When news broke in 2020 that the new volleyball stadium opening on University of Southern Mississippi’s campus that year had been built with federal welfare funds, university officials said it would work to use the facility to help needy families.
“Southern Miss Athletic Foundation is looking forward to initiating conversations with the appropriate state agency and leaders about how its athletics facilities, including the Wellness Center, can be used to the benefit of Mississippi families and individuals in the spirit of the original agreement,” USM spokesperson Jim Coll told Mississippi Today in an February 2020 email.
Nearly three years later, that hasn’t happened. Now, in response to mounting pressure from its own faculty, public officials and the media, USM continues to ignore the idea of returning the funds, saying instead in a statement Thursday morning that it is working on a proposal to allow the welfare department to utilize space on campus to provide programming to the underserved community.
But within hours, that proposal was apparently dead. The Mississippi Department of Human Services released its own statement Thursday afternoon saying it believed such an arrangement would be against the federal laws that govern the funds in question, the Temporary Assistance for Needy Families (TANF) block grant.
“As noted in prior audits, use of TANF funds for the construction of brick and mortar building projects has never been authorized by law,” reads the welfare department’s statement. “MDHS cannot accept USM’s offer to utilize the building constructed with TANF funds in lieu of repayment of the funds, because we believe it to be a continued violation of the law and the purpose of the TANF program to help lift needy families out of poverty.”
USM did not respond to a request for comment regarding the MDHS statement and has declined to speak further on the welfare scandal, including whether it plans to return the funds.
The volleyball stadium is not included in MDHS’s ongoing civil lawsuit, which currently attempts to claw back roughly $24 million in welfare funds from 38 individuals or organizations. Though MDHS Director Bob Anderson has alluded to the possibility of pursuing the volleyball project, the agency’s recent statement is the most unequivocal on its stance about the illegality of the expenditure.
Elizabeth Lower-Basch, deputy director for policy for the Center for Law and Social Policy and national TANF expert, told Mississippi Today that even if a building were to benefit needy families — low-income housing development, for example — the use of TANF funds on construction is strictly prohibited by federal law.
“So even if Mississippi wanted to reach and try to argue that providing tennis lessons to teens from families with low incomes would keep them busy and prevent unplanned pregnancies, they could only use TANF funds to pay usage fees and not for construction of the facility,” she said in an email.
Federal regulations around welfare spending are otherwise notoriously lax, allowing states to use the money on a variety of programs they say will reduce or prevent poverty. But Lower-Basch, who has worked on TANF and other safety net policies for over 25 years, said she has not seen another state use TANF funds in quite this way before.
“Mississippi should not try to justify its past misuse of the TANF program and instead commit to using TANF funds for their intended purpose – helping parents raise their children with the economic security they need to thrive,” Lower-Basch wrote.
MDHS also said it was unable to comment further because of ongoing investigations. It did not answer whether it now plans to add the athletic foundation, which received the funds to build the facility, in the civil suit. The agency fired the private attorney, former U.S. Attorney Brad Pigott, it initially hired to bring the civil suit after he subpoenaed the athletic foundation for its communication with various figures, including former Gov. Phil Bryant, in an attempt to get to the bottom of how welfare money was funneled to a volleyball court. Defense attorneys have also made the stadium an issue of the case, subpoenaing Bryant himself for records related to the deal.
Retired NFL quarterback Brett Favre, whose daughter played volleyball at Southern Miss, was the inspiration behind the new stadium. Text messages show he pushed various officials, including Bryant, for funding for the project in 2017.
After a meeting at USM between Favre, welfare officials and athletics department officials in July of 2017, MDHS and USM legal counsel negotiated a lease agreement that would allow a nonprofit founded by Nancy New to pay $5 million in welfare funds to the Southern Mississippi Athletic Foundation to rent university athletic facilities that it would use to conduct programming. The facilities were used for just one event, a Healthy Teens rally, according to records retrieved by Mississippi Today. Nancy New’s son, Zach New, pleaded guilty to fraud for using TANF money on construction, disguising it as a lease agreement.
None of the six people arrested in connection with the welfare scandal in February of 2020 is expected to have a trial. Five defendants — Nancy New, Zach New, former MDHS Director John Davis, former professional wrestler Brett DiBiase and nonprofit accountant Anne McGrew — have pleaded guilty and agreed to testify for the prosecution. A sixth defendant, former MDHS procurement officer Gregory “Latimer” Smith, entered a pre-trial diversion program in October. No one else has been charged criminally, but officials have said the investigation is ongoing.