United States Government Accountability Office

GAO Report to the Chairman, Subcommittee 

on Human Resources, Committee on 

Ways and Means, House of 

Representatives 

HUMAN SERVICE 

PROGRAMS 

Demonstration 

Projects Could 

Identify Ways to 

Simplify Policies and 

Facilitate Technology 

Enhancements to 

Reduce Administrative 

Costs 

September 2006 

 

GAO-06-942 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

September 2006

HUMAN SERVICE PROGRAMS 

Demonstration Projects Could Identify 

Ways to Simplify Policies and Facilitate 

Technology Enhancements to Reduce 

Administrative Costs 

Highlights of GAO-06-942, a report to 

Chairman, Subcommittee on Human 

Resources, Committee on Ways and 

Means, House of Representatives 

The cost of administering human 

service programs has been a longstanding concern among policy 

makers interested in ensuring that 

federal programs are run in a costefficient manner so that federal

funds go directly to helping 

vulnerable people. Little is known 

about how administrative costs 

compare among programs, or 

about opportunities to better 

manage these costs. GAO looked at

(1) how administrative costs are 

defined and what rules govern 

federal and state participation in 

funding these costs; (2) what is 

known about the amounts of 

administrative spending and how 

they have changed over time; and 

(3) what opportunities exist at the 

federal level to help states balance

cost savings with program 

effectiveness and integrity. GAO’s

review included seven programs:

Adoption Assistance, Child Care 

and Development Fund (CCDF),

Child Support Enforcement (CSE), 

food stamps, Foster Care, 

Temporary Assistance for Needy 

Families (TANF), and 

Unemployment Insurance (UI). To 

address the questions, GAO 

reviewed laws, analyzed spending

data, and visited five states.

What GAO Recommends

To identify ways to reduce

administrative costs, Congress 

should consider authorizing state 

and local demonstration projects 

designed to simplify eligibility

determination and other processes 

for federal human service 

programs. None of the responsible 

agencies commented on the 

recommendation to Congress. 

The statutes and regulations for the seven programs define administrative

costs differently, even though many of the same activities are performed to 

administer the programs. The laws for each program also include different 

mechanisms for state and federal participation in funding administrative 

costs, including matching rates, block grants, and spending caps. 

The seven programs combined spent $21 billion on administration, as 

defined in law, making up about 18 percent of total program spending in 

fiscal year 2004. However, amounts varied widely across the programs and 

states. Administrative spending varied from 2 percent in CCDF to 58 percent 

in Foster Care, with the exception of CSE in which all program spending is 

considered administrative. Between fiscal years 2000 and 2004, 

administrative spending increased in five of the seven programs, generally at 

a lower rate than total program spending. 

Fiscal Year 2004 Combined Federal and State Administrative and Other Spending 

(and Administrative Spending as a Percentage of Total Spending) 

0 5 10 15 20 25 30 35 40

UI

TANF

Foster Care

Food Stamp

CSE

CCDF

Adoption

Assistance

Program

Dollar in billions (percent)

Source: GAO analysis of data from HHS, DOL, and USDA.

(20.1)

(2.3)

(100)

(17.3)

(58.1)

(7.7)

(6.8)

Adminstrative spending

All other spending (non-administrative)

The federal government may help balance administrative cost savings with 

program effectiveness and integrity by simplifying policies and facilitating 

technology improvements. Simplifying policies—especially those related to 

eligibility determination processes and federal funding structures—could 

save resources, improve productivity, and help staff focus more time on 

performing essential program activities. By helping states facilitate 

technology enhancements across programs, the federal government can help 

streamline processes and potentially reduce long-term costs. Over the past 

20 years, many attempts to streamline processes across programs have had 

limited success due, in part, to the considerable challenges that streamlining 

program processes entail. GAO believes one challenge in particular—the 

lack of information on the effect streamlining efforts might have on program 

and administrative costs—is thwarting progress in this area. 

www.gao.gov/cgi-bin/getrpt?GAO-06-942.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Cynthia 

Fagnoni at (202) 512-7215 or 

fagnonic@gao.gov. 
Contents 

Letter 1

Results in Brief 3 

Background 6

Although Similar Types of Administrative Activities Occur across 

Programs, Definitions of Administrative Costs and the Federal 

Funding Role Vary 10 

Administrative Spending Varied across Programs but Generally 

Increased at a Lower Rate Than Total Spending 17 

The Federal Government May Help Balance Administrative Cost 

Savings with Program Effectiveness and Integrity by Simplifying 

Policies and Facilitating Technology Enhancements 28 

Conclusion 36

Matter for Congressional Consideration 38 

Agency Comments 39 

Appendix I Objectives, Scope, and Methodology 41 

Appendix II Administrative Cost Activities Recognized by 

Program Statutes and Regulations 44 

Appendix III Comments from the Department of Health and 

Human Services 48 

Appendix IV GAO Contact and Staff Acknowledgments 50 

Related GAO Products 51 

Page i GAO-06-942 Human Services Programs
Tables 

Table 1: Description of the Seven Selected Programs 7 

Table 2: Fiscal Year 2004 Federal and State Program Spending and 

Agencies Responsible for Administering the Seven 

Selected Programs 8 

Table 3: Level of Government Responsible for Design and Funding 

of the Seven Selected Programs 9 

Table 4: Rules Governing State and Federal Funding of State 

Administrative Costs 15 

Figures 

Figure 1: Fiscal Year 2004 Combined Federal and State 

Administrative and Other Spending in Billions 

(and Administrative Spending as a Percentage of 

Total Spending) 19 

Figure 2: Fiscal Year 2004 State and Federal Shares of 

Administrative Spending 21 

Figure 3: Distribution of Combined Federal and State 

Administrative Spending by States for Fiscal Year 2004 

(as a Percentage of Total Program Spending) 23 

Figure 4: Combined Federal and State Administrative Spending, 

Fiscal Years 2000 to 2004 (Nominal Dollars) 24 

Figure 5: Percent Change in Combined Federal and State 

Administrative Spending, Fiscal Years 2000 to 2004 25 

Figure 6: Federal and State Administrative Spending as a 

Percentage of Total Program Spending, Fiscal Years 

2000 to 2004 27 

Page ii GAO-06-942 Human Services Programs
Abbreviations 

ACF Administration for Children and Families 

AFDC Aid to Families with Dependent Children 

CalWIN CalWORKs Information Network 

CCDBG Child Care and Development Block Grant 

CCDF Child Care and Development Fund 

CSE Child Support Enforcement 

DOL U.S. Department of Labor 

FNS Food and Nutrition Service 

FY fiscal year 

HHS U.S. Department of Health and Human Services 

IT Information Technology 

LIHEAP Low-Income Home Energy Assistance Program 

N/A not applicable 

OMB Office of Management and Budget 

SCHIP State Children’s Health Insurance Program 

SSA Social Security Administration 

SSI Supplemental Security Income 

TANF Temporary Assistance for Needy Families 

UI Unemployment Insurance 

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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other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 

Page iii GAO-06-942 Human Services Programs
United States Government Accountability Office

Washington, DC 20548 

September 19, 2006 

The Honorable Wally Herger 

Chairman 

Subcommittee on Human Resources 

Committee on Ways and Means 

House of Representatives 

The Honorable Wally Herger 

Chairman 

Subcommittee on Human Resources 

Committee on Ways and Means 

House of Representatives 

Dear Mr. Chairman: 

The federal government spends hundreds of billions of dollars annually on 

programs that support vulnerable people. While most of this money is 

used for direct benefits and services, such as cash assistance or child care 

services, a portion of the money also goes toward the cost of 

administering the programs. Spending on administration has been a longstanding concern among policy makers interested in ensuring that federal 

programs are run in a cost-efficient manner so that federal funds go 

directly to helping vulnerable people. While each of the human service 

programs typically has some information available on the costs associated 

with administrative activities, little is known about how these 

administrative costs compare among the programs and whether 

opportunities exist to better manage these costs at the federal level. The 

importance of administering federal programs in an efficient manner is 

heightened by the fiscal challenges facing the nation and the need to 

update the federal government’s programs and priorities to meet current 

and future challenges. 

The federal government spends hundreds of billions of dollars annually on 

programs that support vulnerable people. While most of this money is 

used for direct benefits and services, such as cash assistance or child care 

services, a portion of the money also goes toward the cost of 

administering the programs. Spending on administration has been a longstanding concern among policy makers interested in ensuring that federal 

programs are run in a cost-efficient manner so that federal funds go 

directly to helping vulnerable people. While each of the human service 

programs typically has some information available on the costs associated 

with administrative activities, little is known about how these 

administrative costs compare among the programs and whether 

opportunities exist to better manage these costs at the federal level. The 

importance of administering federal programs in an efficient manner is 

heightened by the fiscal challenges facing the nation and the need to 

update the federal government’s programs and priorities to meet current 

and future challenges. 

Both federal agencies and states play important roles in administering and 

funding many of the federal programs that support vulnerable people. 

These programs may have different goals, but all were established to assist 

vulnerable populations, and as such, the federal and state administrators 

are tasked with the common goal of serving those eligible for program 

benefits and services. Likewise, federal and state administrators must

ensure that funds allocated for program benefits and services are provided 

only to those who are eligible. 

Both federal agencies and states play important roles in administering and 

funding many of the federal programs that support vulnerable people. 

These programs may have different goals, but all were established to assist 

vulnerable populations, and as such, the federal and state administrators 

are tasked with the common goal of serving those eligible for program 

benefits and services. Likewise, federal and state administrators must

ensure that funds allocated for program benefits and services are provided 

only to those who are eligible. 

To better understand these issues, we examined: (1) how administrative 

costs are defined in selected programs and what rules govern federal and

state participation in funding these costs; (2) what is known about the 

amounts of federal and state administrative spending for selected 

programs and how they have changed over time; and (3) what 

To better understand these issues, we examined: (1) how administrative 

costs are defined in selected programs and what rules govern federal and

state participation in funding these costs; (2) what is known about the 

amounts of federal and state administrative spending for selected 

programs and how they have changed over time; and (3) what 

Page 1 GAO-06-942 Human Services Programs
opportunities exist at the federal level to help states balance cost savings 

with program effectiveness and integrity. As agreed with your office, we

focused our study on seven key programs: Adoption Assistance, Child 

Care & Development Fund (CCDF), Child Support Enforcement (CSE), the 

Food Stamp Program, Foster Care, Temporary Assistance for Needy 

Families (TANF), and Unemployment Insurance (UI). These programs are 

among the largest programs serving vulnerable populations and each has 

annual federal outlays of over $1 billion. Each of the programs also is 

funded in part through state contributions. 

To address all of our research questions, we interviewed federal officials 

from each of the programs and the Office of Management and Budget 

(OMB), and we conducted state and local interviews in California, 

Maryland, Michigan, Ohio, and South Carolina. We selected these states to 

provide a range of total program spending and share of spending on 

administration as well as a mixture of state and county administrative 

structures, urban and rural demographics, and geographic location. 

Although our selection includes a range of states, our findings are not 

generalizable beyond the states included in our study. In addition, to 

address our first research question, we reviewed laws and regulations on

definitions of administrative costs and federal-state participation in 

funding these costs for the selected programs. We also reviewed relevant 

circulars issued by the OMB. To address our second question, we analyzed 

administrative spending data, as defined for financial reporting purposes 

by program laws and regulations, for each program for fiscal years 

2000-2004, including federal and state shares of spending. Fiscal year 2004

data were the most recent data available for all seven programs at the time 

of our review. We assessed the reliability of the administrative spending 

data by interviewing (1) agency officials knowledgeable about the data 

and (2) state officials in the five states we visited knowledgeable about the 

data as reported to the federal government. We also reviewed state single 

audit reports and talked to state auditors in the states we visited to 

identify any known problems with the administrative spending data or the 

technology systems that store the data. Our reviews and discussions did 

not identify significant problems with the data. We determined that these 

data were sufficiently reliable for the purposes of this report. 

To address our third question, we interviewed federal officials from each 

of the programs and the OMB as well as state and local program officials 

about administrative costs, options for reducing costs while preserving 

services, and challenges to and consequences of these options. During the 

interviews we also inquired about any interactions between our key 

programs and other programs that support vulnerable people, including 

Page 2 GAO-06-942 Human Services Programs
Medicaid, the State Children’s Health Insurance Programs (SCHIP), the 

Low-Income Home Energy Assistance Program (LIHEAP), and housing 

programs. In addition, we interviewed state audit officials from the five 

states about any similar work they have conducted. We also reviewed our 

prior work related to this issue. 

We issued two related reports in June and July 2006 that focused on the

administrative costs of the Adoption Assistance and Foster Care programs 

(GAO-06-649, Foster Care and Adoption Assistance: Federal Oversight 

Needed to Safeguard Funds and Ensure Consistent Support for States’ 

Administrative Costs, June 2006) and the Child Support Enforcement 

program (GAO-06-491, Child Support Enforcement: More Focus on Labor 

Costs and Administrative Cost Audits Could Help Reduce Federal 

Expenditures, July 2006). We coordinated our data collection efforts for 

all three reports. Therefore, some of the information on the Child Support 

Enforcement, Adoption Assistance, and Foster Care programs in this 

report is drawn from work conducted for the earlier reports. For example, 

for this report, we supplemented our data collection efforts with 

administrative spending data collected for the other two reports as well as 

information collected from interviews conducted for the other reports. We 

also coordinated efforts to assess the reliability of the administrative 

spending data used in the three reports. 

We conducted our work between July 2005 and August 2006 in accordance 

with generally accepted government auditing standards. See appendix I for 

more details on our scope and methodology. 

The activities that are defined as administrative costs in statutes and 

regulations differ across the seven programs in our review, and the 

programs are subject to various federal funding rules and funding types. 

In the states we visited, state and local program officials conduct similar 

activities to operate each program, such as determining eligibility, 

monitoring program quality, and developing and maintaining information 

technology (IT) systems. However, for financial reporting purposes, these 

activities may be defined as administrative costs in one program but not in 

another, in accordance with federal statutes and regulations. For example, 

the TANF regulations and CCDF legislation defining administrative costs 

specifically exclude costs associated with providing direct program 

services, while Food Stamp legislation specifically includes the costs of 

providing direct program services such as certifying applicant households 

and issuing food stamp benefits as administrative costs. The statutes and 

regulations defining administrative costs differ across the programs in part 

Results in Brief 

Page 3 GAO-06-942 Human Services Programs
because these programs have evolved separately over time. The programs 

have different missions, priorities, services, and clients, and jurisdiction 

for these programs is spread among numerous congressional committees 

and federal agencies, each of which has a role in defining what is an 

administrative cost. In addition to differences in definitions of 

administrative costs, the laws for each program also include different 

mechanisms for state and federal participation in funding administrative 

costs, including specific matching rates, block grants, and spending caps. 

These funding mechanisms play a role in managing the federal 

government’s financial risk and can affect state spending decisions by 

providing financial incentives and funding restrictions. While funding 

mechanisms can create incentives for states to limit administrative 

spending, officials in each of the states we visited cautioned that if 

administrative spending is reduced too far, it can negatively affect client 

services. 

In recent years, combined federal and state administrative spending 

generally increased at a lower rate than the increase in total spending in 

five of the seven selected programs, but varied widely across programs. 

In fiscal year 2004, the seven programs combined spent $21 billion on 

administrative costs, as defined by each program’s statutes and 

regulations, amounting to about 18 percent of total program spending. 

The percentage spent on administration varied from 2 percent in CCDF, to 

58 percent in Foster Care, with the exception of CSE in which all program 

spending is considered administrative. Because of the differences in which 

activities are defined as administrative costs for financial reporting 

purposes, a program with high administrative spending is not necessarily 

less efficient than a program with low administrative spending. In recent

years, the amounts spent on administration increased in five of the seven

selected programs, but, in most cases, increased at a lower rate than total

program spending. As a result, the percentage spent on program 

administration declined in five of the programs. In addition, while there 

are limited federal data on what specific costs make up administrative 

spending, officials in the five states we visited reported that staff costs and 

IT were among the largest costs associated with running their programs. 

Officials reported that for some of the programs in our review, personnel 

costs may be higher than necessary, in part because of complex 

administrative processes and outdated information systems that require 

substantial staff time. 

The federal government may help balance long-term administrative cost 

savings with program effectiveness and integrity by simplifying policies 

and facilitating technology improvements. Simplifying policies—especially 

Page 4 GAO-06-942 Human Services Programs
those related to eligibility determination processes and federal funding 

structures—could save resources, improve productivity, and help staff 

focus more time on performing essential program activities, such as 

providing quality services and accurate benefits to recipients. For 

example, the Food and Nutrition Service (FNS) allows some states to use 

TANF, Medicaid, and Supplemental Security Income (SSI) income and 

resource definitions for purposes of determining Food Stamp Program 

eligibility. In addition, by helping states facilitate technology 

enhancements across programs, the federal government may help 

streamline processes and potentially reduce long-term costs. For example, 

by receiving verified electronic data from the Social Security

Administration (SSA), some states are able to determine SSI recipients’ 

eligibility for food stamp benefits without having to separately collect and 

verify applicant information. Officials told us that this arrangement saves 

administrative dollars and reduces duplication across programs while 

protecting program integrity. Together, simplified policies and improved 

technology could streamline administrative processes and potentially 

reduce administrative costs. We acknowledge that all levels of government

have attempted to streamline processes across human service programs 

for the past 20 years. However, many of these efforts have had limited 

success due, in part, to the considerable challenges that streamlining 

program processes entail, such as the challenge of achieving consensus 

among the numerous congressional committees and federal agencies 

involved in shaping human service program policies and a lack of 

information on how program changes would affect particular populations.

We believe one challenge in particular—the lack of information on the 

effect streamlining efforts might have on program and administrative 

costs—is thwarting progress in this area. 

We suggested in our prior work (GAO-02-58) in 2001 that Congress 

consider authorizing state and local demonstration projects designed to 

simplify and coordinate eligibility determination and other processes for 

federal human service programs. While both the House and Senate have 

considered proposals to authorize such demonstration projects, legislation 

was not enacted. We continue to believe that demonstration projects 

would provide more information on how streamlining processes may help 

reduce administrative costs and, further, believe that any projects should 

have an evaluation component to test the long-term cost-effectiveness of 

the projects. In commenting on the draft report, the U.S. Department of 

Health and Human Services (HHS) agreed with the report’s emphasis on 

the need for cost-effective administration of federal programs, FNS 

officials suggested we add more detailed information to the report in 

several areas, and the U.S. Department of Labor (DOL) provided only 

Page 5 GAO-06-942 Human Services Programs
technical comments. None of the agencies commented on our suggestion 

to Congress. 

The federal government funds a wide array of programs intended to 

provide benefits and services or both to individuals, families, and 

households needing financial assistance or other social supports. 

Representing a range of programs available through federal and state 

partnerships, the seven programs in this review have different goals and 

purposes, and, thus, provide a range of benefits and services to specific 

target populations. For example, the Food Stamp Program provides 

nutrition assistance to low-income individuals, while the CSE program 

helps custodial parents, regardless of income, collect child support 

payments from noncustodial parents.1

 Table 1 provides a brief description 

of each of the programs covered in this report. 

Background 

 1

 Noncustodial parents are those who do not have custody of their children.

Page 6 GAO-06-942 Human Services Programs
Table 1: Description of the Seven Selected Programs 

Program Description

Adoption Assistance The Adoption Assistance program, authorized under title IV-E of the Social Security Act, assists 

states in finding adoptive homes for eligible children with special needs. The program provides 

funds to states to assist in providing adoptive families with ongoing financial and medical

assistance for adopted children with special needs as well as funds to support staff training and 

administrative costs. 

CCDF CCDF, authorized by the Personal Responsibility and Work Opportunity Reconciliation Act of 

1996, assists low-income families, families receiving temporary public assistance, and those 

transitioning from public assistance in obtaining child care so that they can work or attend

training or education. With this block grant, states develop and pay for child care programs.

Within certain federal guidelines, states have discretion in deciding how these funds will support 

child care, who will be eligible, and what payment mechanism will be used.

CSE CSE is a joint federal and state partnership established in 1975 under title IV-D of the Social 

Security Act to ensure that parents financially support to their children. State CSE programs are 

primarily responsible for carrying out the basic activities for locating noncustodial parents, 

establishing paternity and support orders, and collecting and distributing child support payments. 

Although the states administer the child support enforcement program, the federal government 

plays a major role, which includes funding 66 percent of the program, establishing policies and 

guidance, and overseeing and monitoring state CSE programs’ compliance with federal 

requirements. 

Food Stamp Program The Food Stamp Program, established in 1964, is designed to provide basic nutrition to lowincome individuals and families in the United States by supplementing their income with benefits 

to purchase food. The federal government pays the full cost of food stamp benefits and shares 

the states’ administrative costs. The federal government promulgates program regulations and 

ensures that state officials administer the program in compliance with federal rules. The states 

administer the program by determining whether households meet the program’s income and 

asset requirements, calculating monthly benefits for qualified households, and issuing benefits to 

participants on an electronic benefits transfer card. 

Foster Care The Foster Care program, authorized under title IV-E of the Social Security Act, helps states 

provide care for eligible children who need placement outside their homes—in a foster family 

home or an institution. This program provides funds to states to assist with the costs of foster 

care maintenance for eligible children, administrative costs to manage the program, and training 

for program staff and foster parents. 

TANF Personal Responsibility and Work Opportunity Reconciliation Act of 1996 replaced Aid to 

Families with Dependent Children (AFDC) with TANF, which marked the end of federal 

entitlement assistance. TANF ended unlimited matching funding for family cash welfare and 

created fixed-block grants to states. The block grant covers benefits, administrative expenses, 

and services targeted to needy families and gives states great flexibility to design their own 

TANF programs. States must spend a specified amount of state funds on eligible low-income 

families—known as the maintenance-of-effort requirement. 

UI The UI program, established in 1935, serves to: (1) temporarily replace a portion of earnings for 

workers who become unemployed through no fault of their own and (2) facilitate the 

reemployment of UI claimants. UI is made up of 53 state-administered programs that are subject 

to broad federal guidelines and oversight. 

Source: GAO.

Page 7 GAO-06-942 Human Services Programs
The programs included in this review also represent a wide range of 

spending, from $2.9 billion for Adoption Assistance to $37 billion for UI. 

For fiscal year 2004, total spending, including administrative and all other 

spending, for the seven programs was $119 billion. Additionally, each of

the seven selected programs is administered or overseen by one of three 

different federal departments. Table 2 shows the agency responsible for 

each program and total program expenditures for fiscal year 2004, the 

most current year available. 

Table 2: Fiscal Year 2004 Federal and State Program Spending and Agencies Responsible for Administering the Seven

Selected Programs 

Agency Program

Total program spending, 

fiscal year 2004 (in billions)

Department of Agriculture/Food and Nutrition Service Food Stamp Program $29.8 

Adoption Assistance 2.9 

CCDF 9.4

CSE 3.2a

Foster Care 8.6 

Department of Health and Human Services/Administration for Children 

and Families 

TANF 25.8

Department of Labor/Employment and Training Administration UI 37.0b

Source: GAO analysis of HHS, USDA, and DOL data. 

a

All CSE spending is administrative. The CSE program reported total federal and state administrative 

expenditures as $5.3 billion for fiscal year 2004. However, total spending on the program is offset by

child support collections for families who received benefits from the TANF and Foster Care programs,

resulting in net program expenditures of $3.2 billion. 

b

In the UI program, federal law gives responsibility for administrative funding to the federal 

government; however, some states supplement federal funding with state funds. We did not include 

the state share in our analysis because historical data on state spending were not available for all of 

the years included in our review. 

The programs covered by this review have varying federal-state 

relationships in administering and funding the programs. The level of

government with responsibility for designing the rules, services, and 

processes varies by program. Some programs have federally standardized 

designs while other programs provide states with flexibility to develop

their own eligibility criteria, benefit levels, and program rules. All of the 

programs are funded through some form of federal-state partnership; 

however, the rules governing funding responsibility vary widely by 

program. Table 3 summarizes the level of government with which 

responsibility for the design and funding resides for each of the seven 

programs. 

Page 8 GAO-06-942 Human Services Programs
Table 3: Level of Government Responsible for Design and Funding of the Seven Selected Programs 

Funding forb

Program Designa

Benefits/services Administration

Adoption Assistance Federal/state Federal/state Federal/state 

CCDF Federal/state Federal/state Federal/state

CSE Federal/state N/AcFederal/state

Food Stamp Program Federal Federal Federal/state

Foster Care Federal/state Federal/state Federal/state

TANF Federal/state Federal/state Federal/state

UI Federal/state StatedFederal

Source: GAO.

a

Defined as the level of government that is primarily responsible for availability, eligibility, and benefit 

amount determination. 

b

Defined as the level of government that supplies the primary source of funding for the benefit or for 

administering the benefit. If substantial funding comes from more that one source, both sources are 

listed. Some additional funding may come from sources not listed in the table. 

c

All CSE spending is considered administrative. 

d

State unemployment taxes pay for regular benefits and half of extended benefits, while federal taxes 

pay half of extended benefits. 

An individual low-income family is likely to be eligible for and participate 

in several human service programs. For example, in 2001, 88 percent of 

families receiving TANF also received food stamp benefits and 98 percent 

received Medicaid. The programs are typically administered out of a local

assistance office that offers benefits from several programs. Depending on

the administrative structure of the local assistance office, a family or 

individual might provide necessary information to only one caseworker 

who determines eligibility and benefits for multiple programs, or they 

might work with several caseworkers who administer benefits for 

different programs. 

Because eligibility determination as well as other activities are often 

conducted jointly for multiple programs, some programs require states to 

have a process to ensure that costs are appropriately charged to the 

correct federal programs for federal reimbursement purposes. The cost 

allocation process is the formal process for sharing the costs of activities 

that are performed jointly for more than one program. Formal “cost 

allocation plans” specify how costs for those activities are to be covered 

by the various programs. For example, when a local eligibility worker 

determines that an applicant is eligible for TANF, food stamp benefits, and 

CCDF, the cost of her or his time is allocated across these programs in 

Page 9 GAO-06-942 Human Services Programs
accordance with the state’s approved cost allocation plan. These costs are 

then reported as administrative or programmatic costs, depending on the 

laws and regulations governing funding for each of the programs. 

Across the seven programs in our review, the legal definitions and the 

federal funding rules for administrative costs vary. The statutes and 

regulations for each program define administrative costs differently, even 

though many of the same activities are performed to administer the 

programs. The laws for each program also include different mechanisms 

for state and federal participation in funding administrative costs, 

including specific matching rates, block grants, and spending caps, which 

can affect state decisions on administrative spending. 

Although Similar 

Types of 

Administrative 

Activities Occur 

across Programs, 

Definitions of 

Administrative Costs 

and the Federal 

Funding Role Vary 

Definitions of 

Administrative Costs Vary 

across Programs 

Although many of the programs we reviewed conduct similar activities to 

administer the program, not all of the activities are defined in laws and 

regulations as administrative costs for financial reporting purposes.2

 Based 

on our analysis of information collected from state and local officials, we 

identified several categories of administrative activities that are common 

across many of these programs. In particular, we found that the 

administration of each program involves at least (1) determining who is 

eligible to participate in the program or processing applications for new 

participants, (2) monitoring program quality, (3) conducting general 

program management and planning, (4) developing and maintaining IT 

systems, and (5) training employees, either at the state or local levels. All 

of the programs also issue benefits or provide services to eligible 

participants, with the exception of CSE, which generally collects and 

distributes payments from noncustodial parents to custodial families. 

Additional activities, such as case management and outreach, are 

performed in only some of the programs or some states. 

 2

 As used in this report, the phrase “administrative spending as defined for financial 

reporting purposes” is used to describe federal and state spending that, by applicable 

federal statutes and regulations, is reportable as administrative expenses of the program.

Page 10 GAO-06-942 Human Services Programs
However, the statutes and regulations for each program differ on which of

these activities are defined as administrative costs and which are not. For 

example, the TANF regulations and CCDF statute defining administrative

costs specifically exclude costs associated with providing direct program 

services, while Food Stamp statute specifically includes the costs of 

providing direct program services, such as certifying applicant households 

and issuing food stamp benefits, as administrative costs. In addition, some 

statutes and regulations are more comprehensive in identifying which 

activities or items are specifically included or excluded from the definition

of administrative costs. For example, while UI legislation allows for 

amounts “necessary for the proper and efficient administration” of state 

programs with few other qualifiers, the Food Stamp legislation and 

regulations list dozens of specific costs, including such items as audit 

services, advisory councils, building lease management, and certain 

advertising costs. Appendix II identifies the activities and items that are 

specifically included in the definitions of administrative costs in the 

statutes and regulations for each program. Nonetheless, most of the lists 

of activities in program statutes and regulations are only illustrative and 

not exhaustive. Phrases such as “these activities may include but are not 

limited to...” are commonplace and leave the exact definitions of 

administrative costs somewhat ambiguous. Such ambiguity may lead to 

inconsistent interpretation of the definitions of administrative costs. Our 

prior work on administrative costs in the Adoption Assistance and Foster 

Care programs found that state program officials and HHS regional offices 

make different decisions as to what costs are appropriate to claim as 

administrative. 

The statutes and regulations defining administrative costs differ across the 

programs in part because these programs have evolved separately over 

time and have different missions, priorities, services, and clients. The CSE 

program, in particular, differs from the other programs in our review in 

that CSE does not provide public financial benefits to its participants; 

rather, CSE services include collecting and distributing payments from 

noncustodial parents to custodial families, other states, and federal 

agencies. In addition, although the programs conduct similar activities, 

differences in missions and priorities may add to differences in spending 

on particular activities. For example, the Food Stamp Program’s extensive 

requirements for monitoring program quality may result in more spending 

on this activity than for a program with few quality control requirements. 

The number of congressional committees and federal agencies involved in

developing laws and regulations for these programs has also contributed 

to differences in the definitions of administrative costs and can make 

Page 11 GAO-06-942 Human Services Programs
coordination across programs difficult. The division of legislative and 

executive responsibility allows multiple points of access for Members of 

Congress, interest groups, and the affected public, but the various 

legislative committees and executive agencies do not necessarily 

collaborate with each other to develop consistent laws and regulations 

across programs. Federal legislation for all of the programs in our review, 

except the Food Stamp Program, is under the jurisdiction of the Senate

Finance Committee and the House Ways and Means Committee, although

some aspects of these programs are under the jurisdiction of other 

congressional committees. Federal regulations for Adoption Assistance 

and Foster Care, CCDF, CSE, and TANF are developed by various offices 

within the HHS Administration for Children and Families; Food Stamp 

Program regulations are developed by the U.S. Department of Agriculture 

(USDA) Food and Nutrition Service; and UI regulations are developed by 

the DOL Employment and Training Administration. 

Federal and state officials we interviewed disagreed on whether it was 

problematic to have different definitions of administrative costs across 

programs. According to officials from the OMB, whose role is to improve 

administrative management of federal programs, differences in legal 

definitions of administrative costs across programs are not a barrier to 

program management. OMB officials stated that it is important to accept 

that programs are different and that it may not be possible to compare 

costs across programs. A number of state budget officials responsible for 

financial reporting, however, described how the variation in definitions of 

administrative costs creates difficulties. For example, one budget official

stated that it can be difficult to develop coding for accounting and 

budgeting that can be used across programs and, as a result, it can be

difficult to monitor costs accurately. A budget official in another state 

argued, similarly, that having consistent definitions of administrative costs 

and consistent caps on administrative spending would help to simplify the 

process for allocating costs across programs and, therefore, might reduce 

costs. On the other hand, state officials responsible for developing 

program policies and overseeing local implementation of the programs 

reported fewer difficulties with the differences in administrative cost 

definitions. Several of these officials reported that they pay little attention 

to which aspects of their jobs are defined as administrative activities and 

which are not. 

Page 12 GAO-06-942 Human Services Programs
Federal and state participation in funding the administrative costs of 

human service programs is governed by federal laws that establish 

matching rates, block grants, spending caps, and other funding

mechanisms. These funding mechanisms, described below, play an 

important role in managing the federal government’s risk and can affect 

states’ spending behavior by producing financial incentives and funding 

restrictions. 

Federal and State 

Participation in Funding 

Administrative Costs Is 

Governed by Matching 

Rates, Block Grants, and 

Spending Caps 

• Matching rates—In programs funded through federal matching

rates, the federal government covers a portion of states’ spending 

on program administration. For example, if a program has a 

50-percent matching rate, the federal government is obligated to 

reimburse states for 50 percent of their spending on administration, 

as defined in law.3

 Funding of Foster Care, Adoption Assistance, 

CSE, the Food Stamp Program, and a portion of CCDF include 

matching rates.4

• Block grants—Block grants provide states with a statutorily fixed 

amount of funding. TANF5

 and a portion of CCDF are funded 

through block grants. The TANF block grant does not change when 

caseloads change, nor is it adjusted for inflation. In both TANF and 

CCDF, states are required to spend a certain amount of their own 

funds to be eligible to receive the full amount of federal funds. 

 3

 The federal matching rate and the actual share of expenditures that the federal 

government pays, in practice, may differ slightly, because of the detailed rules governing

the sharing of expenses and application of the federal matching rate. 

4

 CCDF is funded by a combination of discretionary and entitlement funding through the

Child Care and Development Block Grant (CCDBG). Discretionary funds are subject to the

annual appropriations process and are allocated among states according to a formula; 

states are not required to match these discretionary funds. CCDF also provides entitlement 

(or “mandatory”) funding to states. After reserving an amount for payments to Indian tribes 

and tribal organizations, remaining entitlement funds are allocated to states in two 

components. First, each state receives a fixed amount each year, as established in law; no

state match is required for these funds. Second, remaining entitlement funds are allocated

to states according to each state’s share of children under age 13. States must meet 

maintenance-of-effort and matching requirements to receive these funds. In addition to

amounts provided to states specifically for child care, states may also transfer up to 

30 percent of their TANF block grant allotment into their CCDBG. 

5

 The bulk of federal TANF funds are provided to states in a basic block grant called the

State Family Assistance Grant, totaling $16.5 billion for the 50 states and the District of 

Columbia. The TANF statute also provides for supplemental grants to states that meet

certain criteria and matching contingency funds that can provide additional funding during 

recessionary periods if certain conditions are met. 

Page 13 GAO-06-942 Human Services Programs
• Spending caps—Spending caps limit the amount or percent of state 

or federal funds that can be spent for particular purposes. For 

example, the TANF statute prohibits states from spending more 

than 15 percent of federal funds received on administrative costs, 

while the CCDF statute prohibits states from spending more than 

5 percent of aggregate program funds on administrative costs.6

• Other funding rules—The legislation governing the funding of 

administrative costs for the UI program gives responsibility for 

administrative funding to the federal government. DOL uses 

information gathered from the states to determine how much of the 

available funds each state will receive. While states are not required 

to spend their own funds on administrative costs, over 40 states 

chose to provide additional state funds to cover some 

administrative costs of the UI program in 2004. 

Table 4 summarizes the rules governing state and federal funding of 

administrative costs. The table identifies for each program the federal

funding mechanism and any federal matching rates, caps on administrative

expenditures, and other rules regarding funding of administrative costs. 

 6

 The 5-percent spending cap applies to the total Child Care and Development Fund, and 

need not be applied individually to each of the component funds -- the discretionary, 

mandatory, and matching (including the state share) funds. However, the spending cap 

does not apply to the states’ maintenance-of-effort expenditures. 

Page 14 GAO-06-942 Human Services Programs
Table 4: Rules Governing State and Federal Funding of State Administrative Costs 

Program 

Federal funding 

mechanism 

Federal matching rate 

for administrative 

expenditures 

Cap on 

administrative

expenditures 

Other rules regarding funding of

administrative costs 

Adoption Assistance Matching rate 50% N/A 75% federal matching rate for training 

expenditures 

CSE Matching rate 66% N/A 90% federal matching rate for lab costs of 

paternity testinga

The federal government also provides incentive 

funds to encourage states to achieve program 

goals. 

Food Stamp 

Program 

Matching rate 50%bN/A 100% federal grant coverage for some 

employment and training costs 

Foster Care Matching rate 50% N/A 75% federal matching rate for training 

expenditures 

CCDF Combination of

block grant and 

matching rate 

50% to 77%, as

determined by formula 

for each statec

5% of 

aggregate funds 

N/A 

TANF Block grant N/A 15% of State 

Family 

Assistance 

Grant 

N/A 

Unemployment

Insurance 

Other N/A N/A N/A

Source: GAO analysis of HHS, USDA, and DOL data. 

a

As a result of the Deficit Reduction Act of 2005, Pub.L. 109-171 (Feb. 8, 2006), the higher federal 

matching rate for laboratory costs of paternity testing will be reduced to the general federal CSE 

matching rate of 66-percent beginning October 1, 2006. 

b

The 50-percent federal share of state and local administrative expenses is reduced by $197 million a

year to account for costs covered by grants for TANF, resulting in an actual federal share paid under 

the Food Stamp Program that is slightly below 50 percent. 

c

Federal matching rate applies only to one component of CCDF funding, which is available to states 

that achieve required levels of state spending. 

Administrative Funding 

Mechanisms Can Affect 

State Spending 

Administrative funding mechanisms can create financial incentives that 

affect state spending behavior; however, state responses to these 

incentives vary, according to the federal and state officials we interviewed. 

In some cases, matching rates can encourage states to spend more money 

on a program because for each dollar of its own resources the state 

invests, the state receives additional federal funding for the program. For 

example, the grants manager in one of the states we visited said that the

federal matching rate gives the state an incentive to maintain its funding 

and to provide more services. In other cases, however, state officials 

reported that they limit their use of federal matching funds because they 

have limited state resources to invest in the program. For example, a 

Page 15 GAO-06-942 Human Services Programs
budget official in one of the states we visited reported that when a new 

expenditure could be charged to either the Food Stamp Program, which 

has a matching rate, or the TANF block grant, the state or county might 

decide to use the TANF funds to avoid the need for the state to provide 

additional funding to meet its share of the matching funds. However, block 

grants also create general incentives for states to meet demand for 

services with limited spending because the federal funding amount is 

fixed. CCDF officials in Michigan stated that because they receive a fixed

amount of funding, running the program efficiently is always in the front of

their minds. 

Spending caps on the percentage of a block grant that can be spent on 

administrative costs are, by definition, designed to limit spending. 

However, officials in four of the five states we visited said that the CCDF 

and TANF caps on administrative spending were not a major factor in 

their administrative spending decisions. TANF administrative spending in 

the states we visited was well below the 15-percent cap. Nationally, state

spending on administration was 7.7 percent for TANF and 2.3 percent for 

CCDF in fiscal year 2004. Some CCDF officials reported that their 

administrative spending decisions were influenced more by state limits on 

administrative spending than by the federal spending cap. For example, 

the California Department of Education estimates that for fiscal year 

2006-2007, only 1 percent of program funds will be available for program 

administration due to current state budget constraints. This amount is well 

below the federal 5-percent cap, because, according to CCDF program 

officials in California, the state legislature wanted to put every possible 

dollar into additional child care vouchers. 

In addition, the funding allocation method for the UI program is designed 

to encourage states to administer their programs efficiently. Total funding

appropriated for the UI program is less than the amount the states report 

needing to administer their UI programs. To promote efficiency, DOL 

reduces the requests of states with higher costs for certain “controllable” 

aspects of the budget by greater percentages than lower cost states. For 

example, the longer it takes a state to process claims, the greater its 

reduction in the allocation process. Federal UI officials we interviewed 

argued that this process provides states with an incentive to increase 

efficiency. However, some state officials argued that the funding process 

creates disincentives for states to improve efficiency and reduce 

administrative spending. For example, they argued that if they invest in 

technologies that improve their efficiency in administering the program, 

they do not get to keep the savings they gain. Rather, spending less in one 

year could result in less federal funding the next year. 

Page 16 GAO-06-942 Human Services Programs
While funding mechanisms can create incentives for states to limit 

administrative spending, officials in each of the states we visited cautioned

that if administrative spending is reduced too far, it can negatively affect 

client services. Several officials described how reduced administrative 

spending due to state budget cuts had already affected the quality of their

services. For example, state human service officials in Maryland stated 

that a hiring freeze has resulted in a slower rate of application processing 

and an increase in Food Stamp administrative errors, such as eligible 

applicants being denied benefits. Local human service officials in Michigan 

reported that budget cuts had resulted in increased office waiting times for 

applicants and the elimination of services such as home visits and 

prevention services. 

Administrative spending for the seven programs combined, as defined for

financial reporting purposes by program statutes and regulations, made up 

about 18 percent of total program spending in fiscal year 2004. However, 

amounts varied widely across the programs and states. Between fiscal 

years 2000 and 2004, administrative spending increased in five of the seven 

programs, but generally increased at a lower rate than total program 

spending. Officials in the five states we visited reported that staff and 

technology made up a large portion of the administrative spending in their 

programs. 

Administrative 

Spending Varied 

across Programs but 

Generally Increased 

at a Lower Rate Than 

Total Spending 

In 2004, Administrative 

Spending for the Selected 

Programs Combined Was 

about 18 Percent of Total 

Program Spending, but 

Spending Varied Greatly 

across Programs and 

States 

In fiscal year 2004, administrative spending, as defined for financial 

reporting purposes by program statutes and regulations, amounted to 

about 18 percent7

—or $21 billion—of the $119 billion in total program 

spending for the seven programs combined; however, there were large 

differences in the amounts spent by programs and states. As shown in 

figure 1, the amount spent on administration varied widely among the 

seven programs, ranging from $200 million in CCDF to $5.2 billion in the 

Food Stamp Program and $5.3 billion in CSE. As a percentage of total 

program spending, administrative spending ranged from 2 percent in 

CCDF to 58 percent in the Foster Care program, with the exception of CSE 

 7

 All CSE spending is considered administrative. When including CSE, the programs

combined spent 17.5 percent of total program spending on administration. When excluding

CSE from the calculation, the other programs combined spent 13.6 percent of total 

program spending on administration. 

Page 17 GAO-06-942 Human Services Programs
in which all program spending is considered administrative.8

 While 

administrative spending amounts varied significantly across the seven 

programs, this variation does not necessarily indicate that certain 

programs are more efficiently administered. Instead, differences in 

spending largely reflect the differences in how each program’s laws and 

regulations define what counts as an administrative cost. As a result, 

comparing spending across programs is not a useful means for 

determining efficiency. 

 8

 In addition, in fiscal year 2004, CSE collected $4.38 in child support payments for every 

dollar spent on the program, also known as the cost-effectiveness ratio. 

Page 18 GAO-06-942 Human Services Programs
Figure 1: Fiscal Year 2004 Combined Federal and State Administrative and Other 

Spending in Billions (and Administrative Spending as a Percentage of Total 

Spending) 

0 5 10 15 20 25 30 35 40

UIb

TANF

Foster Care

Food Stamp

CSEa

CCDF

Adoption

Assistance

Program

Dollar in billions (percent)

Source: GAO analysis of data from HHS, DOL, and USDA.

(20.1)

(2.3)

(100)

(17.3)

(58.1)

(7.7)

(6.8)

Adminstrative spending

All other spending (non-administrative)

a

All CSE spending is administrative. The CSE program reported total federal and state administrative 

expenditures as $5.3 billion for fiscal year 2004. However, total spending on the program is offset by

child support collections for families who received benefits from the TANF and Foster Care programs,

resulting in net program expenditures of $3.2 billion. 

b

UI data are only estimates because the administrative spending data provided by DOL were by fiscal 

year, while the benefit data were provided by calendar year. In addition, in the UI program, federal 

law gives responsibility for administrative funding to the federal government; however, some states

chose to supplement federal funding with state funds. We did not include the state share in our 

analysis because historical data on state spending were not available for all of the years included in 

our review. The state share accounted for about $260 million in administrative spending in 2004. 

Each of the seven programs in our review is funded through a combination 

of federal and state contributions. For the seven programs combined, 

federal funds made up roughly 60 percent—or $13 billion—of the 

Page 19 GAO-06-942 Human Services Programs
$21 billion spent on administration in fiscal year 2004.9

 Federal spending 

accounted for roughly half or more of the total amount spent to administer 

each of the seven programs. Figure 2 shows the federal and state shares of

administrative spending for each program. These shares are largely 

representative of the different funding requirements set in law for each 

program, as described earlier in the report.10 For example, the federal 

government matches state administrative spending at specified rates in 

four of the seven programs. The federal match rate set out by law for 

administrative spending in the CSE program is 66 percent, while the match 

rate for the Adoption Assistance, Food Stamp, and Foster Care programs 

is 50 percent.

11 (See table 4, for a description of the matching rates and 

other funding rules that govern state and federal spending in each 

program.) 

 9

 Data on the state and federal shares of administrative spending are not collected for the

CCDF program. In fiscal year 2004, combined federal and state administrative spending for 

CCDF equaled $212 million. With or without including the $212 million in CCDF 

administrative spending, total administrative spending for the selected programs combined

equaled roughly $21 billion. 

10 These funding requirements have not changed significantly since fiscal year 2000 and the 

state and federal shares of administrative spending have remained largely the same over

time. 

11 CCDF also has matching rates that are determined by a formula set in law and that vary 

by state from 50 percent to 77 percent.

Page 20 GAO-06-942 Human Services Programs
Figure 2: Fiscal Year 2004 State and Federal Shares of Administrative Spendinga

Program

Dollar in billions (percent)

Source: GAO analysis of data from HHS, DOL, and USDA.

Federal share

State share

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

UIc

TANF

Foster Care

Food Stamp

CSEb

Adoption

Assistance

(52)

(48)

0.3

0.3

3.5

1.8 (34)

2.5 (49)

2.6

(52)

(48)

(61)

(39)

1.2

0.8

2.5 (100)

2.6

2.4

(51)

(66)

Note: The federal matching rate and the actual share of spending that the federal government pays, 

in practice, may differ slightly, because of the detailed rules governing the sharing of expenses and 

application of the federal matching rate. 

a

State and federal shares of administrative spending for the CCDF program are not available. 

b

The $3.5 billion in federal spending does not include amounts that the federal government paid to 

states in incentive payments. In addition, as reported in GAO–06-491, net federal expenditures—

those that are reduced by child support collections distributed to TANF and Foster Care programs

and fees charged for certain services—for fiscal year 2004 were about $2.8 billion. In this report, we

did not deduct these collections from the reported spending amounts. 

c

In the UI program, federal law gives responsibility for administrative funding to the federal 

government; however, some states supplement federal funding with state funds. We did not include 

the state share in our analysis because historical data on state spending were not available for all of 

the years included in our review. The state share accounted for about $260 million in administrative

spending in 2004, amounting to 9 percent of UI administrative spending. 

As with spending across programs, in fiscal year 2004, the combined 

federal and state amount spent on administration also varied greatly by

state within programs, as shown in figure 3. In some programs, this 

variation is considerable. For example, in the Foster Care program, the 

percentage of total program spending on administration in fiscal year 2004

Page 21 GAO-06-942 Human Services Programs
ranged from 21 percent to 86 percent. Such variation may suggest some 

opportunities for improved administrative efficiencies in some states; 

however, other factors also may account for the wide ranges in the 

percent spent on administration. Specifically, in the Foster Care and 

Adoption Assistance programs, our prior work cited differences in states’ 

claiming practices as well as differences in oversight among HHS regional 

offices that may contribute to differences in state administrative 

spending.12 In addition, federal officials we interviewed said that, given 

high fixed costs, a small state might expend a higher percentage of its total 

program budget on administration than a larger state that serves more 

people with the same fixed costs. Our recent work on administrative costs 

in CSE suggests that states’ structures for administering their support 

programs may also contribute to the cost of running the programs.13

Specifically, we reported that from fiscal year 2000 to fiscal year 2004, the 

median net federal expenditure for CSE agencies with state-operated 

programs decreased about 4 percent while the median net federal 

expenditure for county-operated programs increased about 11 percent. 

A few officials we interviewed said that states with county-administered 

programs required more administrative spending due to the duplication of

effort at the county and state levels. However, in Ohio—a state with a 

county-administered structure—officials reported that while the countyadministered system may contribute to some inefficiencies, moving to a 

state-administered system would require the state to equalize pay scales 

and building costs around the state, which would likely increase 

administrative spending.

 12 See GAO, Foster Care and Adoption Assistance: Federal Oversight Needed to Safeguard

Funds and Ensure Consistent Support for States’ Administrative Costs, GAO-06-649 

(Washington, D.C.: June 15, 2006). 

13 See GAO, Child Support Enforcement: More Focus on Labor Costs and Administrative 

Cost Audits Could Help Reduce Federal Expenditures, GAO-06-491 (Washington, D.C.: 

July 6, 2006). 

Page 22 GAO-06-942 Human Services Programs
Figure 3: Distribution of Combined Federal and State Administrative Spending by

States for Fiscal Year 2004 (as a Percentage of Total Program Spending)

a

Percent of total program spending

Source: GAO analysis of data from HHS, DOL, and USDA.

0

10

20

30

40

50

60

70

80

90

100

Highest 

Average 

Lowest 

UIc

TANF

Foster Care

Food Stamp

CCDFb

Adoption

Assistance

a

All CSE spending is considered administrative; therefore, there is no range across the states of 

percent of total spending on administration. 

b

Our calculation for percent of total spending on CCDF administrative costs includes maintenance of

effort spending and expenditures from all open appropriation years in FY 2004. The cap on CCDF 

administrative spending excludes maintenance of effort spending and applies to a single fiscal year’s 

appropriation, the funds from which need not necessarily be spent in the year of the appropriation. 

Thus, the percentages shown above do not necessarily indicate that some states are spending above 

the legal cap. 

c

For the UI program, the figure only includes federal administrative spending and does not include 

additional state spending. 

In Recent Years, 

Administrative Spending 

Has Risen in Most of the 

Selected Programs, but at 

a Lower Rate Than Total 

Program Spending 

From fiscal years 2000 to 2004, administrative spending increased in most 

of the seven programs covered in this review, but at a lower rate than total

program spending. As shown in figure 4, from fiscal years 2000 to 2004, 

combined federal and state administrative spending rose in five of the

seven programs: Adoption Assistance, CSE, Food Stamp, Foster Care, and 

UI. In the remaining two programs, CCDF and TANF, administrative 

spending declined. CCDF administrative spending hovered just above 

Page 23 GAO-06-942 Human Services Programs
$200 million,14 declining slightly, while TANF administrative spending 

declined by $300 million over the 5 years.15

Figure 4: Combined Federal and State Administrative Spending, Fiscal Years 2000

to 2004 (Nominal Dollars) 

Source: GAO analysis of data from HHS, DOL, and USDA.

Adoption Assistance

CCDFa

CSEb

Food Stamp

Foster Care

TANF

UIc

0

1

2

3

4

5

6

2000 2001 2002 2003 2004

Dollar in billions

Adoption Assistance

CCDF

TANF

UI

CSE

Food Stamp

Foster Care

a

CCDF administrative spending data are not available prior to 2001.

b

The CSE program reported total federal and state administrative expenditures as $5.3 billion for 

fiscal year 2004. However, total spending on the program is offset by child support collections for 

families who received benefits from the TANF and Foster Care programs, resulting in net program 

expenditures of $3.2 billion. 

c

UI administrative spending data only include the federal share. State shares are only available from 

2002 through 2004. 

 14 Administrative spending data for CCDF are not available prior to 2001; thus, changes in 

administrative spending in CCDF are based on fiscal years 2001 through 2004 data. 

15 Nominal dollar spending amounts and percentages are used in the text of the report, 

unless otherwise noted. 

Page 24 GAO-06-942 Human Services Programs
In each of the five programs in which administrative spending rose, it 

increased by between about 17 and 19 percent over the 5 years. 

Administrative spending declined by 3 percent in CCDF and by 12 percent

in TANF. Figure 5 shows the percent change in administrative spending 

during this time period for each of the seven programs. Over the same 

period, the rate of price inflation was 9 percent.16 Therefore, as illustrated 

in the figure, in the five programs in which administrative spending 

increased between fiscal years 2000 and 2004, the increase was much 

smaller when adjusted for inflation, shrinking to an increase of less than 

10 percent in each program. 

Figure 5: Percent Change in Combined Federal and State Administrative Spending,

Fiscal Years 2000 to 2004 

Source: GAO analysis of data from HHS, DOL, and USDA.

Inflation-adjusted dollars

Nominal dollars

-20

-15

-10

-5

0

5

10

15

20

UIb

TANF

Foster Care

Food S

C

tamp

SE

CCDFa

Adoption

Assistance

Percent change

18.9

9.1

-3.2

-9

17.6

8

18

8.3

16.8

7.2

-12.1

-19.3

17.1

7.5

a

Administrative spending data for CCDF are not available prior to 2001; thus, changes in 

administrative spending in CCDF are based on 2001 through 2004 data. 

b

The UI administrative spending data only include the federal share because state spending was only 

available for 2002 through 2004. When including the state share, the nominal percent change in 

combined federal and state administrative spending for 2002 to 2004 was -4 percent. 

 16 We used the Gross Domestic Product (GDP) price index to calculate inflation-adjusted 

dollars. 

Page 25 GAO-06-942 Human Services Programs
In the five states we visited, officials reported that staff salaries and 

benefits were among the largest costs associated with running their 

programs. According to DOL’s wage index, average salaries and benefits 

for state and local government workers increased by 16 percent between

2000 and 2004.17 The percent change in administrative spending for the 

majority of the programs in this review was slightly higher than this 

average, ranging between about 17 percent and 19 percent, as previously 

stated. In two of the programs, CCDF and TANF, the percent change fell 

below this average. While administrative spending may include several 

other types of spending beyond staff salaries and benefits, such as 

overhead and IT, rising salaries and benefits may explain some of the 

increase in spending among the programs in this review. 

Although administrative spending increased between fiscal years 2000 and

2004 in the Adoption Assistance, Food Stamp, and UI programs, it 

increased at a lower rate than total program spending. As a result, in these 

three programs, as well as CCDF and TANF, administrative spending 

declined compared to total program spending between fiscal years 2000 

and 2004, as shown in figure 6, indicating that the amount spent on direct 

benefits and services was rising faster than the amount spent on 

administering these benefits and services. Administrative spending 

increased compared to total program spending in one program, 

Foster Care. 

 17 Data from the DOL’s Bureau of Labor Statistics Employment Cost Index. 

Page 26 GAO-06-942 Human Services Programs
Figure 6: Federal and State Administrative Spending as a Percentage of Total 

Program Spending, Fiscal Years 2000 to 2004 

Source: GAO analysis of data from HHS, DOL, and USDA.

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004

Adoption Assistance

CCDFa

Food Stamp

Foster Care

TANF

UIb

Foster Care

Adoption Assistance

Food Stamp

TANF

UI

CCDF

Percent

Note: All CSE spending is considered administrative; therefore, there are no changes over time in the

percentage of administrative spending. 

a

Administrative spending data for CCDF are not available prior to 2001. 

b

UI administrative spending data only include the federal share. State shares are only available from 

2002 through 2004. In addition, UI data are only estimates because the administrative spending data 

were available by fiscal year, while the benefit data were available by calendar year.

In the Five States We

Visited, Many Program 

Officials Told Us That They 

Spend a Large Portion of 

Their Administrative 

Dollars on Staff Costs and 

Technology 

Officials in the five states we visited reported that staff and IT account for 

substantial portions of the spending related to operating their programs. In 

all five states we visited, officials reported that spending on staff, including

salaries and benefits, was among the largest costs associated with running 

their programs, in part because certain program rules are complicated,

requiring a considerable amount of staff time. To the extent that these 

costs are included in programs’ definitions of administrative costs, this 

will affect the programs’ reported administrative spending. As we have 

reported in our prior work,18 eligibility determination activities make up a 

 18 Means-Tested Programs: Determining Financial Eligibility is Cumbersome and Can 

Be Simplified, GA0-02-58 (Washington, D.C.: Nov. 2, 2001). 

Page 27 GAO-06-942 Human Services Programs
substantial portion of administrative spending for some programs. Policy 

experts and researchers have found that the complexity and variations in

eligibility rules have increased substantially the staff resources needed to 

determine eligibility and benefit levels and thereby increased the costs of 

administering programs. Some of the officials in the states we visited said 

that multiple or outdated IT systems also require a great deal of staff time. 

For example, front-line staff and officials we interviewed reported that in 

order to determine eligibility, staff must manually work outside the 

computer systems to work around problems in the systems. In addition, 

county officials we interviewed in one state said that the same client 

information must be entered into three separate systems. 

While outdated IT systems increase the staff resources needed at the local 

level, officials in four of the five states we visited reported that developing 

and maintaining IT systems also require a significant amount of 

administrative dollars. For example, in California, county officials we 

interviewed reported that two new case management systems have been 

expensive to develop and implement. They said that initial system 

problems and training for staff to learn the new systems added to the 

costs. However, officials in a few states said they believed that their new 

systems will eventually reduce administrative effort and they expected

administrative costs to decrease as a result. 

The federal government, including both Congress and the executive

agencies, may help balance long-term administrative cost savings with 

program effectiveness and integrity by simplifying policies and facilitating 

technology improvements. Simplifying policies—especially those related 

to eligibility determination processes and federal funding structures—

could save resources, improve productivity, and help staff focus more time 

on performing essential program activities, such as providing quality 

services and accurate benefits to recipients. In addition, by helping states 

facilitate technology enhancements across programs, the federal 

government can help streamline processes and potentially reduce longterm costs. Together, simplified policies and improved technology could 

streamline administrative processes and potentially reduce administrative

costs. We acknowledge that all levels of government have attempted to 

streamline processes across human service programs for the past 20 years. 

However, many of these efforts have had limited success due, in part, to 

the considerable challenges that streamlining program processes entail, 

such as the challenge of achieving consensus among the numerous 

congressional committees and federal agencies involved in shaping human 

service program policies, and a lack of information on how program 

The Federal 

Government May 

Help Balance 

Administrative Cost 

Savings with Program 

Effectiveness and 

Integrity by 

Simplifying Policies 

and Facilitating 

Technology 

Enhancements 

Page 28 GAO-06-942 Human Services Programs
changes would affect particular populations. We believe one challenge in 

particular—the lack of information on the effect streamlining efforts might 

have on program and administrative costs—is thwarting progress in this 

area. 

Simplifying Federal 

Policies May Save 

Administrative Costs by 

Reducing Cumbersome 

and Duplicative Work 

Our current and previous reviews indicate that simplifying policies—

especially those related to eligibility determination processes and federal 

funding structures—could potentially save resources, improve 

productivity, and help staff focus more time on performing essential 

program activities, such as providing quality services and accurate benefits 

to recipients. Simplifying policies is particularly important for those 

programs that are administered jointly at the local level. In many localities,

single offices administer TANF, food stamp benefits, CCDF, Medicaid, and 

SCHIP, and make referrals to or have some interaction with CSE, 

Adoption Assistance, Foster Care, UI, LIHEAP, and housing programs. 

Even though the programs are administered jointly, each has its own 

funding structure and eligibility rules, which can be cumbersome and 

require duplicative effort from staff. For example, when a family applies 

for TANF and food stamp benefits, the caseworker applies different rules 

and tests to determine who is eligible for benefits from either or both 

programs. This determination can be complicated as most programs have

different definitions of who is a part of an eligible unit. In the Food Stamp 

Program, an eligible unit, or household, generally consists of all the 

persons who purchase food and prepare meals together. In TANF, the 

eligible unit (which states define in accordance with certain federal 

requirements) often includes only dependent children, their siblings, and 

the parents or other caretaker relatives. Consequently, a family member

may be eligible for benefits in one program and ineligible for benefits in 

another program. To ensure that time is divided among and allocated to

the correct programs, most of the local staff we spoke with track the 

amount of time they spend working on different programs and report this 

information to financial managers. Local financial managers then 

determine what portion of staff’s time is defined as administrative costs in 

each of the programs and charge the programs appropriately. Our current 

and previous reviews show that these involved procedures stem, in part, 

from programs having different target populations, different federal 

funding silos, and different statutory and regulatory requirements. 

Excessive time spent working through complex procedures can consume 

resources and diminish staff’s ability to focus on other activities that 

preserve program effectiveness and integrity. Many of the state and local 

officials we visited emphasized that one of the best ways to balance cost

savings with program integrity and effectiveness is to simplify program 

Page 29 GAO-06-942 Human Services Programs
eligibility determination processes and funding structures across 

programs: 

Simplify Eligibility Determination Processes: According to state and 

local officials, the complexity and variation in financial eligibility rules 

have contributed to the time-consuming and duplicative administrative 

processes. The administrative processes can be particularly time 

consuming when caseworkers determine eligibility for more than one 

program at a time, a common practice when applicants may be eligible for

multiple programs. The issues raised during our site visits echo what we 

reported to Congress in 2001.

19 In that report, we identified federal statutes 

and regulations as a source of some of this variation, although states do 

have considerable flexibility, especially in programs such as TANF, in 

setting eligibility rules. Some states have taken advantage of recent 

changes and additional flexibility granted by the federal government to 

simplify eligibility determination processes across programs. For example, 

states may automatically extend eligibility to food stamp applicants based 

on their participation in the TANF cash assistance program—a provision 

referred to as “categorical eligibility.” Another way states have simplified 

eligibility processes is by aligning program rules. For example, officials in

Maryland told us that they took advantage of the flexibility offered by the 

Farm Security and Rural Investment Act of 2002 (the “Farm Bill”) and 

matched the Food Stamp Program rules for counting income and assets to 

TANF and Medicaid rules. This allows them, for example, to determine the

value of a car the same way across programs. Maryland officials believe 

that this change has helped them to provide benefits and services more 

quickly and accurately. While some states have taken advantage of such

flexibility, others have not. In a 2004 report on state implementation of the 

Farm Bill’s options, we concluded that although federal law and program 

rules allowed states to align food stamp reporting rules with those of other 

assistance programs, state officials in most states had not made the broad 

changes that would result in greater consistency among programs.20 State 

decisions to increase program alignment may have been hindered by 

concerns regarding the cost of programming changes into state computers 

and the concern that benefit costs may increase. On the other hand, 

savings could result from reducing the administrative burden on 

 19 GAO-02-58. 

20 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.: Sept. 16, 2004). 

Page 30 GAO-06-942 Human Services Programs
caseworkers. Ultimately, it is not clear whether costs would rise or savings 

would be realized. 

Simplify Funding Structures: Because the programs are financially 

supported through different federal funding streams and mechanisms, 

state officials argue that serving the needs of families comprehensively 

and efficiently is difficult. Similar to the variation in eligibility rules, 

program administrators face an array of different funding sources 

associated with different federal programs, each with its own financial

reporting requirements, time frames, and other rules. Often, to meet 

individuals or families’ needs, states fund a range of services drawn from

multiple programs and funding sources. For example, to provide child care 

subsidies, some states use funding from both TANF and CCDF to assist 

families, but very different rules apply to reporting requirements and 

funding restrictions, complicating program administration. Many believe 

that being able to draw funds from more than one federal assistance 

program, simplifying the administrative requirements for managing those 

funds, consolidating small grants, or standardizing administrative spending

caps across programs would ease states’ administrative workload and 

reduce administrative spending. To experiment with simplifying funding 

structures, Ohio’s child welfare department officials told us they received

a waiver in 1997 to implement a flexible-funding demonstration project. 

Participating counties received a monthly allotment to fund any child 

services free of any eligibility and allocation restrictions. According to 

Ohio state officials, during the first 6 years of the demonstration, 11 of the 

14 counties operated below the average costs, resulting in a total savings 

of $33 million. 

The need for simplifying program policies, including both those related to

simplifying eligibility determination processes and funding structures, has 

been voiced recurrently for the past several decades. Stretching as far 

back as the 1960s, studies and reports have called for changes to human 

service programs, and we issued several reports during the 1980s that 

focused on welfare simplification. In the early 1990s, a national 

commission as well as a congressionally created advisory commission 

suggested ways to simplify policies and procedures, including steps such 

as developing a common framework for streamlining eligibility 

requirements, formulating standard definitions, and easing administrative 

and documentation requirements. To address these issues, Congress has 

acted in the past to simplify the federal grant system. For example, the 

Omnibus Budget Reconciliation Act of 1981 consolidated a number of 

human service programs into several block grants that allowed for greater

state and local autonomy and flexibility in designing strategies to address 

Page 31 GAO-06-942 Human Services Programs
federal objectives.21 More recently, in 1996 Congress replaced the previous 

welfare program with the TANF block grant and consolidated several child

care programs into one program, providing states with additional 

flexibility to design and operate programs.22 In addition, numerous pilot 

and demonstration projects have given particular states and localities 

flexibility to test approaches to integrating and coordinating services 

across a range of human service programs. While the need for 

simplification of program policies has been widely acknowledged, there 

has also been a general recognition that achieving substantial

improvements in this area is exceptionally difficult. For example, 

implementing systematic changes to the federal rules for human service 

programs can be challenging because of differences among federal 

program goals and purposes and because jurisdiction for these programs 

is spread among numerous congressional committees and federal 

agencies. 

An additional challenge to systematic policy simplification efforts is the 

lack of information on the costs and effects of these efforts. Lack of 

information on the potential cost to the federal government of 

streamlining policies has been a limiting factor in moving forward in this 

area. In our 2001 report, we concluded that determining eligibility across 

human service programs is cumbersome and can be simplified; however, 

we said that additional information is needed about the effects these 

simplification efforts would have on both program and administrative 

costs. Similarly, a Congressional Research Service review of pilot and 

demonstration projects on service integration strategies—one way to 

simplify policies—found that there was little information on the costeffectiveness of these strategies.23 Information is also lacking on the 

potential effects that streamlining policies would have on various 

populations. Streamlining policies could expand client access and increase 

caseloads, but it could also limit access for particular populations, 

depending on which policies were adopted. In addition, no definitive 

 21 For more information, see GAO, Block Grants: Characteristics, Experience, and Lessons

Learned, GAO/HEHS-95-74 (Washington, D.C.: Feb. 9, 1995). 

22 For more information, see GAO, Welfare Reform: States Are Restructuring Programs to

Reduce Welfare Dependence, GAO/HEHS-98-109 (Washington, D.C.: June 17, 1998) and 

GAO, Welfare Reform: With TANF Flexibility, States Vary in How They Implement Work

Requirements and Time Limits, GAO-02-770 (Washington, D.C.: July 5, 2002). 

23 Cheryl Vincent, The “Superwaiver” Proposal and Service Integration: A History of 

Federal Initiatives (Washington, D.C.: Congressional Research Service, April 13, 2005).

Page 32 GAO-06-942 Human Services Programs
information exists to demonstrate the type and extent of changes that 

might result in reduced administrative costs or to demonstrate how 

strategies might work differently in different communities. To help 

address this issue, we asked Congress in our 2001 report to consider 

authorizing state and local demonstration projects designed to simplify 

policies. Recent legislative proposals in both the House and the Senate 

have sought to increase states’ abilities to waive federal program rules to 

address program simplification issues, although some provisions have 

been criticized by policy makers and others for allowing states too much 

latitude to set aside federal rules considered important to protecting 

program integrity and services to people in need. One legislative proposal, 

included as part of broader welfare legislation, passed in the House but 

has not been enacted into law. 

Facilitating Technology 

Enhancements across 

Programs May Save 

Administrative Costs by 

Creating More Efficient 

Processes 

Our previous and current work indicates that the federal government can

help streamline processes and potentially reduce long-term costs by 

facilitating technology enhancements across programs. Technology plays a 

central role in the management of human service programs and keeping up

with technological advancements offers opportunities for improving the 

administration of human services. Recognizing the importance of 

automated systems in state-administered federal human service programs, 

for more than 2 decades, Congress has provided varying levels of federal 

funding to encourage states to implement certain systems to improve the 

efficiency of some programs. The federal agencies have also played a role

in helping states implement IT systems to streamline their processes. For 

example, agencies responsible for child welfare, CSE, and the Food Stamp 

Program must review and approve states’ IT planning documents before 

federal technology funds are passed down to states. In contrast, no 

specific federal regulations guide states’ use of federal TANF or CCDF 

funds for IT systems. DOL provides some technical assistance to states 

under the UI program. 

With congressional and federal support, states have increasingly relied on

technology to streamline their program processes. Having modern systems 

that support multiple human service programs is important for 

streamlining eligibility processes and providing timely and accurate 

services. For example, the counties we visited in California developed a 

single IT system, known as CalWIN.24 This system—like others around the 

 24 The two counties we visited, San Mateo and Santa Cruz, are a part of an 18-county

consortium that helped to develop CalWIN. 

Page 33 GAO-06-942 Human Services Programs
country—replaced several separate IT systems and automated the 

eligibility determination processes across multiple and complex programs, 

such as TANF, the Food Stamp Program, and Medicaid. According to some 

officials, while the new system has experienced some problems, it has 

already improved program integrity and is intended to reduce

administrative costs. Additionally, many believe that sharing data across 

programs and agencies can further streamline processes. Data-sharing 

arrangements allow programs to share client information that they 

otherwise would each collect and verify separately, thus reducing 

duplicative effort, saving money, and improving integrity. For example, by

receiving verified electronic data from SSA, state human service offices 

are able to determine SSI recipients’ eligibility for food stamp benefits 

without having to separately collect and verify applicant information. 

According to South Carolina officials we interviewed, this arrangement 

saves administrative dollars and reduces duplicative effort across 

programs. 

While most agree that IT can help streamline processes, our previous and 

current work shows that technology projects are difficult, and many fall 

short of expectations, creating additional work for staff or compromising 

program integrity. Although many states’ computer systems for TANF, the 

Food Stamp Program, and Medicaid are already integrated, we found that 

states are often using IT systems that are outdated, error-prone, and do not 

effectively share information with additional human service programs. 

This compounds the challenges in updating technology in a human 

services environment that increasingly requires coordination across 

programs. For example, the Michigan Department of Human Services is in

the process of implementing a new integrated IT system that is intended to

replace the three systems that staff currently use to process eligibility for 

several programs. Michigan officials explained that the third system was 

initially intended to replace the other two systems. However, due to 

political and financial reasons and a lack of commitment, only the first 

phase of the project was implemented. As a result, the system failed to 

replace the other systems and created an additional step in the enrollment 

process. The ability to share data across programs also may be limited by 

laws that have been established to protect individuals’ privacy. For 

example, while state CSE programs sometimes utilize information from 

other federal programs, they are often prohibited by law from sharing 

information about their own clients. Michigan CSE officials noted that the 

CSE program must protect its clients’ information because it handles 

money from private citizens rather than providing government benefits. 

Another concern regarding efforts to further enhance technology is that 

there is limited information available on the cost-effectiveness of some of 

Page 34 GAO-06-942 Human Services Programs
these systems. Finally, our previous collaborative work with other 

organizations highlighted challenges related to obtaining federal funding 

for information systems.25 To the extent that state IT systems support more

than one human services program, state cost allocation plans for systems 

development and acquisition projects must be approved by each federal 

agency expected to provide funding, in addition to the regular approval 

process. 

To address concerns about IT systems funding and to identify other ways 

that the federal government may facilitate states’ technology 

improvements, we recommended in April 2000 that a multiagency federal 

working group be created.26 In response to this recommendation as well as 

state complaints about the approval process, agencies within HHS and 

USDA convened a working group to improve the federal approval process. 

This group made some progress in identifying needed changes to the 

federal process. However, after about a year of work, the progress stalled, 

due to changes in leadership at the agencies involved and a lack of 

consensus among the federal partners about the direction to take in 

improving the federal process.27 This helps to highlight the challenges 

involved in identifying and reaching agreement on needed improvements 

to existing processes, particularly when multiple programs and agencies 

are involved. More information on specific barriers that states face when

attempting to make technology improvements when federal funds are 

involved could help facilitate progress in this area. 

Progress on technology improvements could be further facilitated through 

greater collaboration across program agencies and levels of government. 

At the time of our visit, officials in Ohio said that in their efforts to replace 

their outdated IT system for TANF and the Food Stamp Program, they 

would have appreciated more information about what other states were 

doing to implement more efficient and economical IT systems. Officials 

stated that while they had talked to other states about their experiences 

developing IT systems, more comprehensive information on best practices 

would save states time and money. Some agencies are successfully 

 25GAO, Human Services Integration: Results of a GAO Cosponsored Conference on

Modernizing Information Systems, GAO-02-121 (Washington, D.C.: Jan. 31, 2002). 

26 GAO, Welfare Reform: Improving State Automated Systems Requires Coordinated

Federal Effort, GAO/HEHS-00-48 (Washington, D.C.: Apr. 27, 2000). 

27 GAO, Human Services: Federal Approval and Funding Processes for States’ 

Information Systems, GAO-02-347T (Washington, D.C.: July 9, 2002). 

Page 35 GAO-06-942 Human Services Programs
collaborating and sharing best practices. For example, counties that we 

visited in California successfully shared technology information that 

helped to save resources. Officials in San Mateo County, California, 

reported that by automating the case management process for the 

Medicaid and Food Stamp programs through call centers, they avoided 

spending additional dollars on personnel costs associated with rising case 

levels. According to county officials, this strategy has helped them reduce 

staff’s workload, avoid increased administrative costs, and increase 

integrity across programs. Officials in nearby Santa Cruz County reported 

that they adopted this strategy after learning of its effectiveness in San 

Mateo County. Michigan UI officials reported that DOL has a strong 

partnership with state UI agencies. DOL sponsors a central online forum 

for sharing technology information. Michigan UI officials noted that this 

effort provides a forum for exchanging ideas and learning from the 

mistakes of others. DOL’s initiative has helped states develop call centers 

and developed sample computer programming code for Internet claims 

systems, which it shared with states. Further sharing of technology 

strategies like these across programs, states, and agencies potentially 

could yield more cost savings elsewhere. 

To use taxpayer dollars responsibly, federal programs must be 

administered in a cost-efficient manner. Administrative costs are an 

important component of the total cost of providing supports to vulnerable

people. This report shows slow but steady increases in administrative 

spending among many of the human service programs included in this 

review, although administrative spending increased at a lower rate than 

total program spending. Spending data cannot be compared across 

programs due to programmatic differences, and little information is 

available regarding what level of administrative spending for human 

service programs is appropriate. Even so, there are opportunities available 

to the federal government to assist state and local governments in better 

identifying and implementing cost-saving initiatives that also ensure 

accurate and timely provision of benefits and services. However, minimal 

information is available on which opportunities are most effective and 

what any actual cost savings might be. 

Conclusion 

The costs associated with running human service programs have been a 

long-standing concern for policy makers interested in maximizing the 

dollars that go directly to helping vulnerable people. While all levels of 

government have made efforts to reduce the time and money required to 

run these programs, it is unclear the extent to which these efforts have 

actually reduced costs. This is especially true with efforts to streamline 

Page 36 GAO-06-942 Human Services Programs
processes across programs by simplifying program rules and facilitating 

technology enhancements. Simplifying policies across programs may 

increase or decrease the number of eligible individuals, which in turn may 

affect program costs. Technology enhancements likely come with start-up

costs and may initially create additional work for staff. Because of the 

complexities of such strategies for streamlining processes, there are no 

easy solutions for reducing administrative costs. However, it is 

appropriate to move forward to test the cost-effectiveness of various 

strategies. Only then can more systematic approaches be taken to 

maximize the dollars that are spent to run human service programs. 

Our previous work recommended that Congress consider authorizing state 

and local demonstration projects designed to simplify and coordinate 

eligibility determination. Maintaining the status quo of stovepiped program 

rules and policies related to eligibility determination and other processes 

will continue to result in program rules that are complex and vary across 

programs and processes that are duplicative and cumbersome to 

administer. Providing states with demonstration opportunities would 

allow them to challenge the current stovepipes and open the door to new 

cost-efficient approaches for administering human service programs. 

Demonstration projects would allow for testing and evaluating new 

approaches that aim to balance cost savings with program effectiveness 

and integrity. The information from these evaluations would help the 

federal government determine which strategies are most effective without 

investing the time and resources in unproven strategies. Congress can 

allow for such approaches to thrive by not only giving states opportunities 

to test these approaches but by following up to identify and implement 

successful strategies. While it may be difficult to fully determine the extent

to which observed changes are the result of the demonstration projects, 

such projects would be useful to identify lessons learned. Members of 

Congress have identified the usefulness of demonstration projects, and 

both the House and Senate have considered proposals to authorize such 

demonstration projects, although legislation has not been enacted. 

Therefore, continued efforts are needed to move forward. 

Page 37 GAO-06-942 Human Services Programs
As suggested in our prior work (GAO-02-58), we continue to believe that 

Congress should consider authorizing state and local demonstration 

projects designed to streamline and coordinate eligibility determination 

and other processes for federal human service programs. Such projects 

would provide states and localities with opportunities to test the costeffectiveness of changes designed to simplify or align program rules, 

expand data sharing across agencies, or enhance information technology 

systems to facilitate eligibility determinations and other processes. 

Matter for 

Congressional 

Consideration 

Once authorized, states and localities or both could submit proposals for 

demonstration projects and relevant federal agencies working in a 

coordinated manner could review them, suggest modifications as needed, 

and make final approval decisions. Federal agencies should consider 

certain criteria for the demonstration projects, including oversight and 

internal controls to help ensure that effectiveness and integrity are 

preserved and vulnerable populations are protected. Demonstration 

projects would include waivers of federal statutes and regulations as 

needed and deemed appropriate. While our review covered seven federal

support programs, we are not suggesting that the demonstration projects 

must include all of these programs or exclude others. States should be 

given the opportunity to try various approaches aimed at streamlining 

processes that consider all feasible programs. 

Projects must be given sufficient time to be fully implemented and must 

include an evaluation component. Cost neutrality of both administrative 

and program costs would be most desirable for federal approval of these 

projects. However, projects should not be rejected solely because they are 

unable to guarantee cost neutrality over the short run. It would be 

expected that, over a period of time, state and federal efforts to streamline 

processes would create administrative cost savings that could help offset

any increased program costs. Evaluations of the projects should include 

an analysis of whether administrative cost savings were indeed achieved in 

the long-run, which specific laws or regulations were waived to facilitate 

the project, and whether the effectiveness and integrity of program 

services were maintained. To enhance the information from each of the 

projects, Congress should consider authorizing a capping report that 

would compile information from each the individual demonstration 

projects and identify lessons learned.

Page 38 GAO-06-942 Human Services Programs
We shared a draft of this report with HHS, USDA, and DOL for comment. 

HHS agreed with the report’s emphasis on the need for cost-effective 

administration of federal programs and noted that HHS has taken steps to 

increase cost-effectiveness in a number of the programs it oversees. HHS 

also provided a number of specific examples of Child Care Bureau efforts. 

HHS’s written comments appear in appendix III. 

Agency Comments 

In their comments, officials from the USDA Food and Nutrition Service 

suggested that, in order to acknowledge the complexity of the Food Stamp 

Program, we add more detailed information to the report on several 

topics, including: differences in administrative cost definitions, how 

programmatic requirements may affect costs, state by state cost 

comparisons, program level impact analyses on past proposed changes to

eligibility rules, and strategies for facilitating technology. We added more 

information where appropriate, although our focus in this report remains 

on a national perspective across programs rather than in-depth, program 

specific or state-level analyses. In addition, the officials questioned the use 

of the GDP to adjust for inflation and stated that staff salaries and benefits

constitute a large proportion of total costs. As we state in the report, we 

used nominal dollars to discuss historical administrative spending. In 

addition to nominal dollars, we used GDP to discuss the percent change in

spending over time. Recognizing that staff salaries and benefits make up a 

large portion of spending, we also used DOL’s Employment Cost Index to 

discuss how average salaries and benefits for state and local government 

workers changed over time. 

DOL, as well as HHS, provided technical comments, which we 

incorporated in the report where appropriate. None of the agencies 

commented directly on the matter for congressional consideration. 

As agreed with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of the report until 30 days after its 

issue date. At that time, we will send copies of this report to the 

Secretaries of the Departments of Agriculture, Health and Human 

Services, and Labor; relevant congressional committees; and others who 

are interested. Copies will be made available to others upon request, and 

this report will also be available on GAO’s Web site at http://www.gao.gov. 

Page 39 GAO-06-942 Human Services Programs
If you or your staff have any questions about this report, please contact me 

on (202) 512-7215. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

Additional GAO contacts and acknowledgments are listed in appendix IV.

Sincerely, 

Cynthia M. Fagnoni 

Managing Director, Education, Workforce, and Income Security Issues 

Page 40 GAO-06-942 Human Services Programs
Appendix I: 

Methodology 

Objectives, Scope, and 

Page 41 GAO-06-942 

Appendix I: Objectives, Scope, and 

Methodology 

We designed our study to provide information on (1) how administrative 

costs are defined in selected programs and what rules govern federal and

state participation in funding these costs; (2) what is known about the 

amounts of federal and state administrative spending for selected 

programs and how they have changed over time; and (3) what 

opportunities exist at the federal level to help states balance cost savings 

with program effectiveness and integrity. To obtain information on these

issues, we compiled expenditure data for each of the programs covered in 

this review, conducted state and local site visits, interviewed federal 

program officials, and reviewed relevant laws, regulations, and reports. We 

focused our study on seven key programs: Adoption Assistance, Child 

Care & Development Fund (CCDF), Child Support Enforcement (CSE), the 

Food Stamp Program, Foster Care, Temporary Assistance for Needy 

Families (TANF), and Unemployment Insurance (UI). 

We issued two related reports in June and July 2006 that focused on the

administrative costs of the Adoption Assistance and Foster Care programs 

(GAO-06-649, Foster Care and Adoption Assistance: Federal Oversight 

Needed to Safeguard Funds and Ensure Consistent Support for States’ 

Administrative Costs, June 2006) and the Child Support Enforcement 

program (GAO-06-491, Child Support Enforcement: More Focus on Labor 

Costs and Administrative Cost Audits Could Help Reduce Federal 

Expenditures, July 2006). We coordinated our data collection efforts for 

all three reports, so some of the information on the CSE, Adoption 

Assistance, and Foster Care programs in this report is drawn from work

conducted for the earlier reports. For example, for this report, we 

supplemented our data collection efforts with spending data collected for 

the other two reports as well as information collected from interviews 

conducted for the other reports. We also coordinated efforts to assess the 

reliability of the administrative spending data used in the three reports. 

We conducted our work between July 2005 and August 2006 in accordance 

with generally accepted government auditing standards. 

Analyses of Program 

Spending Data 

We obtained spending data for each of the seven programs from the 

departments of Agriculture, Health and Human Services, and Labor. We 

analyzed administrative spending data for each program, as defined for 

financial reporting purposes by program laws and regulations, for fiscal 

years 2000-2004, including federal and state shares of spending. Fiscal year 

2004 data were the most current data available at the time of our review. 

We also analyzed 2004 state spending data to learn about the variations in

spending across states. We assessed the reliability of the administrative 

Human Services Programs
Appendix I: Objectives, Scope, and 

Methodology 

spending data by interviewing (1) agency officials knowledgeable about 

the data and (2) state officials in the five states we visited knowledgeable 

about the data as reported to the federal government. We also reviewed 

state single audit reports and talked to state auditors in the five states we 

visited to identify any known problems with the administrative spending 

data or the systems that store the data. Our reviews and discussions did 

not identify significant problems with the data. We determined that these 

data were sufficiently reliable for the purposes of this report. 

We visited state agencies and county offices in five states—California, 

Maryland, Michigan, Ohio, and South Carolina. The counties we visited 

were: San Mateo and Santa Cruz Counties in California, Wicomico County 

in Maryland, Wayne County in Michigan, Butler and Licking Counties in 

Ohio, and Newberry County in South Carolina. We selected the states to 

provide a range of total program spending and share of spending on 

administration, as well as a mixture of state and county administrative 

structures, urban and rural demographics, and geography. Although our 

selection includes a range of states, our findings are not generalizable 

beyond the states included in our study. In each of the five states, we 

visited at least one county office to talk to county program officials and 

local staff. We developed a questionnaire to capture the types of 

administrative activities that occur in each program at the state and local 

levels. We asked the state and local program officials we visited to fill out 

the questionnaire, and we analyzed the results to learn how administrative

activities compared across the programs. We interviewed state and local 

program officials and staff about administrative activities, costs, options 

for reducing costs while preserving services and challenges to and 

consequences of these options. During the interviews, we also inquired 

about any interactions between our key programs and other programs that 

support vulnerable people, including Medicaid, the State Children’s Health 

Insurance programs (SCHIP), the Low-Income Home Energy Assistance 

Program (LIHEAP), and housing programs. 

Visits to State Agencies 

and County Offices

Interviews of Federal 

Officials, State Auditors, 

and Experts 

We interviewed federal program officials at the departments of 

Agriculture, Health and Human Services, and Labor and the Office of 

Management and Budget about administrative costs, options for reducing 

costs while preserving services and challenges to and consequences of 

these options. In addition, we conducted phone interviews with state audit 

officials from the five states about any similar work they have conducted.

We also discussed our objectives with representatives from the American 

Public Human Services Association, Center for Law and Social Policy, and 

Page 42 GAO-06-942 Human Services Programs
Appendix I: Objectives, Scope, and 

Methodology 

National Governors Association. These discussions covered each of the 

objectives and the participants shared their views and insights. 

Reviews of Laws, 

Regulations, and Reports 

We reviewed laws and regulations on definitions of administrative costs 

and federal/state participation in funding these costs for the selected 

programs. We also reviewed relevant circulars issued by the Office of 

Management and Budget. We obtained and reviewed A-133 state single 

audit reports for the states we visited. In addition, we reviewed documents 

and reports prepared by the Center for Law and Social Policy, 

Congressional Research Service, and other research organizations as well 

as several prior GAO reports. 

Page 43 GAO-06-942 Human Services Programs
Appendix II: Administrative Cost Activities

Recognized by Program Statutes and 

Regulations 

Page 44 GAO-06-942 Human Services Programs

Appendix II: Administrative Cost Activities 

Recognized by Program Statutes and 

Regulations 

Adoption Assistance and Foster Care CCDF 

Eligibility determination/enrollment • Determination and re-determination of 

eligibility 

• Fair hearings and appeals 

Benefit issuance 

Quality control • Audit services as required by regulation 

• Coordinating the resolution of audit and 

monitoring findings 

• Maintaining substantiated complaint files in 

accordance with regulatory requirements 

• Monitoring program activities for compliance 

with program requirements 

Program management and planning • Providing short-term training to current or 

prospective foster or adoptive parents 

and the members of the state licensed or 

approved child care institutions providing 

care to children foster care or adoption 

assistance 

• Rate setting 

• Training personnel employed or 

preparing for employment by the state or 

local agency administering the plan 

• Coordinating the provision of Child Care and

Development Fund services with other federal, 

state, and local child care, early childhood 

development programs, and before-and afterschool care programs 

• Developing agreements with administering 

agencies in order to carry out program 

activities 

• Evaluating program results 

• Planning, developing, and designing the Child 

Care and Development Fund program 

• Preparing the application and plan 

Outreach • Recruitment and licensing of foster 

homes and institutions 

• Providing local officials and the public with 

information about the program, including the 

conduct of public hearings 

Case management • Case management and supervision 

• Case reviews 

• Development of the case plan

• Placement of the child 

• Preparation for and participation in 

judicial determinations 

• Referral to services 
Appendix II: Administrative Cost Activities

Recognized by Program Statutes and 

Regulations 

Food Stamps TANF UIa

• Costs of certifying applicant households 

• Fair hearings

• Activities related to eligibility 

determinations

• Acceptance, storage, protection, control, 

and accounting of coupons 

• Issuance of coupons to all eligible 

households 

• Audit services 

• Program investigations and prosecutions 

• Fraud and abuse units 

• Advisory Councils 

• Management studiesb

• Proposal costsb

• Training and education 

• Monitoring programs and projects 

• Preparation of program plans, budgets, 

and schedules

• Advertising (for limited purposes) 

• Exhibits 

• Food stamp informational activities, but 

not including recruitment activities 

• Public relations

Page 45 GAO-06-942 Human Services Programs
Appendix II: Administrative Cost Activities

Recognized by Program Statutes and 

Regulations 

Adoption Assistance and Foster Care CCDF 

IT Systems • All expenditures of a state to plan, 

design, develop, install and operate the 

statewide automated child welfare 

information system (without regard to 

whether the system may be used with 

respect to foster or adoptive children 

other than those on behalf of whom 

foster care maintenance or adoption 

assistance payments may be made) 

• Costs related to data collection

Reporting • Costs related to reporting • Preparing reports and other documents 

related to the program for submission to 

the Secretary of Health and Human 

Services 

Overhead • A proportionate share of related agency 

overhead 

• Administrative services, including such 

services as accounting services, 

performed by grantees or subgrantees 

or under agreements with third parties 

• Indirect costs as determined by an 

indirect cost agreement or cost

allocation plan pursuant to regulation 

• Managing or supervising persons with 

certain administrative and 

implementation responsibilities 

• Other costs for goods and services 

required for the administration of the 

program, including rental or purchase of 

equipment, utilities, and office supplies 

• Salaries and related staff costs 

• Travel costs incurred for official business 

in carrying out the program 

Source: GAO analysis of applicable program statutes and regulations. 

Page 46 GAO-06-942 Human Services Programs
Appendix II: Administrative Cost Activities

Recognized by Program Statutes and 

Regulations 

Food Stamps TANF UI 

• Automated data processing and 

information retrieval systemsb

• Implementing and operating the 

immigration status verification system 

• Management information systems not 

related to the tracking and monitoring of 

TANF requirements (e.g., for a 

personnel and payroll system for state 

staff) 

• All of the reasonable expenditures 

attributable to the costs of the 

implementation and operation of the 

immigration status verification system 

• Preparing reports and other documents

• Accounting 

• Bonding 

• Budgeting 

• Building lease management 

• Building space and related facilitiesb

• Capital expendituresb

• Central stores 

• Communications 

• Costs incurred by agencies other than 

the Stateb

• Depreciation and use allowance 

• Disbursing service 

• Employee fringe benefits 

• Employee morale, health, and welfare 

costs 

• Insuranceb

• Legal expenses

• Maintenance and repair 

• Materials and supplies 

• Memberships, subscriptions, and 

professional activities 

• Motor pools 

• Payroll preparation 

• Personnel administration 

• Preagreement costsb

• Printing and reproduction 

• Procurement service 

• Professional servicesb

• Salaries 

• Taxes 

• Transportation

• Travel 

• Costs for general administration and 

coordination of programs, including 

contract costs and all indirect or 

overhead costs

• Costs for the goods and services 

required for administration of the 

program such as the costs for supplies, 

equipment, travel, postage, utilities, and 

rental of office space and maintenance 

of office space, provided that such costs 

are not excluded as a direct 

administrative cost for providing 

program services 

• Procurement activities 

• Salaries and benefits of staff performing 

administrative and coordination 

functions (but not salaries and benefits 

for program staff) 

• Services related to accounting, litigation, 

audits, management of property, payroll, 

and personnel

• Travel costs incurred for official 

business and not excluded as a direct 

administrative cost for providing 

program services 

• The cost of mailing unemployment 

compensation statements, even if 

information about the earned income 

credit is mailed along with it (except that a 

portion of the mailing costs may be 

counted as a non-administrative cost if 

the inclusion of materials related to the 

tax credit increases the postage required

to mail the information) 

Note: Child Support Enforcement program statutes and regulations do not contain specific definitions 

of administrative costs. 

a

While the UI program legislation does identify two specific activities that are covered as 

administrative costs, a much broader range of activities is actually covered because each state 

receives “such amounts as the Secretary of Labor determines to be necessary for the proper and 

efficient administration of its unemployment compensation law.” 

b

These costs are allowable only with approval from the USDA Food and Nutrition Service. 

Page 47 GAO-06-942 Human Services Programs
Appendix III: Comments from the Department 

of Health and Human Services 

Page 48 GAO-06-942 Human Services Programs

Appendix III: Comments from the 

Department of Health and Human Services 
Appendix III: Comments from the Department 

of Health and Human Services 

Page 49 GAO-06-942 Human Services Programs
Appendix IV: GAO Contact and Staff Acknowledgments 

Page 50 GAO-06-942 

Appendix IV: GAO Contact and Staff 

Acknowledgments 

Cynthia Fagnoni (202) 512-7215 

The following staff members made major contributions to the report: 

Heather McCallum Hahn (Assistant Director), Cady S. Panetta 

(Analyst-in-Charge), David Bellis, William Colvin, Cheri Harrington, 

Gale Harris, Sheila McCoy, Luann Moy, and Tovah Rom. 

GAO Contact 

Acknowledgments 

Human Services Programs
Related GAO Products 

Page 51 GAO-06-942 

Related GAO Products 

Child Support Enforcement: More Focus on Labor Costs and 

Administrative Cost Audits Could Help Reduce Federal Expenditures.

GAO-06-491. Washington, D.C.: July 6, 2006. 

Foster Care and Adoption Assistance: Federal Oversight Needed to 

Safeguard Funds and Ensure Consistent Support for States’

Administrative Costs. GAO-06-649. Washington, D.C.: June 15, 2006. 

Means-Tested Programs: Information on Program Access Can Be an 

Important Management Tool. GAO-05-221. Washington, D.C.: March 11, 

2005. 

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. 

TANF and Child Care Programs: HHS Lacks Adequate Information to 

Assess Risk and Assist States in Managing Improper Payments. 

GAO-04-723. Washington, D.C.: June 18, 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. 

Human Services: Federal Approval and Funding Processes for States’ 

Information Systems. GAO-02-347T. Washington, D.C.: July 9, 2002. 

Welfare Reform: States Provide TANF-Funded Work Support Services to 

Many Low-Income Families Who Do Not Receive Cash Assistance. 

GAO-02-615T. Washington, D.C.: April 10, 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. 

Human Services Integration: Results of a GAO Cosponsored Conference

on Modernizing Information Systems. GAO-02-121. Washington, D.C.: 

January 31, 2002. 

Means-Tested Programs: Determining Financial Eligibility Is

Cumbersome and Can Be Simplified. GAO-02-58. Washington, D.C.: 

November 2, 2001. 

Human Services Programs
Related GAO Products 

Food Stamp Program: Program Integrity and Participation Challenges.

GAO-01-881T. Washington, D.C.: June 27, 2001. 

Food Stamp Program: States Seek to Reduce Payment Errors and 

Program Complexity. GAO-01-272. Washington, D.C.: January 19, 2001. 

Benefit and Loan Programs: Improved Data Sharing Could Enhance 

Program Integrity. GAO/HEHS-00-119. Washington, D.C.: September 13, 

2000. 

Welfare Reform: Improving State Automated Systems Requires 

Coordinated Federal Effort. GAO/HEHS-00-48. Washington, D.C.: April 27,

2000. 

Food Stamp Program: States Face Reduced Federal Reimbursements for 

Administrative Costs. GAO/RCED/AIMD-99-231. Washington D.C.: July 

23, 1999. 

Food Stamp Program: Various Factors Have Led to Declining 

Participation. RCED-99-185. Washington, D.C.: July 2, 1999. 

Welfare Reform: Few States Are Likely to Use the Simplified Food Stamp 

Program. GAO/RCED-99-43. Washington, D.C.: January 29, 1999. 

Welfare Programs: Opportunities to Consolidate and Increase Program

Efficiencies. GAO/HEHS-95-139. Washington, D.C.: May 31, 1995. 

Means-Tested Programs: An Overview, Problems, and Issues. 

GAO/T-HEHS-95-76. Washington, D.C.: February 7, 1995. 

Welfare Simplification: States’ Views on Coordinating Services for LowIncome Families. GAO/HRD-87-110FS. Washington, D.C.: July 29, 1987. 

Welfare Simplification: Thirty-Two States’ Views on Coordinating 

Services for Low-Income Families. GAO/HRD-87-6FS. Washington, D.C.: 

October 30, 1986. 

Welfare Simplification: Projects to Coordinate Services for Low-Income

Families. GAO/HRD-86-124FS. Washington, D.C.: August 29, 1986. 

Needs-Based Programs: Eligibility and Benefit Factors. 

GAO/HRD-86-107FS. Washington, D.C.: July 9, 1986. 

(130494) Page 52 GAO-06-942 Human Services Programs
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