March 12, 1998

Thirty-two years after Mississippi created a segregationist spy agency, the Mississippi State Sovereignty Commission, its long secret records were finally opened to the public. 

State lawmakers created the agency in 1956 in the wake of the Brown v. Board of Education ruling that ordered desegregation in public schools and gave the agency broad powers to fight federal “encroachment.” 

Under the direction of Gov. Ross Barnett, the commission promoted propaganda, sending white and Black speakers up North to talk about how wonderful segregation was. The commission also hired informants, infiltrated civil rights groups, smeared civil rights workers and got them fired from their jobs. 

The commission collected spy files on more than 10,000 people, including Elvis Presley. In addition, the commission sent more than $193,000 of taxpayers’ money to the white Citizens’ Council — a practice that drew criticism from Mississippi NAACP leader Medgar Evers. 

In spring 1964, the commission spied on two young white civil rights workers, Michael and Rita Schwerner, after they began to work in the movement in Meridian, Mississippi. The commission shared its spy report with the local police, which included the brother of Klansman Alton Wayne Roberts, who was involved in killing Michael Schwerner and two other civil rights workers, James Chaney and Andrew Goodman. 

In 1973, then Gov. Bill Waller vetoed the Mississippi Legislature’s appropriation to the commission, effectively shutting it down. In 1977, the Legislature abolished the agency and sealed the files for 50 years, but a lawsuit by the ACLU succeeded in opening those files.

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

Advocates, Medicaid recipients and their family members gathered outside the Capitol Tuesday to urge both state and federal lawmakers to “protect and expand Medicaid now.” 

Speakers, who held signs with slogans such as “pro-life span,” included representatives from the Mississippi Coalition for Citizens with Disabilities, members of Care4Mississippi, parents of children on Medicaid and one 9-year-old girl. 

Their presence was in response to recent federal action that threatens Medicaid funding nationwide. In February, the U.S. House of Representatives passed a budget resolution that calls for the committee that oversees Medicaid and Medicare to cut $880 billion over 10 years. 

“This budget may not explicitly mention Medicaid, but the math is clear,” said Pam Dollar, executive director of the disability coalition. “Lawmakers cannot meet their aggressive cuts without slashing Medicaid or Medicare. Even if they cut everything unrelated to health care, they would still be $600 billion short. In a state that prides itself on being pro-life, how can we stand by and allow this to happen?”

There are currently over 600,000 Mississippians enrolled in the program. Medicaid covers half of Mississippi’s children, three in four of its nursing home residents and three in eight people with disabilities, according to KFF. 

Susan Stearns traveled from Oxford to speak at the rally. She’s used to driving – and routinely makes a two-hour round-trip car ride every time her son Oscar is in need of a pediatric specialist. 

Oscar and his twin were born prematurely, causing Oscar to develop cerebral palsy, a seizure disorder and blindness. The Stearns’ first medical bill from their sons’ stay in the neonatal intensive care unit was $5.7 million. 

Stearns, a professor at the University of Mississippi, and her husband work full-time and have private insurance, which does apply to Oscar – but doesn’t address the gamut of his needs. 

“Commercial insurance is designed for helping when you’ve broken a leg, or you need your gallbladder removed,” Stearns explained. “It is not prepared to deal with long-term, intensive care needs.”

Oscar accesses Medicaid through what’s called a disabled child living at home waiver, which helps pay for nursing care and therapy for Oscar during school. It also pays for equipment and services that allow the Stearns to give their son care at home. Without it, Oscar would need to go to a pediatric nursing home – of which there are currently none in Mississippi, though one is projected to open in Jackson later this year. 

“Without the waivers, where can these kids and their families look for the support they need?” Stearns asked. “How can their parents hope to keep their families together and their children happy and healthy? How will Mississippi have failed them?”

One 9-year-old girl named Luciana gave testimony of how Medicaid helps her. She’s aware that the conditions she has – including autism and ADHD – are expensive. She says Medicaid saved her life during her stay in the NICU and now helps pay for medication that helps her think. 

“If I didn’t have my medicines I’d feel like a blank piece of paper without any drawings,” she told the crowd. 

Since Mississippi has not expanded Medicaid, advocates fear that any cuts to the federal program will affect the poorest of the poor, pregnant women, children, seniors and those with disabilities in Mississippi. 

“It is long past time to stop using the most vulnerable to subsidize the least vulnerable,” said Jayne Buttross of the disability coalition. 

The group will hold another rally on the south steps of the Capitol on March 18 at 1 p.m. 

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.

The federal welfare agency is finally asking Mississippi for its money back – a long-anticipated next step in rectifying the state’s squandering of millions of tax dollars meant to reduce poverty.

The U.S. Department of Health and Human Services sent a penalty notice to Mississippi in December. The agency determined the state must pay back nearly $101 million in welfare money it says officials misused during former Gov. Phil Bryant’s administration.

The letter represents the first time since the scandal broke in 2020 that HHS has confirmed rules were broken when Mississippi spent welfare money on things such as building a volleyball stadium and a million-dollar public speaking contract with a celebrity athlete. HHS is the federal agency that oversees the $16.5-billion annual Temporary Assistance for Needy Families block grants to states.

The Mississippi Department of Human Services, which administers the federal funds for the state and is still suing dozens of defendants over the misspending in ongoing civil litigation, has disputed the amount.

The welfare scandal took down a former state agency director, two nonprofit directors and a few others who pleaded guilty to federal crimes including fraud and bribery. They still await sentencing for their roles in the scheme, which involved diverting money from the poor to the pet projects of their friends, family and famous athletes.

But the penalty notice seeks administrative relief separate from criminal proceedings, signaling the next stage of the federal government’s response to the scandal.

The federal government used a combination of findings from the Office of State Auditor’s 2019 annual audit of federal funds released in May 2020 and a forensic audit commissioned by the state welfare agency released in October 2021 to arrive at a total penalty of $100,880,029.

The Office of Family Assistance inside HHS’s Administration for Children and Families is handling the matter for the federal government.

In response, Mississippi Department of Human Services Director Bob Anderson said he and the agency “appreciate the gravity of the suggested penalty,” but asked for additional time to fully respond.

“Through our ongoing discovery efforts, we have been attempting to validate the allowability or the misuse of a large portion of the funds,” Anderson wrote in a February letter. “Thus, it is the position of the agency that the amount of penalty proposed by OFA is based on insufficient information and is disputed by the agency.” 

The audits categorize misuse in several ways. Of the total $101 million, $12.5 million was deemed fraud, waste or abuse – primarily because of conflicts of interest or favoritism by former Mississippi Department of Human Services Director John Davis.

Most of the penalty instead consists of “unallowable” purchases. This is spending that either did not comply with federal regulations or did not come with proper documentation. The forensic audit notably lacked records to account for $40 million in TANF spent by Mississippi Community Education Center – the nonprofit at the center of some of the most attention-grabbing purchases – lumping the entire expenditure as a “questioned cost.”

Some purchases that make up the overarching welfare scandal figure may have been legal, but five years later, state officials are still seeking documentation to parse that out and potentially reduce the penalty.

Mississippi Today requested the penalty letter and response, as well as any other follow up communications, from the state welfare agency but was told any additional correspondence was exempt due to attorney-client privilege. 

“We can’t speak to ongoing negotiations in a legal matter,” said agency spokesperson Mark Jones.

The Mississippi Attorney General’s Office similarly would not comment. A spokesperson for the Governor’s Office did not immediately respond to a request for comment from Mississippi Today.

The notice from HHS was more than four years in the making, achieved right at the close of the Biden administration. Many of the top level officials at the Office of Family Assistance are no longer with the agency after Donald Trump took office in January.

Federal welfare officials had been holding off on making a request of repayment until they secured more information, or until getting clearance from the U.S. Department of Justice, which was conducting a parallel criminal investigation. 

“There are several ongoing federal and state investigations, which will likely mean a lengthy process before we can make our determination,” the federal agency told Mississippi Today in 2020, while Trump was still in his first term, “however, we are eager to come to a final penalty resolution and ensure that the state replaces any misused federal TANF funds with its own state fund.”

Federal prosecutors eventually charged five people in the welfare scandal: Davis, former professional wrestlers-turned-state contractors brothers Brett and Ted “Teddy” DiBiase, nonprofit director Christi Webb and Florida-based neuroscientist Jake Vanlandingham.

Separately, federal prosecutors charged nonprofit founder Nancy New and her son Zach New – operators of Mississippi Community Education Center – for defrauding the state of public education dollars.

Teddy DiBiase is the only one who has fought the federal charges. His trial was most recently set for this August, with additional delays possible.

The penalty Mississippi received is unprecedented. The rules around states doling out TANF funds to nonprofits are so lax, and the federal government’s authority to regulate the spending so weak, that states are rarely, if ever, held accountable for misspending. States have been penalized for failing to meet requirements for distributing direct cash to poor families, such as meeting a threshold for recipients who are working or come from two-parent households.

One expert said she was unaware of the federal government ever sending a penalty notice to a state for using TANF money on prohibited outside purchases.

“To the best of my knowledge this is the first one,” said Elizabeth Lower-Basch, a longtime economic justice advocate who has spent her career working on policy within TANF, including 10 years at the federal welfare agency.

The letter is one step in the federal government’s administrative process for recouping the funds and will result in a back and forth negotiation before the state must actually pay the penalty. 

“First, you may dispute the penalty … if you think the information or method that we used were in error or insufficient or that your actions in the absence of federal regulations, were based on a reasonable interpretation of the statute,” the letter from HHS reads.

Once negotiations are complete, the federal government will begin reducing the $86.5 million Mississippi is allotted in TANF money each year and require the state to make up the difference with state money until the penalty is paid.

Mississippi’s widespread TANF misspending was first revealed through arrests by the Office of State Auditor in February of 2020 after an eight-month investigation, starting with a tip that a former agency employee brought to Gov. Bryant in June of 2019 about an alleged kickback to Davis. The state had been approving as little as 2% of people applying for direct cash assistance through the TANF program, and while the recipient rolls dropped, private organizations received an unchecked windfall of money to provide ancillary services.

Annual audits of federal grant spending called the “single audit,” which the state auditor conducts on the federal government’s behalf each year, had not flagged the significant abuse that Davis and others were carrying out in the TANF program from 2016 to 2018. If not for the internal tip, it may have never been uncovered.

“HHS has very limited ability to research what states are doing that basically they’re required to rely on the state single audit for misuse of funds,” Lower-Basch said. “So unless something is directly brought to their attention, they’re not allowed to go poking into the state’s funds on their own.”

Meanwhile, this flexibility in TANF has not changed. Proposed federal rule changes to TANF published in 2023, which would have tightened regulations on how states could spend non-cash assistance funds, are dead after the Biden administration withdrew them last fall. 

“There are a lot of things I don’t think Congress intended for TANF to be used for, and in some cases I don’t think is the highest priority for the use of TANF funds, but it is lawful,” Lower-Basch said. “The idea that what very low-income people, who are struggling to keep their kids housed and fed and going to school, need is someone rich and famous telling them to work harder is disgusting, but it’s allowed.”

This article first appeared on Mississippi Today and is republished here under a Creative Commons license.