Reimbursement to States of Food Stamp Program Administrative Costs

GAO was requested to decide whether Food Stamp Program administrative costs incurred by States before, but paid after, the effective date of a new, higher statutory reimbursement rate, should be paid on the basis of the new or the old rate. Before a 1974 amendment to the Food Stamp Act of 1964, the Department of Agriculture (USDA) was required to reimburse the States for a portion of their direct administrative costs at a rate of 62.5 percent. This reimbursement for only certain functions and nothing for all others resulted in an average reimbursement of 28 percent of all State administrative costs. The 1974 amendment increased the reimbursement rate to 50 percent for all State Program administrative costs and authorized the USDA Secretary to issue regulations appropriate for the effective and efficient administration of the Food Stamp program. Neither the amendment nor its legislative history defined the word "costs," and GAO found that the wording of the statute and regulations was not without ambiguity. USDA has taken the position that under its implementing regulations, administrative costs for which a legal liability to pay arose before October 1, 1974, should be reimbursed under the matching formula in effect before that date, regardless of whether the State maintained its accounts on a cash or accrual basis. Some States believe that since their accounts are maintained on a cash basis, administrative costs paid after October 1, 1974, should be reimbursed under the matching formula which became effective on that date, regardless of the fact that the liability for such costs may have been incurred before then. Great deference is shown to the interpretation of a statute given by an agency charged with its administration. A well-recognized rule provides that the practical construction given to an act of Congress by those charged with the duty of executing it is entitled to great respect, and will not be disturbed except for cogent reasons. Under these rules, GAO could see no basis on which to disturb the USDA interpretation of the statute.