Federal and State Liability for Inaccurate Payments of Food Stamp, AFDC, and SSI Program Benefits

Pursuant to a congressional request, GAO analyzed the error-rate sanction system for the Food Stamp program and compared it to systems used for the Supplemental Security Income (SSI) and Aid to Families with Dependent Children (AFDC) programs. Sanction systems are used to hold states, or the federal government, responsible for excessive errors in determining applicants' eligibility and benefit levels.

GAO found that sanction systems for the three programs establish error-rate thresholds for erroneous payments and impose financial sanctions for errors that exceed the thresholds. The three systems differ regarding: (1) who is liable and for what; (2) applicable error-rate thresholds; (3) calculation of sanctions; and (4) waiver procedures to reduce sanction liabilities. For the Food Stamp and AFDC programs, states are liable for excessive errors involving federal funds. Under the SSI program, which is administered by the Social Security Administration (SSA), the federal government is responsible for overpayments of state funds by states for which SSA administers State supplements concurrently with Federal benefits. The Food Stamp program uses an error-rate threshold of 9 percent for fiscal year (FY) 1983, 7 percent for FY 1984, and 5 percent for FY 1985. The AFDC program uses a threshold of 4 percent for FY 1983 and 3 percent for FY 1984 and thereafter. The SSI program has used a threshold of 4 percent since 1980. For the SSI and AFDC programs, calculation of sanctions involves multiplying the amount of program benefits by the extent the actual error rate exceeds the threshold. For the Food Stamp program, sanctions are based on the amount of a state's federally reimbursed administrative costs. Waivers of sanctions are possible under the Food Stamp and AFDC programs but not under the SSI program. GAO found that SSA and the Department of Agriculture, which administers the Food Stamp program, have made extensive use of this authority to eliminate state liability.