Proposed Amendments to the Food Stamp Act 1977

Under the food stamp program, overissuances have been caused by recipient and administrative errors as well as by fraud. H.R. 4318 and public law 96-58 contain several measures to tighten food stamp program integrity which, if properly implemented, could result in substantial savings. The bill would hold States liable for erroneous benefit issuances in excess of target rates. However, penalties could involve substantial sums in States with large programs. A better approach would be to allow Federal reimbursement of State administrative expenses at the rate of 60 percent instead of the usual 50 percent for any State that reduces its error rate to less than 5 percent of benefits. A general approach of incentives has significant advantages over penalizing States for high error rates. The bill also provides for recovery of overissuance from recipients. Recipients who have been determined to have defrauded the program may not participate until they have agreed to repay the value of benefits they obtained fraudulently. Legislation should also be considered to aid in the recovery of overissuances where fraud cannot be proven. To encourage State efforts to recover fraudulent overissuances, States could be allowed to keep a percentage of all overissuances they recover, not just those due to fraud, as provided in current legislation. Another alternative would be to allow States to retain half of the recoveries of overissuances caused by recipient error, both fraud and nonfraud, but not those caused by State error. Finally the bill allows States to use retrospective accounting in order to base benefit determinations on the previous month's income. Each month's benefits after the first 3 months would be based on income 2 months earlier. Many of the bill's provisions have not been enacted as quickly as expected. Therefore, the savings anticipated for 1980 do not seem possible and the amount of savings for 1981 is uncertain.