GAO

United States General Accounting Office

Report to the Secretary of Agriculture

January 2001 FOOD STAMP 

PROGRAM

States Seek to Reduce 

Payment Errors and 

Program Complexity

GAO-01-272

Page 1 GAO-01-272 Reducing Food Stamp Payment Errors

Contents

Letter 3

Appendixes Appendix I: Scope and Methodology 22

Appendix II: States’ Payment Error Rates and Efforts to Collect 

Overpayments 23

Appendix III: Factors in Calculating the Excess Shelter Cost 

Deduction 30

Appendix IV: FNS’ Financial Sanctions and Enhanced Funding 32

Appendix V: States’ Use of Reporting Waivers 34

Appendix VI: GAO Contacts and Staff Acknowledgments 36

Tables Table 1: Food Stamp Combined Payment Error Rates by State, 

Fiscal Years 1993 to 1999 23

Table 2: Food Stamp Dollar Error and Payment Error Rates by

State, Fiscal Year 1999 25

Table 3: States’ Collection of Food Stamp Overpayments 

by Collection Method, Fiscal Year 1999 27

Table 4: FNS’ Financial Sanctions of States, Fiscal Years 1995 to 1999 32

Table 5: FNS’ Enhanced Funding for States With Low Error Rates, 

Fiscal Years 1995 to 1999 33

Figure Figure 1: National Payment Error Rate for the Food Stamp Program, 

Fiscal Years 1993 to 1999 6

Abbreviations

FNS Food and Nutrition Service

SUA standard utility allowance
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United States General Accounting Office

Washington, D.C. 20548

January 19, 2001 Letr

The Honorable Dan Glickman

The Secretary of Agriculture

Dear Mr. Secretary:

In fiscal year 2000, the U.S. Department of Agriculture’s Food Stamp 

Program provided $15 billion in benefits to a monthly average of 17.2 

million low-income individuals in the 50 states; Washington, D.C.; Guam; 

and the Virgin Islands. Agriculture’s Food and Nutrition Service (FNS) and 

the states jointly implement the Food Stamp Program. FNS, which pays the 

full cost of food stamp benefits and about half of the states’ administrative 

costs, promulgates program regulations and oversees program 

implementation. The states administer the program: they determine 

whether households meet eligibility requirements, calculate monthly 

benefits that households should receive, and issue benefits to participants. 

The states’ accuracy in determining eligibility and benefit levels is assessed 

annually by FNS’ quality control system. According to the quality control 

system, the states overpaid food stamp recipients an estimated $1.1 billion 

in fiscal year 1999 and underpaid recipients $450 million.1

 Together, these 

errors amounted to nearly 10 percent of food stamp benefits. About 56 

percent of these errors occurred when state food stamp workers made 

mistakes, such as misapplying complex food stamp rules in calculating 

benefits. The remaining 44 percent of the errors occurred because 

participants, either inadvertently or deliberately, did not provide accurate 

information to state food stamp offices when required.

Because of congressional interest in assuring the integrity of Food Stamp 

Program payments, we (1) identified the states’ efforts to minimize food 

stamp payment errors, and (2) examined what FNS has done and could do 

to encourage and assist the states in reducing such errors. In doing this 

work, we analyzed information obtained through structured interviews 

with state food stamp officials in 28 states, including 14 states with 

payment error rates below the national average and 14 states with error 

rates above the national average (see app. I). These 28 states delivered 74 

percent of all food stamp benefits in fiscal year 1999. We also obtained and 

1

Fiscal year 1999 is the most current year for which FNS could provide quality control data. 

A monthly average of 18.2 million individuals received $15.8 billion in food stamp benefits in 

that year.
Page 4 GAO-01-272 Reducing Food Stamp Payment Errors

analyzed information from officials at FNS’ headquarters and seven 

regional offices. We performed our work from February through November 

2000 in accordance with generally accepted government auditing 

standards.

Results in Brief All 28 states we contacted had taken actions in recent years to reduce 

payment errors. Specifically, most states (1) verified the accuracy of 

benefit payments calculated by state food stamp workers through 

supervisory and other types of case file reviews, (2) provided specialized 

training for state food stamp workers, (3) analyzed quality control data to 

identify causes of common payment errors and develop corrective actions, 

(4) matched food stamp rolls with other federal and state computer 

databases to identify ineligible participants or verify income and asset 

information provided by food stamp recipients, and (5) used computer 

software programs to assist caseworkers in determining benefits. Because 

many factors can affect error rates, it is difficult to isolate the impact of any 

one action a state may have taken to reduce its error rate. However, most of 

the state food stamp officials cited case file reviews as one of the most 

effective tools for reducing payment errors. State food stamp officials said 

their primary challenge to reducing payment errors in recent years 

stemmed from the priority their states have given to implementing welfare 

reform, which competes with the Food Stamp Program for management 

attention and resources.

FNS has primarily used three approaches to encourage the states to 

minimize their payment error rates. First, relying on the results of its 

quality control system, FNS has imposed financial sanctions—$31 million 

in fiscal year 1999—on states whose error rates were above the national 

average, and provided enhanced funding—$39 million in 1999—to states 

whose payment error rates were below 6 percent. Second, FNS has 

reduced the opportunity for payment errors by allowing the states to 

reduce food stamp reporting requirements for certain recipients. For 

example, in July 1999, FNS began to grant waivers that allowed the states 

to require that food stamp recipients report income changes once every 3 

months, rather than when a change occurred. It should be pointed out, 

however, that these waivers help reduce error rates in part by changing the 

definition of a payment error; they do not necessarily reduce program 

benefit costs. Finally, FNS’ regional offices have promoted the exchange of 

information among states about potentially successful initiatives for 

reducing payment errors. While all three of these approaches can help the 

states reduce payment errors, state food stamp officials believe that the 
Page 5 GAO-01-272 Reducing Food Stamp Payment Errors

action offering the greatest potential for additional reductions involves 

fundamentally simplifying the complex food stamp requirements for 

determining eligibility and calculating benefits. Additionally, FNS officials 

and others have noted that simplification may offer other benefits, 

including greater program participation by eligible recipients—an overall 

goal of the Food Stamp Program—and decreased administrative costs. 

FNS has taken initial steps in examining options for modifying the Food 

Stamp Program, including simplification. However, it is unclear the extent 

to which FNS will systematically develop and analyze the advantages and 

disadvantages of various simplification options. Accordingly, to help ease 

program administration and potentially reduce payment errors, we are 

recommending that the FNS Administrator develop options to simplify 

requirements for determining program eligibility and benefits for 

consideration in the congressional debate on the Food Stamp Program 

reauthorization.

Background FNS’ quality control system measures the states’ performance in accurately 

determining food stamp eligibility and calculating benefits. Under this 

system, the states calculate their payment errors by annually drawing a 

statistically valid sample of at least 300 to 1,200 active cases, depending on 

the average monthly caseload; by reviewing the case information; and by 

making home visits to determine whether households were eligible for 

benefits and received the correct benefit payment. FNS regional offices 

validate the results by reviewing a subset of each state’s sample to 

determine its accuracy, making adjustments to the state’s overpayment and 

underpayment errors as necessary. To determine each state’s combined 

payment error rate, FNS adds overpayments and underpayments, then 

divides the sum by total food stamp benefit payments. As shown in figure 1, 

the national combined payment error rate for the Food Stamp Program was 

consistently above 9 percent from fiscal year 1993 through fiscal year 1999. 

About 70 percent of the food stamp payment errors resulted in 

overpayments to recipients, while about 30 percent resulted in 

underpayments. FNS’ payment error statistics do not account for the 

states’ efforts to recover overpayments; in fiscal year 1999, the states 

collected $213 million in overpayments. (See app. II for information about 

states’ error rates and collections of overpayments.)
Page 6 GAO-01-272 Reducing Food Stamp Payment Errors

Figure 1: National Payment Error Rate for the Food Stamp Program, Fiscal Years 

1993 to 1999

Source: FNS.

Errors in food stamp payments occur for a variety of reasons. For example, 

food stamp caseworkers may miscalculate a household’s eligibility and 

benefits because of the program’s complex rules for determining who are 

members of the household, whether the value of a household’s assets 

(mainly vehicles and bank accounts) is less than the maximum allowable, 

and the amount of a household’s earned and unearned income and 

deductible expenses. Concerning the latter, food stamp rules require 

caseworkers to determine a household’s gross monthly income and then 

calculate a net monthly income by determining the applicability of six 

allowable deductions: a standard deduction, an earned income deduction, a 

dependent care deduction, a medical deduction, a child support deduction, 

and an excess shelter cost deduction. (See app. III for the factors that state 

caseworkers consider in calculating a household’s excess shelter cost 

deduction.) The net income, along with other factors such as family size, 

becomes the basis for determining benefits. Other payment errors occur 

after benefits have been determined primarily because households do not 

always report changes in income that can affect their benefits and the 

0

2

4

6

8

10

12

1993 1994 1995 1996 1997 1998 1999

Combined

Overpayments

Underpayments

Percentage
Page 7 GAO-01-272 Reducing Food Stamp Payment Errors

states do not always act on reported changes, as required by food stamp 

law.

To reduce the likelihood of payment errors, FNS regulations require that 

states certify household eligibility at least annually, and establish 

requirements for households to report changes that occur after 

certification. In certifying households, states are required to conduct faceto-face interviews, typically with the head of the household, and obtain 

pertinent documentation at least annually. In establishing reporting 

requirements, the states have the option of requiring households to use 

either (1) monthly reporting, in which households with earned income file 

a report on their income and other relevant information each month; or (2) 

change reporting, in which all households report certain changes, including 

income fluctuations of $25 or more, within 10 days of the change. 

According to FNS, many states have shifted from monthly reporting to 

change reporting because of the high costs associated with administering a 

monthly reporting system. However, change reporting is error-prone 

because households do not always report changes and the states do not 

always act on them in a timely fashion, if at all. 

All States We 

Contacted Took 

Actions to Reduce 

Payment 

Errors

Each of the 28 states we contacted has taken many actions to reduce 

payment error rates. Further, 80 percent of the states took each of five 

actions: (1) case file reviews by supervisors or special teams to verify the 

accuracy of food stamp benefit payments, (2) special training for 

caseworkers, (3) analyses of quality control data to identify causes of 

payment errors, (4) electronic database matching to identify ineligible 

participants and verify income and assets, and (5) use of computer 

software programs to assist caseworkers in determining benefits. It is 

difficult to link a specific state action to its effect on error rates because 

other factors also affect error rates. However, almost all state food stamp 

officials cited case file reviews by supervisors and others as being one of 

their most effective tools for reducing error rates. Additionally, state 

officials most often cited the competing pressure of implementing welfare 

reform as the primary challenge to reducing food stamp payment errors in 

recent years.

States Took Various Actions 

to Reduce Payment Error 

Rates

The following subsection summarizes our findings on state actions to 

reduce payment errors. 
Page 8 GAO-01-272 Reducing Food Stamp Payment Errors

• Case file reviews to verify payment accuracy: In 26 of the 28 states we 

contacted, supervisors or special teams reviewed case files to verify the 

accuracy of benefit calculations and to correct any mistakes before the 

state’s quality control system identified them as errors. Supervisory 

reviews, used by 22 states, typically require that supervisors examine a 

minimum number of files compiled by each caseworker. For example, 

Alaska requires monthly supervisory review of five cases for each 

experienced caseworker and all cases for each new caseworker. 

Furthermore, 20 states, including many of the states using supervisory 

review, use special teams to conduct more extensive reviews designed 

to identify problems in specific offices, counties, or regions. Reviewers 

correct mistakes before they are detected as quality control errors, 

where possible; identify the reasons for the mistakes; and prescribe 

corrective actions to prevent future errors. For example, in Genesee 

County, Michigan, the teams read about 2,800 case files, corrected errors 

in nearly 1,800, and provided countywide training in such problem areas 

as shelter expenses and earned income. In Massachusetts, caseworkers 

reviewed all case files in fiscal year 2000 because of concerns that the 

state’s error rate would exceed the national average and that FNS would 

impose financial sanctions. Massachusetts corrected errors in about 13 

percent of the case files reviewed; these would have been defined as 

payment errors had they been identified in a quality control review. 

• Special training for caseworkers: In addition to the training provided to 

new caseworkers, 27 states provided a range of training for new and 

experienced caseworkers aimed at reducing payment errors. For 

example, these states conducted training specifically targeted to 

calculating benefits for certain categories of food stamp households, 

such as those with earned income or those with legal noncitizens, for 

which rules are more likely to be misapplied.2

 Many states also 

conducted training to update caseworkers and supervisors on food 

stamp policy changes that affect how benefits are calculated; new 

policies often introduce new calculation errors because caseworkers 

are unfamiliar with the revised rules for calculating benefits, according 

to several state officials.

2

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193, 

Aug. 22, 1996) tightened food stamp eligibility requirements, in part, by disqualifying most 

permanent resident aliens. Subsequently, the Agricultural Research, Extension, and 

Education Reform Act of 1998 (P.L. 105-185) restored eligibility to permanent resident aliens 

who were lawfully residing in the United States as of August 22, 1996, and (1) were age 65 or 

older at that time or (2) are either disabled or under age 18.
Page 9 GAO-01-272 Reducing Food Stamp Payment Errors

• Analysis of quality control data: Twenty-five states conducted special 

analyses of their quality control databases to identify common types of 

errors made in counties or local offices for use in targeting corrective 

actions. For example, California created a quality control database for 

the 19 largest of its 54 counties and generated monthly reports for each 

of the 19 counties to use. Georgia assigned a staff member to review 

each identified quality control error and work with the appropriate 

supervisor or worker to determine why the error occurred and how it 

could be prevented in the future. With this process, officials said, 

counties are much more aware of their error cases, and now perceive 

quality control as a tool for reducing errors. In Michigan, an analysis of 

quality control data revealed that caseworkers were misinterpreting a 

policy that specified when to include adults living with a parent in the 

same household, and changes were made to clarify the policy. 

• Electronic database matching: All 28 states matched their food stamp 

rolls against other state and federal computer databases to identify 

ineligible participants and to verify participants’ income and asset 

information. For example, all states are required to match their food 

stamp rolls with state and local prisoner rolls.3

 In addition, most states 

routinely match their food stamp participants with one or more of the 

following: (1) their department of revenue’s “new hires” database (a 

listing of recently employed individuals in the state) to verify income, 

(2) the food stamp rolls of neighboring states to identify possible fraud, 

and (3) their department of motor vehicle records to verify assets. 

Officials in four states said the “new hires” match reduced payment 

errors by allowing caseworkers to independently identify a change in 

employment status that a household had not reported and that would 

likely affect its benefits. Mississippi food stamp officials said the vehicle 

match helped reduce payment errors because caseworkers verified the 

value of applicants’ vehicles as part of determining eligibility.

• Computer assistance in calculating benefits: Twenty-three states had 

developed computer software for caseworkers to use in determining an 

applicant’s eligibility and/or in calculating food stamp benefit amounts. 

Twenty-two of the states have software that determines eligibility and 

calculates benefits based on information caseworkers enter; the 

remaining states’ software is limited to calculating benefits after the 

3

Effective June 2000, states also are required to match food stamp rolls with the Social 

Security Administration’s master file of deceased individuals. However, Maryland officials 

have found many false matches because records data were incorrectly entered or were outof-date.
Page 10 GAO-01-272 Reducing Food Stamp Payment Errors

caseworker has determined eligibility. These programs may also crosscheck information to correct data entry errors; provide automated alerts 

that, for example, a household member is employed; and generate 

reminders for households, for example, to schedule an office visit. The 

most advanced software programs had online interview capabilities, 

which simplified the application process. Some states had automated 

case management systems that integrated Food Stamp Program records 

with their Medicaid and other assistance programs, which facilitated the 

administration of these programs.

Some states took other actions to reduce their payment errors. For 

example, even though FNS regulations only require that food stamp 

households be recertified annually, 16 states increased the frequency with 

which certain types of food stamp households must provide pertinent 

documentation for recertifying their eligibility for food stamp benefits. In 

particular, 12 of the 16 states now require households with earned income 

to be recertified quarterly because their incomes tend to fluctuate, 

increasing the likelihood of payment errors. More frequent certification 

enables caseworkers to verify the accuracy of household income and other 

information, allowing caseworkers to make appropriate adjustments to the 

household’s benefits and possibly avoid a payment error. However, more 

frequent certification can also inhibit program participation because it 

creates additional reporting burdens for food stamp recipients.4

In addition to more frequent certification, five states reported that they 

access credit reports and public records to determine eligibility and 

benefits. Seven states have formed change reporting units in food stamp 

offices serving certain metropolitan areas, so that participants notify these 

centralized units, instead of caseworkers, about starting a new job or other 

reportable changes. 

States Believe That Case 

File Reviews Have Been Key 

to Reducing Error Rates

Food stamp officials in 20 of the 28 states told us that they have primarily 

relied on case file reviews by supervisors and others to verify payment 

accuracy and reduce payment errors. For example, Georgia officials noted 

one county’s percentage of payment errors dropped by more than half as a 

4

A 1996 survey found that, on average, (1) applicants spent nearly 5 hours and made at least 

two trips to the local food stamp office to apply for food stamps and (2) recipients spent 

nearly 2-1/2 hours and made at least one trip to the local office to recertify eligibility. See 

Mathematica Policy Research, Inc., Customer Service in the Food Stamp Program (July 

1999).
Page 11 GAO-01-272 Reducing Food Stamp Payment Errors

result of the state’s requirement that management staff in 10 urban counties 

re-examine files after a supervisor’s review. In each of the past 3 years, 

Ohio food stamp administrators have reviewed up to 100 cases per county 

per year and have awarded additional state funding to counties with low 

error rates. In fiscal year 1999, the counties used $2.5 million in state funds 

primarily for payment accuracy initiatives. 

There was less consensus about the relative usefulness of other initiatives 

in reducing payment errors. Specifically, food stamp officials in 13 states 

told us that special training for caseworkers was one of their primary 

initiatives; officials in 8 states cited recertifying households more 

frequently; officials in 6 states identified the use of computer software to 

determine eligibility and/or benefits; officials in 5 states identified 

computer database matches; and officials in 4 states cited analyses of 

quality control data.

Implementation of Welfare 

Reform Has Taken Priority 

Over Error Reduction 

Efforts 

Food stamp officials in 22 of the states we contacted cited their states’

implementation of welfare reform as a challenge to reducing error rates in 

recent years.5

 In particular, implementing welfare reform programs and 

policy took precedence over administering the Food Stamp Program in 

many states—these programs competed for management attention and 

resources. In Connecticut, for example, caseworkers were directed to help 

participants find employment; therefore, the accuracy of food stamp 

payments was deemphasized, according to state officials. Similarly, Hawaii 

officials said agency leadership emphasized helping recipients to find 

employment and instituted various programs to accomplish this, which 

resulted in less attention to payment accuracy. Furthermore, officials from 

14 states said welfare reform led to an increase in the number of working 

poor. This increased the possibility of errors because the income of these 

households is more likely to fluctuate than income of other food stamp 

households. 

5

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 replaced the 

Aid to Families with Dependent Children program with the Temporary Assistance for Needy 

Families program and gave the states responsibility for administering the new program with 

block grant funding. The act encouraged welfare recipients to find employment by setting a 

lifetime limit of 5 years on the receipt of program benefits and establishing financial 

penalties for states that fail to ensure that a specified minimum percentage of their welfare 

households work or participate in work-related activities each year.
Page 12 GAO-01-272 Reducing Food Stamp Payment Errors

State food stamp officials cited three other impediments to their efforts to 

reduce payment errors, although far less frequently. First, officials in 12 

states cited a lack of resources, such as a shortage of caseworkers to 

manage food stamp caseloads, as a challenge to reducing error rates. 

Georgia, Mississippi, and Texas officials said caseworker turnover was 

high, and New Hampshire officials said they currently have a freeze on 

hiring new caseworkers. Second, officials in 10 states cited problems 

associated with either using, or making the transition from, outdated 

automated systems as challenges to reducing payment errors. For example, 

New Hampshire officials found that their error rate increased from 10.2 

percent in fiscal year 1998 to 12.9 percent in fiscal year 1999 after they 

began to use a new computer system. In addition, Connecticut and 

Maryland officials noted that incorporating rules changes into automated 

systems is difficult and often results in error-prone manual workarounds 

until the changes are incorporated. Finally, officials in nine states told us 

that food stamp eligibility revisions in recent years, particularly for legal 

noncitizens, have increased the likelihood of errors. 

FNS Has Encouraged 

States to Reduce 

Payment Error Rates, 

but Simplifying Food 

Stamp Rules May 

Reduce Errors Further

To encourage the states to reduce error rates, FNS has employed financial 

sanctions and incentives, approved waivers of reporting requirements for 

certain households, and promoted initiatives to improve payment accuracy 

through the exchange of information among the states. However, state food 

stamp officials told us the single most useful change for reducing error 

rates would be for FNS to propose legislation to simplify requirements for 

determining Food Stamp Program eligibility and benefits. Simplifying food 

stamp rules would not necessarily alter the total amount of food stamp 

benefits given to participants, but it may reduce the program’s 

administrative costs (the states spent $4.1 billion to provide $15.8 billion in 

food stamp benefits in fiscal year 1999). FNS officials and others expressed 

concern, however, that some simplification options may reduce FNS’

ability to precisely target benefits to each individual household’s needs. 

FNS Has Used Three 

Principal Methods to 

Reduce States’ Payment 

Errors

The three principal methods FNS has used to reduce payment errors in the 

states are discussed in the following subsections. 

Financial Sanctions and 

Enhanced Funding 

As required by law, FNS imposes financial sanctions on states whose error 

rates exceed the national average. These states are required to either pay 
Page 13 GAO-01-272 Reducing Food Stamp Payment Errors

the sanction or provide additional state funds—beyond their normal share 

of administrative costs—to be reinvested in error-reduction efforts, such as 

additional training in calculating benefits for certain households. FNS 

imposed $30.6 million in sanctions on 16 states with payment error rates 

above the national average in fiscal year 1999 and $78.2 million in sanctions 

on 22 states in fiscal year 1998—all of which were reinvested in errorreduction efforts.6

 (See app. IV.)

Food stamp officials in 22 states reported that their agencies had increased 

their commitment to reducing payment errors in recent years; officials in 

14 states stated that financial sanctions, or the threat of sanctions, was the 

primary reason for their increased commitment. For example, when the 

Texas Department of Human Services requested money to cover sanctions 

prior to 1995, the Texas legislature required the department to report 

quarterly on its progress in reducing its payment error rate. Officials in 

Texas, which has received enhanced funding for the past 2 fiscal years, 

cited the department’s commitment and accountability to the Texas 

legislature as primary reasons for reducing the error rate over the years and 

for maintaining their focus on payment accuracy.

FNS also rewards states primarily on the basis of their combined payment 

error rate being less than or equal to 5.9 percent—well below the national 

average. FNS awarded $39.2 million in enhanced funding to six states in 

fiscal year 1999 and $27.4 million to six states in fiscal year 1998. In the past 

5 years, 16 states have received enhanced funding at least once. Officials in 

one state told us that the enhanced funding remained in the state’s general 

fund, while officials in four states said the enhanced funding supplemented 

the state’s appropriation for use by the Food Stamp Program and other 

assistance programs. For example, in Arkansas, the food stamp agency 

used its enhanced funding for training, systems development, and 

equipment. Arkansas officials told us that enhanced funding was a major 

motivator for their agency, and they have seen an increase in efforts to 

reduce payment errors as a direct result.

Waivers to Reporting 

Requirements

In July 1999, FNS announced that it would expand the availability of 

waivers of certain reporting requirements placed on food stamp 

households. FNS was concerned that the increase in employment among 

6

In fiscal year 1999, FNS reduced sanctions for states that had a high percentage of 

households with legal noncitizens and households with earned income because these 

households were more prone to payment errors than other food stamp households.
Page 14 GAO-01-272 Reducing Food Stamp Payment Errors

food stamp households would result in larger and more frequent income 

fluctuations, which would increase the risk of payment errors. FNS also 

was concerned that the states’ reporting requirements were particularly 

burdensome for the working poor and may, in effect, act as an obstacle to 

their participation in the program.7

 This is because eligible households may 

not view food stamp benefits as worth the time and effort it takes to obtain 

them. As of November 2000, FNS had granted reporting waivers to 43 

states, primarily for households with earned income. (See app. V.) The 

three principal types of waivers are explained below:

• The threshold reporting waiver raises the earned income changes that 

households must report to more than $100 per month. (Households still 

must report if a member gains or loses a job.) Without this waiver, 

households would be required to report any wage or salary change of 

$25 or more per month. Ohio uses this type of waiver (with a smaller 

$80-per-month threshold) specifically for self-employed households. 

Ohio credits the use of this and other types of reporting waivers to the 

decrease in its error rate from 11.2 percent in 1997 to 8.4 percent in 

1999. 

• The status reporting waiver limits the changes that households must 

report to three key events: (1) gaining or losing a job, (2) moving from 

part-time to full-time employment or vice versa, and (3) experiencing a 

change in wage rate or salary. This waiver eliminates the need for 

households to report fluctuations in the number of hours worked, 

except if a member moves from part-time to full-time employment. 

Texas officials cited the implementation of the status reporting waiver in 

1994 as a primary reason that their error rate dropped by nearly 3 

percentage points (from over 12 percent) in 1995. Texas’ error rate 

reached a low of about 4.6 percent in 1999.

7

Food stamp participation declined by 34 percent, from a monthly average of 27.5 million 

participants in fiscal year 1994 to a monthly average of 18.2 million participants in fiscal year 

1999. This decline includes a reduction in (1) the number of individuals eligible for food 

stamp benefits, reflecting the strong U.S. economy and tighter food stamp eligibility 

requirements for legal immigrants and able-bodied adults without dependents, and (2) the 

percentage of eligible individuals participating in the program. FNS estimates that only 

about 62 percent of eligible people in the United States received food stamp benefits in 

September 1997—a 9-point drop from 71 percent of eligible people participating in 

September 1994.
Page 15 GAO-01-272 Reducing Food Stamp Payment Errors

• The quarterly reporting waiver eliminates the need for households with 

earned income to report any changes during a 3-month period, provided 

the household provides required documentation at the end of the 

period.8

 The waiver reduces payment errors because any changes that 

occurred during a quarter were not considered to be errors and 

households more readily understood requirements for reporting 

changes. Food stamp officials in Arkansas, which implemented a 

quarterly reporting waiver in 1995, believe that their quarterly reporting 

waiver is a primary reason for their subsequent stable error rate. 

FNS expects that reporting waivers will reduce the number of payment 

errors made because households are more likely to report changes and, 

with fewer reports to process, the states will be able to process changes 

accurately and within required time frames. However, the lower payment 

error rates that result from these waivers are primarily caused by a 

redefinition of a payment error, without reducing the Food Stamp 

Program’s benefit costs. For example, a pay increase of $110 per month 

that is not reported until the end of the 3-month period is not a payment 

error under Arkansas’ quarterly reporting waiver, while it would be an error 

if there were no waiver. As a result, the quarterly reporting waiver may 

reduce FNS’ estimate of overpayments and underpayments. FNS estimated, 

in July 1999, that the quarterly waiver would increase food stamp benefit 

costs by $80 million per year, assuming that 90 percent of the states applied 

for the waiver. 

Of the 10 states that do not have a reporting waiver, 7 require monthly 

reporting for households with earned income. The advantage of monthly 

reporting is that benefits are issued on the basis of what has already 

occurred and been documented. In addition, regular contact with food 

stamp households allows caseworkers to quickly detect changes in the 

household’s situation. However, monthly reporting is more costly to 

administer and potentially can exacerbate a state’s error rate, particularly if 

it cannot keep up with the volume of work. A Hawaii food stamp official 

told us that monthly reporting contributed to recent increases in Hawaii’s 

error rate because caseworkers have not processed earned income 

8

In November 2000, FNS promulgated regulations that give the states the option to require 

food stamp households with earned income to report changes semiannually, unless a change 

would result in a household’s gross monthly income exceeding 130 percent of the monthly 

poverty income guideline ($1,533 per month for a family of three).
Page 16 GAO-01-272 Reducing Food Stamp Payment Errors

changes on time, while Connecticut officials said their food stamp workers 

were making mistakes by rushing to meet deadlines.

Fostering Communication 

Among States

As part of the food stamp quality control program, FNS’ seven regional 

offices have assembled teams of federal and state food stamp officials to 

identify the causes of payment errors and ways to improve payment 

accuracy. Each region also has held periodic conferences in which states 

from other regions were invited to highlight their successes and to respond 

to questions about implementing their initiatives. Examples of topics at 

recent conferences in FNS’ northeastern region included best payment 

accuracy practices and targeting agency-caused errors. FNS’ regional 

offices also have made funds available for states to send representatives to 

other states to learn first-hand about initiatives to reduce payment errors. 

Since 1996, FNS has compiled catalogs of states’ payment accuracy 

practices that provide information designed to help other states develop 

and implement similar initiatives. 

Simplifying Food Stamp Rules 

Could Reduce Payment Errors 

and Administrative Costs

Food stamp officials in all 28 states we contacted called for simplifying 

complex Food Stamp Program rules, and most of these states would like to 

see FNS involved in advocating simplification. In supporting simplification, 

the state officials generally cited caseworkers’ difficulty in correctly 

applying food stamp rules to determine eligibility and calculate benefits. 

For example, Maryland’s online manual for determining a household’s food 

stamp benefits is more than 300 pages long. Specifically, the state officials 

cited the need to simplify requirements for (1) determining a household’s 

deduction for excess shelter costs and (2) calculating a household’s earned 

and unearned income.9

Food stamp officials in 20 of the 28 states we contacted said simplifying the 

rules for determining a household’s allowable shelter deduction would be 

one of the best ways to reduce payment errors.10 The Food Stamp Program 

9

The states also cited the need to simplify food stamp rules for determining the valuation of 

vehicles. The Agriculture, Rural Development, Food and Drug Administration, and Related 

Agencies Appropriations Act for fiscal year 2001 (P.L. 106-387) revised the Food Stamp Act 

of 1977 to allow the states to use the same vehicle valuation rules that they use for their 

Temporary Assistance for Needy Families program, if these rules would result in a lower 

attribution of resources to the household.

10While Agriculture’s appropriations act for fiscal year 2001 increased the amount of the 

shelter deduction for food stamp households, it did not change the way that the deduction is 

calculated.
Page 17 GAO-01-272 Reducing Food Stamp Payment Errors

generally provides for a shelter deduction when a household’s monthly 

shelter costs exceed 50 percent of income after other deductions have been 

allowed. Allowable deductions include rent or mortgage payments, 

property taxes, homeowner’s insurance, and utility expenses. Several state 

officials told us that determining a household’s shelter deduction is prone 

to errors because, for example, caseworkers often need to (1) determine 

whether to pro-rate the shelter deduction if members of a food stamp 

household share expenses with others, (2) determine whether to use a 

standard utility allowance rather than actual expenses, and (3) verify 

shelter expenses, even though landlords may refuse to provide required 

documentation. 

Food stamp officials in 18 states told us that simplifying the rules for 

earned income would be one of the best options for reducing payment 

errors because earned income is both the most common and the costliest 

source of payment errors. Generally, determining earned income is prone 

to errors because caseworkers must use current earnings as a predictor of 

future earnings and the working poor do not have consistent employment 

and earnings.11 Similarly, officials in six states told us that simplifying the 

rules for unearned income would help reduce payment errors. In particular, 

state officials cited the difficulty caseworkers have in estimating child 

support payments that will be received during the certification period 

because payments are often intermittent and unpredictable. Because 

households are responsible for reporting changes in unearned income of 

$25 or more, differences between estimated and actual child support 

payments often result in a payment error.

FNS officials and advocates for food stamp participants, however, have 

expressed concern about some possible options for simplifying the rules 

for determining eligibility and calculating benefits. For example, in 

determining a household’s allowable shelter deduction, if a single standard 

deduction were used for an entire state, households in rural areas would 

likely receive greater benefits than they would have using actual expenses, 

while households in urban areas would likely receive smaller benefits. In 

this case, simplification may reduce FNS’ ability to precisely target benefits 

to each individual household’s needs. FNS officials also pointed out that 

likely reductions in states’ payment error rates would reflect changes to the 

11A Pennsylvania official noted that once a payment error occurs, it can be exacerbated 

because benefits are sensitive to income fluctuations—generally a $3 change in monthly 

income results in a $1 change in food stamp benefits.
Page 18 GAO-01-272 Reducing Food Stamp Payment Errors

rules for calculating food stamp benefits rather than improved 

performance by the states.

FNS has begun to examine alternatives for improving the Food Stamp 

Program, including options for simplifying requirements for determining 

benefits, as part of its preparations for the program’s upcoming 

reauthorization. More specifically, FNS hosted a series of public forums, 

known as the National Food Stamp Conversation 2000, in seven cities 

attended by program participants, caseworkers, elected officials, 

antihunger advocates, emergency food providers, health and nutrition 

specialists, food retailers, law enforcement officials, and researchers. 

Simplification of the Food Stamp Program was one of the issues discussed 

at these sessions as part of a broad-based dialogue among stakeholders 

about aspects of the program that have contributed to its success and 

features that should be strengthened to better achieve program goals. FNS 

is currently developing a variety of background materials that will integrate 

the issues and options raised in these forums. FNS has not yet begun to 

develop proposed legislation for congressional consideration in 

reauthorizing the Food Stamp Program.

Conclusions FNS and the states have taken actions aimed at reducing food stamp 

payment errors, which currently stand at about 10 percent of the program’s 

total benefits. Financial sanctions and enhanced funding have been at least 

partially successful in focusing states’ attention on minimizing errors. 

However, this “carrot and stick” approach can only accomplish so much, 

because food stamp regulations for determining eligibility and benefits are 

extremely complex and their application inherently error-prone and costly 

to administer. Furthermore, this approach, carried to extremes, can create 

incentives for states to take actions that may inhibit achievement of one of 

the agency’s basic missions—providing food assistance to those who are in 

need. For example, increasing the frequency that recipients must report 

income changes could decrease errors, but it could also have the 

unintended effect of discouraging participation by the eligible working 

poor. This would run counter not only to FNS’ basic mission but also to an 

overall objective of welfare reform—helping people move successfully 

from public assistance into the workforce.

Simplifying the Food Stamp Program’s rules and regulations offers an 

opportunity to, among other things, reduce payment error rates and 

promote program participation by eligible recipients. FNS has taken initial 

steps in examining options for simplification through its forums with 
Page 19 GAO-01-272 Reducing Food Stamp Payment Errors

stakeholders. However, it is unclear the extent to which FNS will build on 

these ideas to (1) systematically develop and analyze the advantages and 

disadvantages of various simplification options, and (2) if warranted, 

submit the legislative changes needed to implement simplification 

proposals.

Recommendations To help ease program administration and potentially reduce payment 

errors, we recommend that the Secretary of Agriculture direct the 

Administrator of the Food and Nutrition Service to (1) develop and analyze 

options for simplifying requirements for determining program eligibility 

and benefits; (2) discuss the strengths and weaknesses of these options 

with representatives of the congressional authorizing committees; and (3) 

if warranted, submit legislative proposals to simplify the program. The 

analysis of these options should include, among other things, estimating 

expected program costs, effects on program participation, and the extent 

to which the distribution of benefits among recipients could change. 

Agency Comments and 

Our Evaluation

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

for review and comment. We met with Agriculture officials, including the 

Director of the Program Development Division within the Food and 

Nutrition Service’s Food Stamp Program. Department officials generally 

agreed with the information presented in the report and provided technical 

clarifications, which we incorporated as appropriate. Department officials 

also agreed with the thrust of our recommendations. However, they 

expressed reservations about the mechanics of implementing our 

recommendation that they discuss simplification options with 

representatives of the congressional authorizing committees. In particular, 

they noted the importance of integrating consultation on policy options 

with the process for developing the President’s annual budget request. In 

addition, they urged a broader emphasis on consideration of policy options 

that meet the full range of program objectives, including, for example, 

ending hunger, improving nutrition, and supporting work. We agree that 

simplification options should be discussed in the larger context of 

achieving program objectives. However, we believe that an early dialogue 

about the advantages and disadvantages of simplification options will 

facilitate the congressional debate on one of the most important and 

controversial issues for reauthorizing the Food Stamp Program.
Page 20 GAO-01-272 Reducing Food Stamp Payment Errors

Copies of this report will be sent to the congressional committees and 

subcommittees responsible for the Food Stamp Program; the Honorable 

Jacob Lew, Director, Office of Management and Budget; and other 

interested parties. We will also make copies available upon request.

Please contact me at (202) 512-5138 if you or your staff have any questions 

about this report. Key contributors to this report are listed in appendix VI.

Sincerely yours,

Robert E. Robertson

Director, Education, Workforce, and

Income Security Issues
Page 21 GAO-01-272 Reducing Food Stamp Payment Errors
Page 22 GAO-01-272 Reducing Food Stamp Payment Errors

Appendix I

Scope and Methodology ApApenednxidxeiIs

To examine states’ efforts to minimize food stamp payment errors, we 

analyzed information obtained through structured telephone interviews 

with state food stamp officials in 28 states. We selected the 28 states to 

include states with the lowest payment error rates, states with the highest 

error rates, and the 10 states with the most food stamp participants in fiscal 

year 1999. Overall, the states we interviewed included 14 states with 

payment error rates below the national average and 14 states with error 

rates above the national average. They delivered about 74 percent of all 

food stamp benefits in fiscal year 1999. We supplemented the structured 

interviews with information obtained from visits to Maryland, 

Massachusetts, Michigan, and Texas.

To examine what the Department of Agriculture’s Food and Nutrition 

Service (FNS) has done and could do to help states reduce food stamp 

payment errors, we relied in part on information obtained from our 

telephone interviews, as well as with information obtained from 

discussions with officials at FNS’ headquarters and each of its seven 

regional offices. We also analyzed FNS documents and data from its quality 

control system. 
Page 23 GAO-01-272 Reducing Food Stamp Payment Errors

Appendix II

States’ Payment Error Rates and Efforts to 

Collect Overpayments ApendxiI

Table 1: Food Stamp Combined Payment Error Rates by State, Fiscal Years 1993 to 1999

Percent

State FY 1993 FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 FY 1999

Alabama 8.1 5.8 7.0 5.8 8.7 7.7 11.3

Alaska 4.6 9.2 5.1 7.5 11.8 14.2 15.9

Arizona 12.1 15.3 13.5 8.4 7.4 5.9 6.9

Arkansas 6.4 5.4 5.7 4.5 5.2 6.0 4.5

California 9.1 10.5 9.5 9.3 9.9 12.5 11.3

Colorado 7.5 7.4 6.4 7.7 8.6 10.7 9.0

Connecticut 7.9 7.8 8.5 10.7 9.7 13.1 13.9

Delaware 7.6 10.1 9.4 8.7 12.7 12.5 16.9

District of Columbia 9.0 9.6 9.3 6.8 7.5 10.7 12.1

Florida 17.0 13.6 11.1 9.7 10.3 12.9 9.4

Georgia 11.1 11.5 11.0 10.3 12.0 13.7 10.9

Guam 12.3 9.9 7.5 9.6 7.0 10.3 10.1

Hawaii 3.8 4.7 3.8 4.0 4.5 4.8 6.8

Idaho 8.5 10.6 6.7 6.3 7.4 10.5 10.9

Illinois 10.2 9.5 11.7 12.4 14.3 14.0 14.8

Indiana 16.6 17.7 16.4 9.7 9.3 6.8 8.1

Iowa 10.2 11.4 11.6 12.2 9.8 13.4 9.3

Kansas 7.6 7.6 8.1 7.5 7.5 11.1 9.0

Kentucky 5.2 5.5 4.7 5.3 5.8 7.4 7.7

Louisiana 9.3 5.6 7.2 6.0 5.6 7.7 7.4

Maine 7.5 7.5 6.5 7.4 7.2 10.2 8.8

Maryland 10.7 11.2 12.1 11.3 12.8 15.4 13.6

Massachusetts 6.0 5.8 5.0 4.7 8.2 7.5 9.3

Michigan 8.6 8.7 9.6 11.2 11.9 17.7 17.6

Minnesota 9.5 8.8 6.6 7.0 7.0 5.2 6.7

Mississippi 10.0 9.2 10.0 10.0 7.0 6.0 4.9

Missouri 11.2 11.2 13.0 13.4 12.9 8.3 8.6

Montana 7.7 6.9 8.2 8.7 9.2 7.3 8.1

Nebraska 11.0 12.0 8.7 10.5 12.0 16.7 14.2

Nevada 9.0 6.9 9.4 10.6 12.2 8.9 8.1

New Hampshire 12.4 14.7 10.3 9.4 10.1 10.2 12.9

New Jersey 8.3 8.8 8.7 8.7 9.0 11.9 12.9

New Mexico 10.5 8.9 7.6 8.0 7.5 10.6 10.4

New York 12.4 10.1 9.5 8.9 10.1 12.9 10.5
Appendix II

States’ Payment Error Rates and Efforts to 

Collect Overpayments

Page 24 GAO-01-272 Reducing Food Stamp Payment Errors

Source: FNS

North Carolina 9.9 9.5 8.1 10.0 10.7 10.8 9.3

North Dakota 8.0 6.0 6.0 6.1 11.0 9.4 8.0

Ohio 14.4 14.5 14.6 12.6 11.2 9.3 8.4

Oklahoma 10.0 10.8 11.1 10.2 8.1 10.9 11.9

Oregon 9.4 9.9 9.0 11.2 13.0 13.5 10.5

Pennsylvania 9.1 8.4 9.0 9.2 8.7 9.9 10.8

Rhode Island 5.6 7.0 5.2 6.7 7.1 7.0 7.1

South Carolina 10.9 5.1 6.2 6.3 6.3 8.1 5.8

South Dakota 3.8 3.2 3.6 3.5 3.0 2.1 2.2

Tennessee 16.7 9.9 10.6 9.0 12.1 8.7 8.6

Texas 11.4 12.5 8.7 6.5 6.8 5.3 4.6

Utah 7.2 8.6 8.0 9.6 7.6 9.7 12.6

Vermont 11.4 6.3 9.1 10.9 9.7 13.3 12.1

Virgin Islands 5.2 5.9 5.4 8.8 7.4 6.6 5.9

Virginia 10.8 11.6 13.4 14.0 13.0 11.1 11.9

Washington 9.3 9.7 8.5 11.3 14.6 15.2 8.6

West Virginia 13.6 13.9 11.1 12.4 11.2 11.4 8.9

Wisconsin 9.5 10.5 12.2 11.4 13.7 14.6 13.4

Wyoming 7.0 8.9 7.6 7.4 9.1 4.8 2.9

National average 10.8 10.3 9.7 9.2 9.8 10.7 9.9

(Continued From Previous Page)

State FY 1993 FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 FY 1999
Appendix II

States’ Payment Error Rates and Efforts to 

Collect Overpayments

Page 25 GAO-01-272 Reducing Food Stamp Payment Errors

Table 2: Food Stamp Dollar Error and Payment Error Rates by State, Fiscal Year 1999

State

Annual

issuance

(thousands)

Dollars

overissued

(thousands)

Dollars

underissued

(thousands)

Total

payment

errors

(thousands)

Overpayment

error rate

(percent)

Underpayment

error rate

(percent)

Combined

error rate

(percent)

Alabama $346,450 $33,225 $5,890 $39,115 9.6 1.7 11.3

Alaska 48,890 5,779 2,019 7,798 11.8 4.1 15.9

Arizona 232,827 11,362 4,773 16,135 4.9 2.1 6.9

Arkansas 209,874 7,744 1,784 9,528 3.7 0.9 4.5

California 1,805,881 143,026 61,942 204,968 7.9 3.4 11.3

Colorado 144,721 9,103 3,951 13,054 6.3 2.7 9.0

Connecticut 149,596 16,306 4,488 20,794 10.9 3.0 13.9

Delaware 32,314 3,593 1,871 5,464 11.1 5.8 16.9

District of Columbia 80,181 7,625 2,093 9,718 9.5 2.6 12.1

Florida 819,257 47,435 29,821 77,256 5.8 3.6 9.4

Georgia 513,637 40,269 15,563 55,832 7.8 3.0 10.9

Guam 31,221 2,488 678 3,166 8.0 2.2 10.1

Hawaii 179,885 9,660 2,608 12,268 5.4 1.5 6.8

Idaho 45,308 3,063 1,894 4,957 6.8 4.2 10.9

Illinois 767,080 84,379 29,072 113,451 11.0 3.8 14.8

Indiana 255,421 14,814 5,926 20,740 5.8 2.3 8.1

Iowa 103,388 6,513 3,071 9,584 6.3 3.0 9.3

Kansas 80,360 5,320 1,897 7,217 6.6 2.4 9.0

Kentucky 336,772 18,758 7,241 25,999 5.6 2.2 7.7

Louisiana 462,648 23,780 10,178 33,958 5.1 2.2 7.4

Maine 89,118 6,033 1,800 7,833 6.8 2.0 8.8

Maryland 237,311 23,897 8,401 32,298 10.1 3.5 13.6

Massachusetts 205,052 14,272 4,880 19,152 7.0 2.4 9.3

Michigan 514,831 63,736 26,823 90,559 12.4 5.2 17.6

Minnesota 170,672 7,783 3,618 11,401 4.6 2.1 6.7

Mississippi 231,740 7,763 3,615 11,378 3.4 1.6 4.9

Missouri 348,113 22,210 7,624 29,834 6.4 2.2 8.6

Montana 52,398 2,971 1,273 4,244 5.7 2.4 8.1

Nebraska 66,150 7,230 2,176 9,406 10.9 3.3 14.2

Nevada 56,060 3,134 1,430 4,564 5.6 2.6 8.1

New Hampshire 30,746 3,062 892 3,954 10.0 2.9 12.9

New Jersey 345,707 33,603 11,097 44,700 9.7 3.2 12.9

New Mexico 144,188 11,521 3,475 14,996 8.0 2.4 10.4
Appendix II

States’ Payment Error Rates and Efforts to 

Collect Overpayments

Page 26 GAO-01-272 Reducing Food Stamp Payment Errors

New York 1,464,474 93,873 59,311 153,184 6.4 4.1 10.5

North Carolina 434,765 27,608 12,608 40,216 6.4 2.9 9.3

North Dakota 25,690 1,588 473 2,061 6.2 1.8 8.0

Ohio 536,385 34,007 11,210 45,217 6.3 2.1 8.4

Oklahoma 221,448 20,041 6,267 26,308 9.1 2.8 11.9

Oregon 190,451 15,503 4,495 19,998 8.1 2.4 10.5

Pennsylvania 704,175 54,574 21,407 75,981 7.8 3.0 10.8

Rhode Island 61,300 2,716 1,600 4,316 4.4 2.6 7.1

South Carolina 251,171 10,851 3,667 14,518 4.3 1.5 5.8

South Dakota 36,974 717 92 809 1.9 0.3 2.2

Tennessee 424,614 29,129 7,601 36,730 6.9 1.8 8.6

Texas 1,255,473 40,677 16,447 57,124 3.2 1.3 4.6

Utah 73,203 5,893 3,294 9,187 8.1 4.5 12.6

Vermont 34,293 3,368 778 4,146 9.8 2.3 12.1

Virgin Islands 22,193 925 375 1,300 4.2 1.7 5.9

Virginia 282,345 22,446 11,011 33,457 8.0 3.9 11.9

Washington 260,240 15,745 6,506 22,251 6.1 2.5 8.6

West Virginia 208,103 14,650 3,829 18,479 7.0 1.8 8.9

Wisconsin 123,795 11,872 4,741 16,613 9.6 3.8 13.4

Wyoming 19,468 343 224 567 1.8 1.2 2.9

Total $15,768,357 $1,107,980 $449,799 $1,557,779 7.0 2.9 9.9

(Continued From Previous Page)

State

Annual

issuance

(thousands)

Dollars

overissued

(thousands)

Dollars

underissued

(thousands)

Total

payment

errors

(thousands)

Overpayment

error rate

(percent)

Underpayment

error rate

(percent)

Combined

error rate

(percent)
Appendix II

States’ Payment Error Rates and Efforts to 

Collect Overpayments

Page 27 GAO-01-272 Reducing Food Stamp Payment Errors

Table 3: States’ Collection of Food Stamp Overpayments by Collection Method, Fiscal Year 1999

Dollars in Thousands 

State Recoupmenta

U.S. Treasury offset program

and other federal collectionsb Otherc Total

Alabama $990 $1,053 $562 $2,604

Alaska 155 12 131 298

Arizona 1,228 421 975 2,624

Arkansas 238 318 295 850

California 11,694 6,968 6,851 25,513

Colorado 773 1,693 933 3,398

Connecticut 681 241 385 1,308

Delaware 195 331 170 695

District of Columbia 376 290 11 676

Florida 3,048 4,461 652 8,162

Georgia 3,104 2,633 1,792 7,529

Guam 128 0 52 181

Hawaii 1,324 40 412 1,776

Idaho 122 204 127 454

Illinois 5,317 9,858 1,000 16,175

Indiana 686 1,936 431 3,053

Iowa 266 438 357 1,061

Kansas 704 921 196 1,821

Kentucky 427 412 644 1,482

Louisiana 2,346 1,680 538 4,563

Maine 336 34 214 585

Maryland 1,216 905 306 2,427

Massachusetts 103 150 1,557 1,810

Michigan 3,178 3,759 -331 6,607

Minnesota 1,745 1,746 1,671 5,163

Mississippi 1,661 1,872 720 4,253

Missouri 1,272 1,476 d 1,729

Montana 260 195 89 544

Nebraska 383 153 46 583

Nevada 189 187 90 465

New Hampshire 84 101 115 300

New Jersey 5,748 4,122 1,266 11,137

New Mexico 1,310 1,020 97 2,427

New York 7,927 5,624 1,433 14,984
Appendix II

States’ Payment Error Rates and Efforts to 

Collect Overpayments

Page 28 GAO-01-272 Reducing Food Stamp Payment Errors

a

When a claim is established against a household still actively participating in the Food Stamp 

Program, the state may reduce the household’s monthly benefits until the overpayment has been 

collected, provided the household does not make other payment arrangements. 

b

When claims against households no longer participating in the program have gone uncollected, states 

may submit them to the U.S. Department of the Treasury Offset Program. Figures include collections 

through offset and voluntary payments made by the household.

c

Includes all state methods except for recoupment and federal collections through the Treasury Offset 

Program. Households that are financially able to pay the claim at one time, for example, may make a 

lump sum cash payment. The state agency is responsible for establishing a payment schedule for 

households that are unable to pay the entire amount of the claim at one time. 

d

Data on other state collections were not available for Missouri.

Source: FNS.

North Carolina 759 1,380 1,039 3,178

North Dakota 200 222 115 537

Ohio 2,409 5,471 1,661 9,541

Oklahoma 626 419 151 1,196

Oregon 1,121 1,456 846 3,422

Pennsylvania 6,623 4,424 2,537 13,584

Rhode Island 53 53 104 210

South Carolina 1,869 493 619 2,981

South Dakota 118 23 62 203

Tennessee 2,128 2,267 863 5,258

Texas 5,198 12,924 6,836 24,957

Utah 116 213 254 583

Vermont 161 180 40 381

Virgin Islands 77 0 35 112

Virginia 529 949 681 2,159

Washington 852 1,783 156 2,792

West Virginia 908 528 447 1,883

Wisconsin 661 1,180 848 2,690

Wyoming 73 127 25 225

Total $83,696 $89,348 $40,086 $213,130

(Continued From Previous Page)

State Recoupmenta

U.S. Treasury offset program

and other federal collectionsb Otherc Total
Page 29 GAO-01-272 Reducing Food Stamp Payment Errors
Page 30 GAO-01-272 Reducing Food Stamp Payment Errors

Appendix III

Factors in Calculating the Excess Shelter Cost 

Deduction ApendxiI

Source: FNS’ 1997 Food Stamp Desk Reference Guides
Appendix III

Factors in Calculating the Excess Shelter 

Cost Deduction

Page 31 GAO-01-272 Reducing Food Stamp Payment Errors
Page 32 GAO-01-272 Reducing Food Stamp Payment Errors

Appendix IV

FNS’ Financial Sanctions and Enhanced 

Funding ApendxiIV

Table 4: FNS’ Financial Sanctions of States, Fiscal Years 1995 to 1999

Dollars in Thousands

State FY 1995 FY 1996 FY 1997 FY 1998 FY 1999

Alabama $0 $0 $0 $0 $219

Alaska 0 0 199 570 980

Arizona 6,029 0 0 0 0

California 0 28 0.2 6,381 0

Connecticut 0 389 0 898 1,145

Delaware 0 0 321 97 653

District of Columbia 0 0 0 0 61

Florida 2,451 324 155 4,003 0

Georgia 1,162 825 2,589 4,412 0

Guam 0 5 0 0 0

Illinois 4,261 11,556 18,539 8,861 3,861

Indiana 17,277 76 0 0 0

Iowa 531 1,359 0 735 0

Kansas 0 0 0 13 0

Maryland 2,110 1,632 2,776 5,847 1,019

Michigan 0 3,389 2,771 26,820 19,773

Mississippi 29 254 0 0 0

Missouri 5,271 9,003 3,675 0 0

Nebraska 0 146 331 2,281 529

Nevada 0 197 413 0 0

New Hampshire 13 1 2 0 96

New Jersey 0 0 0 534 1,303

New York 0 0 79 6,981 0

North Carolina 0 361 294 3 0

North Dakota 0 0 39 0 0

Ohio 24,609 11,783 1,224 0 0

Oklahoma 644 314 0 7 119

Oregon 0 1,070 2,126 1,409 0

Tennessee 442 0 2,262 0 0

Utah 0 16 0 0 141

Vermont 0 129 0 207 69

Virginia 6,174 10,909 3,667 56 50

Washington 0 2,076 8,541 6,104 0

West Virginia 517 2,762 390 103 0
Appendix IV

FNS’ Financial Sanctions and Enhanced 

Funding

Page 33 GAO-01-272 Reducing Food Stamp Payment Errors

Note: As required by law, FNS imposes financial sanctions on states whose combined error rate 

exceeds the national average. States are required to pay the sanction or provide additional state funds, 

beyond their normal share of administrative costs, for reinvestment in error reduction efforts. 

a

FNS adjusted financial sanctions for fiscal year 1999 to take into account states that had high 

proportions of households with earned income and/or immigrants.

Source: FNS.

Table 5: FNS’ Enhanced Funding for States With Low Error Rates, Fiscal Years 1995 to 1999

Dollars in Thousands

Note: States qualify for enhanced funding if (1) their combined payment error rate is less than or equal 

to 5.9 percent, and (2) their negative case error rate—which measures the frequency with which states 

improperly denied food stamp benefits to qualified applicants—is below the national weighted average 

for the prior fiscal year.

Source: FNS.

Wisconsin 1,383 1,019 2,340 1,842 606

 Total $72,386 $59,623 $52,733 $78,164 $30,624a

(Continued From Previous Page)

State FY 1995 FY 1996 FY 1997 FY 1998 FY 1999

State FY 1995 FY 1996 FY 1997 FY 1998 FY 1999

Alabama $0 $1,070 $0 $0 $0

Alaska 1,096 0 0 0 0

Arizona 0 0 0 298 0

Arkansas 809 3,165 2,709 0 4,099

Hawaii 1,624 1,520 1,884 1,700 0

Kentucky 5,084 3,045 1,012 0 0

Louisiana 0 0 3,095 0 0

Massachusetts 5,558 5,789 0 0 0

Minnesota 0 0 0 4,495 0

Mississippi 0 0 0 0 5,161

Rhode Island 845 0 0 0 0

South Carolina 0 0 0 0 758

South Dakota 613 700 704 653 714

Texas 0 0 0 19,742 27,941

Virgin Islands 255 0 0 0 0

West Virginia 517 0 0 0 0

Wyoming 0 0 0 557 549

Total $16,401 $15,289 $9,404 $27,445 $39,222
Page 34 GAO-01-272 Reducing Food Stamp Payment Errors

Appendix V

States’ Use of Reporting Waivers ApendxiV

Note: Some states have more than one reporting waiver in place. In November 2000, FNS 

promulgated regulations that gave the states the option to require households with earned income to 

report semiannually, unless a household has changes that result in its gross monthly income 

$80 or $100

StatusQuarterlyFive-HourNo Waivers

a

b

cd

Alabama ✓

Alaska ✓

Arizona ✓

Arkansas ✓

California ✓

Colorado ✓

Connecticut ✓

Delaware ✓

District of Columbia ✓

Florida ✓

Georgia ✓

Guam ✓

Hawaii ✓

Idaho ✓

Illinois ✓ ✓

Indiana ✓ ✓

Iowa ✓

Kansas ✓

Kentucky ✓

Louisiana ✓ ✓

Maine ✓

Maryland ✓ ✓

Massachusetts ✓ ✓

Michigan ✓

Minnesota ✓

Mississippi ✓

Missouri ✓

$80 or $100

StatusQuarterlyFive-HourNo Waivers

Montana ✓

Nebraska ✓

Nevada ✓

New Hampshire ✓

New Jersey ✓

New Mexico ✓ ✓

New York ✓ ✓

North Carolina ✓

North Dakota ✓

Ohio ✓ ✓

Oklahoma ✓

Oregon ✓ ✓

Pennsylvania ✓

Rhode Island ✓

South Carolina ✓ ✓

South Dakota ✓

Tennessee ✓ ✓

Texas ✓

Utah ✓

Vermont ✓ ✓

Virgin Islands ✓

Virginia ✓

Washington ✓

West Virginia ✓ ✓

Wisconsin ✓

Wyoming ✓ ✓

a

b

cd
Appendix V

States’ Use of Reporting Waivers

Page 35 GAO-01-272 Reducing Food Stamp Payment Errors

exceeding 130 percent of the monthly poverty income guideline for its household size. To qualify for 

this option, a state must have a certification period of 6 months or more.

a

The threshold reporting waiver raises the earned income changes that households must report to 

more than $100 per month. (Households still must report if a member gains or loses a job.) Without 

this waiver, households would be required to report any wage or salary change of $25 or more per 

month.

b

The status reporting waiver limits the income changes that households must report to three key 

events: (1) gaining or losing a job, (2) moving from part-time to full-time employment or vice versa, and 

(3) a change in the wage rate or salary. 

c

The quarterly reporting waiver eliminates the need for households with earned income to report any 

changes during a 3-month period, provided the household provides required documentation at the end 

of the period.

d

The 5-hour reporting waiver limits changes that households must report to three key events: (1) 

gaining or losing a job; (2) a change in wage rate or salary; and (3) a change in hours worked of more 

than 5 hours per week, if this change is expected to continue for more than a month. 

Source: FNS. 
Page 36 GAO-01-272 Reducing Food Stamp Payment Errors

Appendix VI

GAO Contacts and Staff Acknowledgments ApendxiVI

GAO Contacts Robert E. Robertson, (202) 512-5138

Richard Cheston, (202) 512-5138

Acknowledgments In addition to those named above, Christine Frye, Debra Prescott, and 

Michelle Zapata made key contributions to this report.

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