Supplemental Nutrition Assistance Program: Payment Errors and Trafficking Have Declined, but Challenges Remain
Published: 2010-07-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. Department of Agriculture's (USDA) Supplemental Nutrition Assistance Program (SNAP) is intended to help low-income individuals and families obtain a better diet by supplementing their income with benefits to purchase food. USDA's Food and Nutrition Service (FNS) and the states jointly implement SNAP. Participation in the program has risen steadily over the last decade to an all time high of more than 33 million in fiscal year 2009, providing critical assistance to families in need. This testimony discusses GAO's past work on three issues related to ensuring integrity of the program: (1) improper payments to SNAP participants, (2) trafficking of SNAP benefits, and (3) categorical eligibility for certain individuals or households. This testimony is based on prior GAO reports on categorical eligibility (GAO-07-465), payment errors (GAO-05-245), and food stamp trafficking (GAO-07-53), developed through data analyses, case file reviews, site visits, interviews with officials, and a 50- state survey. GAO also updated data where available and collected information on recent USDA actions and policy changes.
section_title: What GAO Found
paragraphs: The national payment error rate reported for SNAP, which combines states' overpayments and underpayments to program participants, has declined by 56 percent from 1999 to 2009, from 9.86 percent to a record low of 4.36 percent. This reduction is due, in part, to options made available to states that simplified certain program rules. In addition, FNS and the states GAO reviewed have taken several steps to improve SNAP payment accuracy that are consistent with internal control practices known to reduce improper payments such as providing financial incentives and penalties based on performance. Despite this progress, the amount of SNAP benefits paid in error is substantial, totaling about $2.2 billion in 2009 and necessitating continued top-level attention and commitment to determining the causes of improper payments and taking corrective actions to reduce them. FNS estimates indicate that the national rate of food stamp trafficking declined from about 3.8 cents per dollar of benefits redeemed in 1993 to about 1.0 cent per dollar during the years 2002 to 2005 but that trafficking occurs more frequently in smaller stores. FNS has taken advantage of electronic benefit transfer to reduce fraud, and in response to prior GAO recommendations, has implemented new technology and categorized stores based on risk to improve its ability to detect trafficking and disqualify retailers who traffic. FNS also received authority to impose increased financial penalties for trafficking as recommended; however, it has not yet assessed higher penalties because implementing regulations are not yet finalized. FNS is considering additional steps to encourage states to pursue recipients suspected of trafficking but limited state resources are a constraint. Categorically eligible households do not need to meet SNAP eligibility requirements because their need has been established under the states' Temporary Assistance for Needy Families (TANF) program. As of June 2010, 36 states have opted to provide categorical eligibility for SNAP to any household found eligible for a service funded through TANF and, in 35 states, there is no limit on the amount of assets certain households may have to be determined eligible, according to FNS. Households can be categorically eligible for SNAP even if they receive no TANF funded service other than a toll-free telephone number or informational brochure. However, the amount of assistance eligible households receive is determined using the same process used for other SNAP recipients. According to FNS officials, increased use of categorical eligibility by states has reduced administrative burdens and increased access to SNAP benefits to households who would not otherwise be eligible due to asset or income limits. However, little is known about the extent of its impact on increased access or program integrity. SNAP has played a key role in assisting families facing hardship during the economic crisis, but given fiscal constraints and program growth, it is more important than ever to understand the impact of policy changes, and balance improvements in access with efforts to ensure accountability. FNS generally agreed with GAO's prior recommendations to address SNAP trafficking and categorical eligibility issues and has taken action in response to most of them.

section_title: Letter
paragraphs: Thank you for inviting me here today to discuss issues related to the  integrity of the U.S. Department of Agriculture’s (USDA) Supplemental  Nutrition Assistance Program (SNAP), formerly the Food Stamp Program.  SNAP is intended to help low-income individuals and families obtain a  better diet by supplementing their income with benefits to purchase food.  Participation in SNAP has risen steadily over the last decade in response  to economic conditions and has played a critical role in assisting families  facing hardship. In fiscal year 2000, SNAP provided about $15 billion in  benefits to about 17 million individuals while in fiscal year 2009, it  provided more than $50 billion in benefits to nearly 34 million individuals.  The recent economic crisis has sharply increased demand for such  assistance, with participation in SNAP increasing by 22 percent from June  2008 to June 2009 alone. Currently, almost 1 in every 11 Americans  participates in the program. Further, the American Recovery and  Reinvestment Act of 2009 provided a temporary across-the-board increase  to the SNAP benefit amount. This recent growth highlights the  importance of ensuring program integrity. Every year, more than $1 billion in benefits are paid incorrectly. Further, SNAP recipients exchange  hundreds of millions of dollars in benefits for cash instead of food with authorized retailers across the country, a practice known as trafficking. In addition, concerns have been raised about a policy option allowing state s  to give households automatic eligibility for SNAP if they are eligible for  minimal services financed with Temporary Assistance for Needy Families  (TANF) funds (a type of categorical eligibility).
The information I am presenting today is based on past work, updated  with current information where available, on three issues related to  ensuring integrity of the program: (1) improper payments to SNAP  participants, (2) trafficking of SNAP benefits, and (3) categorical eligibility  for SNAP benefits. The payment error and trafficking findings are based  on past analyses of program quality control data, case file reviews, data  analysis of the Food and Nutrition Service (FNS) retailer database, and  interviews and site visits with program stakeholders, including federal  agency and state and local officials. The categorical eligibility findings are  based on a 2007 survey of state SNAP administrators, an analysis of  household characteristic data collected from 21 states, and interviews and  site visits with federal and state officials. More complete information on  the scope and methodology for our prior work is available in each  published report. In addition, we updated data where available, reviewed  recent USDA policy changes and actions taken in response to our  recommendations, and discussed the implications of these actions and  changes with USDA officials. We also reviewed relevant federal laws and  regulations. We conducted this work in accordance with generally  accepted government auditing standards. Those standards require that we  plan and perform the audit to obtain sufficient, appropriate evidence to  provide a reasonable basis for our findings and conclusions based on our  audit objectives. We believe that the evidence obtained provides a  reasonable basis for our findings and conclusions.
subsections: section_title: Background
paragraphs: SNAP is jointly administered by FNS and the states. FNS pays the full cost  of SNAP benefits, shares the states’ administrative costs, and is  responsible for promulgating program regulations and ensuring that state  officials administer the program in compliance with program rules. States  administer the program by determining whether households meet the  program’s eligibility requirements, calculating monthly benefits for  qualified households, and issuing benefits to participants through an  Electronic Benefits Transfer (EBT) system.
subsections: section_title: Program Participation
paragraphs: As shown in figure 1, program participation has increased sharply from  fiscal years 1999 to 2009, and indications are that participation has  continued to increase significantly in fiscal year 2010. According to FNS,  the downturn in the U.S. economy, coupled with changes in the program’s  rules and administration, has led to an increase in the number of SNAP  participants.
section_title: Determination of Eligibility and Benefits
paragraphs: Eligibility for SNAP is based primarily on a household’s income and assets.  To determine a household’s eligibility, a caseworker must first determine  the household’s gross income, which cannot exceed 130 percent of the  federal poverty level for that year as determined by the Department of  Health and Human Services. A household’s net income cannot exceed 100  percent of the poverty level (or about $22,056 annually for a family of four  living in the continental United States in fiscal year 2010). Net income is  determined by deducting from gross income a portion of expenses such as  dependent care costs, medical expenses for elderly individuals, utilities  costs, and housing expenses.
A household’s assets are also considered to determine SNAP eligibility and  SNAP asset rules are complex. There is a fixed limit, adjusted annually for  inflation, on the amount of assets a household may own and remain  eligible for SNAP. Certain assets are not counted, such as a home and  surrounding lot. There are also basic program rules that limit the value of  vehicles an applicant can own and still be eligible for the program.
section_title: Categorical Eligibility for SNAP
paragraphs: Federal regulations require states to make households categorically  eligible for SNAP if the household receives certain cash benefits, such as  TANF cash assistance or Supplemental Security Income. States must also  confer categorical eligibility for certain households receiving, or  authorized to receive, certain TANF non-cash services that are funded  with more than 50 percent federal or state maintenance of effort (MOE)  funds and serve certain TANF purposes. In addition, in certain  circumstances, states have the option to confer categorical eligibility using  TANF non-cash services funded with less than 50 percent federal TANF or  state MOE funds. The intent of categorical eligibility was to increase  program access and reduce the administrative burden on state agencies by  streamlining the need to apply means tests for both TANF and SNAP.
section_title: FNS’s Quality Control (QC) System
paragraphs: Improper payments (or payment errors) occur when recipients receive too  much or too little in SNAP benefits. FNS and the states share  responsibility for implementing an extensive quality control system used  to measure the accuracy of SNAP payments and from which state and  national error rates are determined. Under FNS’s quality control system,  the states calculate their payment errors annually by drawing a statistical  sample to determine whether participating households received the  correct benefit amount. The state’s error rate is determined by dividing the  dollars paid in error by the state’s total issuance of SNAP benefits. Once  the error rates are final, FNS is required to compare each state’s  performance with the national error rate and imposes financial penalties  or provides financial incentives according to legal specifications.
section_title: Trafficking and FNS Authorization and Monitoring of Retailers
paragraphs: Trafficking occurs when SNAP recipients exchange SNAP benefits for  cash instead of food with authorized retailers. Under the EBT system,  SNAP recipients receive an EBT card imprinted with their name and a  personal account number, and SNAP benefits are automatically credited to  the recipients’ accounts once a month. In legitimate SNAP transactions,  recipients run their EBT card, which works much like a debit card,  through an electronic point-of-sale machine at the grocery checkout  counter, and enter their secret personal identification number to access  their SNAP accounts. This authorizes the transfer of SNAP benefits from a  federal account to the retailer’s account to pay for the eligible food items.  The legitimate transaction contrasts with a trafficking transaction in which  recipients swipe their EBT card, but instead of buying groceries, they  receive a discounted amount of cash and the retailer pockets the  difference.
FNS has the primary responsibility for authorizing retailers to participate  in SNAP. To become an authorized retailer, a store must offer, on a  continuing basis, at least three varieties of foods in each of the four staple  food categories—meats, poultry or fish; breads or cereals; vegetables or  fruits; and dairy products—or over 50 percent of its sales must be in a  staple group. The store owner submits an application and includes  relevant forms of identification such as copies of the owner’s Social  Security card, driver’s license, business license, liquor license, and alien  resident card. The FNS field office program specialist then checks the  applicant’s Social Security number against FNS’s database of retailers, the  Store Tracking and Redemption System, to see if the applicant has  previously been sanctioned in the SNAP program. The application also  collects information on the type of business, store hours, number of  employees, number of cash registers, the types of staple foods offered, and  the estimated annual amount of gross sales and eligible SNAP sales.
In addition to approving retailers to participate in the program, FNS has  the primary responsibility for monitoring their compliance with  requirements and administratively disqualifying those who are found to  have trafficked SNAP benefits. FNS headquarters officials collect and  monitor EBT transaction data to detect suspicious patterns of transactions  by retailers. They then send any leads to FNS program specialists in the  field office who either work the cases themselves or refer them to  undercover investigators in the Retailer Investigations Branch to pursue  by attempting to traffic SNAP benefits for cash.
section_title: States Have Made Significant Progress in Reducing Payment Errors
subsections: section_title: The SNAP Payment Error Rate Has Declined to a Record Low
paragraphs: The national payment error rate — the percentage of SNAP benefit dollars  overpaid or underpaid to program participants—has declined by about 56  percent over the last 11 years, from 9.86 percent in 1999 to 4.36 percent in  2009, in a time of increasing participation (see figure 1). Of the total $2.19  billion in payment errors in fiscal year 2009, $1.8 billion, or about 82  percent, were overpayments. Overpayments occur when eligible persons  are provided more than they are entitled to receive or when ineligible  persons are provided benefits. Underpayments, which occur when eligible  persons are paid less than they are entitled to receive, totaled $412 million,  or about 18 percent of dollars paid in error, in fiscal year 2009.
The decline in payment error rates has been widespread despite the  significant increase in participation. Error rates fell in almost all states,  and 36 states reduced their error rates by over 50 percent from fiscal years  1999 to 2009. In addition, 47 states had error rates below 6 percent in 2009;  this is an improvement from 1999, when 7 states had error rates below 6  percent. However, payment error rates vary among states. Despite the  decrease in many states’ error rates, a few states continue to have high  payment error rates.
section_title: Program Simplification Has Been Shown to Reduce Error Rates, but the Program Remains Complex
paragraphs: State use of simplified reporting options has been shown to have  contributed to the reduction in the payment error rate. Several options are  made available to the states to simplify the application and reporting  process, and one such option is simplified reporting. Of the 50 states  currently using simplified reporting, 47 have expanded it beyond earned  income households, according to a recent FNS report. Once a state has  elected to use simplified reporting, eligible households in the state need  only report changes occurring between certification and normally  scheduled reporting if the changes result in income that exceeds 130  percent of the federal poverty level. This simplified reporting option can  reduce a state’s error rate by minimizing the number of income changes  that must be reported between certifications and thereby reducing errors  associated with caseworker failure to act, as well as participant failure to  report changes.
Despite these simplified reporting options, program eligibility  requirements remain complex. This complexity increases the risk that  caseworkers will make errors when considering all the factors needed to  determine eligibility. Our previous work has shown that the financial  eligibility of an applicant can be difficult to verify in means-tested  programs, further increasing the risk of payment to an ineligible recipient.  For example, caseworkers must verify several types of household assets to  determine eligibility and benefit amounts, such as bank accounts,  property, and vehicles. While additional efforts to simplify the program  may further reduce payment error, it could also reduce FNS’ ability to  target the program to individual families’ needs. Moreover, participant- caused errors, which we earlier reported constitute one-third of the overall  national errors, are difficult to prevent.
section_title: FNS and States Have Taken Steps to Increase Payment Accuracy
paragraphs: We found that FNS and the states we reviewed have taken many  approaches to increasing SNAP payment accuracy, most of which are  consistent with internal control practices known to reduce improper  payments. Often, several practices are tried simultaneously, making it  difficult to determine which have been the most effective.
Tracking state performance. FNS staff use Quality Control (QC) data to  monitor states’ performance over time; conduct annual reviews of state  operations; and where applicable, monitor the states’ implementation of  corrective action plans. FNS, in turn, requires states to perform  management evaluations to monitor whether adequate corrective action  plans are in place at local offices to address the causes of persistent errors  and deficiencies. In addition, in November 2003, FNS created a Payment  Accuracy Branch at the national level to work with FNS regional offices to  suggest policy and program changes and to monitor state performance.  The branch facilitates a National Payment Accuracy Work Group with  representatives from each FNS regional office and headquarters who use  QC data to review and categorize state performance into one of three  tiers. Increased intervention and monitoring approaches are applied  when state error rates increase and states are assigned to tier 2 or tier 3.
Penalties and incentives. FNS has long focused its attention on states’  accountability for error rates through its QC system by assessing financial  penalties and providing financial incentives. However, since 2000, USDA  leadership has more explicitly established payment accuracy as a program  priority. High level USDA officials visited states with particularly high  error rates, and FNS has collected a higher percentage of penalties from  states compared with prior years. For example, from fiscal year 1992 to  2000, FNS collected about $800,000 in penalties from states. In the next 5  years, FNS collected more than $20 million from states.
In fiscal year 2009, 3 states (Maine, West Virginia, and New Mexico) were  notified that they had incurred a financial liability for having a poor  payment error rate for at least two consecutive years. An additional 9  states and territories (Connecticut, Maryland, Indiana, Wisconsin,  Louisiana, Texas, Iowa, Alaska, and Guam) were found to be in jeopardy  of being penalized if their error rates do not improve. Ten states and  territories received bonus payments for the best and most improved  payment error rates in fiscal year 2009 (Delaware, Florida, Georgia, Guam,  Maine, Nebraska, Ohio, South Dakota, Washington, Wisconsin).
Information sharing. FNS also provides and facilitates the exchange of  information gleaned from monitoring by training state QC staff, presenting  at conferences, publishing best practice guides, supporting the adoption of  program simplification options, and providing states policy interpretation  and guidance.
At the time of our 2005 study, states we reviewed adopted a combination  of practices to prevent, minimize, and address payment accuracy  problems, such as:  Increasing the awareness of, and the accountability for, payment error.  For example, some states set error rate targets for their local offices and  hold staff accountable for payment accuracy.
Analyzing quality control data to identify causes of common payment  errors and developing corrective actions.
Making automated system changes to prompt workers to obtain complete  documentation from clients.
Developing specialized change units that focus on acting upon reported  case changes.
Verifying the accuracy of benefit payments calculated by state SNAP  workers through supervisory and other types of case file reviews.
Despite this progress, the amount of SNAP benefits paid in error is  substantial, totaling about $2.2 billion in 2009. This necessitates continued  top-level attention from USDA management and continued federal and  state commitment to determining the causes of improper payments and  taking corrective actions to reduce them.
section_title: Estimates Suggest Trafficking Has Declined, but FNS Could Further Enhance Program Integrity
subsections: section_title: FNS Estimates Suggest That the Rate of SNAP Trafficking Has Declined
paragraphs: The national rate of SNAP trafficking declined from about 3.8 cents per  dollar of benefits redeemed in 1993 to about 1.0 cent per dollar during the  years 2002 to 2005, as shown in table 1. However, even at that lower rate,  FNS estimates that about $241 million in SNAP benefits were trafficked  annually in those years. FNS has not completed an updated estimate of  trafficking since 2005.
Overall, we found that the estimated rate of trafficking at small stores was  much higher than the estimated rate for supermarkets and large groceries,  which redeem most SNAP benefits. The rate of trafficking in small stores  was an estimated 7.6 cents per dollar and an estimated 0.2 cents per dollar  in large stores in 2005.
section_title: FNS Has Used EBT Data to Improve Retailer Monitoring
paragraphs: With the implementation of EBT, FNS has supplemented its traditional  undercover investigations by the Retailer Investigations Branch with cases  developed by analyzing EBT transaction data. The nationwide  implementation of EBT, completed in 2004, has given FNS powerful new  tools to supplement its traditional undercover investigations of retailers  suspected of trafficking SNAP benefits. FNS traditionally sent its  investigators into stores numerous times over a period of months to  attempt to traffic benefits. However, in 1996 Congress gave FNS the  authority to charge retailers with trafficking in cases using evidence  obtained through an EBT transaction report, called “paper cases.” A  major advantage of paper cases is that they can be prepared relatively  quickly and without multiple store visits.
These EBT cases now account for more than half of the permanent  disqualifications by FNS. Although the number of trafficking  disqualifications based on undercover investigations has declined, these  investigations continue to play a key role in combating trafficking.  However, as FNS’s ability to detect trafficking has improved, the number  of suspected traffickers investigated by other federal entities, such as the  USDA Inspector General and the U.S. Secret Service, declined, according  to data available at the time of our review. These entities have focused  more on a smaller number of high-impact investigations. As a result,  retailers who traffic are less likely to face criminal penalties or  prosecution.
section_title: FNS Has Taken Action to Improve Retailer Monitoring and Increase Trafficking Penalties
paragraphs: In response to our prior recommendation that FNS improves analysis and  monitoring, FNS has implemented new technology to improve its ability to  detect trafficking and disqualify retailers who traffic, which has  contributed to more sophisticated analyses of SNAP transactions and  categorization of stores based on risk. Specifically, FNS implemented a  revised store classification system to systematically compare similar  stores in order to better identify fraudulent transaction activity for  investigation. FNS also increased the amount of data available to review  and changed its monitoring of transaction data from reviewing monthly  data to reviewing these data on a daily basis. FNS also implemented a new  tool that assesses each retailer’s risk of trafficking. FNS reports that these  changes have assisted with early monitoring and identification of violating  stores and allocation of its monitoring resources.
Consistent with our recommendation that FNS develop a strategy to  increase penalties for trafficking, FNS received new authority to impose  increased financial penalties for trafficking. The Food, Conservation, and  Energy Act of 2008 expanded FNS authority to assess civil money  penalties in addition to or in lieu of disqualification. It also provided  authority for FNS, in consultation with the Office of the Inspector General,  to withhold funds from traffickers during the administrative process, if  such trafficking is considered a flagrant violation. Regulations to  implement this provision are being developed and FNS expects the  proposed rule to be published in July 2012. According to FNS, the rule that  will address addition of monetary sanctions to disqualification is targeted  for publication in September 2011. Until the policy is implemented, the  impact of this change will not be known.
section_title: Despite Progress, Vulnerabilities Still Exist
paragraphs: Despite the progress FNS has made in combating retailer trafficking, the  SNAP program remains vulnerable.
Program vulnerabilities we identified include:    Limited inspection of stores. FNS authorizes some stores with limited  food supplies so that low-income participants in areas with few  supermarkets have access to food, but may not inspect these stores again  for 5 years unless there is some indication of a problem.
Varied state efforts. Some states actively pursue and disqualify recipients  who traffic their benefits while inaction by other states allow recipients  suspected of trafficking to continue the practice. We recommended in our  October 2006 report that FNS promote state efforts to pursue recipients  suspected of trafficking by revisiting the incentive structure to incorporate  additional provisions to encourage states to investigate and take action  against recipients who traffic. We also recommended that FNS ensure that  field offices report to states those recipients who are suspected of  trafficking with disqualified retailers. However, FNS officials told us they  have taken few recent steps to increase state efforts to pursue recipients  suspected of trafficking, in part because of state resource constraints, but  will continue to examine the impact of financial incentives in preparation  for the expected upcoming program reauthorization.
section_title: States Can Provide Automatic SNAP Eligibility to Individuals Authorized to Receive TANF Services
subsections: section_title: Many States Confer Categorical Eligibility Using No Asset Limit and Income Limits Above Regular SNAP Rules
paragraphs: States that confer TANF non-cash categorical eligibility use a variety of  TANF services to qualify participants for SNAP benefits. According to  FNS, as of June 2010, 36 states are using broad-based policies that could  make most, if not all, TANF non-cash households categorically eligible for  SNAP because the households receive TANF/MOE funded benefits, such  as brochures or information referral services. This is an increase from the  29 states that conferred this type of categorical eligibility at the time of our  2007 report. Other states have more narrow policies in place that could  make a smaller number of households categorically eligible for SNAP  because they receive a TANF/MOE funded benefit such as child care or  counseling.
These categorically eligible households do not need to meet SNAP  eligibility requirements such as the SNAP asset or gross income test  because their general need has been established by the TANF program.  For example, in 35 of the states that confer categorical eligibility for all  TANF services, there is no limit on the amount of assets a household may  have to be determined eligible, according to a FNS report. In addition, the  gross income limit of the TANF program set by these states ranged from  130 to 200 percent of the federal poverty level, according to a FNS report.  As a result, households with substantial assets but low income could be  deemed eligible for SNAP under these policies.
Even though households may be deemed categorically eligible for SNAP,  the amount of assistance households are eligible for is determined based  on each household’s income and other circumstances using the same  process used for other SNAP recipients. Some families determined  categorically eligible for the program could be found eligible for the  minimum benefit. However, FNS noted in a recent report that families  with incomes above 130 percent of the federal poverty level and high  expenses (shelter costs, dependent care expenses, and medical costs)  could receive a significant SNAP benefit.
Households can be categorically eligible for SNAP even if they receive no  TANF funded service other than a toll-free telephone number or  informational brochure. For example, one state reported to FNS that it  included information about a pregnancy prevention hotline on the SNAP  application to confer categorical eligibility. Other states reported  providing households brochures with information about available services,  such as domestic violence assistance or marriage classes, to confer  categorical eligibility. Receipt of the information on the SNAP applications  or on the brochures can qualify the household to be categorically eligible  for SNAP benefits. However, the amount of the SNAP benefit is still  determined in accordance with SNAP rules by the eligibility workers using  information on income and expenses.
In 2007, we reported that six states may not have been following program  regulations because they were not using certain TANF noncash services to  confer SNAP categorical eligibility. These services included child care,  transportation, and substance abuse services, which may have been  funded by more than 50 percent federal TANF or state MOE funds. In  addition, some states reported that they did not specifically determine  whether an individual needs a specific TANF noncash service before  conferring SNAP eligibility. We recommended that FNS provide guidance  and technical assistance to states clarifying which TANF noncash services  states must use to confer categorical eligibility for SNAP and monitor  states’ compliance with categorical eligibility requirements. In September  2009, USDA released a memorandum encouraging states to continue  promoting noncash categorical eligibility. FNS reported that four of the six  states currently are using the required noncash services to confer  categorical eligibility.
section_title: FNS and States Cite Several Advantages to Use of Expanded Categorical Eligibility
paragraphs: FNS has encouraged states to adopt categorical eligibility to improve  program access and simplify the administration of SNAP. According to  FNS officials, increased use of categorical eligibility by states has reduced  administrative burdens and increased access to SNAP benefits to  households who would not otherwise be eligible for the program due to  SNAP income or asset limits. Adoption of this policy option can provide  needed assistance to low-income families, simplify state policies, reduce  the amount of time states must devote to verifying assets, and reduce the  potential for errors, according to FNS. FNS recently also encouraged  states that have implemented a broad-based categorical eligibility program  with an asset limit to exclude refundable tax credits from consideration as  assets.
In our previous work, we found that many of the states’ SNAP officials  surveyed believed eliminating TANF non-cash categorical eligibility would  decrease participation in SNAP. Many of the states’ SNAP officials we  surveyed also believed that eliminating TANF non-cash categorical  eligibility would increase the SNAP administrative workload and state  administrative costs. Some common reasons state officials indicated for  the increase in SNAP administrative workload were:  increase in verifications needed, increase in error rates as required verifications increase,   changes to data systems,  increase in time to process applications, and   changes to policies and related materials.
While FNS and the states believe categorical eligibility has improved  program access and payment accuracy, the extent of its impact on access  and program integrity is unclear.
section_title: Concluding Observations
paragraphs: Over the past few years, the size of the Supplemental Nutrition Assistance  Program has grown substantially, both in terms of the number of people  served and the amount paid out in benefits, at a time when the slow pace  of the economic recovery has left many families facing extended hardship.  At the same time, due largely to the efforts of FNS working with the states,  payment errors have declined and mechanisms for detecting and reducing  trafficking have improved. However, little is known about the extent to  which increased use of categorical eligibility has affected the integrity of  the program. Further, improper payments in the program continue to  exceed $2 billion and retailer fraud remains a serious concern, highlighting  the importance of continued vigilance in ensuring that improvements in  program access are appropriately balanced with efforts to maintain  program integrity. As current fiscal stress and looming deficits continue to  limit the amount of assistance available to needy families, it is more  important than ever that scarce federal resources are targeted to those  who are most in need and that the federal government ensure that every  federal dollar is spent as intended.
Mr. Chairman, this concludes my prepared statement. I will be happy to  answer any questions you or members of the Subcommittee may have.
section_title: Contact and Acknowledgements
paragraphs: For future contacts regarding this testimony, please contact Kay Brown at  (202) 512-7215 or e-mail brownke@gao.gov. Key contributors to this  testimony were Kathy Larin, Cathy Roark, and Alex Galuten.
section_title: Related GAO Products
paragraphs: Domestic Food Assistance: Complex System Benefits Millions, but  Additional Efforts Could Address Potential Inefficiency and Overlap  among Smaller Programs. GAO-10-346. Washington, D.C.: April 15, 2010.
Improper Payments: Progress Made but Challenges Remain in  Estimating and Reducing Improper Payments. GAO-09-628T.  Washington, D.C.: April 22, 2009.
Food Stamp Program: FNS Could Improve Guidance and Monitoring to  Help Ensure Appropriate Use of Noncash Categorical Eligibility.  GAO-07-465. Washington, D.C.: March 28, 2007.
Food Stamp Program: Payment Errors and Trafficking Have Declined  despite Increased Program Participation. GAO-07-422T. Washington,  D.C.: January 31, 2007.
Food Stamp Trafficking: FNS Could Enhance Program Integrity by  Better Targeting Stores Likely to Traffic and Increasing Penalties.  GAO-07-53. Washington, D.C.: October 13, 2006.
Improper Payments: Federal and State Coordination Needed to Report  National Improper Payment Estimates on Federal Programs.  GAO-06-347. Washington, D.C.: April 14, 2006.
Food Stamp Program: States Have Made Progress Reducing Payment  Errors, and Further Challenges Remain. GAO-05-245. Washington, D.C.:  May 5, 2005.
Food Stamp Program: Farm Bill Options Ease Administrative Burden,  but Opportunities Exist to Streamline Participant Reporting Rules  among Programs. GAO-04-916. Washington, D.C.: September 16, 2004.
Food Stamp Program: States Have Made Progress Reducing Payment  Errors, and Further Challenges Remain. GAO-05-245. Washington, D.C.:  May 5, 2005.
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