States Have Made Significant Progress in Reducing Payment Errors

		The SNAP Payment Error Rate Has Declined to a Record Low

The national payment error rate — the percentage of SNAP benefit dollars  overpaid or underpaid to program participants—has declined by about 56  percent over the last 11 years, from 9.86 percent in 1999 to 4.36 percent in  2009, in a time of increasing participation (see figure 1). FNS and States Have Taken Steps to Increase Payment Accuracy

We found that FNS and the states we reviewed have taken many  approaches to increasing SNAP payment accuracy, most of which are  consistent with internal control practices known to reduce improper  payments. Despite this progress, the amount of SNAP benefits paid in error is  substantial, totaling about $2.2 billion in 2009. This necessitates continued  top-level attention from USDA management and continued federal and  state commitment to determining the causes of improper payments and  taking corrective actions to reduce them. Estimates Suggest Trafficking Has Declined, but FNS Could Further Enhance Program Integrity

		FNS Estimates Suggest That the Rate of SNAP Trafficking Has Declined

The national rate of SNAP trafficking declined from about 3.8 cents per  dollar of benefits redeemed in 1993 to about 1.0 cent per dollar during the  years 2002 to 2005, as shown in table 1. FNS Has Taken Action to Improve Retailer Monitoring and Increase Trafficking Penalties

In response to our prior recommendation that FNS improves analysis and  monitoring, FNS has implemented new technology to improve its ability to  detect trafficking and disqualify retailers who traffic, which has  contributed to more sophisticated analyses of SNAP transactions and  categorization of stores based on risk. Consistent with our recommendation that FNS develop a strategy to  increase penalties for trafficking, FNS received new authority to impose  increased financial penalties for trafficking. However, FNS officials told us they  have taken few recent steps to increase state efforts to pursue recipients  suspected of trafficking, in part because of state resource constraints, but  will continue to examine the impact of financial incentives in preparation  for the expected upcoming program reauthorization. These categorically eligible households do not need to meet SNAP  eligibility requirements such as the SNAP asset or gross income test  because their general need has been established by the TANF program. For example, in 35 of the states that confer categorical eligibility for all  TANF services, there is no limit on the amount of assets a household may  have to be determined eligible, according to a FNS report. Even though households may be deemed categorically eligible for SNAP,  the amount of assistance households are eligible for is determined based  on each household’s income and other circumstances using the same  process used for other SNAP recipients. Households can be categorically eligible for SNAP even if they receive no  TANF funded service other than a toll-free telephone number or  informational brochure. According to  FNS officials, increased use of categorical eligibility by states has reduced  administrative burdens and increased access to SNAP benefits to  households who would not otherwise be eligible for the program due to  SNAP income or asset limits. While FNS and the states believe categorical eligibility has improved  program access and payment accuracy, the extent of its impact on access  and program integrity is unclear. However, little is known about the extent to  which increased use of categorical eligibility has affected the integrity of  the program. As current fiscal stress and looming deficits continue to  limit the amount of assistance available to needy families, it is more  important than ever that scarce federal resources are targeted to those  who are most in need and that the federal government ensure that every  federal dollar is spent as intended. GAO-07-465. GAO-07-53. GAO-05-245. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

The U.S. Department of Agriculture's (USDA) Supplemental Nutrition Assistance Program (SNAP) is intended to help low-income individuals and families obtain a better diet by supplementing their income with benefits to purchase food. USDA's Food and Nutrition Service (FNS) and the states jointly implement SNAP. Participation in the program has risen steadily over the last decade to an all time high of more than 33 million in fiscal year 2009, providing critical assistance to families in need. This testimony discusses GAO's past work on three issues related to ensuring integrity of the program: (1) improper payments to SNAP participants, (2) trafficking of SNAP benefits, and (3) categorical eligibility for certain individuals or households. This testimony is based on prior GAO reports on categorical eligibility (GAO-07-465), payment errors (GAO-05-245), and food stamp trafficking (GAO-07-53), developed through data analyses, case file reviews, site visits, interviews with officials, and a 50- state survey. GAO also updated data where available and collected information on recent USDA actions and policy changes.

What GAO Found

The national payment error rate reported for SNAP, which combines states' overpayments and underpayments to program participants, has declined by 56 percent from 1999 to 2009, from 9.86 percent to a record low of 4.36 percent. This reduction is due, in part, to options made available to states that simplified certain program rules. In addition, FNS and the states GAO reviewed have taken several steps to improve SNAP payment accuracy that are consistent with internal control practices known to reduce improper payments such as providing financial incentives and penalties based on performance. Despite this progress, the amount of SNAP benefits paid in error is substantial, totaling about $2.2 billion in 2009 and necessitating continued top-level attention and commitment to determining the causes of improper payments and taking corrective actions to reduce them. FNS estimates indicate that the national rate of food stamp trafficking declined from about 3.8 cents per dollar of benefits redeemed in 1993 to about 1.0 cent per dollar during the years 2002 to 2005 but that trafficking occurs more frequently in smaller stores. FNS has taken advantage of electronic benefit transfer to reduce fraud, and in response to prior GAO recommendations, has implemented new technology and categorized stores based on risk to improve its ability to detect trafficking and disqualify retailers who traffic. FNS also received authority to impose increased financial penalties for trafficking as recommended; however, it has not yet assessed higher penalties because implementing regulations are not yet finalized. FNS is considering additional steps to encourage states to pursue recipients suspected of trafficking but limited state resources are a constraint. Categorically eligible households do not need to meet SNAP eligibility requirements because their need has been established under the states' Temporary Assistance for Needy Families (TANF) program. As of June 2010, 36 states have opted to provide categorical eligibility for SNAP to any household found eligible for a service funded through TANF and, in 35 states, there is no limit on the amount of assets certain households may have to be determined eligible, according to FNS. Households can be categorically eligible for SNAP even if they receive no TANF funded service other than a toll-free telephone number or informational brochure. However, the amount of assistance eligible households receive is determined using the same process used for other SNAP recipients. According to FNS officials, increased use of categorical eligibility by states has reduced administrative burdens and increased access to SNAP benefits to households who would not otherwise be eligible due to asset or income limits. However, little is known about the extent of its impact on increased access or program integrity. SNAP has played a key role in assisting families facing hardship during the economic crisis, but given fiscal constraints and program growth, it is more important than ever to understand the impact of policy changes, and balance improvements in access with efforts to ensure accountability. FNS generally agreed with GAO's prior recommendations to address SNAP trafficking and categorical eligibility issues and has taken action in response to most of them.