United States Government Accountability Office 

GAO Report to Congressional Committees 

May 2005 FOOD STAMP 

PROGRAM 

States Have Made 

Progress Reducing 

Payment Errors, and 

Further Challenges 

Remain 

GAO-05-245 

Why GAO Did This Study 

Highlights 

Accountability Integrity Reliability 

www.gao.gov/cgi-bin/getrpt?GAO-05-245. 

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Sigurd Nilsen at 

(202) 512-7215 or nilsens@gao.gov. 

Highlights of GAO-05-245, a report to 

congressional committees 

In fiscal year 2003, the federal Food 

Stamp Program made payment 

errors totaling about $1.4 billion in 

benefits, or about 7 percent of the 

total $21.4 billion in benefits 

provided to a monthly average of 

21 million low-income participants. 

Because payment errors are a 

misuse of public funds and can 

undermine public support of the 

program, it is important that the 

government minimize them. 

Because of concerns about 

ensuring payment accuracy GAO 

examined: (1) what is included in 

the national food stamp payment 

error rate and how it has changed 

over time, (2) what is known about 

the causes of food stamp payment 

errors, and (3) what actions the 

Food and Nutrition Service (FNS) 

and states have taken to reduce 

these payment errors. 

To answer these questions, GAO 

analyzed program quality control 

data for fiscal years 1999 through 

2003 and interviewed program 

stakeholders, including state and 

local officials from nine states. 

May 2005 

FOOD STAMP PROGRAM 

States Have Made Progress Reducing 

Payment Errors, and Further Challenges 

Remain 

What GAO Found 

The national dollar payment error rate for the Food Stamp Program, which 

combines states’ overpayments and underpayments to program participants 

in all states, has declined by almost one-third over the last 5 years to a 

record low of 6.63 percent. This decline has been widespread; the rate fell in 

41 states and the District of Columbia, and rates in 18 of these states fell by 

at least one-third. However, despite this decrease, some states continue to 

have relatively high payment error rates. For example, in 2003, 7 states had 

payment error rates of more than 10 percent. 

Food Stamp Payment Errors Have Dropped over the Last 5 Years 

Percent 

12 

9.86 

10 

8 

6 

6.63 

8.26 8.66 8.91 

4 

2 

0 

1999 2000 2001 2002 2003 

Fiscal year 

Underpayments Overpayments Combined 

Source: the Food and Nutrition Service. 

Almost two-thirds of food stamp payment errors are caused by caseworkers, 

usually when they fail to keep up with reported changes or make mistakes 

applying program rules, and one-third are caused by participant failure to 

report required, complete, or correct information, such as household income 

and composition. State officials said program complexity and other factors, 

such as the lack of resources and staff turnover, can contribute to these 

errors. In fiscal year 2003, states referred about 5 percent of all cases 

identified with errors for suspected participant fraud investigation. 

To increase food stamp payment accuracy, FNS and the 9 states GAO 

reviewed took many approaches that parallel good internal control 

practices. These efforts include increasing the leadership and accountability 

in the program, performing risk assessments to identify problem areas, 

implementing various program and process changes in response to the 

findings from risk assessments, and monitoring and promoting improved 

performance. The states are using a combination of approaches to improve 

payment accuracy, making it difficult to tie error rate improvements to 

specific practices. However, state officials point to their improved state 

error rates as evidence of a collective impact. 

United States Government Accountability Office 
Contents 


Letter 

Results in Brief


Background


The Food Stamp Error Rate, Which Combines Overpayments and 


Underpayments, Has Declined by Almost One-Third over the 

Last 5 Years 

Caseworkers Cause about Two-Thirds and Participants Cause 

about One-Third of Payment Errors 

FNS and States Have Taken Steps to Increase Payment Accuracy 

Concluding Observations 

Agency Comments 

1 

3 

5 

10 

16 

24 

36 

37 

Appendix IMethodology for Determining the Causes of Food 

Stamp Payment Errors for Fiscal Years 1999 through 

2003 

Appendix IIFood Stamp Combined Error Rates by State for Fiscal 

Years 1999 to 2004 

Appendix III GAO Contacts and Acknowledgments 

Related GAO Products 

Tables 

Table 1: Changes in Payment Error Rates for States Providing the 

Largest Amount in Food Stamp Benefits, Fiscal Year 2003 14 

Table 2: Caseworker Errors Most Often Resulted in Incorrect 

Household Income or Deductions, Fiscal Year 2003 18 

Table 3: Participant-Caused Errors Most Often Resulted in 

Incorrect Household Income Determinations, Fiscal Year 

2003 23 

Page i GAO-05-245 Food Stamp Payment Accuracy 

38 

40 

42 

43 
Figures 

Figure 1: Food Stamp Recipiency Has Increased Sharply in the Last 

3 Years, Following a Substantial Decline 6 

Figure 2: National Payment Error Rate for the Food Stamp 

Program, Fiscal Years 1999 to 2003 12 

Figure 3: Map of State Error Rate Changes from Fiscal Year 1999 to 

2003 13 

Figure 4: Map of State Error Rates for Fiscal Year 2003 15 

Figure 5: Caseworker- and Participant-Caused Errors in Fiscal Year 

2003 17 

Figure 6: California Used a Combination of Internal Control 

Practices to Reduce Payment Error 34 

Abbreviations 


EBT Electronic Benefits Transfer 


FNS Food and Nutrition Service 


QC quality control 


TANF Temporary Assistance for Needy Families 


USDA U.S. Department of Agriculture 


This is a work of the U.S. government and is not subject to copyright protection in the 

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reproduce this material separately. 

Page ii GAO-05-245 Food Stamp Payment Accuracy 
United States Government Accountability Office 

Washington, DC 20548 

May 5, 2005 


The Honorable Saxby Chambliss 


Chairman 


The Honorable Tom Harkin 


Ranking Minority Member


Committee on Agriculture, Nutrition, and Forestry


United States Senate 


The Honorable Bob Goodlatte 


Chairman 


The Honorable Collin C. Peterson 


Ranking Minority Member


Committee on Agriculture 


House of Representatives 


In fiscal year 2003, the federal Food Stamp Program, administered by the 


U.S. Department of Agriculture’s (USDA) Food and Nutrition Service 


(FNS), reported it made payment errors totaling about $1.4 billion in 


benefits. This sum represents about 7 percent of the total $21.4 billion in 


benefits provided each year to a monthly average of 21 million low-income 


program participants. The program is intended to help low-income


individuals and families obtain a better diet by supplementing their income 


with benefits to purchase food. However, payment errors reflect the 


misuse of public funds and may undermine public confidence in the 


program.


The Food Stamp Program is jointly administered by FNS and the states. 


State caseworkers must determine an applicant’s eligibility and benefit 


levels based on a complex formula that takes into account the members of


the household, their assets, and net monthly income; households must


report changes in their circumstances that may affect their eligibility and 


benefit levels; and caseworkers periodically recertify eligibility. Depending


on household circumstances, some cases may require more adjustments


than others. For example, households with earned income may be 


required to report more income changes to caseworkers than households


without earned income, such as those that are dependent solely on 


retirement benefits. In addition, some food stamp participants receive 


benefits from other programs, such as Medicaid or the cash assistance 


program Temporary Assistance for Needy Families (TANF). Although the 


caseworkers who process these eligibility determinations may be the same 


as those who administer the Food Stamp Program, the rules for the 


Page 1 GAO-05-245 Food Stamp Payment Accuracy 
various programs can differ. These differences add to the complexity of 

determining and recertifying eligibility and program benefits. 

FNS’s quality control (QC) system measures payment accuracy and 

monitors how accurately states determine food stamp eligibility and 

calculate benefits. Under FNS’s QC system, states participate in the 

calculation of their payment errors by reviewing a sample of cases to 

examine whether eligibility was correctly determined and whether 

participating households received the correct benefit amount. FNS 

validates the sample and the accuracy of the state review. 

Because the government must make the best use of funding, it is important 

to minimize payment errors. Due to concerns about ensuring payment 

accuracy, we examined (1) what is included in the national food stamp 

payment error rate and how has the rate changed over time, (2) what is 

known about the causes of food stamp payment errors, and (3) what 

actions USDA and states have taken to reduce these payment errors. 

To determine what is included in the payment error rate, how it has 

changed over time, and the causes of payment error, we analyzed FNS’s 

QC data for fiscal years 1999 through 2003.1

 We determined that the QC 

data were reliable for the purposes of our work by reviewing our past 

reports, FNS and external evaluations of the QC system, and related 

documents. We also met with knowledgeable FNS officials to discuss 

issues of the QC system’s accuracy and completeness. To understand the 

causes of payment errors and what actions have been taken to reduce 

them, we conducted interviews with program stakeholders from FNS 

headquarters, each of FNS’s seven regional offices, and the USDA Office of 

the Inspector General. In addition, we interviewed food stamp officials 

from 9 states, officials from the state auditor’s office in each of these 9 

states, food stamp officials from the local office within 8 of these 9 states 

with the largest food stamp caseload, and food stamp researchers and 

representatives from special interest groups. The 9 states we selected 

were California, Michigan, Mississippi, New Jersey, New York, Oregon, 

South Dakota, Texas, and Wisconsin. We chose these states for the 

diversity in their locations, number of Food Stamp Program participants, 

and payment accuracy performances. We included 3 states with 

consistently low error rates, 3 states with consistently high error rates, and 

1

See appendix I for a detailed explanation of the methodology we used to analyze FNS’s 

data. 

Page 2 GAO-05-245 Food Stamp Payment Accuracy 
Results in Brief 

3 states that reduced their error rate by more than 30 percent between 

1999 and 2003. To guide our work on actions taken to reduce payment 

errors, we used the key components of internal control as our framework.2 

Finally, to learn about past work regarding Food Stamp payment error, we 

reviewed previous GAO reports on the Food Stamp Program and FNS 

reports concerning food stamp payment error. We conducted our work 

between May 2004 and April 2005 in accordance with generally accepted 

government auditing standards. 

The national payment error rate for the Food Stamp Program combines 

states’ overpayments and underpayments to program participants and has 

declined by almost one-third over the last 5 years to a record low of 6.63 

percent in a time of rising caseloads. Of the total $1.4 billion of errors in 

fiscal year 2003, 76 percent were due to overpayments and about 24 

percent were underpayments. The payment error rate has fallen each year 

since 1999, when it was 9.86 percent. This decline in the payment error 

rate has been widespread; the rate fell in 42 states and the District of 

Columbia, and rates in 18 of these states fell by at least one-third. 

However, despite the decrease in many state error rates over the past few 

years, a number of states continue to have difficulties reducing payment 

error. For example, in 2003, 7 states had payment error rates of more than 

10 percent. Finally, in addition to measuring improper payments to 

program participants, FNS also monitors households that were refused 

benefits. In fiscal year 2003, about 8 percent of these cases were 

improperly denied, suspended, or terminated. However, these cases are 

not part of a state’s error rate, and the amount of benefits these 

households would have received is unknown. 

Food stamp payment errors are caused primarily by caseworkers, usually 

when they fail to keep up with new information or make mistakes when 

applying program rules, and by participants when they fail to report 

needed information. These causes can be linked, in part, to how frequently 

changes must be reported and the complexity of program rules. Almost 

two-thirds of all payment errors occur when state food stamp caseworkers 

fail to act on reported information or misapply complex rules in 

calculating benefits. For example, the increase in the number of food 

2

See GAO, Internal Control: Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington D.C.: November 1999), and GAO, Executive Guide: 

Strategies to Manage Improper Payments: Learning from Public and Private Sector 

Organizations, GAO-02-69G (Washington D.C.: October 2001), for more details. 

Page 3 GAO-05-245 Food Stamp Payment Accuracy 
stamp recipients who are low-wage workers and the changeable nature of 

their income has made it more difficult for caseworkers to keep up with 

changes, according to state officials. They also cited increased caseloads 

and state fiscal problems, which resulted in staff reductions and 

competing demands on workers, as contributing factors. In addition, 

caseworkers may misapply the numerous eligibility requirements—such as 

allowable deductions for shelter, utility, or child care—when calculating a 

household’s net monthly income. Moreover, state and local officials from 5 

of the 9 states we contacted told us that it can be difficult for caseworkers 

when they are responsible for multiple programs—such as TANF, food 

stamps, and Medicaid—because the eligibility and reporting rules among 

the programs often differ. Payment errors associated with participants 

account for about one-third of all payment errors. This generally is a result 

of participants not providing required information to caseworkers, such as 

changes in household income and composition and employment or of 

providing incomplete or incorrect information. Participants may fail to 

provide this information either intentionally or unintentionally. In 2003, 

states referred about 5 percent of all errors for suspected participant fraud 

investigation. However, despite these widespread challenges, states have 

continued to reduce their payment error rates and remain concerned 

about continued improvement in the future. 

FNS and the 9 states we reviewed have taken many approaches to 

increasing food stamp payment accuracy, most of which are parallel with 

internal control practices known to reduce improper payments. These 

approaches include practices to improve accountability, conduct risk 

assessments, implement program and process changes based on those 

assessments, and monitor and promote improved performance. FNS’s 

increased focus on the error rate and the threat of increased financial 

penalties were cited by several states as the impetus for state leaders and 

managers to make payment accuracy a priority. Also, some states are 

holding their local managers accountable for their error rates by setting 

overall local office target rates or including target rates in the managers’ 

contracts. FNS and the states are also actively conducting risk 

assessments to identify the types and sources of payment errors. For 

example, California, a state that has reduced its error rate by over 

50 percent since 2001, has increased the number of cases sampled for its 

19 largest counties as a way to assess risk and identify the causes of errors 

at the county level. Once the likely causes are identified, the states are 

adopting program and process changes to address risk. For example, some 

localities have adopted specialized units to respond to reported changes in 

case information to address their failure to act on reported information 

errors. In addition, most states we contacted have adopted a simplified 

Page 4 GAO-05-245 Food Stamp Payment Accuracy 
Background 

reporting option, which is designed to reduce administrative burden and 

promote higher participation. The option also helps reduce errors because 

it reduces the frequency with which households must report changes. In 

essence, unreported changes that might have caused errors in the past are 

no longer required to be reported. Overall, states put into place a 

combination of approaches based upon their available resources, 

priorities, the nature of their errors, and other factors, making it difficult 

to tie error rate improvements to specific practices. However, state 

officials point to their improved state error rates as evidence that 

collectively the practices are having an impact. 

The federal Food Stamp Program is intended to help low-income 

individuals and families obtain a more nutritious diet by supplementing 

their income with benefits to purchase food. FNS pays the full cost of food 

stamp benefits and shares the states’ administrative costs—with FNS 

paying approximately 50 percent—and is responsible for promulgating 

program regulations and ensuring that state officials administer the 

program in compliance with program rules.3

 The states usually administer 

the program out of local assistance offices that determine whether 

households meet the program’s eligibility requirements, calculate monthly 

benefits for qualified households, and issue benefits to participants, almost 

always on an Electronic Benefits Transfer (EBT) card. The local 

assistance offices often administer other benefit programs as well, 

including TANF, Medicaid, and child care assistance. 

In fiscal year 2004, the Food Stamp Program issued almost $25 billion in 

benefits, and in September 2004, almost 25 million individuals participated 

in the program. As shown in figure 1, the increase in the average monthly 

participation of food stamp recipients in 2004 continues a recent upward 

trend in the number of people receiving benefits, with caseloads 

increasing over 40 percent since 2001, but still below the level in 1996. 

3

Following passage of the Personal Responsibility and Work Opportunity Reconciliation 

Act of 1996, reimbursements for food stamp administrative costs in 44 states are adjusted 

each year to subtract certain food stamp administrative costs that have already been 

factored into these states’ TANF grants. As a result, these states receive less than 50 

percent of their administrative costs. See GAO, Food Stamp Program: States Face Reduced 

Federal Reimbursement for Administrative Costs, RCED/AIMD-99-231 (Washington D.C.: 

July 23, 1999). 

Page 5 GAO-05-245 Food Stamp Payment Accuracy 
Figure 1: Food Stamp Recipiency Has Increased Sharply in the Last 3 Years, 

Following a Substantial Decline 

Average monthly participation (in millions) 

30 

Eligibility for participation in the Food Stamp Program is based on the 

Department of Health and Human Services’ poverty measures for 

households. The caseworker must first determine the household’s gross 

income, which cannot exceed 130 percent of the poverty level for that year 

(or about $1,654 per month for a family of three living in the contiguous 

United States in 2003). Then the caseworker must determine the 

household’s net income, which cannot exceed 100 percent of the poverty 

level (or about $1,272 per month for a family of three living in the 

contiguous United States). Net income is determined by deducting from 

gross income expenses such as dependent care costs, medical expenses, 

utilities costs, and shelter expenses. In addition, there is a limit of $2,000 in 

household assets, and basic program rules limit the value of vehicles an 

applicant can own and still be eligible for the program.4

 If the household 

owns a vehicle worth more than $4,650, the excess value is included in 

calculating the household’s assets.

5 

4

Households with elderly or disabled members are exempt from the gross income limit and 

may have assets valued at $3,000. 

5

If a household has no other assets, its vehicle can be worth $6,650. 

25 

20 

15 

10 

5 

0 

1996 1997 1998 1999 2000 2001 2002 2003 2004 

Fiscal year 

Source: the Food and Nutrition Service. 

Eligibility Requirements 


Page 6 GAO-05-245 Food Stamp Payment Accuracy 
After eligibility is established, households are certified to receive for food 

stamps for periods ranging from 1 to 24 months depending upon 

household circumstances. The average certification period is 10 months. 

Once the certification period ends, households must reapply for benefits, 

at which time eligibility and benefit levels are redetermined. Between 

certification periods, households must report changes in their 

circumstances—such as household composition, income, and certain 

expenses—that food stamp agencies must consider to determine whether 

the change affects their eligibility or benefit amounts. States have the 

option of requiring food stamp participants to report on their financial 

circumstances at various intervals and in various ways. States can institute 

a type of periodic reporting system, or they can rely on households to 

report changes in their household circumstances within 10 days of 

occurrence.6

 Under periodic reporting, participants report monthly, 

quarterly, or under a simplified system. The simplified reporting system, 

available since early 2001, provides for an alternative reporting option that 

requires households with earned income to report changes between 

certifications only when their income rises above 130 percent of the 

poverty level. This easing of program requirements was designed to help 

increase the program access and participation of eligible working families, 

an FNS goal, by making it easier for them to participate, as well as to 

reduce the administrative burden on local food stamp offices. 

Quality Control System
 To ensure the accuracy of food stamp payments, FNS and the states have 

an extensive quality control system. In fiscal year 2003, the states spent an 

estimated $80 million to administer the system, and FNS spent and 

estimated $9 million.

7

 According to FNS officials, each month a state’s 

food stamp QC staff selects a representative sample of the open food 

stamp cases for review.

8

 The QC staff reviews each sample case to verify 

whether the recipient’s eligibility and benefit amount were determined 

correctly. If the reviewer finds the benefit amount off by more than 

6

States can choose from a variety of change-reporting methods. They can require 

households to report only when a member changes jobs, receives a different rate of pay, or 

has a change in his or her work status, such as from full-time to part-time or vice versa. 

States can also require households to report only when there is a change in earnings of 

$100 or more per month. 

7

FNS reimbursed the states half of the money they spend on QC. State QC expenses 

include salaries for QC workers, the costs associated with sampling and reviewing case 

files, office space, supplies, and travel. 

8

Sample sizes range from under 400 in smaller states to over 1,500 cases in others. 

Page 7 GAO-05-245 Food Stamp Payment Accuracy 
$25, it is counted as an error. The statewide sample produces a valid 

statewide error rate, although in most cases, it does not include sufficient 

cases to generate error rates for local offices.9 

FNS plays a significant role in monitoring and validating the state’s review. 

The FNS regional offices approve the states’ sampling plans; validate the 

states’ samples, totaling 56,557 in fiscal year 2003; and review one-third of 

these sample cases to ensure accuracy. They also handle informal 

arbitration of disputes resulting from differences between the state and 

FNS review outcomes. Disputes that are not resolved at the regional office 

can be appealed to FNS headquarters for formal arbitration. In fiscal year 

2003, regional reviews found 151 cases where the regional offices’ finding 

or error amount was different from the states’ finding or error amount. 

According to FNS officials, this constitutes less than 1 percent of the cases 

reviewed by the regions, and each year between 20 and 30 of these 

unresolved disputes between the state and the regional office are appealed 

to FNS headquarters for formal arbitration. According to FNS officials, 

upon the completion of the regional office’s review and error 

disagreement processes, the regional office adjusts error rates to reflect 

the final results. 

Once the error rates are final, FNS is required to compare each state’s 

performance with the national error rate and imposes penalties or 

provides incentives according to specifications in law. Prior to fiscal year 

2003, penalties were levied each year a state’s payment error rate was 

above the national average. In addition, states with error rates above 

6 percent, other than for good cause, were required to develop corrective 

action plans that are monitored by the FNS regional offices. FNS can 

negotiate with the states the amount of the penalty that will be paid to 

FNS, the amount that will be reinvested into the program, and the amount 

of money that will be collected if the state does not improve its error rate 

to an agreed-upon amount. In order to encourage program improvement, 

FNS also provided enhanced funding to states that with a payment error 

rate less than or equal to 5.90 percent according to a formula set in law. 

During this period of time, the states were held accountable only for their 

error rate and no other performance measure. 

9

The state’s error rate is determined by weighting the dollars paid in error divided by the 

state’s total issuance of food stamp benefits. 

Page 8 GAO-05-245 Food Stamp Payment Accuracy 
The Farm Security and Rural Investment Act of 2002 (the 2002 Farm Bill) 

made significant changes to the way penalties and incentives are 

calculated and awarded.10 States will not be penalized until their error rate 

exceeds the national error rate threshold for 2 years in a row. The error 

rate threshold changed so that states are not penalized unless there is a 95 

percent statistical probability that their error rate exceeds 105 percent of 

the national average for 2 consecutive years. If a state’s error rate exceeds 

the threshold for 2 years in a row, a penalty will be established that is 

equal to 10 percent of the cost of errors above 6 percent.11 In addition to 

establishing the new penalty system, the 2002 Farm Bill instructed FNS to 

create new criteria for performance bonuses that award states with high 

or most improved performance for actions taken to correct errors, reduce 

error rates, improve eligibility determination, and other indicators of 

effective program operations. 

FNS and the states also conduct fraud prevention activities to detect and 

prosecute food stamp fraud by retailers and participants. In fiscal year 

2002, the states spent $229 million on their fraud control activities and 

reported that they completed 834,000 client investigations resulting in 

12,000 state prosecutions and 61,000 ineligibility rulings. As a result of 

these fraud control activities and following up on overpayments identified 

through the QC process and during regular case processing activities, the 

states established almost $26 million in fraud claims, $176 million in 

household error claims, and $59 million in agency error claims. States also 

reported they collected $209 million on previously established claims. 

FNS’s payment error statistics do not account for the states’ results in 

recovering overpayments. 

10The 2002 Farm Bill also gave states the option of adopting provisions that could simplify 

program administration and possibly reduce error rates. These options include simplifying 

income and resources, housing costs and deductions, reporting requirements, and utility 

allowances. See GAO, Food Stamp Program: Farm Bill Options Ease Administrative 

Burden, but Opportunities Exist to Streamline Participant Reporting Rules among 

Programs, GAO-04-916 (Washington, D.C.: September 2004). 

11Of that amount, USDA may waive all or part, and/or require up to 50 percent to be 

reinvested in corrective action programs and/or require up to 50 percent to be set aside for 

possible recovery in the third year. If a state’s error rate exceeds the threshold for 3 

consecutive years, the state is responsible for paying the second year at-risk amount, and 

USDA will again require up to 50 percent of the liability amount to be reinvested in 

corrective action programs and up to 50 percent be set aside for possible recovery in the 

following year if the state again exceeds the threshold for that year. 

Page 9 GAO-05-245 Food Stamp Payment Accuracy 
Payment errors can typically be traced to a lack of or a breakdown in 

internal controls, which are an integral component of an organization’s 

management. Internal control is not one event, but a series of actions and 

activities that occur throughout an organization on an ongoing basis. 

Therefore, to guide our review of FNS and state actions taken to reduce 

payment errors, we used the key components of internal control as our 

framework. These components include creating a work environment that 

promotes accountability and the reduction of payment error, analyzing 

program operations to identify areas that present the risk of payment 

error, making policy and program changes to address the identified risks, 

and monitoring the results and communicating the lessons learned to 

support further improvement. 

The Food Stamp 

Error Rate, Which 

Combines 

Overpayments and 

Underpayments, Has 

Declined by Almost 

One-Third over the 

Last 5 Years 

The national Food Stamp Program payment error rate combines 

overpayments and underpayments to participants, and has declined by 

about one-third in recent years from 9.86 percent in 1999 to a record low 

of 6.63 percent in 2003.12 In dollars, this means if the 1999 error rate was in 

effect in 2003, the program would have made payment errors totaling over 

$2.1 billion rather than the $1.4 billion it experienced. Most states have 

enjoyed a recent reduction in payment error, with error rates falling in 

41 states and the District of Columbia. However, some states continue to 

struggle with relatively high payment error rates. In addition to measuring 

the accuracy of benefits paid, about 8 percent of the decisions to deny, 

suspend, or terminate benefits were also made in error. However, the 

amount of benefits these households would have received is unknown and 

is not part of a state’s payment error rate. 

Food Stamp Payment 

Error Rate Combines 

Benefit Overpayments and 

Underpayments 

The national food stamp payment error rate combines overpayments and 

underpayments made to benefit recipients in all states. Of the total 

$1.4 billion in payment error in fiscal year 2003, $1.1 billion, or about 

76 percent, were overpayments, which represent a financial loss to the 

federal government. Overpayments occur when eligible persons are 

provided more than they are entitled to receive or when ineligible persons 

are provided benefits. Underpayments, which occur when eligible persons 

are paid less than they are entitled to receive, totaled $340 million, or 

about 24 percent of dollars paid in error, in fiscal year 2003. 

12In contrast, USDA’s strategic plan for fiscal years 2000 to 2005 set a target error rate of 9.2 

percent by fiscal year 2005. 

Page 10 GAO-05-245 Food Stamp Payment Accuracy 
Underpayments represent unintentional financial savings to the federal 

government. 

Studies have reviewed the effects of payment errors on household income. 

An analysis of fiscal year 2003 QC data conducted by Mathematica Policy 

Research, Inc., for FNS found that typical overpaid eligible households 

received an average of $97 too much in monthly benefits and underpaid 

eligible households received an average of $78 too little in monthly 

benefits.

13 As a result, overpaid households’ purchasing power, which 

includes household gross income and food stamp benefits, rose by 8 

percentage points, from 94 percent of the federal poverty level to 102 

percent of the federal poverty level. Underpaid households’ purchasing 

power decreased by 6 percentage points from 80 percent of the federal 

poverty level to 74 percent of the federal poverty level. More than 98 

percent of households receiving food stamps were eligible for the 

program. Ineligible households receiving food stamp benefits saw their 

purchasing power rise from 118 percent of the federal poverty level to 132 

percent of the federal poverty level. 

The National Error Rate 

Declined by One-Third in 

the Last 5 Years, Driven by 

States Providing the 

Largest Amount of Food 

Stamp Benefits 

The national Food Stamp Program payment error rate has declined by 

about one-third over the last 5 years. The rate has declined each year, from 

9.86 percent in 1999 to a record low of 6.63 percent in 2003, as shown in 

figure 2. If the 1999 error rate had been in effect in 2003, the program 

would have made payment errors totaling over $2.1 billion rather than the 

$1.4 billion it experienced. In addition, the state-reported error rates for 

fiscal year 2004 suggest that the overall error rate has continued to 

decline. These error rates have not yet been validated by FNS, which 

usually produces slight adjustments to these state-reported rates. 

13Memorandum: Carole Trippe and Daisey Ewell, Size and Impact of Food Stamp Payment 

Errors Based on FY 2003 FSPQC Unedited Database (Prepared by Mathematica Policy 

Research, Inc., for the Food and Nutrition Service, USDA, Alexandria, Va.: January 2005). 

Page 11 GAO-05-245 Food Stamp Payment Accuracy 
Figure 2: National Payment Error Rate for the Food Stamp Program, Fiscal Years 

1999 to 2003 

Percent 

12 

9.86 10 

8 

6 

6.63 

8.26 

8.66 8.91 

4 

2 

0 

1999 2000 2001 2002 2003 

Fiscal year 

Underpayments 

Overpayments 

Combined 

Source: the Food and Nutrition Service. 

Error rates fell in 41 states and the District of Columbia, and 18 states 

reduced their error rates by one-third or more, as shown in figure 3. See 

appendix II for more information on individual states’ error rates over 

time. 

Page 12 GAO-05-245 Food Stamp Payment Accuracy 
Page 13 GAO-05-245 ood Stamp Payment Accuracy 

Figure 3: Map of State Error Rate Changes from Fiscal Year 1999 to 2003 

Further, the 5 states that issue the most food stamp benefits reduced their 

error rates by an average of 36 percent during this period, as shown in

Source: data from the Food and Nutrition Service and GAO analysis.

Increased (9 states)

0-33 percent reduction (24 states)

33-50 percent reduction (12 states)

50-81 percent reduction (6 states)

Alaska

Hawaii

Percent change in error rate

New York

Vermont

New Hampshire

Massachusetts

Rhode Island

Connecticut

New Jersey

Delaware

Maryland

District of Columbia

Mississippi

Alabama

Arizona

Arkansas

California Colorado

Florida

Georgia

Idaho

Illinois Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Michigan

Minnesota

Missouri

Montana

Nebraska

Nevada

New Mexico

North 

Carolina

North 

Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

South 

Carolina

South

Dakota

Tennessee

Texas

Utah

Washington

Wisconsin

Wyoming

Virginia

 West

Virginia

F
table 1. The changes in these states have a large effect on the national 

error rate because of the way the rate is calculated.

14 

Table 1: Changes in Payment Error Rates for States Providing the Largest Amount 

in Food Stamp Benefits, Fiscal Year 2003 

Percentage 

1999 2003 change in error 

2003 benefit error error rates between 

State payments rate rate 1999 and 2003 

New York $1,676,508,940 10.47 5.88 

Florida 987,926,276 9.43 8.00 

Illinois 1,052,739,082 14.79 4.87 

Texas 1,880,851,630 4.56 3.29 

California $1,807,987,279 11.34 7.96 

Source: GAO analysis of FNS data. 

In addition to contributing to the downward trend in the payment error 

rate, an increasing number of states had error rates below 6 percent in 

2003.15 However, payment error rates vary among states. For example, 21 

states had error rates below 6 percent in 2003 (see fig. 4 for states’ error 

rate performance); this is an improvement from 1999, when 7 states had 

error rates below 6 percent. Despite the decrease in many states’ error 

rates over the past few years, some states continue to have high payment 

error rates. For example, 7 states had payment error rates of 10 percent or 

higher in 2003. These states are also making progress, however, and are 

expected to have reduced their error rates in 2004. 

14The national food stamp payment error rate is the average of the states’ food stamp 

payment error rates weighted by each state’s proportion of all food stamp benefits issued 

during the fiscal year. Therefore, a state issuing a higher proportion of the food stamp 

benefits plays a larger part in determining the national food stamp payment error rate 

compared with a state issuing a smaller proportion of the food stamp benefits. 

15FNS does not require states with payment error rates under 6 percent to develop and 

implement corrective action plans to reduce payment errors. 

Page 14 GAO-05-245 Food Stamp Payment Accuracy 

-44 

-15 

-67 

-28 

-30 
Page 15 GAO-05-245 ood Stamp Payment Accuracy 

Figure 4: Map of State Error Rates for Fiscal Year 2003 

In addition to monitoring the payment error rate, FNS estimates the rate at

which eligible households are improperly denied benefits, which is called 

the negative error rate. According to a FNS QC official, this rate is not 

included in the national food stamp payment error rate because it counts

the number of cases affected rather than the number of dollars given in 

Improper Denials Are 

Monitored Separately 

Source: data from the Food and Nutrition Service.

1.1 to 5.99 percent (21states)

6.0 to 7.99 percent (13 states)

8.0 to 9.99 percent (10 states)

10.0 to 13.99 percent (7 states)

Alaska

Hawaii

New York

Vermont

New Hampshire

Massachusetts

Rhode Island

Connecticut

New Jersey

Delaware

Maryland

District of Columbia

Mississippi

Alabama

Arizona

Arkansas

California Colorado

Florida

Georgia

Idaho

Illinois Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Michigan

Minnesota

Missouri

Montana

Nebraska

Nevada

New Mexico

North 

Carolina

North 

Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

South 

Carolina

South

Dakota

Tennessee

Texas

Utah

Washington

Wisconsin

Wyoming

Virginia

West

Virginia

Fiscal year 2003 error rate

F
Caseworkers Cause 

about Two-Thirds and 

Participants Cause 

about One-Third of 

Payment Errors 

error. In fiscal year 2003, FNS reported that about 8 percent of the 

decisions to deny, suspend, or terminate benefits were made in error. 

However, the amount of benefits these households would have received 

had this error not occurred is unknown. 

Almost two-thirds of the payment errors in the Food Stamp Program are 

caused by caseworkers, usually when they fail to act on new information 

or make mistakes when applying program rules, and one-third are caused 

by participants, when they unintentionally or intentionally do not report 

needed information or provide incomplete or incorrect information (see 

fig. 5). Program complexity and other factors, such as the lack of 

resources and staff turnover, can contribute to caseworker mistakes. 

Despite the decrease in error rate in recent years, these factors have 

remained the key causes of payment error over the last 5 years. 

Page 16 GAO-05-245 Food Stamp Payment Accuracy 
Figure 5: Caseworker- and Participant-Caused Errors in Fiscal Year 2003 

26% 

9% 

5% 

13% 

20% 

23% 

4% 

Incomplete/incorrect information 

provided 

Incomplete/incorrect information 

provided and case referred for potential 

fraud investigation 

Failure to act on 

reported information 

Information not reported 

Policy incorrectly applied 

Failure to follow up on or 

verify information 

Other 

Participant caused error (35%) 

Caseworker caused error (65%) 

Source: the Food and Nutrition Service and GAO analysis. 

Page 17 GAO-05-245 Food Stamp Payment Accuracy 
Caseworkers Failing to Act 

on Reported Information 

and Misapplying Program 

Rules Cause Most 

Caseworker Errors 

Caseworkers Fail to Act on 

Changes 

Almost two-thirds of all payment errors are made by state food stamp 

caseworkers, according to our analysis of FNS QC data.16 

Errors can occur when caseworkers have difficulty keeping up with 

reported changes in household circumstances, according to officials from 

all of the states we reviewed. Caseworkers are required to review reported 

changes and assess their effect on a household’s eligibility and benefit 

levels. In addition, caseworkers regularly receive information from data 

matches and other sources that should be assessed and verified, and the 

failure to do so is another important cause of error. In previous work, we 

have found that the risk of improper payments increases in programs with 

a significant volume of transactions. When caseworkers fail to keep up 

with changes, the errors usually are reflected as incorrect household 

income or deductible expenses, as shown in table 2. 

Table 2: Caseworker Errors Most Often Resulted in Incorrect Household Income or Deductions, Fiscal Year 2003 

Percentage of Percentage of Percentage of Percentage of Percentage of 

Reason income errors deduction errors nonfinancial errorsa other errors total errors 

Failure to act on reported 

information 10.36 8.86 4.08 .03 23.33 

Policy incorrectly applied 8.35 6.99 3.99 .81 20.14 

Failure to verify 

information or follow up 6.81 4.65 1.54 .03 13.03 

Other agency error 5.22 2.72 .4 .66 

Total caseworker-caused 

error 30.74 23.22 10.01 1.53 65.5b 

Source: GAO analysis of FNS data. 

a

Nonfinancial errors refer to factors considered in determining a household’s eligibility, such as 

household composition, citizenship, and student status of household members. 

b

The caseworker errors in table 2 and participant errors in table 3 account for all errors. The two totals 

may not add to 100 percent because of rounding. 

16The percent of all errors due to caseworker mistakes is 65.5 percent. The margin of error 

associated with this estimate is plus or minus 1 percent at the 95 percent level of 

confidence. GAO’s analysis results could differ slightly from those reported by FNS 

because of small variations in the databases. FNS utilized the raw QC database for its 

analysis while GAO’s database omitted some cases with incomplete case data. 

Page 18 GAO-05-245 Food Stamp Payment Accuracy 

9 
Caseworkers Incorrectly 

Apply Program Rules 

Food stamp officials in 8 of the 9 states told us that increasing caseloads 

have contributed to payment errors, making it more difficult for 

caseworkers to attend to all of the reported changes. In recent years, FNS 

and several states have made it a priority to reach out to likely eligible 

households that are not yet participating in the program, in addition to 

focusing on minimizing payment error. At the same time, the nation 

experienced an economic downturn, which contributed to an increase in 

the number of families who had a need for food assistance. As a result of 

these and other factors, nationally, the number of food stamp participants 

has increased by more than 30 percent since February of 2001. 

Moreover, as states across the country have faced fiscal challenges due to 

the overall slowdown in the economy, some responded by reducing their 

staff, offering early retirements, or imposing hiring freezes. This also has 

contributed to rising caseloads per worker. For example, food stamp 

officials in Michigan said state fiscal problems resulting in staff reductions, 

increased caseloads per worker, and competing demands on workers 

made it difficult for caseworkers to act on all reported changes because of 

high caseloads. Oregon state officials also attribute their difficulties with 

payment accuracy to a 40 percent increase in the number of food stamp 

cases in the state between 2001 and 2003 as well as state financial 

problems that led to staff cuts and a hiring freeze. FNS officials informed 

us that there is no central collection of comparable data on caseload per 

worker among states. 

Further, the recent outreach efforts included a focus on increasing 

participation among working families. State and local officials from 8 of 

the 9 states we interviewed said managing cases with earnings contributes 

to payment error in part because caseworkers may find it difficult to keep 

up with the frequent changes reported to them.17 For example, Michigan 

food stamp officials told us that they experienced an increase in 

overpayment errors because caseworkers were failing to act on the 

frequent wage and salary changes reported by working participants. 

The complexity of the eligibility criteria for the Food Stamp Program 

contributes to caseworker errors. In previous work, we found that the risk 

of improper payments increases in programs with complex criteria for 

17GAO previously reported that FNS and some states and localities have taken several steps 

to help working families participate in the program. See GAO, Food Stamp Program: Steps 

Have Been Taken to Increase Participation of Working Families, but Better Tracking of 

Efforts Is Needed, GAO-04-346 (Washington D.C.: March 2004) for more details. 

Page 19 GAO-05-245 Food Stamp Payment Accuracy 
computing eligibility and payments.18 Caseworkers may miscalculate a 

household’s eligibility and benefits, in part because of the program’s 

complex rules for determining eligible household members and for 

calculating the household’s financial status. Our analysis of QC data found 

that caseworker mistakes often involve incorrectly determining household 

income, followed by mistakes related to income deductions, and 

nonfinancial issues, such as determining household composition. Although 

the error rate has declined in recent years, these three types of mistakes 

have remained the major sources of error over the last 5 years. 

To determine household gross income, caseworkers must decide which 

types of income to include. Households may have income from a number 

of different sources, and rules require that some of this income be counted 

and some not. Further, the fluctuations in earnings for low-income 

working participants can increase the likelihood of error simply because 

they result in a higher volume of case reviews and adjustments. 

Payment errors also occur when caseworkers misapply one or more of six 

allowable deductions when determining net income. Caseworkers 

calculate and deduct expenses such as dependent care costs, medical 

expenses, utilities costs, and shelter expenses—each of which have their 

own set of eligibility criteria.19 For example, caseworkers can provide 

households an excess shelter expense deduction if their shelter expenses 

exceed 50 percent of monthly household income after applying other 

deductions. As part of that process, caseworkers must determine whether 

the household is entitled to a standard utility allowance.20 

Other common caseworker errors involve nonfinancial factors, such as 

misapplying the program’s complex rules for determining the members of 

the household. Although individuals may be living in the same home, they 

may be treated as different households for eligibility and benefit purposes, 

depending on whether they customarily purchase food and prepare meals 

18See GAO, Executive Guide: Strategies to Manage Improper Payments: Learning from 

Public and Private Sector Organizations, GAO-02-69G (Washington D.C.: October 2001). 

19The six allowable deductions are a standard deduction, an earned income deduction, a 

dependent care deduction, a medical deduction, a child support deduction, and an excess 

shelter cost deduction. 

20Not all households are eligible for the standard utility allowance. Exceptions include 

households sharing a living space with others and not eligible for the full value of the 

allowance and public housing residents who were charged only for excess utility costs. 

Page 20 GAO-05-245 Food Stamp Payment Accuracy 
together. However, this is sometimes difficult to determine. Food stamp 

officials in Michigan told us that given the variety of household 

circumstances and arrangements caseworkers face, determining 

household composition can be confusing. For instance, officials said it can 

be difficult to determine how to treat a youth over age 22 who moves in 

and out of the parents’ home or households that contain multiple 

generations of family members. In addition, officials from 5 of the 9 states 

we contacted told us that having caseloads with legal noncitizens was a 

challenge to reducing payment error, in part because of the numerous 

policy changes in recent years that affect the eligibility of various 

segments of this population.21 

Correctly determining food stamp eligibility and benefits can be 

complicated by differences between Food Stamp Program rules and the 

rules governing other assistance programs. Officials from 5 of the 9 states 

we interviewed told us that minimizing payment error is difficult for 

caseworkers when they are responsible for multiple programs, such as 

TANF, food stamps, and Medicaid, because the eligibility and reporting 

rules among the programs often differ.22 For example, local officials from 

Texas told us that because of the way the state chose to implement the 

simplified reporting option, caseworkers are held responsible for failing to 

act on a change when a birth is reported to the Medicaid program, even 

though participants are not required to report the change to the Food 

Stamp Program, according to a recently approved policy option. Oregon 

state and local officials also told us that it is challenging for caseworkers 

to attend to food stamp payment accuracy when they have to determine 

eligibility and recertify households for other assistance programs. 

21The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 

104-193, Aug. 22, 1996) tightened food stamp eligibility requirements, in part, by 

disqualifying most permanent resident aliens. Subsequently, the Agricultural Research, 

Extension, and Education Reform Act of 1998 (P.L. 105-185) restored eligibility to 

permanent resident aliens who were lawfully residing in the United States as of August 22, 

1996, and (1) were age 65 or older at that time or (2) are either disabled or under age 18. 

The 2002 Farm Bill also partially restored food stamp eligibility on certain dates to qualified 

aliens who are otherwise eligible and meet criteria laid out in the legislation. 

22GAO previously reported that changes in food stamp reporting rules aimed to reduce 

program complexity and payment error introduced complications for participants and 

caseworkers because the rules were not consistent with the reporting rules of other 

assistance programs. See GAO, Food Stamp Program: Farm Bill Options Ease 

Administrative Burden, but Opportunities Exist to Streamline Participant Reporting 

Rules among Programs, GAO-04-916 (Washington D.C.: September 2004) for more details. 

Page 21 GAO-05-245 Food Stamp Payment Accuracy 
Officials from all 9 of the states we interviewed stated that staff turnover 

contributes to incorrect application of program rules. Food stamp officials 

in Oregon said that half of the caseworkers in the Portland area have less 

than 1 year of work experience because of high staff turnover, which 

makes it difficult for the office to maintain a workforce trained in making 

accurate eligibility decisions. Officials also told us that lack of training can 

be a challenge in part because it is difficult for caseworkers to learn the 

complex program rules and policies. 

Similar factors also affect errors where benefits are improperly denied, 

suspended, or terminated, according to officials from states we 

interviewed. They cited caseworkers misapplying policies or 

miscalculating income. For example, Michigan food stamp officials told us 

that these errors sometimes occur when caseworkers temporarily suspend 

benefits because participants are not complying with certain rules but 

then do not review the case to complete it correctly. Mississippi officials 

told us that these errors can also occur when caseworkers misapply a 

policy or fail to add up wages correctly. 

Participant Error Involves About 35 percent of all payment errors occur because participants do not 

Failure to Report provide required, complete, or correct information to caseworkers, either 

Required, Complete, or unintentionally or deliberately (see table 3).

23 Although applicants are 

Correct Information to required to provide a variety of personal information to the caseworker, 

Caseworkers failure to report income is the most common cause of participant food 

stamp errors. 

23The percentage of all errors attributable to participant reporting is 34.5 percent. The 

margin of error associated with this estimate is plus or minus 1 percent at the 95 percent 

level of confidence. 

Page 22 GAO-05-245 Food Stamp Payment Accuracy 
Table 3: Participant-Caused Errors Most Often Resulted in Incorrect Household Income Determinations, Fiscal Year 2003 

Percentage of Percentage of Percentage of Percentage of Percentage of 

Reason income errors deduction errors nonfinancial errors other errors total errors 

Information not reported 17.46 4.30 3.75 .13 25.64 

Incomplete or incorrect 

information reported 1.63 1.76 .57 

Incomplete or incorrect 

information reported & case 

referred for suspected fraud 2.96 1.13 .83 

Total participant-caused 

error 22.05 7.19 5.15 .13 34.52a 

Source: GAO analysis of FNS data. 

a

The caseworker errors in table 2 and participant errors in table 3 account for all errors. The two totals 

may not add to 100 percent because of rounding. 

Program complexity may play a role in participants’ failure to report 

needed information because the participants may not understand the 

reporting requirements, according to officials from 2 states we 

interviewed. For example, California state food stamp officials told us they 

believe that some participants do not report information because they are 

unfamiliar with the reporting requirements or because of language 

barriers. In addition, when participants receive assistance from multiple 

programs, they may be confused about what to report to whom because 

the requirements differ among the programs, including those for Medicaid 

and TANF.24 When participants fail to report information, the result is 

usually an incorrect determination of household income. Further, 

participants may not report information to caseworkers because of the 

perceived burden associated with reporting changes. For example, a food 

stamp official in Wisconsin told us that because of the lack of staff at the 

call center, participants calling to report changes may wait on the line for 

up to 20 minutes, and as a result, some participants will hang up. 

Errors may also occur when the participant intentionally does not report 

needed information or unintentionally or intentionally provides the 

caseworker with false or incomplete information. Although the percentage 

of payment errors that involve participants intentionally withholding 

information is not known, food stamp workers from all of the states we 

24See GAO, Food Stamp Program: Farm Bill Options Ease Administrative Burden, but 

Opportunities Exist to Streamline Participant Reporting Rules among Programs, 

GAO-04-916 (Washington D.C.: September 2004) for more details. 

Page 23 GAO-05-245 Food Stamp Payment Accuracy 

3.96 

4.92 
interviewed refer cases for investigation when they suspect fraud. For 

example, Oregon food stamp officials explained that cases are referred for 

suspected fraud when a participant consistently reports no income yet 

seems to have the resources needed to live self-sufficiently. In 2003, about 

5 percent of all payment errors were referred for fraud investigation. Data 

are not available, however, to determine what percentage of these error 

cases resulted in disqualifying participants because of fraud. 

Despite the recent decrease in error rates, the program continues to face 

these same causes of error over time. Over the last 5 years, caseworker 

failure to act on reported information, caseworker misapplying program 

policies and requirements, and participant failure to report key 

information have remained the three largest causes of error. Moreover, 

errors involving incorrect household income or deductions for expenses 

continue to be the most common types of errors over the same period. 

FNS and the states we reviewed have taken many approaches to 

increasing food stamp payment accuracy, most of which are parallel with 

internal control practices known to reduce improper payments.

25 These 

include practices to improve accountability, perform risk assessments, 

implement changes based on such assessments, and monitor program 

performance. Often, several practices are tried simultaneously, making it 

difficult to determine which have been the most effective. 

FNS and States Have 

Taken Steps to 

Increase Payment 

Accuracy 

FNS’s and States’ 

Approaches Are Parallel 

with Good Internal Control 

Practices 

Improving Accountability 

Because payment errors can typically be traced to problems with internal 

controls, we used the key components of internal control as our 

framework to categorize the approaches taken to reduce payment errors. 

In doing so, we found that both FNS and the states we reviewed were 

employing many of the same practices recognized as being effective in 

reducing payment errors. 

Both FNS and states have taken steps to ensure that program officials 

recognize their responsibility for payment accuracy. FNS has long focused 

its attention on states’ accountability for error rates through its QC system 

by assessing penalties and providing financial incentives. The 

administration of the QC process and its system of performance bonuses 

and sanctions is credited or faulted by many as being the single largest 

motivator of program behavior, and most of the states in our review 

25See GAO-02-69G. 

Page 24 GAO-05-245 Food Stamp Payment Accuracy 
believe the QC system has helped increase payment accuracy. From fiscal 

year 1998 to fiscal year 2002, FNS has assessed $327 million in penalties. 

Of these penalties, FNS waived $93 million, approved $92 million for 

reinvestment into state food stamp programs, collected almost 

$24 million, and designated $118 million at risk for payment if the states 

did not improve their error rates to agreed-upon targets. During this same 

period, FNS awarded states almost $251 million of enhanced funding 

because of their low error rates. 

In fiscal year 2003, the first year under the 2002 Farm Bill changes to the 

QC system, 11 states were found to be in jeopardy of being penalized if 

their fiscal year 2004 error rates did not improve. This was a higher 

number than was originally expected by some analysts because the error 

rate had fallen much faster than in previous years, leaving more states 

above the new error rate threshold. Some states have expressed concern 

that they may improve their error rates and yet still be penalized because 

the national rate continues to drop around them. In addition, under its new 

performance bonus system, FNS awarded a total of $48 million to states, 

including $24 million to states with the lowest and most improved error 

rates and $6 million to states with the lowest and most improved negative 

error rate.

26 

In addition to using the tools available under its QC system, FNS’s 

leadership has actively communicated the importance of accountability. 

Establishing payment accuracy as a program priority is considered by 

many to be the most important strategy for achieving program 

improvement. Since the arrival of the current Undersecretary for Food, 

Nutrition, and Consumer Services in 2001, FNS has put increased pressure 

on states to reduce error rates. For example, the undersecretary and other 

FNS officials visited states with particularly high error rates to discuss 

payment accuracy. FNS also began to collect a higher percentage of 

penalties. From fiscal year 1992 to 2000, FNS collected about $800,000 in 

penalties. Since fiscal year 2000, FNS has collected more than $20 million 

in penalties. Officials from one advocacy group active in food stamp issues 

credits this official’s active role as one reason for the drop in the error 

rates in the larger states. The FNS regional administrators also visit high 

26The remaining $18 million was awarded for improvements not related to error rates—the 

highest and most improved ratio of food stamp participants compared with the number of 

persons in poverty and the highest percentage of timely completed applications. 

Page 25 GAO-05-245 Food Stamp Payment Accuracy 
error rate states and emphasize payment accuracy as a major management 

priority at regional meetings of state commissioners. 

All the states we reviewed also reported taking steps to increase the 

awareness of, and the accountability for, errors in their programs. Often, 

this coincided with a change in state leadership and responded to 

accumulating program penalties, bad publicity, or both. For example, 

• 	 Michigan state officials said that after their new governor took office in 

2003, error reduction became an issue for the governor and the 

legislature because the state had paid more than $5 million in penalties 

in 2003 and 2004. In response, the Food Stamp Program began 

producing weekly internal reports and issuing regular reports to the 

governor and the legislature. The state’s error rate has dropped from 

14.1 percent in fiscal year 2002 to a state-reported error rate of 6.73 

percent in fiscal year 2004. As a result of the state’s progress in 

reducing its error rate, the governor has publicly recognized the 

program’s efforts. 

• 	 Wisconsin’s turnaround began in 2002 when state officials, with the 

support of the governor, made it clear to local food stamp offices that 

double-digit error rates and the penalties that go along with them were 

no longer acceptable. Wisconsin had been assessed penalties totaling 

over $8 million for 2000, 2001, and 2002. The state’s error rate has 

dropped from 13.14 percent in fiscal year 2001 to a state-reported error 

rate of 6.57 percent in fiscal year 2004. 

• 	 Penalties totaling over $5 million for 1998, 1999, and 2000, also spurred 

New Jersey’s human services director to appoint a special assistant to 

focus on reducing the state’s error rate. The state’s error rate has 

dropped from 12.93 percent in fiscal year 1999 to a state-reported error 

rate of 2.62 percent in fiscal year 2004. 

In addition, states we reviewed understood the need to communicate the 

importance of payment accuracy to individuals working at all levels of the 

program. Of the states we studied, California, Michigan, New Jersey, and 

Oregon have begun to set error rate targets for their local offices and have 

supplemental quality assurance processes in place to produce local error 

rates or error rates for their largest offices. Oregon and Texas also include 

payment accuracy goals in the expectations for their managers and 

workers, making payment accuracy one of the bases for their evaluations. 

California, New York, and Wisconsin have shared the accountability for 

poor performance by passing on a portion of their state’s financial 

Page 26 GAO-05-245 Food Stamp Payment Accuracy 
Identifying Risks 

penalties to their largest counties. New Jersey, South Dakota, and Texas, 

on the other hand, have shared the enhanced funding they have received 

for good performance with their local food stamp offices. 

Both FNS and states have taken steps to analyze program operations to 

identify where risks exist. For example, through its QC system, FNS 

determined that working families receiving benefits were error prone 

because of frequent changes in their income and deductions. In addition, 

officials from our 9 review states said they analyze the QC data to identify 

the sources and causes of food stamp payment error in their states. New 

Jersey officials used the QC data to identify salaries and wages as the 

largest sources of error in their state. In most cases, however, the QC 

samples are not large enough to produce valid error rates or to identify 

specific problem areas for most counties or local offices. In order to be 

able to obtain this information, California, Michigan, New Jersey, New 

York, and Oregon have developed their own quality assurance systems to 

produce monthly error rates for their counties or local offices. For 

example, in January 2003, Oregon instituted a targeted case review 

process that requires officials in local offices to review between 35 and 

100 cases per month to identify errors. State officials say the reviews 

provide better information to local-level officials on the causes and 

sources of payment error at their site so they can plan corrective action. 

Oregon’s payment error rate dropped from 13 percent in fiscal year 2003 to 

a state-reported error rate of 7.81 percent in fiscal year 2004. 

California, New York, Wisconsin, and Michigan targeted their largest and 

most error-prone offices for special risk assessments. In Wisconsin, for 

example, the state focused its approaches on Milwaukee because it is the 

largest metropolitan area in the state, accounting for 47 percent of the 

state food stamp caseload. Because it had the highest error rate, it had the 

most significant influence on the state’s error rate. The state brought in a 

contractor that conducted an assessment of payment accuracy and the 

service delivery model used in Milwaukee. The contractor recommended 

that Milwaukee adopt a number of policy, program, and case review 

changes. In response, Wisconsin and the city of Milwaukee conducted a 

one-time find-and-fix case sweep between March and September 2004. 

State and county case readers reviewed 14,000, or almost 25 percent of , 

their food stamp cases to identify and correct potential errors. The 

information gained from this exercise identified certain risks and errorprone cases that county officials have used to implement other changes. 

As a result, Milwaukee County officials said their error rate dropped from 

12.2 percent in March 2004 to 7.7 percent in June 2004. 

Page 27 GAO-05-245 Food Stamp Payment Accuracy 
Responding to Findings from 

Risk Assessments 

Once the QC review process is completed, penalties are assessed by law to 

high error rate states and FNS works with the states to correct the 

problems. Staff from the FNS regional offices work with the states on the 

development and implementation of reinvestment and corrective action 

plans that address specific threats and risks identified in risk assessments. 

These plans can vary depending upon the state’s systems and 

characteristics. Examples of activities included in the plans include 

training to address errors identified from QC and quality assurance 

reviews, developing online training curricula, and correcting errors 

generated by automated systems. 

States have also adopted practices to prevent, minimize, and address 

payment accuracy problems in response to the sources of error identified 

in risk assessments. States chose their varied practices in response to their 

unique characteristics, resources, and risks. 

• 	 Automated system changes. Michigan implemented changes in its 

automated system to help deal with problems resulting from failure to 

collect complete case information, particularly household income, during 

the application and recertification processes. The state’s automated 

system now prompts workers to obtain complete income documentation 

for cases with earned income 

• 	 Specialized change units. In June 2002, Los Angeles established 

30 specialized change units for its 30 district offices to address their failure 

to act on reported information, which was one of their largest sources of 

errors. FNS supports the adoption of change centers such as these based 

upon their reported outcomes in other states. Los Angeles County officials 

said the change unit workers now act upon reported case changes that 

previously had not been acted upon by caseworkers because of their large 

caseloads. 

• 	 Outreach to more stable food stamp population. New York has 

implemented a program to automatically certify eligible nonparticipating 

elderly Supplemental Security Income recipients for food stamps for 

4 years.27 In addition to reaching an underserved population without 

adding undue administrative burden on the local offices, officials believe 

that increasing the participation of these recipients could help reduce the 

27The Supplemental Security Income Program is designed to provide aged, blind, and 

disabled people who have little or no income with cash to meet basic needs for food, 

clothing, and shelter. 

Page 28 GAO-05-245 Food Stamp Payment Accuracy 
state’s error rate because this group is less error prone because of its 

stable income and circumstances. 

States also adopted various case review practices that would help them 

address a wide range of risks and problems. 

• 	 Supervisory review of cases. Several states have begun to require local 

supervisory reviews of cases to detect and correct errors caused by 

misapplication of food stamp policies or workers failing to act on reported 

information. Some states require that all cases be reviewed, while others 

target error-prone cases or a certain number of cases per worker. 

• 	 Targeted local office reviews. Some states have used contractors or 

have established their own teams to target high error rate offices for 

improvement. Michigan recently started using technical assistance teams 

to observe the local office’s processes and make recommendations for 

improvement. 

• 	 Error review panels. Some of our review states have also established 

panels to review errors discovered through the QC process. New Jersey 

established such a panel, consisting of system, policy and QC staff. This 

panel reviews all errors, challenges some that it believes have been 

inaccurately classified and develops corrective actions to address the root 

causes of the errors. The results of the reviews can then be communicated 

to all local offices. For example, as a result the panel’s finding that 

computing utility bill deductions was a source of payment errors, the state 

implemented a mandatory standard utility allowance policy to reduce this 

type of error. 

Many of the error reduction practices employed by the states in our review 

focused primarily on agency-caused rather than client-caused errors. Many 

state officials we spoke with believe that states should not be held 

accountable for participant-caused errors, such as failure to report 

information, because the state cannot control participants’ behavior. 

However, FNS officials believe that states can reduce participant-caused 

errors by better using computer matching of state data sources and other 

outside sources of data, improving interviewing techniques to collect all 

relevant information and identify discrepancies, and educating clients 

about their responsibilities. 

In addition to taking the above steps focused specifically on decreasing 

the error rate, FNS has made and advocated for a number of program and 

policy changes designed primarily to address other issues, such as 

Page 29 GAO-05-245 Food Stamp Payment Accuracy 
program participation, which have also helped reduce payment errors. 

FNS believes that serving eligible low-income families, particularly 

working poor families, is imperative to the success of welfare reform and 

the nutritional well-being of eligible persons. However, because the 

income and deductions for working poor families tend to be volatile, these 

households are more error prone, and their participation could increase 

the error rates of states trying hardest to serve them and thus discourage 

states from reaching out to these families. In response, FNS raised the 

error tolerance level in fiscal year 2000 from $5 to $25 for monthly food 

stamp payments for all cases. This change exempted smaller errors that 

had been counted in the past. FNS estimated that this change would have 

reduced the nationwide error rate by 0.66 percentage points if it had been 

implemented in the previous fiscal year. 

In addition, FNS and Congress have made several options available to the 

states to simplify the application and reporting process. These 

simplification measures are designed, in part, to reduce the administrative 

burden on both caseworkers and participants and thus promote higher 

participation in the program. One option in particular reduces the 

frequency with which households with earned income must report 

changes. Prior to this simplified reporting option, participants were 

required to frequently report changes in their circumstances. Under the 

simplified reporting rule issued in November 2000, most households need 

only report changes between certification periods if their new household 

income exceeds 130 percent of the federal poverty level. 

This simplified reporting option can reduce a state’s error rate as well. 

Absent simplified reporting, certain unreported or undetected changes 

between certification periods would be considered an error. Minimizing 

the number of income changes that must be reported between 

certifications can help reduce errors associated with caseworker failure to 

act as well as participant failure to report changes, and income-related 

errors account for more than half of all payment errors. 

Essentially, this simplification option redefines the threshold for what is 

considered an error. This type of change can result in an increase in 

program benefits paid out, such as when participants experience an 

increase in income between certification periods that need not be reported 

until the next certification under the simplified requirements. In 2000, FNS 

estimated the additional cost to the program to be approximately 

$51 million in fiscal year 2004 affecting nearly 1.5 million households per 

month. By expanding this option in the 2002 Farm Bill beyond earned 

income households to any and all households that can be asked to report 

Page 30 GAO-05-245 Food Stamp Payment Accuracy 
Monitoring and Promoting 

Performance 

periodically, an FNS official said Congress had endorsed the idea of 

making the program more user friendly to working families. Since the 2000 

estimate, program participation has grown significantly, but FNS has not 

completed a more recent estimate of the additional cost. Moreover, the 

possible savings and efficiencies gained in program administration have 

not been quantified. 

Most of our review states have adopted some form of simplified reporting 

to help them better serve working families, permit greater program 

participation, and address the errors associated with frequent change 

reporting. Nationwide, FNS reported that as of September 2004, 41 states 

and the Virgin Islands had adopted some form of simplified reporting. 

FNS has taken many actions to track the success of improvement 

initiatives and to provide the information needed to facilitate program 

improvement. FNS managers use data generated from the QC system as 

well as the results of their own monitoring activities to track the states’ 

performance over time. FNS regional offices annually review state agency 

operations to, among other things, confirm that problems in program 

operations are being identified, properly analyzed, and resolved. Where 

applicable, the regional office also monitors the states’ implementation of 

corrective action plans. FNS, in turn, requires states to perform 

management evaluations to monitor whether adequate corrective action 

plans are in place at local offices to address the causes of persistent errors 

and deficiencies. To monitor corrective actions identified through the 

management evaluations, FNS suggests that states review a sample of case 

records containing actions that are error prone. 

In addition, in November of 2003, FNS created a Payment Accuracy 

Branch at the national level to work with FNS regions to suggest policy 

and program changes and to monitor state performance. The branch 

facilitates a National Payment Accuracy Workgroup with representatives 

from each FNS regional office and headquarters who use QC data to 

review and categorize state performance into one of three tiers.28 FNS has 

recommended a specific level of increasing intervention and monitoring 

approaches for each tier as error rates increase, and the FNS regional 

28Tier 1 states have an error rate under 6 percent, and tier 2 states have an error rate of 

6 percent or greater but do not fall into tier 3. States are assigned to tier 3 when the lower 

limit of their error rate estimate at the 90 percent confidence level is higher than 

105 percent of the national error rate estimate. 

Page 31 GAO-05-245 Food Stamp Payment Accuracy 
offices report to headquarters on both state actions and regional 

interventions quarterly. 

FNS also provides and facilitates the exchange of information gleaned 

from monitoring by 

• 	 publishing a periodic guide to highlight the practices states are using to 

address specific problems;

29 

• 	 sponsoring national and regional conferences and best practices 

seminars; 

• training state QC staff; 

• 	 providing state policy training and policy interpretation and guidance; 

and 

• supporting adoption of program simplification options. 

Once promising state practices have been identified, FNS also provides 

funding to state and local food stamp officials to promote knowledge 

sharing of good practices. Oregon officials said FNS provided state 

exchange funds for them to visit Kentucky, Indiana, and Arizona—three 

states that had effective systems for monitoring performance at the local 

management and worker level. FNS also provided state exchange funds 

for Oregon officials to meet several times with officials from Idaho and 

Alaska to discuss common problems they faced trying to reduce payment 

errors and to generate solutions. In fiscal year 2004, FNS provided 

$612,000 for states to conduct state exchange visits. Officials from most of 

our review states found this program to be particularly helpful to their 

efforts to improve program performance. 

States are also using information generated by the QC system to track the 

results of their policy and program changes over time and communicate 

timely operational information to local offices. Information gleaned from 

monitoring can help inform their ongoing risk assessments. States are also 

promoting knowledge sharing of promising practices. These practices 

include 

• 	 preparing reports detailing causes and sources of errors for the local 

offices and publishing and distributing monthly error rates for all local 

offices; 

29U.S. Department of Agriculture, Food and Nutrition Service, Payment Accuracy in the 

Food Stamp Program (Alexandria, Va.: September 2004). 

Page 32 GAO-05-245 Food Stamp Payment Accuracy 
• 	 transmitting the results of statewide error review panels on the source 

and causes of errors to local offices, along with suggested corrective 

actions; 

• 	 sponsoring statewide QC meetings and state best practices conferences 

for local offices to discuss error rate actions taken and common 

problems; and 

• sponsoring local office participation in FNS regional conferences. 

Despite FNS and state mechanisms used to track the initiatives and share 

promising practices, there are no data available on which initiatives are 

most cost-effective. FNS’s primary focus has been on monitoring progress 

in reducing error rates, which can help ensure eligible households receive 

the correct benefits and maintain public support for the program. Even so, 

from fiscal year 2001 to 2004, the annual administrative cost per 

participant has fallen from $129 to $99 per participant while program 

participation has increased. It is possible that some states gained 

efficiencies from simplified reporting. However, FNS has not studied the 

cost-effectiveness of this or other measures and thus cannot share this 

type of information with the states. 

States Are Using a 

Combination of 

Approaches to Address 

Payment Errors, Making It 

Difficult to Determine the 

Effectiveness of Specific 

Practices 

Every state we surveyed has put into place a combination of approaches 

to address the key components of internal control, and the practices states 

adopted under each approach varied among them. For example, in 

California, state and local officials employed a combination of practices 

under each internal control component over the last several years to bring 

about their improved error rate (see fig. 6). 

Page 33 GAO-05-245 Food Stamp Payment Accuracy 
Figure 6: California Used a Combination of Internal Control Practices to Reduce 

Payment Error 

Under the threat of a $61 million penalty for its fiscal year 2002 error rate, the state 

and counties adopted a combination of approaches and practices to address 

payment error. 

To increase the focus on accountability, state upper management made a firm 

commitment to place more emphasis on reducing errors in 2003 and expanded 

program oversight on multiple fronts. Officials also posted error rate targets in 

each local office. 

To assess risk, that is, to identify areas for improvement, officials expanded the 

case sampling requirements for their largest 19 counties and formed a panel to 

analyze errors identified in the QC process. The panel officials discussed ways 

to avoid that type of error in the future and challenged cases in which they did 

not agree with the error designation. 

To respond to findings from risk assessments, state officials hired a contractor to 

perform detailed program assessments, identify weaknesses, and provide QC 

training in some of their larger counties with high error rates. State officials also 

cited the multiple best practices seminars and conferences sponsored by FNS 

and the state as important practices to promote knowledge sharing of good 

practices as factors in their improvement. The state also moved from monthly 

reporting to quarterly reporting in June 2004. 

To monitor and promote performance, state officials are preparing detailed error 

analyses reports for the counties to help them home in on specific types of 

payment errors and are conducting 25 management evaluation reviews focusing 

on counties with the highest food stamp error rates. 

Los Angeles County, which accounts for 40 percent of the state’s caseload, also 

adopted multiple approaches to address payment error. The county began its own 

quality assurance case review, in which it samples 2,800 cases per month so it can 

develop an error rate for each of its 30 district offices. County officials have set a 

94 percent payment accuracy goal for each district office, and they promote 

accountability at this level by publishing the results for each district office monthly. 

In addition, the county implemented change centers in each district in June 2002 to 

help reduce caseworkers’ failure to act on changes. 

Previous to these changes, California had the highest payment error rate in the 

country. State officials credit the adoption of these and other program changes as 

the reason for their dramatic error rate decreases. The rate dropped from 17.37 

percent in fiscal year 2001 to a state-reported error rate of 5.45 percent for fiscal 

year 2004 at the same time as the number of cases increased by 17 percent. 

Source: GAO analysis. 

Page 34 GAO-05-245 Food Stamp Payment Accuracy 
Because many states have adopted multiple error reduction practices, 

officials we spoke with said it is difficult to isolate the results of individual 

practices, particularly when other program and economic changes are 

occurring simultaneously. State officials point to their low or dropping 

error rates as evidence that, collectively, their new practices are having a 

positive impact. However, they have little data to determine which 

practices have been most successful or cost-effective. 

Despite the lack of data, state officials citied various practices that they 

believe have worked well in their state. For example, officials in Michigan 

and New York believe new automated processes are their most effective 

practices. Michigan food stamp officials cited targeted local office reviews 

as another effective strategy for error reduction. Mississippi food stamp 

officials believe their required supervisory review of cases has been the 

most effective practice. California, South Dakota, and Texas also cited 

supervisory reviews as one of their most effective practices. 

As a result of unique circumstances in each state, some practices that may 

prove effective in one state would not be effective or feasible in another. 

For example, New Jersey food stamp officials credit their 2001 

implementation of the simplified reporting option for earned income cases 

with being the most significant reason for the decline in their error rates. 

However, officials in South Dakota continue to require monthly reporting 

because they have been able to keep up with the reported changes. They 

believe this requirement is primarily responsible for its error rate, which is 

the lowest in the nation. Monthly reporting requires participants to report, 

and caseworkers to act, on case changes once per month, rather than 

relying on participants to report key changes and workers to react to the 

reported change. Monthly reporting requires significantly more work for 

both the caseworkers and participants, and other states with larger 

caseloads have said they do not have adequate resources to sustain this 

more labor-intensive approach. 

The success of new practices, however, can be undermined if the changes 

do not receive adequate management attention or are not effectively 

implemented. For example, Los Angeles established 30 specialized change 

units. County officials said these units helped reduce one of their largest 

sources of errors, caseworkers’ failure to act. On the other hand, 

Milwaukee’s change units have not been as effective in reducing the error 

rate as officials hoped because they have not been able to staff the center 

appropriately, according to county officials. They designed their change 

units on a model implemented in Atlanta, Georgia. The Atlanta model calls 

for 10 staff per 10,000 calls, and Milwaukee has about 7 staff per 

Page 35 GAO-05-245 Food Stamp Payment Accuracy 
20,000 calls. As a result, clients wait on the phone for up to 20 minutes, 

and some hang up before their changes can be reported. 

Similarly, Wisconsin state and Milwaukee food stamp officials said their 

find-and-fix case sweep program conducted between March and 

September 2004 was a particularly effective practice for reducing payment 

errors. Milwaukee officials believe the case sweep was largely responsible 

for their error rate dropping from 12.2 percent in March 2004 to 

7.7 percent in June 2004, and they expect to see long-term effects as a 

result of their workers learning from the errors identified using this 

practice. However, Michigan tried a similar program but did not have 

comparable results. State officials said using this method did not reduce 

their error rate because the state and counties did not have enough staff to 

conduct a sufficient number of reviews. Los Angeles County officials said 

they also tried and abandoned a similar approach in 2001 because they did 

not have sufficient staff to correct the errors that were identified. 

Concluding 

Observations 

The Food Stamp Program has seen a significant decline in the national 

error rate to a record low in 2003. If the 1999 error rate was in effect in 

2003, the program would have made payment errors totaling over 

$2.1 billion rather than the $1.4 billion it experienced. Despite the many 

challenges states identified, a number of them have significantly lowered 

their error rates even while caseloads have continued to rise. However, 

some states are having more difficulty lowering their rates, and improper 

food stamp payments continue to account for a large amount of money— 

$1.4 billion in 2003. 

It is not completely clear why some states have been more successful at 

lowering their error rates than others. Rather than implementing one 

specific strategy, the nine states we reviewed have each implemented a 

package of changes in response to the unique circumstances in the state. 

Even those states we selected because of consistently high error rates 

have implemented multiple strategies and expect to see error rate 

decreases this year. However, although it is difficult to determine which 

actions are most likely to succeed in particular circumstances, we found 

examples of strategies that did not succeed because they lacked adequate 

management attention or were not effectively implemented. 

Future similar error rate reductions may prove challenging. The three 

major causes of errors have remained the same over time and are closely 

linked to the complexity of program rules and reporting requirements. As 

long as eligibility requirements remain so detailed and complex, certain 

Page 36 GAO-05-245 Food Stamp Payment Accuracy 
caseworker decisions will be at risk of error. Moreover, participant-caused 

errors, which constitute one-third of the overall national errors, are 

difficult to prevent and identify. 

Attention from top USDA management as well as continued support and 

assistance from FNS will likely continue to be important factors in further 

reductions. In addition, if error rates continue to decrease, this trend will 

continue to put pressure on states to improve because penalties are 

assessed using the state’s error rate as compared with the national 

average. However, given the size of the Food Stamp Program, the costs to 

administer it, and the current federal budget deficit, achieving program 

goals more cost-effectively may become more important. FNS and the 

states will continue to face a challenge in balancing the goals of payment 

accuracy, increasing program participation rates, and the need to contain 

program costs. 

We provided a draft of this report to the U.S. Department of Agriculture 

for review and comment. On April 7, 2005, we met with FNS officials to get 

their comments. The officials said they agreed with our findings and 

conclusions. FNS also provided us with technical comments, which we 

incorporated where appropriate. 

Agency Comments 

We are sending copies of this report to the Secretary of Agriculture, 

appropriate congressional committees, and other interested parties. We 

will also make copies available to others upon request. In addition, the 

report will be available at no charge on GAO’s Web site at 

http://www.gao.gov. Please contact me at (202) 512-7215 if you have any 

questions about this report. Other major contributors to this report are 

listed in appendix III. 

Sigurd R. Nilsen, Director 

Education, Workforce, and 

Income Security Issues 

Page 37 GAO-05-245 Food Stamp Payment Accuracy 
Appendix I: Methodology for Determining the 

Causes of Food Stamp Payment Errors for 

Fiscal Years 1999 through 2003 

To determine the causes of food stamp payment errors for fiscal years 

1999 through 2003, we analyzed the Food and Nutrition Service’s (FNS) 

quality control (QC) system data of active cases used in error rate 

calculations. State officials draw monthly samples of cases—which are at 

the household level—and review them to determine the extent to which 

the households received benefits to which they were entitled. The results 

of these reviews are included in FNS’s QC database, and weighted 

analyses of these data produce nationally representative results. 

We constructed a database for each year from 1999 through 2003 that 

contained a subset of the QC variables relevant to our analysis. For the 

1999-2002 databases, we included the reason for error and type of error 

variables from the database we obtained directly from FNS and the review 

finding, amount of error, and weight variables from an FNS QC database 

maintained by Mathematica Policy Research, Inc., and made available to 

the public via Mathematica’s Web site. For the 2003 data, we only used the 

FNS QC database maintained by Mathematica and made available via its 

Web site because it contained all the variables we needed. In addition, for 

each data set, we created a new variable categorizing the numerous 

reasons for error in the agency-or-client (1) variable for the most 

significant error to reflect, on a very general level, whether the error was 

agency- or-client caused. Likewise, we created a variable categorizing the 

numerous types of error in the element (1) code variable as nonfinancial, 

resources, income, deductions, or other for the most significant error. We 

generated weighted frequencies for the reason, type, and review finding 

variables for active cases that were used in calculating the error rate. 

Sampling errors for these weighted tabulations were estimated using the 

methodology provided in Appendix E of Characteristics of Food Stamp 

Households: Fiscal Year 2003, FNS Report Number FSP-04-CHAR. We also 

created weighted average dollar amounts of error by case review finding 

(e.g., overissuance or underissuance) and weighted frequencies for the 

intersection of reason for error and type of error. 

To assess the reliability of the data we used, we worked with FNS staff to 

obtain and understand the QC data and relied on FNS and Mathematica 

documentation on the datasets, and FNS and Mathematica reports based 

on these data. We ensured that we reliably downloaded the Mathematica 

QC data from the Web and correctly read in FNS’s raw QC data that FNS 

provided to us by comparing the number of records in each database with 

the number of records reported in FNS and Mathematica documentation. 

In addition, to ensure the accuracy of the computer programs we used to 

create and process the data, a review was made by a second GAO analyst. 

Page 38 GAO-05-245 Food Stamp Payment Accuracy 
Appendix I: Methodology for Determining the 

Causes of Food Stamp Payment Errors for 

Fiscal Years 1999 through 2003 

Through our assessment of the reliability of these data, we found that 

some variability exists in how states interpret and code the reason for 

error variable (i.e., whether error was client- or agency-caused). FNS 

stated that no quantitative analysis of the differences across states has 

been made. In 2003, FNS implemented guidelines to ensure greater 

consistency in state interpretations of the reasons for error (i.e., whether 

the reason for error was client- or agency-caused). Prior to 2003, interstate 

variation is believed to be greater than intrastate variation in these 

interpretations. Consistency in the error amount is expected to be a lesser 

problem since it is based on an established formula. We also reviewed 

reports including previous GAO efforts that studied QC processes and 

statistical properties. On the basis of the collective information and 

findings of our reliability assessment, we determined the data are 

sufficiently reliable for our analysis of the causes of food stamp payment 

errors. 

Page 39 GAO-05-245 Food Stamp Payment Accuracy 
Appendix II: Food Stamp Combined Error 

Rates by State for Fiscal Years 1999 to 2004 

State 1999 2000 2001 2002 2003 2004a 

Alabama 11.29 11.37 9.76 8.74 8.02 

Alaska 15.94 7.24 9.69 10.99 13.88 

Arizona 6.93 5.61 5.79 5.27 5.83 

Arkansas 4.54 4.03 3.24 4.29 4.02 

California 11.34 13.99 17.37 14.84 7.96 

Colorado 9.02 7.77 8.53 9.66 7.40 

Connecticut 13.90 9.31 9.86 11.70 8.77 

Delaware 16.92 12.53 10.02 8.46 5.38 

District of Columbia 12.12 10.62 11.38 8.75 8.97 

Florida 9.43 9.40 9.80 9.61 7.93 

Georgia 10.86 8.61 6.42 6.73 5.15 

Guam 10.14 10.56 9.22 6.05 7.04 

Hawaii 6.82 7.74 6.53 5.03 4.78 

Idaho 10.94 9.71 7.41 9.04 11.31 

Illinois 14.79 9.26 8.19 8.75 4.87 

Indiana 8.11 6.86 6.83 8.31 10.00 

Iowa 9.27 7.14 7.05 6.44 5.23 

Kansas 8.98 9.88 10.37 11.70 10.45 4.65 

Kentucky 7.72 5.81 7.53 7.71 6.32 5.39 

Louisiana 7.35 5.66 5.78 5.78 5.79 4.74 

Maine 8.79 9.25 8.49 6.26 13.29 10.38 

Maryland 13.62 11.06 8.92 8.80 7.23 5.36 

Massachusetts 9.34 8.63 8.50 8.40 4.99 4.58 

Michigan 17.59 13.28 13.93 14.10 11.10 6.73 

Minnesota 6.68 3.58 5.22 5.73 7.96 6.35 

Mississippi 4.91 4.69 3.47 4.39 4.07 5.55 

Missouri 8.58 8.06 10.21 9.77 6.75 7.16 

Montana 8.10 8.48 8.15 8.18 5.78 4.33 

Nebraska 14.22 10.16 8.44 7.02 7.24 5.48 

Nevada 8.14 5.11 8.00 7.59 8.25 7.30 

New Hampshire 12.86 10.26 10.99 12.03 7.52 6.98 

New Jersey 12.93 12.88 7.97 4.08 2.43 2.62 

New Mexico 10.39 8.11 6.65 6.71 6.16 5.41 

New York 10.47 12.35 8.61 7.75 5.88 4.12 

North Carolina 9.25 6.93 6.35 4.70 4.94 3.21 

Page 40 GAO-05-245 Food Stamp Payment Accuracy 

7.82 

6.71 

6.47 

5.29 

5.45 

2.94 

4.60 

6.16 

5.51 

5.54 

6.02 

7.68 

4.28 

9.19 

5.54 

5.74 

5.33 
Appendix II: Food Stamp Combined Error 

Rates by State for Fiscal Years 1999 to 2004 

State 1999 2000 2001 2002 2003 2004a 

North Dakota 8.03 7.04 5.96 6.14 4.85 4.09 

Ohio 8.44 7.96 8.48 6.50 6.61 7.74 

Oklahoma 11.88 7.05 8.23 7.94 8.98 

Oregon 10.50 10.15 9.76 11.07 13.00 

Pennsylvania 10.79 8.19 8.29 9.49 8.21 

Rhode Island 7.05 8.74 5.56 10.21 8.94 12.60 

South Carolina 5.79 4.47 4.62 4.40 4.94 

South Dakota 2.19 1.18 2.11 2.12 1.16 

Tennessee 8.64 5.71 6.22 7.02 7.20 

Texas 4.56 4.14 3.73 4.85 3.29 

Utah 12.55 14.43 9.04 6.60 5.00 

Vermont 12.09 10.80 10.95 7.68 8.52 

Virgin Islands 5.85 6.50 4.70 5.72 6.88 

Virginia 11.85 8.66 8.07 6.74 5.46 

Washington 8.55 8.20 8.53 8.16 6.28 

West Virginia 8.88 5.09 6.78 7.13 6.21 

Wisconsin 13.42 12.72 13.14 12.69 9.32 

Wyoming 2.91 4.01 3.04 3.29 4.23 


National average 9.86 8.91 8.66 8.26 6.63 n/a


Source: the Food and Nutrition Service. 

a

These are state-reported rates. FNS has not yet adjusted the rates to reflect the final results of their 

review. 

Page 41 GAO-05-245 Food Stamp Payment Accuracy 

5.83 

7.81 

3.93 

6.17 

1.93 

6.39 

4.06 

3.50 

4.91 

3.29 

6.40 

7.40 

6.25 

6.57 

4.39 
Appendix III: GAO Contacts and 

Acknowledgments 

GAO Contacts 	 Kay Brown, (202) 512-3674, brownke@gao.gov 

Kevin Kumanga (202) 512-4962, kumangak@gao.gov 

Acknowledgments 	 Cathy Roark and Luana Espana also made significant contributions to this 

report. In addition, Carl Barden, Evan Gilman, and Kevin Jackson 

produced our estimates of the causes of payment error, and Corinna 

Nicolaou assisted in the message and report development. 

Page 42 GAO-05-245 Food Stamp Payment Accuracy 
Related GAO Products 


Food Stamp Program: Farm Bill Options Ease Administrative Burden, 

but Opportunities Exist to Streamline Participant Reporting Rules 

among Programs. GAO-04-916. Washington, D.C.: September 16, 2004. 

Food Stamp Program: Steps Have Been Taken to Increase Participation 

of Working Families, but Better Tracking of Efforts Is Needed. 

GAO-04-346. Washington, D.C.: March 5, 2004. 

Welfare Reform: Information on Changing Labor Market and State 

Fiscal Conditions. GAO-03-977. Washington, D.C.: July 15, 2003. 

Food Stamp Employment and Training Program: Better Data Needed to 

Understand Who Is Served and What the Program Achieves. GAO-03-388. 

Washington, D.C.: March 12, 2003. 

Financial Management: Coordinated Approach Needed to Address the 

Government’s Improper Payments Problems. GAO-02-749. Washington, 

D.C.: August 9, 2002. 

Food Stamp Program: States’ Use of Options and Waivers to Improve 

Program Administration and Promote Access. GAO-02-409. Washington, 

D.C.: February 22, 2002. 

Means-Tested Programs: Determining Financial Eligibility Is 

Cumbersome and Can Be Simplified. GAO-02-58. Washington, D.C.: 

November 2, 2001. 

Executive Guide: Strategies to Manage Improper Payments: Learning 

From Public and Private Sector Organizations. GAO-02-69G. 

Washington, D.C.: October 2001 

Food Stamp Program: States Seek to Reduce Payment Errors and 

Program Complexity. GAO-01-272. Washington D.C.: January 19, 2001. 

Internal Control: Standards for Internal Control in the Federal 

Government. GAO/AIMD-00-21.3.1. Washington, D.C.: November 1999. 

Food Stamp Program: States Face Reduced Federal Reimbursements for 

Administrative Costs. GAO/RCED/AIMD-99-231. Washington D.C.: July 

23, 1999. 

(130368) Page 43 GAO-05-245 Food Stamp Payment Accuracy 
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