Food Stamp Program: States Have Made Progress Reducing Payment Errors, and Further Challenges Remain
Published: 2005-05-05T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In fiscal year 2003, the federal Food Stamp Program made payment errors totaling about $1.4 billion in benefits, or about 7 percent of the total $21.4 billion in benefits provided to a monthly average of 21 million low-income participants. Because payment errors are a misuse of public funds and can undermine public support of the program, it is important that the government minimize them. Because of concerns about ensuring payment accuracy GAO examined: (1) what is included in the national food stamp payment error rate and how it has changed over time, (2) what is known about the causes of food stamp payment errors, and (3) what actions the Food and Nutrition Service (FNS) and states have taken to reduce these payment errors. To answer these questions, GAO analyzed program quality control data for fiscal years 1999 through 2003 and interviewed program stakeholders, including state and local officials from nine states.
section_title: What GAO Found
paragraphs: The national dollar payment error rate for the Food Stamp Program, which combines states' overpayments and underpayments to program participants in all states, has declined by almost one-third over the last 5 years to a record low of 6.63 percent. This decline has been widespread; the rate fell in 41 states and the District of Columbia, and rates in 18 of these states fell by at least one-third. However, despite this decrease, some states continue to have relatively high payment error rates. For example, in 2003, 7 states had payment error rates of more than 10 percent. Almost two-thirds of food stamp payment errors are caused by caseworkers, usually when they fail to keep up with reported changes or make mistakes applying program rules, and one-third are caused by participant failure to report required, complete, or correct information, such as household income and composition. State officials said program complexity and other factors, such as the lack of resources and staff turnover, can contribute to these errors. In fiscal year 2003, states referred about 5 percent of all cases identified with errors for suspected participant fraud investigation. To increase food stamp payment accuracy, FNS and the 9 states GAO reviewed took many approaches that parallel good internal control practices. These efforts include increasing the leadership and accountability in the program, performing risk assessments to identify problem areas, implementing various program and process changes in response to the findings from risk assessments, and monitoring and promoting improved performance. The states are using a combination of approaches to improve payment accuracy, making it difficult to tie error rate improvements to specific practices. However, state officials point to their improved state error rates as evidence of a collective impact.

section_title: Letter
paragraphs: In fiscal year 2003, the federal Food Stamp Program, administered by the  U.S. Department of Agriculture’s (USDA) Food and Nutrition Service  (FNS), reported it made payment errors totaling about $1.4 billion in  benefits. This sum represents about 7 percent of the total $21.4 billion in  benefits provided each year to a monthly average of 21 million low-income  program participants. The program is intended to help low-income  individuals and families obtain a better diet by supplementing their income  with benefits to purchase food. However, payment errors reflect the  misuse of public funds and may undermine public confidence in the  program.
The Food Stamp Program is jointly administered by FNS and the states.  State caseworkers must determine an applicant’s eligibility and benefit  levels based on a complex formula that takes into account the members of  the household, their assets, and net monthly income; households must  report changes in their circumstances that may affect their eligibility and  benefit levels; and caseworkers periodically recertify eligibility. Depending  on household circumstances, some cases may require more adjustments  than others. For example, households with earned income may be  required to report more income changes to caseworkers than households  without earned income, such as those that are dependent solely on  retirement benefits. In addition, some food stamp participants receive  benefits from other programs, such as Medicaid or the cash assistance  program Temporary Assistance for Needy Families (TANF). Although the  caseworkers who process these eligibility determinations may be the same  as those who administer the Food Stamp Program, the rules for the  various programs can differ. These differences add to the complexity of  determining and recertifying eligibility and program benefits.
FNS’s quality control (QC) system measures payment accuracy and  monitors how accurately states determine food stamp eligibility and  calculate benefits. Under FNS’s QC system, states participate in the  calculation of their payment errors by reviewing a sample of cases to  examine whether eligibility was correctly determined and whether  participating households received the correct benefit amount. FNS  validates the sample and the accuracy of the state review.
Because the government must make the best use of funding, it is important  to minimize payment errors. Due to concerns about ensuring payment  accuracy, we examined (1) what is included in the national food stamp  payment error rate and how has the rate changed over time, (2) what is  known about the causes of food stamp payment errors, and (3) what  actions USDA and states have taken to reduce these payment errors.
To determine what is included in the payment error rate, how it has  changed over time, and the causes of payment error, we analyzed FNS’s  QC data for fiscal years 1999 through 2003. We determined that the QC  data were reliable for the purposes of our work by reviewing our past  reports, FNS and external evaluations of the QC system, and related  documents. We also met with knowledgeable FNS officials to discuss  issues of the QC system’s accuracy and completeness. To understand the  causes of payment errors and what actions have been taken to reduce  them, we conducted interviews with program stakeholders from FNS  headquarters, each of FNS’s seven regional offices, and the USDA Office of  the Inspector General. In addition, we interviewed food stamp officials  from 9 states, officials from the state auditor’s office in each of these 9  states, food stamp officials from the local office within 8 of these 9 states  with the largest food stamp caseload, and food stamp researchers and  representatives from special interest groups. The 9 states we selected  were California, Michigan, Mississippi, New Jersey, New York, Oregon,  South Dakota, Texas, and Wisconsin. We chose these states for the  diversity in their locations, number of Food Stamp Program participants,  and payment accuracy performances. We included 3 states with  consistently low error rates, 3 states with consistently high error rates, and  3 states that reduced their error rate by more than 30 percent between  1999 and 2003. To guide our work on actions taken to reduce payment  errors, we used the key components of internal control as our framework.  Finally, to learn about past work regarding Food Stamp payment error, we  reviewed previous GAO reports on the Food Stamp Program and FNS  reports concerning food stamp payment error. We conducted our work  between May 2004 and April 2005 in accordance with generally accepted  government auditing standards.
subsections: section_title: Background
paragraphs: The federal Food Stamp Program is intended to help low-income  individuals and families obtain a more nutritious diet by supplementing  their income with benefits to purchase food. FNS pays the full cost of food  stamp benefits and shares the states’ administrative costs—with FNS  paying approximately 50 percent—and is responsible for promulgating  program regulations and ensuring that state officials administer the  program in compliance with program rules. The states usually administer  the program out of local assistance offices that determine whether  households meet the program’s eligibility requirements, calculate monthly  benefits for qualified households, and issue benefits to participants, almost  always on an Electronic Benefits Transfer (EBT) card. The local  assistance offices often administer other benefit programs as well,  including TANF, Medicaid, and child care assistance.
In fiscal year 2004, the Food Stamp Program issued almost $25 billion in  benefits, and in September 2004, almost 25 million individuals participated  in the program. As shown in figure 1, the increase in the average monthly  participation of food stamp recipients in 2004 continues a recent upward  trend in the number of people receiving benefits, with caseloads  increasing over 40 percent since 2001, but still below the level in 1996.
subsections: section_title: Eligibility Requirements
paragraphs: Eligibility for participation in the Food Stamp Program is based on the  Department of Health and Human Services’ poverty measures for  households. The caseworker must first determine the household’s gross  income, which cannot exceed 130 percent of the poverty level for that year  (or about $1,654 per month for a family of three living in the contiguous  United States in 2003). Then the caseworker must determine the  household’s net income, which cannot exceed 100 percent of the poverty  level (or about $1,272 per month for a family of three living in the  contiguous United States). Net income is determined by deducting from  gross income expenses such as dependent care costs, medical expenses,  utilities costs, and shelter expenses. In addition, there is a limit of $2,000 in  household assets, and basic program rules limit the value of vehicles an  applicant can own and still be eligible for the program. If the household  owns a vehicle worth more than $4,650, the excess value is included in  calculating the household’s assets.
After eligibility is established, households are certified to receive for food  stamps for periods ranging from 1 to 24 months depending upon  household circumstances. The average certification period is 10 months.  Once the certification period ends, households must reapply for benefits,  at which time eligibility and benefit levels are redetermined. Between  certification periods, households must report changes in their  circumstances—such as household composition, income, and certain  expenses—that food stamp agencies must consider to determine whether  the change affects their eligibility or benefit amounts. States have the  option of requiring food stamp participants to report on their financial  circumstances at various intervals and in various ways. States can institute  a type of periodic reporting system, or they can rely on households to  report changes in their household circumstances within 10 days of  occurrence. Under periodic reporting, participants report monthly,  quarterly, or under a simplified system. The simplified reporting system,  available since early 2001, provides for an alternative reporting option that  requires households with earned income to report changes between  certifications only when their income rises above 130 percent of the  poverty level. This easing of program requirements was designed to help  increase the program access and participation of eligible working families,  an FNS goal, by making it easier for them to participate, as well as to  reduce the administrative burden on local food stamp offices.
section_title: Quality Control System
paragraphs: To ensure the accuracy of food stamp payments, FNS and the states have  an extensive quality control system. In fiscal year 2003, the states spent an  estimated $80 million to administer the system, and FNS spent and  estimated $9 million. According to FNS officials, each month a state’s  food stamp QC staff selects a representative sample of the open food  stamp cases for review. The QC staff reviews each sample case to verify  whether the recipient’s eligibility and benefit amount were determined  correctly. If the reviewer finds the benefit amount off by more than   $25, it is counted as an error. The statewide sample produces a valid  statewide error rate, although in most cases, it does not include sufficient  cases to generate error rates for local offices.
FNS plays a significant role in monitoring and validating the state’s review.  The FNS regional offices approve the states’ sampling plans; validate the  states’ samples, totaling 56,557 in fiscal year 2003; and review one-third of  these sample cases to ensure accuracy. They also handle informal  arbitration of disputes resulting from differences between the state and  FNS review outcomes. Disputes that are not resolved at the regional office  can be appealed to FNS headquarters for formal arbitration. In fiscal year  2003, regional reviews found 151 cases where the regional offices’ finding  or error amount was different from the states’ finding or error amount.   According to FNS officials, this constitutes less than 1 percent of the cases  reviewed by the regions, and each year between 20 and 30 of these  unresolved disputes between the state and the regional office are appealed  to FNS headquarters for formal arbitration. According to FNS officials,  upon the completion of the regional office’s review and error  disagreement processes, the regional office adjusts error rates to reflect  the final results.
Once the error rates are final, FNS is required to compare each state’s  performance with the national error rate and imposes penalties or  provides incentives according to specifications in law. Prior to fiscal year  2003, penalties were levied each year a state’s payment error rate was  above the national average. In addition, states with error rates above   6 percent, other than for good cause, were required to develop corrective  action plans that are monitored by the FNS regional offices. FNS can  negotiate with the states the amount of the penalty that will be paid to  FNS, the amount that will be reinvested into the program, and the amount  of money that will be collected if the state does not improve its error rate  to an agreed-upon amount. In order to encourage program improvement,  FNS also provided enhanced funding to states that with a payment error  rate less than or equal to 5.90 percent according to a formula set in law.  During this period of time, the states were held accountable only for their  error rate and no other performance measure.
The Farm Security and Rural Investment Act of 2002 (the 2002 Farm Bill)  made significant changes to the way penalties and incentives are  calculated and awarded. States will not be penalized until their error rate  exceeds the national error rate threshold for 2 years in a row. The error  rate threshold changed so that states are not penalized unless there is a 95  percent statistical probability that their error rate exceeds 105 percent of  the national average for 2 consecutive years. If a state’s error rate exceeds  the threshold for 2 years in a row, a penalty will be established that is  equal to 10 percent of the cost of errors above 6 percent. In addition to  establishing the new penalty system, the 2002 Farm Bill instructed FNS to  create new criteria for performance bonuses that award states with high  or most improved performance for actions taken to correct errors, reduce  error rates, improve eligibility determination, and other indicators of  effective program operations.
FNS and the states also conduct fraud prevention activities to detect and  prosecute food stamp fraud by retailers and participants. In fiscal year  2002, the states spent $229 million on their fraud control activities and  reported that they completed 834,000 client investigations resulting in  12,000 state prosecutions and 61,000 ineligibility rulings. As a result of  these fraud control activities and following up on overpayments identified  through the QC process and during regular case processing activities, the  states established almost $26 million in fraud claims, $176 million in  household error claims, and $59 million in agency error claims. States also  reported they collected $209 million on previously established claims.  FNS’s payment error statistics do not account for the states’ results in  recovering overpayments.
Payment errors can typically be traced to a lack of or a breakdown in  internal controls, which are an integral component of an organization’s  management. Internal control is not one event, but a series of actions and  activities that occur throughout an organization on an ongoing basis.  Therefore, to guide our review of FNS and state actions taken to reduce  payment errors, we used the key components of internal control as our  framework. These components include creating a work environment that  promotes accountability and the reduction of payment error, analyzing  program operations to identify areas that present the risk of payment  error, making policy and program changes to address the identified risks,  and monitoring the results and communicating the lessons learned to  support further improvement.
section_title: The Food Stamp Error Rate, Which Combines Overpayments and Underpayments, Has Declined by Almost One-Third over the Last 5 Years
paragraphs: The national Food Stamp Program payment error rate combines  overpayments and underpayments to participants, and has declined by  about one-third in recent years from 9.86 percent in 1999 to a record low  of 6.63 percent in 2003. In dollars, this means if the 1999 error rate was in  effect in 2003, the program would have made payment errors totaling over  $2.1 billion rather than the $1.4 billion it experienced. Most states have  enjoyed a recent reduction in payment error, with error rates falling in   41 states and the District of Columbia. However, some states continue to  struggle with relatively high payment error rates. In addition to measuring  the accuracy of benefits paid, about 8 percent of the decisions to deny,  suspend, or terminate benefits were also made in error. However, the  amount of benefits these households would have received is unknown and  is not part of a state’s payment error rate.
subsections: section_title: Food Stamp Payment Error Rate Combines Benefit Overpayments and Underpayments
paragraphs: The national food stamp payment error rate combines overpayments and  underpayments made to benefit recipients in all states. Of the total   $1.4 billion in payment error in fiscal year 2003, $1.1 billion, or about   76 percent, were overpayments, which represent a financial loss to the  federal government. Overpayments occur when eligible persons are  provided more than they are entitled to receive or when ineligible persons  are provided benefits. Underpayments, which occur when eligible persons  are paid less than they are entitled to receive, totaled $340 million, or  about 24 percent of dollars paid in error, in fiscal year 2003.
Underpayments represent unintentional financial savings to the federal  government.
Studies have reviewed the effects of payment errors on household income.  An analysis of fiscal year 2003 QC data conducted by Mathematica Policy  Research, Inc., for FNS found that typical overpaid eligible households  received an average of $97 too much in monthly benefits and underpaid  eligible households received an average of $78 too little in monthly  benefits. As a result, overpaid households’ purchasing power, which  includes household gross income and food stamp benefits, rose by 8  percentage points, from 94 percent of the federal poverty level to 102  percent of the federal poverty level. Underpaid households’ purchasing  power decreased by 6 percentage points from 80 percent of the federal  poverty level to 74 percent of the federal poverty level. More than 98  percent of households receiving food stamps were eligible for the  program.  Ineligible households receiving food stamp benefits saw their  purchasing power rise from 118 percent of the federal poverty level to 132  percent of the federal poverty level.
section_title: The National Error Rate Declined by One-Third in the Last 5 Years, Driven by States Providing the Largest Amount of Food Stamp Benefits
paragraphs: The national Food Stamp Program payment error rate has declined by  about one-third over the last 5 years. The rate has declined each year, from  9.86 percent in 1999 to a record low of 6.63 percent in 2003, as shown in  figure 2. If the 1999 error rate had been in effect in 2003, the program  would have made payment errors totaling over $2.1 billion rather than the  $1.4 billion it experienced. In addition, the state-reported error rates for  fiscal year 2004 suggest that the overall error rate has continued to  decline. These error rates have not yet been validated by FNS, which  usually produces slight adjustments to these state-reported rates.
Error rates fell in 41 states and the District of Columbia, and 18 states  reduced their error rates by one-third or more, as shown in figure 3. See  appendix II for more information on individual states’ error rates over  time.
Further, the 5 states that issue the most food stamp benefits reduced their  error rates by an average of 36 percent during this period, as shown in  table 1. The changes in these states have a large effect on the national  error rate because of the way the rate is calculated.
In addition to contributing to the downward trend in the payment error  rate, an increasing number of states had error rates below 6 percent in  2003. However, payment error rates vary among states. For example, 21  states had error rates below 6 percent in 2003 (see fig. 4 for states’ error  rate performance); this is an improvement from 1999, when 7 states had  error rates below 6 percent. Despite the decrease in many states’ error  rates over the past few years, some states continue to have high payment  error rates. For example, 7 states had payment error rates of 10 percent or  higher in 2003. These states are also making progress, however, and are  expected to have reduced their error rates in 2004.
section_title: Improper Denials Are Monitored Separately
paragraphs: In addition to monitoring the payment error rate, FNS estimates the rate at  which eligible households are improperly denied benefits, which is called  the negative error rate. According to a FNS QC official, this rate is not  included in the national food stamp payment error rate because it counts  the number of cases affected rather than the number of dollars given in  error. In fiscal year 2003, FNS reported that about 8 percent of the  decisions to deny, suspend, or terminate benefits were made in error.  However, the amount of benefits these households would have received  had this error not occurred is unknown.
section_title: Caseworkers Cause about Two-Thirds and Participants Cause about One-Third of Payment Errors
paragraphs: Almost two-thirds of the payment errors in the Food Stamp Program are  caused by caseworkers, usually when they fail to act on new information  or make mistakes when applying program rules, and one-third are caused  by participants, when they unintentionally or intentionally do not report  needed information or provide incomplete or incorrect information (see  fig. 5). Program complexity and other factors, such as the lack of  resources and staff turnover, can contribute to caseworker mistakes.  Despite the decrease in error rate in recent years, these factors have  remained the key causes of payment error over the last 5 years.
Participant caused error (35%)
Caseworker caused error (65%)
subsections: section_title: Caseworkers Failing to Act on Reported Information and Misapplying Program Rules Cause Most Caseworker Errors
paragraphs: Almost two-thirds of all payment errors are made by state food stamp  caseworkers, according to our analysis of FNS QC data.
subsections: section_title: Caseworkers Fail to Act on Changes
paragraphs: Errors can occur when caseworkers have difficulty keeping up with  reported changes in household circumstances, according to officials from  all of the states we reviewed. Caseworkers are required to review reported  changes and assess their effect on a household’s eligibility and benefit  levels. In addition, caseworkers regularly receive information from data  matches and other sources that should be assessed and verified, and the  failure to do so is another important cause of error. In previous work, we  have found that the risk of improper payments increases in programs with  a significant volume of transactions. When caseworkers fail to keep up  with changes, the errors usually are reflected as incorrect household  income or deductible expenses, as shown in table 2.
Food stamp officials in 8 of the 9 states told us that increasing caseloads  have contributed to payment errors, making it more difficult for  caseworkers to attend to all of the reported changes. In recent years, FNS  and several states have made it a priority to reach out to likely eligible  households that are not yet participating in the program, in addition to  focusing on minimizing payment error. At the same time, the nation  experienced an economic downturn, which contributed to an increase in  the number of families who had a need for food assistance. As a result of  these and other factors, nationally, the number of food stamp participants  has increased by more than 30 percent since February of 2001.
Moreover, as states across the country have faced fiscal challenges due to  the overall slowdown in the economy, some responded by reducing their  staff, offering early retirements, or imposing hiring freezes. This also has  contributed to rising caseloads per worker. For example, food stamp  officials in Michigan said state fiscal problems resulting in staff reductions,  increased caseloads per worker, and competing demands on workers  made it difficult for caseworkers to act on all reported changes because of  high caseloads. Oregon state officials also attribute their difficulties with  payment accuracy to a 40 percent increase in the number of food stamp  cases in the state between 2001 and 2003 as well as state financial  problems that led to staff cuts and a hiring freeze. FNS officials informed  us that there is no central collection of comparable data on caseload per  worker among states.
Further, the recent outreach efforts included a focus on increasing  participation among working families. State and local officials from 8 of  the 9 states we interviewed said managing cases with earnings contributes  to payment error in part because caseworkers may find it difficult to keep  up with the frequent changes reported to them. For example, Michigan  food stamp officials told us that they experienced an increase in  overpayment errors because caseworkers were failing to act on the  frequent wage and salary changes reported by working participants.
section_title: Caseworkers Incorrectly Apply Program Rules
paragraphs: The complexity of the eligibility criteria for the Food Stamp Program  contributes to caseworker errors. In previous work, we found that the risk  of improper payments increases in programs with complex criteria for  computing eligibility and payments. Caseworkers may miscalculate a  household’s eligibility and benefits, in part because of the program’s  complex rules for determining eligible household members and for  calculating the household’s financial status. Our analysis of QC data found  that caseworker mistakes often involve incorrectly determining household  income, followed by mistakes related to income deductions, and  nonfinancial issues, such as determining household composition. Although  the error rate has declined in recent years, these three types of mistakes  have remained the major sources of error over the last 5 years.
To determine household gross income, caseworkers must decide which  types of income to include. Households may have income from a number  of different sources, and rules require that some of this income be counted  and some not. Further, the fluctuations in earnings for low-income  working participants can increase the likelihood of error simply because  they result in a higher volume of case reviews and adjustments.
Payment errors also occur when caseworkers misapply one or more of six  allowable deductions when determining net income. Caseworkers  calculate and deduct expenses such as dependent care costs, medical  expenses, utilities costs, and shelter expenses—each of which have their  own set of eligibility criteria. For example, caseworkers can provide  households an excess shelter expense deduction if their shelter expenses  exceed 50 percent of monthly household income after applying other  deductions. As part of that process, caseworkers must determine whether  the household is entitled to a standard utility allowance.
Other common caseworker errors involve nonfinancial factors, such as  misapplying the program’s complex rules for determining the members of  the household. Although individuals may be living in the same home, they  may be treated as different households for eligibility and benefit purposes,  depending on whether they customarily purchase food and prepare meals  together. However, this is sometimes difficult to determine. Food stamp  officials in Michigan told us that given the variety of household  circumstances and arrangements caseworkers face, determining  household composition can be confusing. For instance, officials said it can  be difficult to determine how to treat a youth over age 22 who moves in  and out of the parents’ home or households that contain multiple  generations of family members. In addition, officials from 5 of the 9 states  we contacted told us that having caseloads with legal noncitizens was a  challenge to reducing payment error, in part because of the numerous  policy changes in recent years that affect the eligibility of various  segments of this population.
Correctly determining food stamp eligibility and benefits can be  complicated by differences between Food Stamp Program rules and the  rules governing other assistance programs. Officials from 5 of the 9 states  we interviewed told us that minimizing payment error is difficult for  caseworkers when they are responsible for multiple programs, such as  TANF, food stamps, and Medicaid, because the eligibility and reporting  rules among the programs often differ. For example, local officials from  Texas told us that because of the way the state chose to implement the  simplified reporting option, caseworkers are held responsible for failing to  act on a change when a birth is reported to the Medicaid program, even  though participants are not required to report the change to the Food  Stamp Program, according to a recently approved policy option. Oregon  state and local officials also told us that it is challenging for caseworkers  to attend to food stamp payment accuracy when they have to determine  eligibility and recertify households for other assistance programs.
Officials from all 9 of the states we interviewed stated that staff turnover  contributes to incorrect application of program rules. Food stamp officials  in Oregon said that half of the caseworkers in the Portland area have less  than 1 year of work experience because of high staff turnover, which  makes it difficult for the office to maintain a workforce trained in making  accurate eligibility decisions. Officials also told us that lack of training can  be a challenge in part because it is difficult for caseworkers to learn the  complex program rules and policies.
Similar factors also affect errors where benefits are improperly denied,  suspended, or terminated, according to officials from states we  interviewed. They cited caseworkers misapplying policies or  miscalculating income. For example, Michigan food stamp officials told us  that these errors sometimes occur when caseworkers temporarily suspend  benefits because participants are not complying with certain rules but  then do not review the case to complete it correctly. Mississippi officials  told us that these errors can also occur when caseworkers misapply a  policy or fail to add up wages correctly.
section_title: Participant Error Involves Failure to Report Required, Complete, or Correct Information to Caseworkers
paragraphs: About 35 percent of all payment errors occur because participants do not  provide required, complete, or correct information to caseworkers, either  unintentionally or deliberately (see table 3). Although applicants are  required to provide a variety of personal information to the caseworker,  failure to report income is the most common cause of participant food  stamp errors.
Program complexity may play a role in participants’ failure to report  needed information because the participants may not understand the  reporting requirements, according to officials from 2 states we  interviewed. For example, California state food stamp officials told us they  believe that some participants do not report information because they are  unfamiliar with the reporting requirements or because of language  barriers. In addition, when participants receive assistance from multiple  programs, they may be confused about what to report to whom because  the requirements differ among the programs, including those for Medicaid  and TANF. When participants fail to report information, the result is  usually an incorrect determination of household income. Further,  participants may not report information to caseworkers because of the  perceived burden associated with reporting changes. For example, a food  stamp official in Wisconsin told us that because of the lack of staff at the  call center, participants calling to report changes may wait on the line for  up to 20 minutes, and as a result, some participants will hang up.
Errors may also occur when the participant intentionally does not report  needed information or unintentionally or intentionally provides the  caseworker with false or incomplete information. Although the percentage  of payment errors that involve participants intentionally withholding  information is not known, food stamp workers from all of the states we  interviewed refer cases for investigation when they suspect fraud. For  example, Oregon food stamp officials explained that cases are referred for  suspected fraud when a participant consistently reports no income yet  seems to have the resources needed to live self-sufficiently. In 2003, about  5 percent of all payment errors were referred for fraud investigation. Data  are not available, however, to determine what percentage of these error  cases resulted in disqualifying participants because of fraud.
Despite the recent decrease in error rates, the program continues to face  these same causes of error over time. Over the last 5 years, caseworker  failure to act on reported information, caseworker misapplying program  policies and requirements, and participant failure to report key  information have remained the three largest causes of error. Moreover,  errors involving incorrect household income or deductions for expenses  continue to be the most common types of errors over the same period.
section_title: FNS and States Have Taken Steps to Increase Payment Accuracy
paragraphs: FNS and the states we reviewed have taken many approaches to  increasing food stamp payment accuracy, most of which are parallel with  internal control practices known to reduce improper payments. These  include practices to improve accountability, perform risk assessments,  implement changes based on such assessments, and monitor program  performance. Often, several practices are tried simultaneously, making it  difficult to determine which have been the most effective.
subsections: section_title: FNS’s and States’ Approaches Are Parallel with Good Internal Control Practices
paragraphs: Because payment errors can typically be traced to problems with internal  controls, we used the key components of internal control as our  framework to categorize the approaches taken to reduce payment errors.  In doing so, we found that both FNS and the states we reviewed were  employing many of the same practices recognized as being effective in  reducing payment errors.
subsections: section_title: Improving Accountability
paragraphs: Both FNS and states have taken steps to ensure that program officials  recognize their responsibility for payment accuracy. FNS has long focused  its attention on states’ accountability for error rates through its QC system  by assessing penalties and providing financial incentives. The  administration of the QC process and its system of performance bonuses  and sanctions is credited or faulted by many as being the single largest  motivator of program behavior, and most of the states in our review  believe the QC system has helped increase payment accuracy. From fiscal  year 1998 to fiscal year 2002, FNS has assessed $327 million in penalties.  Of these penalties, FNS waived $93 million, approved $92 million for  reinvestment into state food stamp programs, collected almost   $24 million, and designated $118 million at risk for payment if the states  did not improve their error rates to agreed-upon targets. During this same  period, FNS awarded states almost $251 million of enhanced funding  because of their low error rates.
In fiscal year 2003, the first year under the 2002 Farm Bill changes to the  QC system, 11 states were found to be in jeopardy of being penalized if  their fiscal year 2004 error rates did not improve. This was a higher  number than was originally expected by some analysts because the error  rate had fallen much faster than in previous years, leaving more states  above the new error rate threshold. Some states have expressed concern  that they may improve their error rates and yet still be penalized because  the national rate continues to drop around them. In addition, under its new  performance bonus system, FNS awarded a total of $48 million to states,  including $24 million to states with the lowest and most improved error  rates and $6 million to states with the lowest and most improved negative  error rate.
In addition to using the tools available under its QC system, FNS’s  leadership has actively communicated the importance of accountability.  Establishing payment accuracy as a program priority is considered by  many to be the most important strategy for achieving program  improvement. Since the arrival of the current Undersecretary for Food,  Nutrition, and Consumer Services in 2001, FNS has put increased pressure  on states to reduce error rates. For example, the undersecretary and other  FNS officials visited states with particularly high error rates to discuss  payment accuracy. FNS also began to collect a higher percentage of  penalties. From fiscal year 1992 to 2000, FNS collected about $800,000 in  penalties. Since fiscal year 2000, FNS has collected more than $20 million  in penalties. Officials from one advocacy group active in food stamp issues  credits this official’s active role as one reason for the drop in the error  rates in the larger states. The FNS regional administrators also visit high  error rate states and emphasize payment accuracy as a major management  priority at regional meetings of state commissioners.
All the states we reviewed also reported taking steps to increase the  awareness of, and the accountability for, errors in their programs. Often,  this coincided with a change in state leadership and responded to  accumulating program penalties, bad publicity, or both. For example,    Michigan state officials said that after their new governor took office in  2003, error reduction became an issue for the governor and the  legislature because the state had paid more than $5 million in penalties  in 2003 and 2004. In response, the Food Stamp Program began  producing weekly internal reports and issuing regular reports to the  governor and the legislature. The state’s error rate has dropped from  14.1 percent in fiscal year 2002 to a state-reported error rate of 6.73  percent in fiscal year 2004. As a result of the state’s progress in  reducing its error rate, the governor has publicly recognized the  program’s efforts.
Wisconsin’s turnaround began in 2002 when state officials, with the  support of the governor, made it clear to local food stamp offices that  double-digit error rates and the penalties that go along with them were  no longer acceptable. Wisconsin had been assessed penalties totaling  over $8 million for 2000, 2001, and 2002. The state’s error rate has  dropped from 13.14 percent in fiscal year 2001 to a state-reported error  rate of 6.57 percent in fiscal year 2004.
Penalties totaling over $5 million for 1998, 1999, and 2000, also spurred  New Jersey’s human services director to appoint a special assistant to  focus on reducing the state’s error rate. The state’s error rate has  dropped from 12.93 percent in fiscal year 1999 to a state-reported error  rate of 2.62 percent in fiscal year 2004.
In addition, states we reviewed understood the need to communicate the  importance of payment accuracy to individuals working at all levels of the  program. Of the states we studied, California, Michigan, New Jersey, and  Oregon have begun to set error rate targets for their local offices and have  supplemental quality assurance processes in place to produce local error  rates or error rates for their largest offices. Oregon and Texas also include  payment accuracy goals in the expectations for their managers and  workers, making payment accuracy one of the bases for their evaluations.  California, New York, and Wisconsin have shared the accountability for  poor performance by passing on a portion of their state’s financial  penalties to their largest counties. New Jersey, South Dakota, and Texas,  on the other hand, have shared the enhanced funding they have received  for good performance with their local food stamp offices.
section_title: Identifying Risks
paragraphs: Both FNS and states have taken steps to analyze program operations to  identify where risks exist. For example, through its QC system, FNS  determined that working families receiving benefits were error prone  because of frequent changes in their income and deductions. In addition,  officials from our 9 review states said they analyze the QC data to identify  the sources and causes of food stamp payment error in their states. New  Jersey officials used the QC data to identify salaries and wages as the  largest sources of error in their state. In most cases, however, the QC  samples are not large enough to produce valid error rates or to identify  specific problem areas for most counties or local offices. In order to be  able to obtain this information, California, Michigan, New Jersey, New  York, and Oregon have developed their own quality assurance systems to  produce monthly error rates for their counties or local offices. For  example, in January 2003, Oregon instituted a targeted case review  process that requires officials in local offices to review between 35 and   100 cases per month to identify errors. State officials say the reviews  provide better information to local-level officials on the causes and  sources of payment error at their site so they can plan corrective action.  Oregon’s payment error rate dropped from 13 percent in fiscal year 2003 to  a state-reported error rate of 7.81 percent in fiscal year 2004.
California, New York, Wisconsin, and Michigan targeted their largest and  most error-prone offices for special risk assessments. In Wisconsin, for  example, the state focused its approaches on Milwaukee because it is the  largest metropolitan area in the state, accounting for 47 percent of the  state food stamp caseload. Because it had the highest error rate, it had the  most significant influence on the state’s error rate. The state brought in a  contractor that conducted an assessment of payment accuracy and the  service delivery model used in Milwaukee. The contractor recommended  that Milwaukee adopt a number of policy, program, and case review  changes. In response, Wisconsin and the city of Milwaukee conducted a  one-time find-and-fix case sweep between March and September 2004.  State and county case readers reviewed 14,000, or almost 25 percent of ,  their food stamp cases to identify and correct potential errors. The  information gained from this exercise identified certain risks and error- prone cases that county officials have used to implement other changes.  As a result, Milwaukee County officials said their error rate dropped from  12.2 percent in March 2004 to 7.7 percent in June 2004.
section_title: Responding to Findings from Risk Assessments
paragraphs: Once the QC review process is completed, penalties are assessed by law to  high error rate states and FNS works with the states to correct the  problems. Staff from the FNS regional offices work with the states on the  development and implementation of reinvestment and corrective action  plans that address specific threats and risks identified in risk assessments.  These plans can vary depending upon the state’s systems and  characteristics. Examples of activities included in the plans include  training to address errors identified from QC and quality assurance  reviews, developing online training curricula, and correcting errors  generated by automated systems.
States have also adopted practices to prevent, minimize, and address  payment accuracy problems in response to the sources of error identified  in risk assessments. States chose their varied practices in response to their  unique characteristics, resources, and risks.
Automated system changes. Michigan implemented changes in its  automated system to help deal with problems resulting from failure to  collect complete case information, particularly household income, during  the application and recertification processes. The state’s automated  system now prompts workers to obtain complete income documentation  for cases with earned income   Specialized change units. In June 2002, Los Angeles established   30 specialized change units for its 30 district offices to address their failure  to act on reported information, which was one of their largest sources of  errors. FNS supports the adoption of change centers such as these based  upon their reported outcomes in other states. Los Angeles County officials  said the change unit workers now act upon reported case changes that  previously had not been acted upon by caseworkers because of their large  caseloads.
Outreach to more stable food stamp population. New York has  implemented a program to automatically certify eligible nonparticipating  elderly Supplemental Security Income recipients for food stamps for   4 years. In addition to reaching an underserved population without  adding undue administrative burden on the local offices, officials believe  that increasing the participation of these recipients could help reduce the  state’s error rate because this group is less error prone because of its  stable income and circumstances.
States also adopted various case review practices that would help them  address a wide range of risks and problems.
Supervisory review of cases. Several states have begun to require local  supervisory reviews of cases to detect and correct errors caused by  misapplication of food stamp policies or workers failing to act on reported  information. Some states require that all cases be reviewed, while others  target error-prone cases or a certain number of cases per worker.
Targeted local office reviews. Some states have used contractors or  have established their own teams to target high error rate offices for  improvement. Michigan recently started using technical assistance teams  to observe the local office’s processes and make recommendations for  improvement.
Error review panels. Some of our review states have also established  panels to review errors discovered through the QC process. New Jersey  established such a panel, consisting of system, policy and QC staff. This  panel reviews all errors, challenges some that it believes have been  inaccurately classified and develops corrective actions to address the root  causes of the errors. The results of the reviews can then be communicated  to all local offices. For example, as a result the panel’s finding that  computing utility bill deductions was a source of payment errors, the state  implemented a mandatory standard utility allowance policy to reduce this  type of error.
Many of the error reduction practices employed by the states in our review  focused primarily on agency-caused rather than client-caused errors. Many  state officials we spoke with believe that states should not be held  accountable for participant-caused errors, such as failure to report  information, because the state cannot control participants’ behavior.  However, FNS officials believe that states can reduce participant-caused  errors by better using computer matching of state data sources and other  outside sources of data, improving interviewing techniques to collect all  relevant information and identify discrepancies, and educating clients  about their responsibilities.
In addition to taking the above steps focused specifically on decreasing  the error rate, FNS has made and advocated for a number of program and  policy changes designed primarily to address other issues, such as  program participation, which have also helped reduce payment errors.  FNS believes that serving eligible low-income families, particularly   working poor families, is imperative to the success of welfare reform and  the nutritional well-being of eligible persons. However, because the  income and deductions for working poor families tend to be volatile, these  households are more error prone, and their participation could increase  the error rates of states trying hardest to serve them and thus discourage  states from reaching out to these families. In response, FNS raised the  error tolerance level in fiscal year 2000 from $5 to $25 for monthly food  stamp payments for all cases. This change exempted smaller errors that  had been counted in the past. FNS estimated that this change would have  reduced the nationwide error rate by 0.66 percentage points if it had been  implemented in the previous fiscal year.
In addition, FNS and Congress have made several options available to the  states to simplify the application and reporting process. These  simplification measures are designed, in part, to reduce the administrative  burden on both caseworkers and participants and thus promote higher  participation in the program. One option in particular reduces the  frequency with which households with earned income must report  changes. Prior to this simplified reporting option, participants were  required to frequently report changes in their circumstances. Under the  simplified reporting rule issued in November 2000, most households need  only report changes between certification periods if their new household  income exceeds 130 percent of the federal poverty level.
This simplified reporting option can reduce a state’s error rate as well.  Absent simplified reporting, certain unreported or undetected changes  between certification periods would be considered an error. Minimizing  the number of income changes that must be reported between  certifications can help reduce errors associated with caseworker failure to  act as well as participant failure to report changes, and income-related  errors account for more than half of all payment errors.
Essentially, this simplification option redefines the threshold for what is  considered an error. This type of change can result in an increase in  program benefits paid out, such as when participants experience an  increase in income between certification periods that need not be reported  until the next certification under the simplified requirements. In 2000, FNS  estimated the additional cost to the program to be approximately   $51 million in fiscal year 2004 affecting nearly 1.5 million households per  month. By expanding this option in the 2002 Farm Bill beyond earned  income households to any and all households that can be asked to report  periodically, an FNS official said Congress had endorsed the idea of  making the program more user friendly to working families. Since the 2000  estimate, program participation has grown significantly, but FNS has not  completed a more recent estimate of the additional cost. Moreover, the  possible savings and efficiencies gained in program administration have  not been quantified.
Most of our review states have adopted some form of simplified reporting  to help them better serve working families, permit greater program  participation, and address the errors associated with frequent change  reporting. Nationwide, FNS reported that as of September 2004, 41 states  and the Virgin Islands had adopted some form of simplified reporting.
section_title: Monitoring and Promoting Performance
paragraphs: FNS has taken many actions to track the success of improvement  initiatives and to provide the information needed to facilitate program  improvement. FNS managers use data generated from the QC system as  well as the results of their own monitoring activities to track the states’  performance over time. FNS regional offices annually review state agency  operations to, among other things, confirm that problems in program  operations are being identified, properly analyzed, and resolved. Where  applicable, the regional office also monitors the states’ implementation of  corrective action plans. FNS, in turn, requires states to perform  management evaluations to monitor whether adequate corrective action  plans are in place at local offices to address the causes of persistent errors  and deficiencies. To monitor corrective actions identified through the  management evaluations, FNS suggests that states review a sample of case  records containing actions that are error prone.
In addition, in November of 2003, FNS created a Payment Accuracy  Branch at the national level to work with FNS regions to suggest policy  and program changes and to monitor state performance. The branch  facilitates a National Payment Accuracy Workgroup with representatives  from each FNS regional office and headquarters who use QC data to  review and categorize state performance into one of three tiers. FNS has  recommended a specific level of increasing intervention and monitoring  approaches for each tier as error rates increase, and the FNS regional  offices report to headquarters on both state actions and regional  interventions quarterly.
FNS also provides and facilitates the exchange of information gleaned  from monitoring by    publishing a periodic guide to highlight the practices states are using to    sponsoring national and regional conferences and best practices  seminars;  training state QC staff;    providing state policy training and policy interpretation and guidance;    supporting adoption of program simplification options.
Once promising state practices have been identified, FNS also provides  funding to state and local food stamp officials to promote knowledge  sharing of good practices. Oregon officials said FNS provided state  exchange funds for them to visit Kentucky, Indiana, and Arizona—three  states that had effective systems for monitoring performance at the local  management and worker level. FNS also provided state exchange funds  for Oregon officials to meet several times with officials from Idaho and  Alaska to discuss common problems they faced trying to reduce payment  errors and to generate solutions. In fiscal year 2004, FNS provided  $612,000 for states to conduct state exchange visits. Officials from most of  our review states found this program to be particularly helpful to their  efforts to improve program performance.
States are also using information generated by the QC system to track the  results of their policy and program changes over time and communicate  timely operational information to local offices. Information gleaned from  monitoring can help inform their ongoing risk assessments. States are also  promoting knowledge sharing of promising practices. These practices  include   preparing reports detailing causes and sources of errors for the local  offices and publishing and distributing monthly error rates for all local  offices;  transmitting the results of statewide error review panels on the source  and causes of errors to local offices, along with suggested corrective  actions;    sponsoring statewide QC meetings and state best practices conferences  for local offices to discuss error rate actions taken and common  problems; and    sponsoring local office participation in FNS regional conferences.
Despite FNS and state mechanisms used to track the initiatives and share  promising practices, there are no data available on which initiatives are  most cost-effective. FNS’s primary focus has been on monitoring progress  in reducing error rates, which can help ensure eligible households receive  the correct benefits and maintain public support for the program. Even so,  from fiscal year 2001 to 2004, the annual administrative cost per  participant has fallen from $129 to $99 per participant while program  participation has increased. It is possible that some states gained  efficiencies from simplified reporting. However, FNS has not studied the  cost-effectiveness of this or other measures and thus cannot share this  type of information with the states.
section_title: States Are Using a Combination of Approaches to Address Payment Errors, Making It Difficult to Determine the Effectiveness of Specific Practices
paragraphs: Every state we surveyed has put into place a combination of approaches  to address the key components of internal control, and the practices states  adopted under each approach varied among them. For example, in  California, state and local officials employed a combination of practices  under each internal control component over the last several years to bring  about their improved error rate (see fig. 6).
Because many states have adopted multiple error reduction practices,  officials we spoke with said it is difficult to isolate the results of individual  practices, particularly when other program and economic changes are  occurring simultaneously. State officials point to their low or dropping  error rates as evidence that, collectively, their new practices are having a  positive impact. However, they have little data to determine which  practices have been most successful or cost-effective.
Despite the lack of data, state officials citied various practices that they  believe have worked well in their state. For example, officials in Michigan  and New York believe new automated processes are their most effective  practices. Michigan food stamp officials cited targeted local office reviews  as another effective strategy for error reduction. Mississippi food stamp  officials believe their required supervisory review of cases has been the  most effective practice. California, South Dakota, and Texas also cited  supervisory reviews as one of their most effective practices.
As a result of unique circumstances in each state, some practices that may  prove effective in one state would not be effective or feasible in another.  For example, New Jersey food stamp officials credit their 2001  implementation of the simplified reporting option for earned income cases  with being the most significant reason for the decline in their error rates.  However, officials in South Dakota continue to require monthly reporting  because they have been able to keep up with the reported changes. They  believe this requirement is primarily responsible for its error rate, which is  the lowest in the nation. Monthly reporting requires participants to report,  and caseworkers to act, on case changes once per month, rather than  relying on participants to report key changes and workers to react to the  reported change. Monthly reporting requires significantly more work for  both the caseworkers and participants, and other states with larger  caseloads have said they do not have adequate resources to sustain this  more labor-intensive approach.
The success of new practices, however, can be undermined if the changes  do not receive adequate management attention or are not effectively  implemented. For example, Los Angeles established 30 specialized change  units. County officials said these units helped reduce one of their largest  sources of errors, caseworkers’ failure to act. On the other hand,  Milwaukee’s change units have not been as effective in reducing the error  rate as officials hoped because they have not been able to staff the center  appropriately, according to county officials. They designed their change  units on a model implemented in Atlanta, Georgia. The Atlanta model calls  for 10 staff per 10,000 calls, and Milwaukee has about 7 staff per   20,000 calls. As a result, clients wait on the phone for up to 20 minutes,  and some hang up before their changes can be reported.
Similarly, Wisconsin state and Milwaukee food stamp officials said their  find-and-fix case sweep program conducted between March and  September 2004 was a particularly effective practice for reducing payment  errors. Milwaukee officials believe the case sweep was largely responsible  for their error rate dropping from 12.2 percent in March 2004 to   7.7 percent in June 2004, and they expect to see long-term effects as a  result of their workers learning from the errors identified using this  practice. However, Michigan tried a similar program but did not have  comparable results. State officials said using this method did not reduce  their error rate because the state and counties did not have enough staff to  conduct a sufficient number of reviews. Los Angeles County officials said  they also tried and abandoned a similar approach in 2001 because they did  not have sufficient staff to correct the errors that were identified.
section_title: Concluding Observations
paragraphs: The Food Stamp Program has seen a significant decline in the national  error rate to a record low in 2003. If the 1999 error rate was in effect in  2003, the program would have made payment errors totaling over   $2.1 billion rather than the $1.4 billion it experienced. Despite the many  challenges states identified, a number of them have significantly lowered  their error rates even while caseloads have continued to rise. However,  some states are having more difficulty lowering their rates, and improper  food stamp payments continue to account for a large amount of money— $1.4 billion in 2003.
It is not completely clear why some states have been more successful at  lowering their error rates than others. Rather than implementing one  specific strategy, the nine states we reviewed have each implemented a  package of changes in response to the unique circumstances in the state.  Even those states we selected because of consistently high error rates  have implemented multiple strategies and expect to see error rate  decreases this year. However, although it is difficult to determine which  actions are most likely to succeed in particular circumstances, we found  examples of strategies that did not succeed because they lacked adequate  management attention or were not effectively implemented.
Future similar error rate reductions may prove challenging. The three  major causes of errors have remained the same over time and are closely  linked to the complexity of program rules and reporting requirements. As  long as eligibility requirements remain so detailed and complex, certain  caseworker decisions will be at risk of error. Moreover, participant-caused  errors, which constitute one-third of the overall national errors, are  difficult to prevent and identify.
Attention from top USDA management as well as continued support and  assistance from FNS will likely continue to be important factors in further  reductions. In addition, if error rates continue to decrease, this trend will  continue to put pressure on states to improve because penalties are  assessed using the state’s error rate as compared with the national  average. However, given the size of the Food Stamp Program, the costs to  administer it, and the current federal budget deficit, achieving program  goals more cost-effectively may become more important. FNS and the  states will continue to face a challenge in balancing the goals of payment  accuracy, increasing program participation rates, and the need to contain  program costs.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the U.S. Department of Agriculture  for review and comment. On April 7, 2005, we met with FNS officials to get  their comments. The officials said they agreed with our findings and  conclusions. FNS also provided us with technical comments, which we  incorporated where appropriate.
We are sending copies of this report to the Secretary of Agriculture,  appropriate congressional committees, and other interested parties. We  will also make copies available to others upon request. In addition, the  report will be available at no charge on GAO’s Web site at  http://www.gao.gov. Please contact me at (202) 512-7215 if you have any  questions about this report. Other major contributors to this report are  listed in appendix III.
section_title: Appendix I: Methodology for Determining the Causes of Food Stamp Payment Errors for Fiscal Years 1999 through 2003
paragraphs: To determine the causes of food stamp payment errors for fiscal years  1999 through 2003, we analyzed the Food and Nutrition Service’s (FNS)  quality control (QC) system data of active cases used in error rate  calculations. State officials draw monthly samples of cases—which are at  the household level—and review them to determine the extent to which  the households received benefits to which they were entitled. The results  of these reviews are included in FNS’s QC database, and weighted  analyses of these data produce nationally representative results.
We constructed a database for each year from 1999 through 2003 that  contained a subset of the QC variables relevant to our analysis. For the  1999-2002 databases, we included the reason for error and type of error  variables from the database we obtained directly from FNS and the review  finding, amount of error, and weight variables from an FNS QC database  maintained by Mathematica Policy Research, Inc., and made available to  the public via Mathematica’s Web site. For the 2003 data, we only used the  FNS QC database maintained by Mathematica and made available via its  Web site because it contained all the variables we needed. In addition, for  each data set, we created a new variable categorizing the numerous  reasons for error in the agency-or-client (1) variable for the most  significant error to reflect, on a very general level, whether the error was  agency- or-client caused. Likewise, we created a variable categorizing the  numerous types of error in the element (1) code variable as nonfinancial,  resources, income, deductions, or other for the most significant error. We  generated weighted frequencies for the reason, type, and review finding  variables for active cases that were used in calculating the error rate.  Sampling errors for these weighted tabulations were estimated using the  methodology provided in Appendix E of Characteristics of Food Stamp  Households: Fiscal Year 2003, FNS Report Number FSP-04-CHAR. We also  created weighted average dollar amounts of error by case review finding  (e.g., overissuance or underissuance) and weighted frequencies for the  intersection of reason for error and type of error.
To assess the reliability of the data we used, we worked with FNS staff to  obtain and understand the QC data and relied on FNS and Mathematica  documentation on the datasets, and FNS and Mathematica reports based  on these data. We ensured that we reliably downloaded the Mathematica  QC data from the Web and correctly read in FNS’s raw QC data that FNS  provided to us by comparing the number of records in each database with  the number of records reported in FNS and Mathematica documentation.  In addition, to ensure the accuracy of the computer programs we used to  create and process the data, a review was made by a second GAO analyst.
Through our assessment of the reliability of these data, we found that  some variability exists in how states interpret and code the reason for  error variable (i.e., whether error was client- or agency-caused). FNS  stated that no quantitative analysis of the differences across states has  been made. In 2003, FNS implemented guidelines to ensure greater  consistency in state interpretations of the reasons for error (i.e., whether  the reason for error was client- or agency-caused). Prior to 2003, interstate  variation is believed to be greater than intrastate variation in these  interpretations. Consistency in the error amount is expected to be a lesser  problem since it is based on an established formula. We also reviewed  reports including previous GAO efforts that studied QC processes and  statistical properties. On the basis of the collective information and  findings of our reliability assessment, we determined the data are  sufficiently reliable for our analysis of the causes of food stamp payment  errors.
section_title: Appendix II: Food Stamp Combined Error Rates by State for Fiscal Years 1999 to 2004
section_title: Appendix III: GAO Contacts and Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: Cathy Roark and Luana Espana also made significant contributions to this  report. In addition, Carl Barden, Evan Gilman, and Kevin Jackson  produced our estimates of the causes of payment error, and Corinna  Nicolaou assisted in the message and report development.
section_title: Related GAO Products
paragraphs: Food Stamp Program: Farm Bill Options Ease Administrative Burden,  but Opportunities Exist to Streamline Participant Reporting Rules  among Programs.  GAO-04-916. Washington, D.C.: September 16, 2004.
Food Stamp Program: Steps Have Been Taken to Increase Participation  of Working Families, but Better Tracking of Efforts Is Needed.    GAO-04-346. Washington, D.C.:  March 5, 2004.
Welfare Reform: Information on Changing Labor Market and State  Fiscal Conditions. GAO-03-977. Washington, D.C.: July 15, 2003.
Food Stamp Employment and Training Program:  Better Data Needed to  Understand Who Is Served and What the Program Achieves. GAO-03-388.  Washington, D.C.: March 12, 2003.
Financial Management: Coordinated Approach Needed to Address the  Government’s Improper Payments Problems. GAO-02-749. Washington,  D.C.: August 9, 2002.
Food Stamp Program: States’ Use of Options and Waivers to Improve  Program Administration and Promote Access. GAO-02-409.  Washington,  D.C.:  February 22, 2002.
Means-Tested Programs: Determining Financial Eligibility Is  Cumbersome and Can Be Simplified. GAO-02-58. Washington, D.C.:  November 2, 2001.
Executive Guide: Strategies to Manage Improper Payments: Learning  From Public and Private Sector Organizations. GAO-02-69G.  Washington, D.C.: October 2001   Food Stamp Program: States Seek to Reduce Payment Errors and  Program Complexity. GAO-01-272. Washington D.C.: January 19, 2001.
Internal Control: Standards for Internal Control in the Federal  Government. GAO/AIMD-00-21.3.1. Washington, D.C.: November 1999.
Food Stamp Program: States Face Reduced Federal Reimbursements for  Administrative Costs. GAO/RCED/AIMD-99-231. Washington D.C.: July  23, 1999.