Food Stamp Program Administration

The Food Stamp Program is administered by the Department of Agriculture’s (USDA) Food and Consumer Service (FCS) in partnership with state and local governments. Objectives, Scope, and Methodology

The Chairman and Ranking Minority Member of the House Committee on Agriculture asked us to determine (1) why benefit overpayments occur, (2) whether USDA controls and procedures are adequate to prevent food retailer involvement in trafficking, and (3) what can be done to reduce trafficking by food stamp recipients. Caseworkers’ errors, which accounted for 42 percent of the overpayments, occur for a multitude of reasons, but state officials said that the complex Food Stamp Program regulations and the differences between the Food Stamp Program and the Aid to Families with Dependent Children (AFDC) regulations are the primary contributing factors. FCS is also taking a number of actions to improve payment accuracy. Inadequately trained caseworkers and poor supervision lead to errors. Group Recertifications

Local offices in some states are using group recertifications. This system is called the Income and Eligibility Verification System (IEVS). These initiatives include focusing FCS management attention on error reduction, reducing the differences between the food stamp and AFDC programs, granting states waivers from program requirements, and evaluating new incentives to offer states to reduce their error rates. The primary factor in lowering error rates in these states appears to be the willingness of states to focus on reducing overpayments and making a commitment to do so. Existing FCS controls and procedures have not proven effective in reducing retailer involvement in food stamp trafficking. FCS has various initiatives underway to improve its authorization and monitoring of food stores and is proposing additional actions. However, these initiatives do not include providing additional resources to make site visits. FCS efforts to reduce the number of violating retailers, however, should make it more difficult for recipients to use their benefits for nonfood purchases. Some of the major legislative changes requested include: requiring retailers to provide sales and income tax filing documents when applying for authorization along with permission for FCS to verify such information with other agencies; requiring a 6-month waiting period before reapplication by a store that does not meet initial eligibility criteria; allowing FCS to set time limits for retailer authorization, including shorter authorization periods for questionable retailers; suspending stores charged with trafficking while their cases are pending administrative or judicial review thereby preventing them from continuing to abuse the program during the appeals process; suspending stores charged with trafficking on the basis of electronic benefit transfer transaction data; expanding forfeiture authority to allow the seizure of property used by traffickers in felony food stamp transactions of $5,000 or more, including property gained with the proceeds of illegal transactions; permitting permanent disqualification of retailers who intentionally falsify their applications; increasing the penalties for recipient trafficking; and disqualifying stores from participating in the Food Stamp Program that have been disqualified from participating in the Special Supplemental Nutrition Program for Women, Infants, and Children.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed fraud, waste, and abuse in the Department of Agriculture's (USDA) food stamp program, focusing on: (1) the causes of benefit overpayments; (2) whether USDA controls and procedures are adequate to prevent retailer involvement in the trafficking of food stamp coupons; and (3) what can be done to reduce trafficking by food stamp recipients.

What GAO Found

GAO found that: (1) state caseworkers' and recipients' errors cause food stamp overpayments; (2) state officials believe that caseworkers' errors stem from the complexity of the program's regulations, the different eligibility criteria for food stamp and Aid to Families with Dependent Children programs, and recipients providing inaccurate income and other information; (3) the states that have reduced their error rates have made a commitment to do so in response to fiscal sanctions and incentives; (4) these states have improved their program administration, caseworker training, accountability, and information analyses and verification; (5) states use group recertifications, recipient contacts to detect household changes, and shorter certification periods for recipients with fluctuating incomes to prevent recipient errors and reduce overpayments; (6) USDA and the states are simplifying program regulations, reducing eligibility criteria differences, and using waivers from certain program requirements to improve payment accuracy; (7) Congress and USDA are considering changing the system of sanctions and incentives for rewarding and penalizing states' error rate performance; (8) insufficient resources for site visits and other monitoring activities hamper USDA controls and procedures for monitoring food stamp trafficking; (9) although USDA has implemented a number of initiatives to improve its retailer monitoring processes, the initiatives do not include additional resources for retailer monitoring; and (10) aggressively reducing the number of retailers who are trafficking in food stamps would make it more difficult for recipients to sell their benefits or use them for nonfood purchases.