Need for Greater Efforts To Recover Costs of Food Stamps Obtained Through Errors or Fraud

RCED-83-40: Published: Feb 4, 1983. Publicly Released: Feb 4, 1983.

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GAO conducted a review of the Food Stamp Program to see if improvements have been made in the identification and recovery of overissuances and the adjudication of cases involving alleged fraud since a 1977 report.

During fiscal years 1980 and 1981, the federal government lost about $2 billion through state overissuances of food stamp benefits, and eligible households received about $500 million less than they should have. The erroneous issuances resulted from administrative and recipient errors and fraud. Only about 1 cent of each overissued dollar was recovered. Using semiannual quality control results, the Food and Nutrition Service (FNS) can project the total amount of overissued and underissued benefits, but it has no reliable data on how many of these errors identify with specific households. Data from six states indicated that, compared with total estimated overissuances, relatively few specific cases have been identified. GAO stated that the use of computer matching to identify and ultimately recover specific overissuances holds considerable promise, and legislation implemented in recent years provides needed financial incentives to identify more overissuance cases. Although states are required to establish claims against households identified as receiving overissuances, they have not always done so because collection was difficult; however, recent legislation provides financial incentives and requires offsets against benefits to households still in the program. GAO found that states have not investigated or adjudicated many identified cases of potential fraud because of the problems they perceived in pursuing them, and FNS has not acted in a concerted way to solve or lessen barriers to state fraud pursuit.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: This recommendation was included in the Farm Bill, which Congress passed in December 1985.

    Matter: Congress should add a new section 13(b)(3) to require states to promptly take all necessary steps to recover any overissuances from households no longer participating in the program.

  2. Status: Closed - Not Implemented

    Comments: No legislation has been enacted. The legislative plans of the 100th Congress are uncertain.

    Matter: The congressional legislative and appropriations committees should direct the Secretary of Agriculture to evaluate and inform them of the results of any legislative changes and administrative efforts to improve the identification and collection of overissuances and the potential impact of any additional initiatives being considered in this area.

  3. Status: Closed - Not Implemented

    Comments: This recommendation was included in the 1985 Farm Bill which passed the Senate, but was deleted in conference. The legislative plans of the 100th Congress are uncertain.

    Matter: Congress should amend the Food Stamp Act of 1977, as amended, to require recovery of overissuances by reducing monthly benefits of recipient households regardless of the reason for the improper issuance.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Department of Agriculture (USDA) believes that regulations requiring states to establish claims for all identified overpayments implies that states should actively strive to identify all cases where overpayments were made.

    Recommendation: The Secretary of Agriculture should issue regulations specifically requiring states to identify and correct erroneous issuance cases, either: (1) as a by-product of routine program procedures required for other purposes, such as recertifications; or (2) through computer matching and other specific identification techniques that can detect multiple program participation and discrepancies in household-reported eligibility/benefit data. These regulations should require that each state, at a minimum, identify erroneous issuances caused by classes of eligibility criteria that quality control results or other available information shows as causing substantial dollar errors in that state. Adequate implementation of this aspect of state operations should be specifically considered by FNS in determining whether administrative sanctions are warranted.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: USDA developed profiles of error-prone households and distributed the profiles to the states to assist them in verifying participants' eligibility. In addition, in 1986, USDA developed profiles of the geographic areas that are most error-prone, as required by the 1985 Farm Bill. USDA has reported on high-error project areas to Congress since 1986.

    Recommendation: The Secretary of Agriculture should explore with the states ways in which error-prone profiles could be used, in conjunction with computer matching and other identification techniques, to pinpoint household circumstances which have high error potential so that states' administrative resources can be directed toward corrective actions that will result in maximum benefits.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: As part of its Operation Awareness initiative, FNS developed a catalog of program improvements to share with the states. However, the catalog did not emphasize information on data files that could be used to verify household eligibility.

    Recommendation: The Secretary of Agriculture should require FNS to solicit, compile, and distribute to the states information on the availability of different kinds of data files that could and should be used to verify household data items that have a major bearing on program eligibility and benefit levels.

    Agency Affected: Department of Agriculture

  4. Status: Closed - Implemented

    Comments: This recommendation should be closed.

    Recommendation: The Secretary of Agriculture should require FNS to revise the present claims report received from the states monthly to include information on the number and value of erroneous issuance cases identified through each of the various identification methods that are available. This information should be assessed and distributed to inform the states of the effectiveness of the different identification methods being used.

    Agency Affected: Department of Agriculture

  5. Status: Closed - Implemented

    Comments: This recommendation should be closed.

    Recommendation: The Secretary of Agriculture should evaluate each state's performance in establishing and collecting claims. Such evaluations should reveal individual state's, as well as programwide, strengths and weaknesses in the claims establishment and collection process and provide a basis for a FNS determination of whether administrative sanctions are warranted. At a minimum, these evaluations should include: (1) a review of the information in states' Status of Claims Against Households reports to ensure that all claims and collection activity are reported accurately; (2) systematic reviews of Office of Inspector General reports, state management evaluations, and other analytical reports and statistical information on the states' success in claims and collection activity; and (3) onsite reviews of the effectiveness of each state's collection techniques, especially the required offset procedure.

    Agency Affected: Department of Agriculture

  6. Status: Closed - Implemented

    Comments: This recommendation should be closed.

    Recommendation: The Secretary of Agriculture should provide technical assistance, based on evaluation and monitoring efforts and other available information, to improve state claims establishment and collection activity as may be needed. Such assistance should include, but not be limited to: (1) advice and help to states in developing appropriate accounting systems and controls needed to use the offset procedures most effectively, particularly in cases involving amounts owed from prior periods of households' participation; (2) identification and dissemination of available information on alternative and innovative collection techniques that states use in other programs, which could be used, or used more, to enhance collection of food stamp overissuances not subject to offset authority; and (3) assistance in implementing alternative collection strategies that hold promise for good results.

    Agency Affected: Department of Agriculture

  7. Status: Closed - Implemented

    Comments: This recommendation should be closed.

    Recommendation: The Secretary of Agriculture should determine the extent of recipient fraud within the Food Stamp Program and establish the appropriate level of state pursuit and adjudicative efforts needed to control recipient fraud.

    Agency Affected: Department of Agriculture

  8. Status: Closed - Implemented

    Comments: This recommendation should be closed.

    Recommendation: The Secretary of Agriculture should require that states' program operating plans include adequate: (1) methods and criteria for identifying cases in which a question of fraud may exist; (2) procedures, developed in cooperation with states' legal authorities, for referring to law enforcement officials cases in which a valid reason to suspect fraud exists; and (3) procedures for referring to an administrative fraud hearing process all cases not referred to or accepted for court prosecution for reasons other than insufficient evidence.

    Agency Affected: Department of Agriculture

  9. Status: Closed - Implemented

    Comments: This recommendation should be closed.

    Recommendation: The Secretary of Agriculture should require states to periodically report pertinent information on their fraud pursuit activities. These reports should include information on all phases of fraud pursuit and adjudication, including the numbers and dollar amounts of all referrals to and from various levels of the investigative and adjudicative processes, and the ultimate dispositions of the cases. Such data should identify backlogs in any of the investigative steps or adjudication procedures used.

    Agency Affected: Department of Agriculture

  10. Status: Closed - Implemented

    Comments: USDA now evaluates and ranks states according to their level of fraud pursuit.

    Recommendation: The Secretary of Agriculture should periodically evaluate states' investigation and adjudication efforts to determine whether states collectively and individually are adequately pursuing potential food stamp fraud.

    Agency Affected: Department of Agriculture

  11. Status: Closed - Implemented

    Comments: USDA has not made progress on its attempt to assess barriers to adjudicating alleged food stamp fraud. Indications are that further progress will be minimal in the near future.

    Recommendation: The Secretary of Agriculture should assess the problems that state officials have reported, or may report, as barriers to adjudicating alleged food stamp fraud and, to the extent practical, provide the guidance and technical assistance necessary for resolving or decreasing the adverse effect of those problems.

    Agency Affected: Department of Agriculture

 

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