Different Methodologies Were Agreed Upon for Estimating Benefit and Administrative Costs

To estimate benefit costs, Minnesota agreed to use a research design that (1) randomly assigns applicant families to a control group eligible for traditional welfare program benefits, including food stamps, or to a group eligible for MFIP benefits and (2) uses the cost of food stamp benefits provided to families assigned to the control group to estimate what the cost would have been to provide traditional food stamp benefits to those assigned to MFIP. Minnesota Implemented Agreed-Upon Methodologies and Generated Required Estimates for Fiscal Year 1994

For fiscal year 1994, Minnesota implemented the agreed-upon cost-neutrality methodologies and generated the required estimates of food stamp benefit and administrative costs that would have been incurred in the absence of the demonstration project. While implementing this methodology, Minnesota encountered a data-processing problem that prevented it from obtaining needed data on the cost of the food stamp benefits. Minnesota also implemented the agreed-upon cost allocation methodology to determine what the administrative costs would have been in the absence of the MFIP demonstration project. Methods Used Provided Reasonable Cost Estimates

The methodologies for estimating the costs of the Food Stamp Program in the absence of the MFIP demonstration project, and the manner in which they were implemented, resulted in reasonable estimates of costs for fiscal year 1994.
Why GAO Did This Study

GAO examined the methodologies that Minnesota used for estimating the costs that would have been incurred if it had not implemented the Minnesota Family Investment Program (MFIP), focusing on whether: (1) Minnesota implemented the agreed-upon methodologies; (2) Minnesota reasonably estimated fiscal year (FY) 1994 Food Stamp Program costs; and (3) the Department of Agriculture (USDA) paid Minnesota the same amount for food stamp benefits in FY 1994 than it would have paid in the absence of MFIP.

What GAO Found

GAO found that: (1) Minnesota agreed to use two methodologies for estimating food stamp benefit costs that would have been incurred in the absence of MFIP; (2) Minnesota randomly assigned applicant families to either traditional welfare programs or MFIP and estimated the cost of providing MFIP benefits and food stamp benefits in traditional welfare programs; (3) Minnesota excluded all costs unique to MFIP which are paid by the state to achieve cost neutrality; (4) Minnesota used the same methodology to allocate allowable administrative costs among the welfare programs; (5) Minnesota implemented the agreed-upon methodologies and generated reasonable cost estimates for FY 1994, but a data processing problem delayed results for 7 months; and (6) USDA overpaid Minnesota $115,395 in excess food stamp benefits during the first 6 months of MFIP, based on Minnesota's forecasts of what food stamp costs would have been in the absence of MFIP.