GAO

United States General Accounting Office

Testimony

Before the Subcommittee on Government Management, 

Information and Technology, Committee on Government 

Reform, and the Subcommittee on Technology, Committee 

on Science, House of Representatives

For Release on Delivery

Expected at

10 a.m.

Wednesday,

October 6, 1999

YEAR 2000 COMPUTING 

CHALLENGE

Readiness of Key 

State-Administered Federal 

Programs

Statement of Joel C. Willemssen

Director, Civil Agencies Information Systems

Accounting and Information Management Division

GAO/T-AIMD-00-9
Page 1 GAO/T-AIMD-00-9

Mr. Chairman, Ms. Chairwoman, and Members of the Subcommittees:

Thank you for inviting us to participate in today’s hearing on the Year 2000 

readiness of state-administered federal programs. These programs include 

critical federal human services functions such as Food Stamps and 

Medicaid. As we reported in November 1998, many systems that support 

state-administered federal human services programs were at risk from the 

Year 2000 challenge and much work remained to ensure that services 

would continue.1

 In February of this year, we testified that while some 

progress had been achieved, many states’ systems were not scheduled to 

become Year 2000 compliant until the last half of 1999.2

 This past summer, 

we testified that although federal agencies were working with their state 

partners to obtain readiness information and provide assistance, much 

work remained at the state level to ensure that major services were not 

disrupted.3

As requested, after a brief background discussion, today I will (1) highlight 

the reported Year 2000 readiness of 10 key state-administered federal 

human services programs and (2) discuss federal activities to assess states’ 

readiness for these 10 programs.

Background In March 1999, the Office of Management and Budget (OMB) designated 

42 programs as high impact (later adding a 43rd) and designated lead 

agencies for each. OMB reported that it designated those programs that, if 

disrupted, could have a direct effect on the public’s health and safety or the 

well-being of individuals.

Almost one quarter of the programs on OMB’s high-impact list are 

administered by the states. These programs provide essential benefits, such 

as food stamps and unemployment benefits, to millions of people. 

1

Year 2000 Computing Crisis: Readiness of State Automated Systems to Support Federal 

Welfare Programs (GAO/AIMD-99-28, November 6, 1998).

2

Year 2000 Computing Crisis: Readiness of State Automated Systems That Support Federal 

Human Services Programs (GAO/T-AIMD-99-91, February 24, 1999).

3

Year 2000 Computing Challenge: Federal Efforts to Ensure Continued Delivery of Key StateAdministered Benefits (GAO/T-AIMD-99-241, July 15, 1999).
Page 2 GAO/T-AIMD-00-9

Table 1 lists these 10 high-impact state-administered federal human 

services programs and the lead federal agency responsible for each.4

Table 1: State-Administered Federal Human Services Programs

Source: OMB.

For each high-impact program, the lead federal agency was charged with 

identifying to OMB the partners integral to program delivery; taking a 

leadership role in convening those partners; assuring that each partner had 

an adequate Year 2000 plan and, if not, helping each partner without one; 

and developing a plan to ensure that the program would operate effectively. 

According to OMB, such a plan might include testing data exchanges 

across partners, developing complementary business continuity and 

contingency plans, sharing key information on readiness with other 

partners and the public, and taking other steps necessary to ensure that the 

program would work. OMB directed the lead agencies to provide a 

schedule and milestones of key activities in the plan by April 15, 1999; it 

also asked agencies to provide monthly progress reports.

OMB also directed federal oversight agencies to include the status of 

selected state human services systems in their quarterly Year 2000 progress 

reports. Specifically, OMB asked that agencies report the date when each 

state’s systems would be Year 2000 compliant. Further, it requested that 

4

Appendix I contains a description of each program.

Lead federal agency Program

Department of Agriculture Child Nutrition programs

Food Stamps

Special Supplemental Nutrition Program for Women, Infants, and Children

Department of Health and Human Services (HHS) Child Care

Child Support Enforcement

Child Welfare

Low Income Home Energy Assistance Program

Medicaid

Temporary Assistance for Needy Families

Department of Labor Unemployment Insurance
Page 3 GAO/T-AIMD-00-9

federal agencies describe their planned actions to help ensure that these 

programs would be able to provide services and benefits. 

Some State Programs 

Reported as Already 

Compliant; Others May 

Not Be Until Late 1999

Table 2 summarizes the latest information on state-administered federal 

human services programs reported by OMB on September 13, 1999.5

 The 

table indicates that while many states6

 reported their programs to be 

compliant, a number did not plan to complete Year 2000 efforts until the 

last quarter of 1999. For example, nine states did not expect to be 

compliant until the last quarter of 1999 for Child Support Enforcement, 

seven states for Food Stamps, and four states for Unemployment 

Insurance. Moreover, Year 2000 readiness information was unknown in 

many cases. For example, according to OMB, the status of 16 states’ Low 

Income Home Energy Assistance programs was unknown because 

applicable readiness information was not available.

5

For Medicaid, OMB reports on the two primary systems that states use to administer the 

program: (1) the Integrated Eligibility System, used to determine whether an individual 

applying for Medicaid meets the eligibility criteria for participation, and (2) the Medicaid 

management information system, used to process claims and deliver payments for services 

rendered. Integrated eligibility systems are also often used to determine eligibility for other 

public assistance programs, such as Food Stamps. 

6

In the context of this testimony, the term states can include the District of Columbia and 

U.S. territories, such as Puerto Rico.
Page 4 GAO/T-AIMD-00-9

Table 2: Reported State-level Readiness for Federally Supported Programs

Note: This chart contains readiness information from the 50 states, the District of Columbia, Guam, 

Puerto Rico, and the Virgin Islands.

a

OMB defined compliant as when the state or territory had determined that its systems were able to 

provide services, whether directly or indirectly, to beneficiaries.

b

In many cases, the report indicated a date instead of whether the state was compliant. According to 

OMB, in some cases, while the estimated dates had passed, confirmation of completion had not been 

received from the federal agencies.

c

Unk. indicates that, according to OMB, no information was reported by the agency.

d

N/A indicates that the states or territories reported that the data requested were not applicable to 

them.

Source: Progress on Year 2000 Conversion: 10th Quarterly Report (OMB, data received August 13, 

1999; report issued September 13, 1999).

The information in the OMB report was gathered, but not verified, by the 

Departments of Agriculture, HHS, and Labor based on submissions by the 

states and territories. As a result, some of the state information reported by 

OMB may not be accurate or up-to-date. For example, in five cases, state 

Expected date of 1999 compliance

Program Complianta

Est. compliance date

before Aug. 1999b Aug. Sept. Oct. Nov. Dec. Unk.c N/Ad

Child Nutrition 41 1 4 4 2 0 2 0 0

Food Stamps 39 0 3 5 3 4 0 0 0

Women, Infants, and 

Children 45 0 0 2 3 3 1 0 0

Child Care 25 12 0 2 2 3 0 6 4

Child Support 

Enforcement 23 9 2 7 4 3 2 4 0

Child Welfare 23 14 1 3 5 3 0 5 0

Low Income Home 

Energy Assistance 

Program 25 2 3 3 2 0 0 16 3

Medicaid − Integrated 

Eligibility System 25 18 0 5 4 0 0 2 0

Medicaid −

Management 

Information System 22 16 5 4 4 1 0 2 0

Temporary Assistance 

for Needy Families 27 15 2 4 2 1 0 3 0

Unemployment 

Insurance 39 0 0 10 3 0 1 0 1
Page 5 GAO/T-AIMD-00-9

programs cited as compliant by OMB in its June quarterly report had 

estimated compliance dates of October 1999 or later in its September 

quarterly report.

Further, the late reported compliance dates of some states are problematic 

since schedule delays or unexpected problems could well arise. Indeed, 

reported schedule delays have now occurred in 8 of the 10 stateadministered programs since OMB’s June 1999 report.7

 For example, OMB’s 

June report showed that three states had estimated compliance dates in the 

last quarter of 1999 for Food Stamps, while the most recent OMB report 

indicates that seven states now have estimated fourth quarter compliance 

dates. To illustrate, the June OMB report indicated that a state and a 

territory were due to be compliant in June for Food Stamps but the 

September OMB report indicated that the date for these entities had moved 

to November 1999.

Assessments of StateAdministered Human 

Services Programs Are 

Ongoing

In addition to obtaining state-reported readiness status information, the 

three federal departments are taking other actions to assess the ability of 

state-administered programs to continue operating successfully into the 

next century. However, the approaches of the three departments in 

assessing the readiness of state-administered federal human services 

programs vary significantly. For example, HHS’ Health Care Financing 

Administration (HCFA) obtained a contractor to perform comprehensive 

on-site reviews in all states, using a standard methodology. Agriculture’s 

Food and Nutrition Service’s (FNS) approach includes actions such as 

having regional offices monitor state Year 2000 efforts and obtaining state 

certifications of compliance. The Department of Labor is relying on its 

regional offices to monitor state Year 2000 activities as well as requiring 

states to obtain and submit independent verification and validation reports 

after declaring their systems compliant. I will now briefly describe some of 

the specific actions that the Departments of Agriculture, HHS, and Labor 

have taken and/or plan to take. 

Department of Agriculture Agriculture’s FNS is responsible for three state-administered federal human 

services programs−Child Nutrition; Food Stamps; and Women, Infants, and 

7

There was no change in one state-administered federal program and the number of states 

with estimated compliance dates in the last quarter declined by one for a second program.
Page 6 GAO/T-AIMD-00-9

Children. This past week we reported that FNS has taken action and made 

progress in ensuring Year 2000 readiness of these programs.8

 However, FNS 

had a long way to go with the limited time remaining to fully meet its highimpact program responsibilities. We continue to perform work in this area 

for the House Committee on Agriculture, Subcommittee on Department 

Operations, Oversight, Nutrition, and Forestry.

To obtain assurance that state systems are compliant, FNS’ regional offices 

are collecting readiness status information from states as part of their 

monitoring. Moreover, in June 1999, FNS required its regions to provide, for 

each program, a copy of either a state letter certifying that it was Year 2000 

compliant or a business continuity and contingency plan. As of August 25, 

1999, FNS had received 

• 15 certifications and 6 business continuity and contingency plans for 

Child Nutrition;

• 22 certifications and 16 business continuity and contingency plans for 

Food Stamps; and 

• 25 certifications and 21 business continuity and contingency plans for 

Women, Infants, and Children. 

The number of certifications provided to FNS9

 is significantly lower than 

the number of compliant state-level programs indicated in OMB’s latest 

quarterly report (see table 2)−41 states for Child Nutrition; 39 for Food 

Stamps; and 45 for Women, Infants, and Children. 

Business continuity and contingency plans are essential to respond to two 

types of failures: those that can be predicted (e.g., systems renovations that 

are behind schedule) and those that are unforeseen (e.g., systems that fails 

despite having been certified as Year 2000 compliant). Therefore, it is 

important for organizations to have such plans, regardless of the readiness 

status of their systems. 

Although agency officials instructed FNS regional offices to require state 

agencies for all three programs to prepare business continuity and 

contingency plans, it remains unclear whether all states have adequate 

8

Year 2000 Computing Challenge: Readiness of USDA High-Impact Programs Improving, But 

More Action Is Needed (GAO/AIMD-99-284, September 30, 1999).

9

FNS officials told us that some states are reluctant to provide certification statements 

because of potential litigation concerns.
Page 7 GAO/T-AIMD-00-9

plans to ensure the continuity of these programs. For example, a 

June 18 FNS document summarizing the agency’s review of contingency 

plans received to date noted that “all need work.” It appears that little 

progress has been made since then because, as of September 15, FNS 

officials told us that only two states had submitted suitable contingency 

plans. In addition, FNS has not established milestones for when states 

should complete business continuity and contingency plans. Our 

September report10 recommended that such milestones be established. 

USDA and FNS agreed with this recommendation and said they planned to 

take steps to implement it.

To help states with their Year 2000 efforts, FNS obtained a contractor to 

conduct on-site visits to certain states and territories. Between May 1999 

and September 1999, this contractor visited 21 states and territories−for 

one or more state-administered programs−in which (1) the state had 

estimated it would not be compliant until the last quarter of the year, 

(2) the state had reported little or no progress to date, and/or (3) an FNS 

regional office requested that the state be visited. These visits were 

principally intended to provide technical assistance to the states in areas 

such as Year 2000 project management, hardware and software testing, and 

contingency planning. FNS headquarter officials told us that while they 

have not required their regional offices to follow up with states in those 

cases in which the contractor had recommendations for improvement, the 

regional offices were doing so in some cases. As a next step, FNS plans to 

have its contractor review contingency plans at those states that reported 

that they expect to be compliant after September 30, 1999. 

Department of Health and 

Human Services

Six of the 10 state-administered federal human services programs are 

overseen by either one of two HHS component entities, HCFA or the 

Administration for Children and Families (ACF). HCFA has adopted an 

approach that includes three rounds of on-site contractor reviews of states 

(performed in conjunction with HCFA regional and headquarters offices) 

using a standard methodology. Yesterday, we issued correspondence to the 

Senate Committee on Finance on the results of our Medicaid work, as 

summarized below.11

10GAO/AIMD-99-284, September 30, 1999.

11Reported Medicaid Year 2000 Readiness (GAO/AIMD-00-22R, October 5, 1999). 
Page 8 GAO/T-AIMD-00-9

Between November 1998 and April 1999, the HCFA contractor completed 

the initial round of on-site reviews in all 50 states and the District of 

Columbia. These reviews included assessments of states’ integrated 

eligibility systems and Medicaid management information systems (MMIS) 

in areas such as project management and planning, remediation progress, 

testing, and contingency planning. After completing the on-site review, the 

contractor (1) identified barriers to successful remediation, (2) made 

recommendations to address specific areas of concern, and (3) placed 

Medicaid integrated eligibility and management information systems into 

low, medium, or high risk categories based on the quality and completeness 

of project management/planning, progress in remediation, quality 

management, testing, and contingency planning.

Since May 1999, HCFA’s contractor has (again, along with officials from 

HCFA regional and headquarters offices) conducted a second round of onsite reviews in 40 states−primarily those in which at least one system was 

categorized as a high or medium risk during the initial visit. As in the first 

round, the state systems were placed in low, medium, or high risk 

categories. A system’s risk level was determined based on the resolution of 

critical issues previously identified, progress in remediation, testing, and 

senior management support. During this round, HCFA’s contractor also 

conducted follow-up telephone calls to four states not visited. 

With respect to the risk levels assigned to the states, as of October 4, 1999, 

• 4 eligibility systems and 5 MMISs were assessed at high risk,

• 13 eligibility systems and 8 MMISs were assessed at medium risk, and

• 36 eligibility systems and 40 MMISs were assessed at low risk.12

These risk ratings indicate that information in the latest OMB quarterly 

report may have overstated the compliance status of some states. For 

example, a program cited as compliant in two states (see table 2) was 

considered to be at high risk by HCFA.

HCFA’s current state risk ratings represent an overall improvement from 

those assigned after the first round of reviews. Nevertheless, many issues 

continue to be unresolved at the states. For example, based on final and 

draft reports for the eligibility systems and MMISs for 37 states, the District 

12Thirteen state risk ratings in the low category are based on the results of first-round visits 

because the states were not visited in the second round. 
Page 9 GAO/T-AIMD-00-9

of Columbia, and two territories and completed follow-up telephone calls 

to 3 states, (1) 43 testing issues were open, (2) 37 project management or 

planning issues were open, and (3) 24 contingency planning issues were 

open.13

HCFA’s third and final round of contractor visits began during the last week 

of September. While HCFA had not finalized its list of states to visit as of 

September 28, 1999, HCFA officials told us that all states will either be 

visited or undergo follow-up telephone calls.

To complement its system reviews, HCFA obtained another contractor to 

review state business continuity and contingency plans. In June 1999, 

HCFA’s business continuity and contingency plan contractor began 

reviewing the quality of state plans through either a desk audit alone or 

both a desk audit and an on-site visit. After the contractor’s review, each 

state’s plan was placed into a high, medium, or low risk category based on 

the contractor’s evaluation of the state’s development process and the 

quality and completeness of its plan. Of the 33 states and two territories 

that have been reviewed by the business continuity and contingency plan 

contractor as of October 1, 1999,14 11 were high risk, 11 were medium risk, 

and 13 were low risk. In addition, many states were reported to have open 

issues in essential areas. For example, 9 states had insufficient detail in 

their plans, 7 states lacked management oversight, and 4 states did not 

intend to test their plans.15

Regarding the other five HHS state-administered federal programs, ACF 

modeled its state assessment program after that of HCFA. However, 

because ACF began its Year 2000 review of state programs several months 

later than HCFA, it is not as far along in its assessment of each state’s 

ability to continue the operation of these programs into the next century. 

As of September 27, 1999, an ACF contractor had conducted on-site 

reviews of 50 states, three territories, and the District of Columbia. These 

reviews, performed with the participation of ACF regional offices, 

encompassed areas such as project management, business risk assessment, 

13A state can have more than one issue in each area.

14As of October 1, 1999, 16 state business continuity and contingency plans had not been 

reviewed, and 2 states had not provided their plans to HCFA.

15A state may have more than one issue. 
Page 10 GAO/T-AIMD-00-9

interfaces, testing, and the business continuity and contingency planning 

process. 

While ACF and its contractor have completed an initial round of site visits, 

the agency has only issued one final report and has provided draft reports 

to another 18 states even though some states were visited many weeks ago. 

For example, as of September 27, 1999, ACF had not provided draft reports 

to five states in which the visits had been completed in June.

The delays in issuing reports restrict the value of the contractor’s state 

visits. For example, because draft reports may not be sent to states for 

months after on-site visits, the information in the reports may no longer be 

current. Further, the recommendations in the reports to improve the states’ 

Year 2000 program may no longer be useful, applicable, or feasible.

With respect to the 19 reports that have been provided to the states as of 

September 27, 1999, table 3 breaks out the number of states placed in each 

risk assessment level.

Table 3: Summary of Risk Levels as of September 27, 1999

a

This program was not evaluated for one of the U.S. territories.

Given the results of the contractor’s review, the state readiness information 

in the latest OMB quarterly report (see table 2) may have overstated the 

status of one state system. One state assessed as at high risk for the Child 

Care program was cited as compliant in the OMB report.

The 19 reports also raised a number of concerns. The most common areas 

of concern were business continuity and contingency planning and testing. 

Risk levels

Program

Number of

state reports High Medium Low

ACF - Child Care 19 1 9 9

ACF - Child Support Enforcement 19 3 6 10

ACF - Child Welfarea 18 0 8 10

ACF - Low Income Home Energy Assistance Program 19 0 7 12

ACF - Temporary Assistance for Needy Families 19 2 7 10
Page 11 GAO/T-AIMD-00-9

ACF plans to continue working with the states after the initial on-site 

reviews are completed, and a second round of reviews is expected for at 

least 10 states. According to an ACF official, this second round of reviews 

will include a reassessment of the concerns raised in the first round as well 

as technical assistance for business continuity and contingency planning. 

Department of Labor With respect to Unemployment Insurance, State Employment Security 

Agencies (SESA) use automated systems to pay unemployment 

compensation benefits to eligible workers and collect state unemployment 

taxes from employers. We have ongoing work reviewing this program for 

the House Committee on Education and the Workforce.

Labor’s regional offices are responsible for monitoring the SESAs’ Year 

2000 activities to better ensure the reliability of state-reported readiness 

status information provided quarterly to Labor. In September 1998, Labor 

established a valuable tool in gauging the readiness status of state 

Unemployment Insurance programs by requiring that all SESAs conduct 

independent verification and validation reviews of their Unemployment 

Insurance programs. The department set a target date of July 1, 1999, for 

states to submit independent verification and validation reports of their 

Unemployment Insurance systems to Labor. Labor obtained a contractor to 

review these reports and rate them from low to high probability of Year 

2000 compliance.

According to the Labor contractor’s review of states’ independent 

verification and validation reports for their benefits and tax systems,

• 20 benefits and 19 tax systems had a low probability of compliance,

• 10 benefits and 9 tax systems had a medium probability of compliance, 

and

• 7 benefits and 6 tax systems had a high probability of compliance.

In addition, 11 and 12 states, respectively, had not submitted independent 

verification and validation reports for their benefits and tax systems.16

Given the results of the contractor’s review, the information provided in the 

latest OMB quarterly report (see table 2) appears to overstate the readiness 

16Five benefits and seven tax systems independent verification and validation reports had 

not yet been rated.
Page 12 GAO/T-AIMD-00-9

status of state systems. Of the 39 state Unemployment Insurance programs 

cited in the report as compliant, Labor’s contractor rated 15 states as 

having low probability for Year 2000 compliance for their benefits and/or 

tax systems.

Labor’s contractor also reviewed states’ business continuity and 

contingency plans. The states’ plans were rated from low to high in terms 

of their compliance with Labor’s requirements for coverage of core 

business functions of benefits and tax systems. Based on the contractor’s 

completed reviews,17 the quality of state business continuity and 

contingency plans varied widely. For example, according to Labor’s 

contractor (1) 23 benefits and 14 tax plans had a low/very low degree of 

compliance with Labor’s requirements and (2) 9 benefits and 5 tax plans 

had a high degree of compliance with Labor’s requirements. In addition, 

one and five states, respectively, did not submit business continuity and 

contingency plans for their benefits and tax functions. 

In summary, much work remains at the state level to ensure that major 

services are not disrupted. At particular risk are several states with systems 

that are not yet Year 2000 compliant. In addition, federal agency reviews of 

business continuity and contingency plans for state-administered federal 

programs indicate that many are inadequate. Federal agencies are working 

with their state partners to obtain readiness information and evaluate and 

provide assistance in key activities such as business continuity and 

contingency planning. Nevertheless, some state completion dates are so 

close to the turn of the century that the risk of disruption to their programs 

is substantially increased, especially if schedule delays or unexpected 

problems arise. This is especially troublesome considering the amount of 

work remaining in developing effective business continuity and 

contingency plans.

Mr. Chairman, Ms. Chairwoman, this concludes my statement. I would be 

pleased to respond to any questions that you or other members of the 

Subcommittees may have at this time.

17Eleven state tax business continuity and contingency plans were not yet rated. 
Page 13 GAO/T-AIMD-00-9

Contact and 

Acknowledgments

For information about this testimony, please contact Joel Willemssen at 

(202) 512-6253 or by e-mail at willemssenj.aimd@gao.gov . Individuals 

making key contributions to this testimony included David Alston, 

Pamlutricia Bens, Margaret Davis, Norman Heyl, Troy Hottovy, Linda 

Lambert, Glenn Nichols, Steve Schwartz, Cynthia Scott, and Mark Shaw.
Page 14 GAO/T-AIMD-00-9

Appendix I

Descriptions of Ten State-Administered 

Federal Human Services Programs ApendxIi

Agriculture

Child Nutrition Programs These provide healthful, nutritional meals to children in public and 

nonprofit private schools, child care institutions, adult day care centers, 

and summer recreational programs through the National School Lunch 

Program, School Breakfast Program, Special Milk Program, Child and 

Adult Care Food Program, Summer Food Service Program, and Nutrition 

Education and Training Program. Agriculture funds these programs, while 

state and local governments administer them. In fiscal year 1998, about

$8.7 billion was obligated for these programs. 

Food Stamps This program provides low-income households with paper coupons or 

electronic benefits transfer cards that can be redeemed for food in about 

200,000 authorized stores across the nation. Agriculture administers the 

program in cooperation with state agencies. The federal government pays 

the full cost of benefits and shares administrative costs with the states. In 

an average month in 1998, 19.8 million people, or 8.2 million households, 

received benefits. 

Special Supplemental 

Nutrition Program for 

Women, Infants, and 

Children

This program is designed to improve the health of lower-income pregnant, 

breast-feeding and postpartum women; infants; and children up to age 5, 

who are at nutritional risk. The program provides participants with 

nutritious supplemental foods, nutrition, education, and referrals to health 

care services. Agriculture provides grants to states that, in turn, provide 

program benefits to participants through local agencies. In 1998, the 

program reached an average of 7.4 million people each month.

HHS

Child Care This is a block grant program that provides low-income families with 

financial assistance for child care. It also funds activities to improve the 

quality and availability of child care, and to establish, expand, or conduct 

early childhood development programs and before- and after-school 

programs. Grants are made to the states and Indian tribes to administer 
Appendix I

Descriptions of Ten State-Administered 

Federal Human Services Programs

Page 15 GAO/T-AIMD-00-9

such programs. In fiscal year 1998, about $1 billion in grants was made to 

provide child care services for about 1.25 million children.

Child Support Enforcement This program provides four major services−locating noncustodial parents, 

establishing paternity, establishing child support obligations, and enforcing 

child support orders−to ensure that children are financially supported by 

both parents. The federal government provides funding to the states and 

local governments to run this program. In fiscal year 1998, the federal 

government provided about $2.6 billion to states and local governments.

Child Welfare Federal grants provide for programs delivering foster care, adoption 

assistance, independent living for older foster children, family preservation 

and support services, child welfare services, prevention of neglect/disabled 

infants, and programs designed to improve the investigation and 

prosecution of child abuse and neglect cases. Grants are provided to states 

and local agencies to develop and administer such programs. In fiscal year 

1998, about $4.3 billion was obligated to the states in grants for child 

welfare programs.

Low Income Home Energy 

Assistance

This is a federal block grant program that assists eligible low-income 

households in meeting their home energy needs. Grants are made to states, 

the District of Columbia, Indian tribes and tribal organizations, and insular 

areas. They can be used for energy assistance in heating, cooling, energy 

crisis intervention, and low-cost residential weatherization and other 

energy-related home repairs. In fiscal year 1998, about $1.2 billion was 

obligated for this program.

Medicaid This is a federal/state-funded health care program furnishing medical 

assistance to eligible needy persons. In fiscal year 1998, Medicaid paid 

about $169 billion for medical services to millions of recipients. Medicaid 

provides health coverage for about 33 million low-income people, which 

include children, the elderly, the blind, and disabled individuals. Within 

broad federal guidelines, each state establishes its own eligibility 

standards; determines the type, amount, duration, and scope of services; 

sets the rate of payment for services; and administers its own program. 
Appendix I

Descriptions of Ten State-Administered 

Federal Human Services Programs

Page 16 GAO/T-AIMD-00-9

Temporary Assistance for 

Needy Families

This program provides time-limited assistance to low-income families. HHS 

provides block grants to the states to operate the program. The states are 

given broad flexibility to set eligibility criteria and determine the types of 

assistance they provide. In fiscal year 1998, the federal government 

provided $16.5 billion in grants to the states.

Labor

Unemployment Insurance The Unemployment Insurance program is a federal-state partnership that 

covers 97 percent of all wage earners. Under this program, Labor is 

responsible for establishing broad guidelines, general oversight, and 

administrative funding, while SESAs pay unemployment compensation 

benefits to eligible workers and collect state unemployment taxes from 

employers. In fiscal year 1998, these state agencies collected $22 billion in 

state unemployment insurance taxes.

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