Food Stamp Program:

Achieving Cost Neutrality in Washington's Family Independence Program

RCED-90-84: Published: Jun 28, 1990. Publicly Released: Jun 28, 1990.

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Pursuant to a legislative requirement, GAO reviewed the Food Stamp Program's progress in achieving cost neutrality in Washington under its Family Independence Program (FIP), focusing on the: (1) methods for establishing the amount of benefit and administrative costs that Washington would have incurred for food stamps in the absence of FIP; and (2) accuracy of the data and the methods used to calculate cost neutrality each quarter.

GAO found that: (1) several problems existed with the state's methodology for estimating the benefit cost of the Food Stamp Program; (2) the state needed to consider alternative methodologies that did not establish a statewide cost ceiling; (3) data gathering and reporting were erroneous for calculations of ceiling amounts and cost neutrality for the first 3 quarters of FIP operations; (4) Washington submitted a proposed method for calculating the programs' administrative cost-neutral ceiling, which included a number of questionable assumptions; (5) Washington had not received a response regarding its May 1988 or August 1989 proposed administrative methodology; and (6) several problems existed with the calculations used to determine the ceiling amount under the proposed administrative cost method.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Secretaries of Agriculture and Health and Human Services should direct their responsible agencies and Washington to consider alternative methods for calculating the food stamp benefit cost ceiling under the FIP demonstration. They should consider approaches such as those that estimate benefit costs only for sites at which FIP is implemented and adopt the method that appears to provide the greatest assurance of cost neutrality.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: On September 28, 1990, HHS directed Washington to consider alternatives to calculate the cost-neutral baseline. On December 21, 1990, Washington notified HHS that it was declining the adoption of any of the proposed alternative methodologies.

    Recommendation: If any number of non-FIP sites continue to be used to estimate benefit costs for other sites, the Secretaries of Agriculture and Health and Human Services should direct their responsible agencies and Washington to agree on the criteria for adjusting the cost-neutral calculation data for food stamp benefits when conditions affecting food stamp expenditures, and thus cost-neutral calculations, change significantly in one or more of the non-FIP sites but not in the FIP sites, or vice-versa.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: On August 19, 1991, a settlement agreement was reached between Washington and HHS in the U.S. District Court for Washington at Seattle. Under the agreements reached, the calculation adjustments will be made at the termination of the demonstration.

    Recommendation: If any number of non-FIP sites continue to be used to estimate benefit costs for other sites, the Secretaries of Agriculture and Health and Human Services should direct their responsible agencies and Washington to agree on the criteria for adjusting the cost-neutral calculation data for food stamp benefits when conditions affecting food stamp expenditures, and thus cost-neutral calculations, change significantly in one or more of the non-FIP sites but not in the FIP sites, or vice-versa.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: On September 28, 1990, HHS, the lead agency, indicated in a letter to Washington its willingness to make adjustments to the cost-neutral calculation data. Washington has not responded to the HHS initiative.

    Recommendation: If any number of non-FIP sites continue to be used to estimate benefit costs for other sites, the Secretaries of Agriculture and Health and Human Services should direct their responsible agencies and Washington to monitor economic, demographic, and other indicators at both FIP and non-FIP sites in order to be aware of major events or changes in conditions that meet the agreed-upon criteria and warrant adjustments in the data used for calculating the benefit's cost neutrality.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: On August 19, 1991, a settlement agreement was reached between Washington and HHS in the U.S. District Court for Washington at Seattle. Under the agreements, HHS will review major events at the termination of the demonstration and make any necessary cost-neutral adjustments at that time.

    Recommendation: If any number of non-FIP sites continue to be used to estimate benefit costs for other sites, the Secretaries of Agriculture and Health and Human Services should direct their responsible agencies and Washington to monitor economic, demographic, and other indicators at both FIP and non-FIP sites in order to be aware of major events or changes in conditions that meet the agreed-upon criteria and warrant adjustments in the data used for calculating the benefit's cost neutrality.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: On August 19, 1991, a settlement agreement was reached between Washington and HHS in the U.S. District Court for Washington at Seattle. Under the agreements reached, the calculation adjustments will be made at the termination of the demonstration.

    Recommendation: If any number of non-FIP sites continue to be used to estimate benefit costs for other sites, the Secretaries of Agriculture and Health and Human Services should direct their responsible agencies and Washington to adjust the data used to calculate the benefit's cost neutrality to help ensure accurate cost-neutral determinations, whenever conditions affecting food stamp expenditures, and thus cost-neutral calculations, change significantly.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: On August 19, 1991, a settlement agreement was reached between Washington and HHS in the U.S. District Court for Washington at Seattle. Under the agreements reached, HHS will review the cost calculations at demonstration termination and make appropriate benefit calculation adjustments at that time.

    Recommendation: If any number of non-FIP sites continue to be used to estimate benefit costs for other sites, the Secretaries of Agriculture and Health and Human Services should direct their responsible agencies and Washington to adjust the data used to calculate the benefit's cost neutrality to help ensure accurate cost-neutral determinations, whenever conditions affecting food stamp expenditures, and thus cost-neutral calculations, change significantly.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: On August 19, 1991, a settlement agreement was reached between Washington and HHS in the U.S. District Court for Washington at Seattle. Under the agreements, HHS will review major events at the termination of the demonstration and make any necessary cost-neutral adjustments at that time.

    Recommendation: The Secretary of Agriculture should direct the Administrator, FNS, to work with Washington to agree on the best available, most internally consistent data to be used for making quarterly cost-neutral calculations.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: USDA and State officials met on July 26, 1990 and agreed on the use of consistent data sources from which to make cost-neutral calculations.

    Recommendation: The Secretary of Agriculture should direct the Administrator, FNS, to work with Washington to require the FIP office to verify all FIP-related cost data before they are released from the state and sent to the federal agencies.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: On July 26, 1990, USDA and Washington State officials met and reached agreements on consistent and accurate FIP data.

    Recommendation: The Secretaries of Agriculture and Health and Human Services should direct their agencies to expedite their response to Washington regarding the state's proposals for determining food stamp administrative cost neutrality and resolve with the state the problems and concerns raised by the agencies' and GAO reviews.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: HHS provided input on the proposed revisions to Washington State on September 14, 1990.

    Recommendation: The Secretaries of Agriculture and Health and Human Services should direct their agencies to expedite their response to Washington regarding the state's proposals for determining food stamp administrative cost neutrality and resolve with the state the problems and concerns raised by the agencies' and GAO reviews.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: USDA provided input on the proposed revisions to Washington State on August 3, 1990.

    Recommendation: The Secretaries of Agriculture and Health and Human Services should direct their responsible agencies and Washington to consider alternative methods for calculating the food stamp benefit cost ceiling under the FIP demonstration. They should consider approaches such as those that estimate benefit costs only for sites at which FIP is implemented and adopt the method that appears to provide the greatest assurance of cost neutrality.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: The Department of Agriculture (USDA) has entered into discussions with Washington State to determine the most appropriate alternative method for calculating cost neutrality.

    Recommendation: The Secretary of Agriculture should direct the Administrator, FNS, to ensure that food stamp administrative cost neutrality is calculated each quarter on the basis of actual food stamp and FIP food cash administrative expenditures.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: Washington, USDA, HHS, and OMB are completing discussions regarding needed revisions to comply with this recommendation. Changes to cost-neutral calculations will ensure accuracy of quarterly expenditures.

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