Food Assistance:

Reducing Food Stamp Benefit Overpayments and Trafficking

RCED-95-198: Published: Jun 23, 1995. Publicly Released: Jun 23, 1995.


Robert A. Robinson
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Pursuant to a congressional request, GAO reviewed fraud, waste, and abuse in the Department of Agriculture's (USDA) food stamp program, focusing on: (1) the causes of benefit overpayments; (2) whether USDA controls and procedures are adequate to prevent retailer involvement in the trafficking of food stamp coupons; and (3) what can be done to reduce trafficking by food stamp recipients.

GAO found that: (1) state caseworkers' and recipients' errors cause food stamp overpayments; (2) state officials believe that caseworkers' errors stem from the complexity of the program's regulations, the different eligibility criteria for food stamp and Aid to Families with Dependent Children programs, and recipients providing inaccurate income and other information; (3) the states that have reduced their error rates have made a commitment to do so in response to fiscal sanctions and incentives; (4) these states have improved their program administration, caseworker training, accountability, and information analyses and verification; (5) states use group recertifications, recipient contacts to detect household changes, and shorter certification periods for recipients with fluctuating incomes to prevent recipient errors and reduce overpayments; (6) USDA and the states are simplifying program regulations, reducing eligibility criteria differences, and using waivers from certain program requirements to improve payment accuracy; (7) Congress and USDA are considering changing the system of sanctions and incentives for rewarding and penalizing states' error rate performance; (8) insufficient resources for site visits and other monitoring activities hamper USDA controls and procedures for monitoring food stamp trafficking; (9) although USDA has implemented a number of initiatives to improve its retailer monitoring processes, the initiatives do not include additional resources for retailer monitoring; and (10) aggressively reducing the number of retailers who are trafficking in food stamps would make it more difficult for recipients to sell their benefits or use them for nonfood purchases.

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

    Recommendation for Executive Action

    Recommendation: In view of proposed legislation, the Secretary of Agriculture should direct the Administrator, Food and Consumer Service, to determine the resources needed to incorporate on-site visits into its processes for authorizing and reauthorizing stores to accept food stamp benefits. This analysis should include a determination of the resources needed to effectively monitor stores once they are authorized to accept benefits and to investigate stores suspected of food stamp trafficking. The Secretary should consider the results of this analysis in the setting of departmental priorities and the allocation of resources, and provide this information to Congress for its use in considering program reforms.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: The Food and Consumer Service (FCS) has undertaken numerous efforts to increase the number of on-site visits to stores and improve the oversight of retailers. In addition, USDA's fiscal year 1997 appropriation includes $4.2 million to increase visits to high-risk stores. FCS will contract for these visits because of a restriction on increasing agency staff levels. FCS efforts are improving retailer integrity in the Food Stamp Program.

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