GAO warns states lack adequate safeguards for major federally funded benefit programs

The Government Accountability Office is warning that major federally funded programs administered by states and local governments need stronger safeguards against fraud, after reviewing 20 programs that received an estimated $1.2 trillion in fiscal year 2025.

The report, publicly released July 23, 2026, examines fraud risks and oversight practices in programs including Medicaid, the Supplemental Nutrition Assistance Program and federal disaster assistance. The selected programs represent nearly 90% of federal obligations among state-administered programs with obligations above $100 million.

The findings give Congress and federal agencies a current accountability record covering programs that deliver benefits and assistance across the United States. They also identify areas where agencies and states can improve how they define, monitor and mitigate fraud risks.

What GAO reviewed

GAO’s review focused on 20 federally funded programs administered by states and local governments. The group was defined using an obligation threshold of more than $100 million, and the selected programs accounted for nearly 90% of federal obligations among qualifying state-administered programs.

The estimated $1.2 trillion associated with the programs in fiscal year 2025 represents the scale of the federal funding universe examined by the report. It is not an estimate of fraudulent or improperly spent money.

GAO said the report identifies fraud risks and describes how the programs are administered and safeguarded. The assessment is aimed at management and oversight practices rather than a finding that every covered program has the same control weaknesses.

Recommendations and congressional role

GAO recommended using its Fraud Risk Framework and prior recommendations to improve fraud prevention and detection. The framework is presented as a tool for addressing the risks identified in the review; the report’s recommendations are not enacted policy.

The report also says Congress can help address the identified risks. That places responsibility for next steps with federal agencies, state and local administrators and lawmakers, which could use the findings to examine program controls and consider changes.

The report does not provide a single nationwide dollar estimate of confirmed improper payments resulting from the weaknesses it identifies. It also does not allege that all of the programs experienced fraud.

A broader oversight concern

The fraud-risk report comes alongside other 2026 GAO work on how federal programs are managed and evaluated. A report published July 21 said federal programs often lack clearly defined goals and relevant data for measuring results. That review identified 15 direct-service programs across five agencies.

GAO’s May 12 annual report on duplication, overlap and fragmentation reported 610 remaining matters for congressional or agency action. It identified 97 new matters and recommendations, along with potential savings exceeding $100 billion if those issues are addressed.

Those related findings provide additional context for the July 23 report, but they do not change its central conclusion: federal and state administrators have identified opportunities to strengthen oversight of programs handling a large share of federal obligations.

What happens next

The approved report record identifies recommendations and points to actions available to agencies and Congress, but it does not set a single implementation deadline or announce that the recommendations have been adopted.

For people who rely on Medicaid, SNAP, disaster assistance or other state-administered federal programs, the immediate significance is oversight rather than a change in eligibility or benefits. The report documents risks and management steps for officials to consider; it does not announce a nationwide reduction, suspension or redesign of services.

Sources

• Combating Fraud: Managing Risks in Federally Funded, State-Administered Programs, U.S. Government Accountability Office
• Federal Programs: Assessing and Improving Effectiveness, U.S. Government Accountability Office
• 2026 Annual Report: Opportunities to Reduce Duplication, Overlap, and Fragmentation, U.S. Government Accountability Office

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