Human Service Programs:

Demonstration Projects Could Identify Ways to Simplify Policies and Facilitate Technology Enhancements to Reduce Administrative Costs

GAO-06-942: Published: Sep 19, 2006. Publicly Released: Oct 19, 2006.

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The cost of administering human service programs has been a long-standing concern among policy makers interested in ensuring that federal programs are run in a cost-efficient manner so that federal funds go directly to helping vulnerable people. Little is known about how administrative costs compare among programs, or about opportunities to better manage these costs. GAO looked at (1) how administrative costs are defined and what rules govern federal and state participation in funding these costs; (2) what is known about the amounts of administrative spending and how they have changed over time; and (3) what opportunities exist at the federal level to help states balance cost savings with program effectiveness and integrity. GAO's review included seven programs: Adoption Assistance, Child Care and Development Fund (CCDF), Child Support Enforcement (CSE), food stamps, Foster Care, Temporary Assistance for Needy Families (TANF), and Unemployment Insurance (UI). To address the questions, GAO reviewed laws, analyzed spending data, and visited five states.

The statutes and regulations for the seven programs define administrative costs differently, even though many of the same activities are performed to administer the programs. The laws for each program also include different mechanisms for state and federal participation in funding administrative costs, including matching rates, block grants, and spending caps. The seven programs combined spent $21 billion on administration, as defined in law, making up about 18 percent of total program spending in fiscal year 2004. However, amounts varied widely across the programs and states. Administrative spending varied from 2 percent in CCDF to 58 percent in Foster Care, with the exception of CSE in which all program spending is considered administrative. Between fiscal years 2000 and 2004, administrative spending increased in five of the seven programs, generally at a lower rate than total program spending. The federal government may help balance administrative cost savings with program effectiveness and integrity by simplifying policies and facilitating technology improvements. Simplifying policies--especially those related to eligibility determination processes and federal funding structures--could save resources, improve productivity, and help staff focus more time on performing essential program activities. By helping states facilitate technology enhancements across programs, the federal government can help streamline processes and potentially reduce long-term costs. Over the past 20 years, many attempts to streamline processes across programs have had limited success due, in part, to the considerable challenges that streamlining program processes entail. GAO believes one challenge in particular--the lack of information on the effect streamlining efforts might have on program and administrative costs--is thwarting progress in this area.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: In 2009, Congress enacted the Consolidated Appropriations Act, 2010 (P.L.111-117), providing $37.5 million to create a Partnership Fund for Program Integrity Innovation to carry out pilot projects to demonstrate ways to streamline administration or strengthen program integrity while balancing cost neutrality and preserving beneficiary eligibility and participation. Specifically, the law calls for these efforts to "save at least as much money as they cost; demonstrate the potential to streamline administration or strengthen program integrity; and do not achieve savings primarily by reducing the participation of eligible beneficiaries." The law also requires the program to report semiannually with detailed information on the goals, objectives, performance measures, and evaluations of the program and each pilot undertaken.

    Matter: Evaluations of the projects should include an analysis of whether administrative cost savings were indeed achieved in the long-run, which specific laws or regulations were waived to facilitate the project, and whether the effectiveness and integrity of program services were maintained. To enhance the information from each of the projects, Congress may wish to consider authorizing a capping report that would compile information from each the individual demonstration projects and identify lessons learned.


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