Internal reviews of accounting and management practices in the Food Stamp Nutrition Education Program at the University of California, Davis, have concluded that university personnel misused federal grant funds and committed fraud, prompting UC Davis to initiate outside reviews, tighten financial controls and commit to repay funds.

Three separate audits conducted by UC Davis' Internal Audit Services identified fraud and found failures in internal financial controls and management oversight of the program, which educates thousands of food stamp recipients throughout California on proper diet and nutritious food purchases. Campus officials believe that the program, which had a total budget of nearly $12.9 million in 2006-07, has continued to provide a high level of service to participants.

UC Davis has reported the accounting and management lapses to the California Department of Social Services, which administers the program funding on behalf of the U.S. Department of Agriculture. UC Davis expects to repay the state approximately $600,000 for fraudulent or inappropriate expenditures identified by its audits. The campus is working with the state Department of Social Services to determine if any additional repayment is required.

In addition, UC Davis officials have transferred oversight of the Food Stamp Nutrition Education Program from the university's Department of Nutrition to the Dean's Office of the College of Agricultural and Environmental Sciences. The college's dean, Neal Van Alfen, has requested a complete program review by an external task force whose members will be appointed by the university, based on recommendations from the USDA.

Meanwhile, internal UC Davis investigations into the matter are continuing. UC Davis also has been cooperating with the United States Attorney's Office in Sacramento and the USDA Office of Inspector General, as they conduct a joint criminal investigation into the program and its activities.

"From the moment my office learned of possible problems, we conducted extensive internal reviews and turned over our findings to the relevant government agencies," said UC Davis Chancellor Larry Vanderhoef. "The Food Stamp Nutrition Education Program provides an important service to people in need throughout California and we take our responsibilities in administering this program very seriously. We are following every possible avenue to repay funds and to make certain that our policies and processes are followed correctly."

UC Davis audits examined the education program's management practices and expenditures for the 2005-2006 fiscal year, and equipment and travel purchases throughout the past eight years. The university is in the process of retaining an outside audit firm to review the program's financial records for fiscal years 2003-04, 2004-05, and 2006-07.

At the same time, Van Alfen said, the external task force will review the Food Stamp Nutrition Education Program and make recommendations "to assure that we achieve program excellence, and that we administer our funds efficiently and appropriately, and in a manner that maintains the highest level of service to food stamp recipients.

"Despite the issues uncovered by the university's audit of this program," Van Alfen added, "we are confident that the program remains fundamentally sound and continues to provide excellent service to food stamp recipients in accord with the goals and objectives of the education program contract."

Of the food stamp program's nearly $12.9 million budget in 2006-07, approximately $6.4 million is provided by the state from USDA funds, and the remainder is matching funds from three UC campuses -- Davis, Berkeley and Riverside -- and about 40 counties where UC Cooperative Extension conducts the nutrition program.

The fraud and mismanagement allegations were initially reported to UC Davis officials in August 2006 as a whistleblower complaint. When the initial campus investigation found that fraudulent activities had occurred, UC Davis officials reported their findings to the USDA Office of Inspector General. The Office of Inspector General and the U.S. Attorney's Office then initiated their joint criminal investigation in October 2006.

Last March, a federal grand jury indicted a former Food Stamp Nutrition Education Program administrator, Beverly Benford, on a charge of theft of government property and travel expense-related fraud, all totaling approximately $200,000. Benford resigned her position in the UC Davis Department of Nutrition in October 2006. A federal criminal prosecution is under way.

Among their most significant conclusions, university auditors also found that an estimated $400,000 in unallowable expenditures were inappropriately billed to the Food Stamp Nutrition Education Program's federal grant funds. In addition, the audits concluded that the program failed to meet its obligation for cost sharing -- costs requiring matching campus funding in the form of faculty salaries and in-kind university support for the education program. In total, expenditures of approximately $1 million in federal funds and $1 million in campus funds are under review.

In response to the internal audits, university administrators have ordered these corrective actions:

• UC Davis officials have already taken certain appropriate personnel actions; more actions are expected.
• Responsibility for oversight and management of the Food Stamp Nutrition Education Program was moved to the Dean's Office of the College of Agricultural and Environmental Sciences in January 2007. The college has since completed an administrative review and is now revising the organizational structure to include adequate staffing, separation of duties, accurate timekeeping, and other appropriate business and financial controls.
• Internal Audit Services will review other large UC Davis grant and research programs that have significant funding from outside sources. This audit will focus on identifying these types of arrangements, and assessing the management oversight and financial and administrative controls of the research activities.
• The campus is revising its policies to require that large cost-sharing commitments be reviewed and approved by deans' offices. The university already has in place a Web-based cost-share tracking system that requires departments to enter information into a central system to track expenditures, significantly improving controls to ensure the campus meets cost-sharing obligations.
• The campus will develop a training program, to be in place by June, to ensure that principal research investigators in charge of grants and contracts understand their responsibilities for administrative and fiscal management.
• The Offices of the Chancellor and Provost have directed that a national accounting firm review the Food Stamp Nutrition Education Program's records for 2003-04, 2004-05, and 2006-07. The campus is reviewing proposals and expects to hire the firm by mid-November.
• All UC Davis department chairs and managers of major administrative and service units will be required to sign annual certification letters, as part of the annual campus audit process, attesting that "all known allegations of fraud or suspected fraud, particularly with regard to management or staff with internal control responsibilities, have been disclosed to the appropriate campus official or workgroup."
• All UC Davis employees will be reminded that allegations of impropriety can be reported directly to the Offices of the Chancellor and Provost through the campus whistleblower policy.

About the California Food Stamp Nutrition Education Program

UC Davis has administered the California Food Stamp Nutrition Education Program since 1995. The goal of the program is to improve the nutrition and health of the eligible food stamp population, consistent with the USDA Dietary Guidelines for Americans. Today, the program delivers nutrition education to 186,351 food stamp-eligible individuals, including 127,311 adults and 59,040 youngsters in 40 participating counties in California. Since its inception, the program has taught more than 700,000 food stamp-eligible Californians.

The program operates through a joint agreement between the USDA's Food and Nutrition Service, the California Department of Social Services Food Stamp Bureau, and the University of California, Davis. The California Department of Social Services is the agency responsible for administering the Food Stamp Nutrition Education Program in California. UC Cooperative Extension educates families in the participating counties.

The nutrition education program enrolls food stamp-eligible recipients on a voluntary basis at local county welfare departments, food stamp offices and other community sites. Adult nutrition education lessons focus on self-sufficiency, food budgeting, managing resources, food preparation skills, food safety and sanitation, and feeding infants and children. Youth education programs focus on healthy lifestyle, fruit and vegetable consumption and physical activity.

The program also provides funding for projects that study food stamp-related issues, such as how to improve diet and nutritional knowledge among specific groups of food stamp recipients. More information can be found at http://fsnep.ucdavis.edu.