Monday, August 13, 2007

Your Tax Dollars at Work (Mass Transit Edition)

The Washington, D.C. Metro. Thanks to a government program, some federal workers have found a way to turn a profit on their daily commute.

Federal employees in the Washington, D.C. area (and other cities) have a unique transportation "benefit," subsidized by the U.S. tax payer. Under a long-standing transit compensation program, federal workers receive pre-paid "Metrochecks" or a debit card, allowing them to use public transportation for free and reduce congestion on crowded freeways that serve their area.

All told, the federal government spends about $250 million a year on public transit benefits for its employees, with more than half of that amount in the D.C. area. According to the Department of Transportation (which runs the program), there are 120,000 federal workers in the "National Capital Region" who receive the benefit, at a cost of $140 million a year.

The transit program has been around for years and for almost as long, there have been reports of federal employees who sell their Metrochecks or SmartTrip debit cards, turning a nice little profit on their taxpayer-funded "benefit." A Senate committee asked the Government Accountability Office to look into those allegations, and you can probably guess what they found.

Investigating only three days of internet sales, the GAO confirmed at least 20 federal employees who were fraudulently selling their Metrochecks on eBay. GAO investigators also purchased transit benefits from three other federal workers on Craig's List, while others inflated their commute costs to receive the monthly, maximum reimbursement ($105) under the program. Among the investigation's findings:

--Over that three-day period, GAO investigators found 58 individuals selling Metrochecks on eBay. Twenty were selected for investigation, and it was determined that all 20 were federal workers. Collectively, they sold more than $21,000 in Metrochecks over the past two years. In some cases, the sellers never used public transit to get to work, or were on extended leave from their government jobs.

--Investigators also purchased $840 in transit benefits from three federal employees who were advertising on Craig's List. One of the sellers--an Air Force Captain--set up a designated meeting spot with his military e-mail account, and promised to show up at the location in his "service dress uniform." After the GAO investigator concluded the purchase, the officer explained that he usually rode to work with another Pentagon employee, and had no actual, out-of-pocket transit expenses, making him ineligible for the program.

--The GAO also identified at least 41 individuals receiving benefits who (a) apparently don't work for the federal government; (b) left federal service, but didn't return their unused benefits, or (c) continued to receive Metrochecks or SmartCard payments after leaving their federal jobs.

So, how much is this costing the taxpayer? Based on their limited data sample, the GAO estimates that during 2006 alone, federal agencies paid at least $17 million in fraudulent transit benefits, and possibly much more. Some estimates put the real amount at $25 million in the D.C. area alone. Factor in potential fraud in other cities where the program operates, and the final cost is much higher.

And in case you're wondering, employees at agencies participating in the program are required to sign a certification statement as part of the benefit application process. The certification confirms that the worker is eligible for for the program, will not sell or transfer benefits, and is not requesting more than the needed amount of benefits.

Incidentally, the GAO report on transit benefit fraud was released almost four months ago, and generated a minor media splash. There were stories in the Washington Post (and other outlets), creating enough publicity (or so you'd think) to drive the sellers off-line, or make them more cautious.

Guess again. There are currently two sets of Metro Checks up for auction on eBay, and more for sale on Craigslist as well. And that leads us to the real bottom line: how many of those employees--identified in the original GAO "sting," have been punished for their misconduct? We're guessing that number is extremely low, if any have been punished at all. No wonder some federal workers are still selling their transit benefits on-line, with the taxpayers getting taken for a ride.
Obviously, there's nothing wrong with encouraging government employees to use mass transit, or compensating those who do. The problem, of course, lies in the implementation and administration of the transit program. Too many employees are allowed to sign up with little more than a vague promise to use public transporation, and no follow-up to ensure that the benefits are used for their intended purpose. In terms of fixing the program, that's easy, too. Tighten up the audit process, and prosecute anyone who sells their benefits. After a while, even the sleaziest of public employees will decide it's not worth the risk, and fraud will virtually disappear.

Readers will also note that there wasn't much of an outcry from that Senate panel when they received the GAO report. And for good reason. With the exception of DoD, federal employees tend to vote Democratic, and party leaders aren't about to upset a key constituency over a "little" fraud in a benefit program.


Unknown said...

More gov't excess here:

Now, I'm not against using every break you can get when paying takes, but this is just way over the top.

Unknown said...

Well, of course, they vote Democratic. If they didn't and we had some true conservatives in office for a lengthy time, a lot of those employees would be out of a cushy job where competence isn't a criteria for employment.

DebbieKinIL said...

These prepaid metro passes should be considered part of their compensation. Then is can be taxed as part of their income.

If not taxed , then why not? To me it's just like using a company car-a benefit that is taxable and reported as part of income.