The statutes and  regulations for each program define administrative costs differently, even  though many of the same activities are performed to administer the  programs. The laws for each program also include different mechanisms  for state and federal participation in funding administrative costs,  including specific matching rates, block grants, and spending caps, which  can affect state decisions on administrative spending. However,  amounts varied widely across the programs and states. Between fiscal  years 2000 and 2004, administrative spending increased in five of the seven  programs, but generally increased at a lower rate than total program  spending. In 2004, Administrative Spending for the Selected Programs Combined Was about 18 Percent of Total Program Spending, but Spending Varied Greatly across Programs and States

In fiscal year 2004, administrative spending, as defined for financial  reporting purposes by program statutes and regulations, amounted to  about 18 percent—or $21 billion—of the $119 billion in total program  spending for the seven programs combined; however, there were large  differences in the amounts spent by programs and states. As a percentage of total  program spending, administrative spending ranged from 2 percent in  CCDF to 58 percent in the Foster Care program, with the exception of CSE  in which all program spending is considered administrative. In addition, by helping states  facilitate technology enhancements across programs, the federal  government can help streamline processes and potentially reduce long- term costs. We acknowledge that all levels of government have attempted to  streamline processes across human service programs for the past 20 years. We believe one challenge in  particular—the lack of information on the effect streamlining efforts might  have on program and administrative costs—is thwarting progress in this  area. Simplifying Federal Policies May Save Administrative Costs by Reducing Cumbersome and Duplicative Work

Our current and previous reviews indicate that simplifying policies— especially those related to eligibility determination processes and federal  funding structures—could potentially save resources, improve  productivity, and help staff focus more time on performing essential  program activities, such as providing quality services and accurate benefits  to recipients. The costs associated with running human service programs have been a  long-standing concern for policy makers interested in maximizing the  dollars that go directly to helping vulnerable people. Appendix I: Objectives, Scope, and Methodology

We designed our study to provide information on (1) how administrative  costs are defined in selected programs and what rules govern federal and  state participation in funding these costs; (2) what is known about the  amounts of federal and state administrative spending for selected  programs and how they have changed over time; and (3) what  opportunities exist at the federal level to help states balance cost savings  with program effectiveness and integrity. We  focused our study on seven key programs: Adoption Assistance, Child  Care & Development Fund (CCDF), Child Support Enforcement (CSE), the  Food Stamp Program, Foster Care, Temporary Assistance for Needy  Families (TANF), and Unemployment Insurance (UI).
Why GAO Did This Study

The cost of administering human service programs has been a long-standing concern among policy makers interested in ensuring that federal programs are run in a cost-efficient manner so that federal funds go directly to helping vulnerable people. Little is known about how administrative costs compare among programs, or about opportunities to better manage these costs. GAO looked at (1) how administrative costs are defined and what rules govern federal and state participation in funding these costs; (2) what is known about the amounts of administrative spending and how they have changed over time; and (3) what opportunities exist at the federal level to help states balance cost savings with program effectiveness and integrity. GAO's review included seven programs: Adoption Assistance, Child Care and Development Fund (CCDF), Child Support Enforcement (CSE), food stamps, Foster Care, Temporary Assistance for Needy Families (TANF), and Unemployment Insurance (UI). To address the questions, GAO reviewed laws, analyzed spending data, and visited five states.

What GAO Found

The statutes and regulations for the seven programs define administrative costs differently, even though many of the same activities are performed to administer the programs. The laws for each program also include different mechanisms for state and federal participation in funding administrative costs, including matching rates, block grants, and spending caps. The seven programs combined spent $21 billion on administration, as defined in law, making up about 18 percent of total program spending in fiscal year 2004. However, amounts varied widely across the programs and states. Administrative spending varied from 2 percent in CCDF to 58 percent in Foster Care, with the exception of CSE in which all program spending is considered administrative. Between fiscal years 2000 and 2004, administrative spending increased in five of the seven programs, generally at a lower rate than total program spending. The federal government may help balance administrative cost savings with program effectiveness and integrity by simplifying policies and facilitating technology improvements. Simplifying policies--especially those related to eligibility determination processes and federal funding structures--could save resources, improve productivity, and help staff focus more time on performing essential program activities. By helping states facilitate technology enhancements across programs, the federal government can help streamline processes and potentially reduce long-term costs. Over the past 20 years, many attempts to streamline processes across programs have had limited success due, in part, to the considerable challenges that streamlining program processes entail. GAO believes one challenge in particular--the lack of information on the effect streamlining efforts might have on program and administrative costs--is thwarting progress in this area.