Millions Can Be Saved by Improving the Productivity of State and Local Governments Administering Federal Income Maintenance Assistance Programs

GAO reviewed three State-administered Federal income maintenance programs whose administrative costs are fully paid or shared by the Federal Government: the Unemployment Insurance (UI), Aid to Families with Dependent Children (AFDC), and Food Stamp programs. The objective of the review was to demonstrate that many opportunities exist for improving productivity in State and local management of Federal income maintenance programs and that these improvements can reduce costs and improve efficiency and enhance program effectiveness. In addition, changes needed in these Federal assistance programs to promote productivity improvement were identified.

GAO identified potential savings of millions of dollars associated with the use of inefficient procedures by State and local governments administering these programs. Federal methods for allocating and distributing funds in the income maintenance assistance programs reviewed neither reward nor encourage productivity improvements. Instead, these systems serve primarily as mechanisms for justifying how limited resources are allocated to the States with little, if any, regard as to how efficiently these resources are used. Neither the Department of Health and Human Services (HHS) nor the Department of Agriculture has implemented approaches to help States determine staff needs or control administrative spending in the AFDC and Food Stamp programs. The Department of Labor has established the Cost Model Management System in an effort to make UI program administration more efficient, control administrative costs, and provide technical assistance to the States. Although conceptually sound, poor management, weak budget controls, and a lack of incentives undermine the system, causing it to fall far short of its goals. Few Federal assistance programs have systems to measure and improve productivity. Moreover, the Federal assistance system generally provides no incentive to States or their employees to improve productivity. The Office of Management and Budget and the Office of Personnel Management are taking the lead in efforts to better coordinate Federal assistance policies and to improve private sector productivity.

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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