Food Assistance

The Agriculture Department's (USDA) Food Stamp Program is one of the nation's largest welfare programs, providing about $24 billion in food stamps to more than 27 million recipients during fiscal year 1994. Errors in determining recipients' eligibility and benefit levels generate nearly $2 billion in benefit overpayments each year. Complex regulations governing the program and differences in eligibility and benefit determination criteria between the Food Stamp and the Aid to Families With Dependent Children Programs appear to be the main sources of state caseworker errors. Some errors also result from Food Stamp recipients' inadvertently or fraudulently providing inaccurate income information that affects their benefit levels. Despite the lack of complete data, illegal trafficking in food stamps appears to be pervasive, with coupons often traded as a second currency. GAO believes that aggressive on-site monitoring, greater enforcement, and stiffer penalties are needed to reduce the number of retailers that traffic in food stamps.

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.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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