The Food Stamp Error Rate, Which Combines Overpayments and Underpayments, Has Declined by Almost One-Third over the Last 5 Years

The national Food Stamp Program payment error rate combines  overpayments and underpayments to participants, and has declined by  about one-third in recent years from 9.86 percent in 1999 to a record low  of 6.63 percent in 2003. Of the total   $1.4 billion in payment error in fiscal year 2003, $1.1 billion, or about   76 percent, were overpayments, which represent a financial loss to the  federal government. Error rates fell in 41 states and the District of Columbia, and 18 states  reduced their error rates by one-third or more, as shown in figure 3. Despite the decrease in many states’ error  rates over the past few years, some states continue to have high payment  error rates. For example, 7 states had payment error rates of 10 percent or  higher in 2003. Caseworkers Cause about Two-Thirds and Participants Cause about One-Third of Payment Errors

Almost two-thirds of the payment errors in the Food Stamp Program are  caused by caseworkers, usually when they fail to act on new information  or make mistakes when applying program rules, and one-third are caused  by participants, when they unintentionally or intentionally do not report  needed information or provide incomplete or incorrect information (see  fig. Program complexity and other factors, such as the lack of  resources and staff turnover, can contribute to caseworker mistakes. State and local officials from 8 of  the 9 states we interviewed said managing cases with earnings contributes  to payment error in part because caseworkers may find it difficult to keep  up with the frequent changes reported to them. In 2003, about  5 percent of all payment errors were referred for fraud investigation. FNS and States Have Taken Steps to Increase Payment Accuracy

FNS and the states we reviewed have taken many approaches to  increasing food stamp payment accuracy, most of which are parallel with  internal control practices known to reduce improper payments. These  include practices to improve accountability, perform risk assessments,  implement changes based on such assessments, and monitor program  performance. State officials point to their low or dropping  error rates as evidence that, collectively, their new practices are having a  positive impact. Appendix I: Methodology for Determining the Causes of Food Stamp Payment Errors for Fiscal Years 1999 through 2003

To determine the causes of food stamp payment errors for fiscal years  1999 through 2003, we analyzed the Food and Nutrition Service’s (FNS)  quality control (QC) system data of active cases used in error rate  calculations. FNS  stated that no quantitative analysis of the differences across states has  been made. Food Stamp Program: States’ Use of Options and Waivers to Improve  Program Administration and Promote Access.
Why GAO Did This Study

In fiscal year 2003, the federal Food Stamp Program made payment errors totaling about $1.4 billion in benefits, or about 7 percent of the total $21.4 billion in benefits provided to a monthly average of 21 million low-income participants. Because payment errors are a misuse of public funds and can undermine public support of the program, it is important that the government minimize them. Because of concerns about ensuring payment accuracy GAO examined: (1) what is included in the national food stamp payment error rate and how it has changed over time, (2) what is known about the causes of food stamp payment errors, and (3) what actions the Food and Nutrition Service (FNS) and states have taken to reduce these payment errors. To answer these questions, GAO analyzed program quality control data for fiscal years 1999 through 2003 and interviewed program stakeholders, including state and local officials from nine states.

What GAO Found

The national dollar payment error rate for the Food Stamp Program, which combines states' overpayments and underpayments to program participants in all states, has declined by almost one-third over the last 5 years to a record low of 6.63 percent. This decline has been widespread; the rate fell in 41 states and the District of Columbia, and rates in 18 of these states fell by at least one-third. However, despite this decrease, some states continue to have relatively high payment error rates. For example, in 2003, 7 states had payment error rates of more than 10 percent. Almost two-thirds of food stamp payment errors are caused by caseworkers, usually when they fail to keep up with reported changes or make mistakes applying program rules, and one-third are caused by participant failure to report required, complete, or correct information, such as household income and composition. State officials said program complexity and other factors, such as the lack of resources and staff turnover, can contribute to these errors. In fiscal year 2003, states referred about 5 percent of all cases identified with errors for suspected participant fraud investigation. To increase food stamp payment accuracy, FNS and the 9 states GAO reviewed took many approaches that parallel good internal control practices. These efforts include increasing the leadership and accountability in the program, performing risk assessments to identify problem areas, implementing various program and process changes in response to the findings from risk assessments, and monitoring and promoting improved performance. The states are using a combination of approaches to improve payment accuracy, making it difficult to tie error rate improvements to specific practices. However, state officials point to their improved state error rates as evidence of a collective impact.