Legal Services Corporation (LSC), a federally funded agency that provides free legal aid to the poor through 269 grantee offices around the country, is asking Congress for a $40 million increase in funding for fiscal year (FY) 2000. The request, which will be considered under the Commerce, Justice, State, the Judiciary, and Related Agencies appropriations bill, represents a 13 percent increase over FY 1999 funding--despite the fact that various government watchdogs and the media have reported serious problems with the LSC's case-reporting statistics and performance numbers.

Information on the LSC's handling of cases is important because it is the only tangible information on the agency's overall performance currently available to Congress. Congress relies on the accuracy and integrity of reporting on performance measures to determine the amount of funding agencies should receive, and agencies use their performance numbers to justify their budget requests to congressional appropriators. Until this year, Congress has not seriously questioned the accuracy of the LSC's reported numbers. But preliminary audits conducted by the LSC's own inspector general (IG) in 1998 have caused Members of Congress and the media to question the accuracy of LSC's 1997 caseload data.

Every program audited by the IG, and more recently by the U.S. General Accounting Office (GAO), since the 1997 case statistics were released in the LSC's 1998 Factbook has demonstrated serious misreporting of the LSC caseload, and this has given rise to concerns about systemic performance deficiencies throughout the agency. In fact, the IG and GAO audits reveal that for 11 grantees that reported 370,000 cases, only 198,000 cases were deemed valid.

For the most part, audited LSC grantee offices overstated the number of cases handled, either because the cases were ineligible to be counted in the first place or because a case was counted more than once. In other instances, the statistics were inflated because telephone contacts and nonexistent cases were included in the numbers. Investor's Business Daily even quoted a former LSC employee who said that telephone calls made to the LSC offices were counted as cases simply to "build up numbers to report to LSC and other funding sources." Despite the heightened scrutiny the agency received due to mounting evidence of misreporting, LSC officials still have not been forthcoming with accurate data for Congress.

As early as July 1998, the agency's inspector general told LSC President John McKay that case statistics at several offices were seriously flawed. In October 1998, when it approved a $17 million increase in LSC funding--the first such increase in two years--Congress was still unaware of this information. In fact, the LSC's leadership did not report these performance problems to Congress for another five months, until March 1999. The agency should have viewed the IG's findings as serious enough to bring to the attention of Congress before this $17 million decision was made.

As the evidence of management problems has emerged, many Members of Congress have become concerned that the LSC misled Congress intentionally. On May 3, 1999, five Members asked the GAO to audit additional LSC grantee offices to assess how widespread the reporting error problem is before Congress considers LSC funding for FY 2000. The GAO's recently released findings further discredit the LSC's 1997 case numbers and raise serious questions about all of the data supplied by this federal entity to Congress.

No one would deny that the less privileged in society benefit significantly from free legal assistance. But it is entirely unacceptable for Congress or the states to continue to disburse taxpayer funds to LSC programs without considering credible and accurate information on how current money is being spent. Indeed, just as donors would alter their charitable contributions if they learned a charity had misrepresented its activities in its annual report, so too should Congress be vigilant with taxpayer dollars when LSC misrepresents the number of clients served.

In 1993, Congress passed the Government Performance and Results Act with bipartisan support and the Administration's stamp of approval. The act codified Washington's desire to hold federal programs accountable for their performance and their use of taxpayer dollars. It is useless, however, unless Congress can rely on the information provided by federal agencies. Without accurate information about the performance of Legal Services Corporation grantees, Congress cannot hold the agency accountable for its performance.

Congress should demand that the LSC immediately release its overdue 1999 Factbook so that Members can consider 1998 caseload data during the FY 2000 appropriations process. It also should reduce FY 2000 funding to offset the funding provided in previous years with overinflated statistics; conduct oversight hearings; and, to secure better information in the future, establish both quality and quantity measures that allow it to verify the accuracy of the LSC's information, including requiring annual independent audits, preventing the LSC from administratively changing the definition of reportable cases, and applying the Federal False Statements Act to the LSC and its grantees.

Once Congress has a clear picture of the agency's performance, Members should ask first whether the federal government should be running this program. If not, funding should be transferred to the U.S. Department of Justice to provide block grants to the states based on the number of eligible poor in each jurisdiction.

Virginia L. Thomas is a Senior Fellow in Government Studies and Ryan H. Rogers is a former Research Assistant in Government Studies at The Heritage Foundation.

About the Author

Virginia L. Thomas Director, Executive Branch Relations
Government Studies