Supplemental Nutrition Assistance Program: Enhanced Detection Tools and Reporting to Combat Recipient Fraud Are in Development
Released: 2016-06-09T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: In fiscal year 2015, SNAP, the nation's largest nutrition support program, provided about 46 million people with $70 billion in benefits. Fraud has been a long-standing concern in the program, and state agencies are responsible for addressing SNAP recipient fraud. In 2014, GAO reviewed state and federal efforts to combat SNAP recipient fraud.

This testimony summarizes: (1) findings from GAO's 2014 report and (2) the steps FNS has taken since then to address GAO's recommendations. For its 2014 report, GAO reviewed relevant federal laws, regulations, guidance, and documents; interviewed officials in 11 states; interviewed federal officials; tested fraud detection tools using fiscal year 2012 program data, the most recent available at the time of GAO's report; and monitored websites for potential trafficking online. Although GAO's results are not generalizable to all states, the selected states served about a third of SNAP recipient households. For this statement, GAO reviewed FNS's actions to date on its recommendations.

section_title: What GAO Found
paragraphs: In 2014, GAO found that selected states employed a range of tools to detect potential Supplemental Nutrition Assistance Program (SNAP) recipient fraud, but they faced challenges, including inadequate staffing levels, that limited the effectiveness of their actions, and the Food and Nutrition Service (FNS) lacked data about the states' efforts. The 11 states GAO studied reported using detection tools required or recommended by FNS, among others, to combat SNAP recipient fraud. However, 8 of these states reported difficulties in conducting fraud investigations due to reduced or stagnant staff levels and funding despite program growth, and some state officials suggested changing the financial incentives structure to help support the costs of investigating potential fraud.

GAO also found limitations to the effectiveness of website monitoring tools and the analysis of card replacement data states used, under the direction of FNS, for fraud detection. Specifically, GAO found FNS's recommended website monitoring tools to be less effective than manual searches and impractical for detecting internet posts indicative of SNAP trafficking—the misuse of program benefits to obtain non-food items. Further, although FNS required states to monitor SNAP households that request at least four replaced electronic benefit transfer (EBT) cards in a year, GAO found that multiple EBT card requests in the same benefit period may not indicate increased risk of trafficking. GAO found that, by adjusting the analysis to focus on SNAP households that both requested cards in at least four different monthly benefit periods and engaged in suspicious transactions, states could possibly detect potential fraud more accurately. For example, in 2014, GAO found that 4,935 SNAP households in Michigan received at least 4 replaced EBT cards in a year. However, out of these householders, GAO identified 39 households that both received multiple replacement cards in at least four different monthly benefit periods and engaged in suspicious transactions indicative of SNAP trafficking, resulting in 10 or more trafficking flags. GAO reported that this type of targeted analysis may help provide states with a starting point for identifying higher priority households for further review, which can be particularly helpful given that states had reported having limited resources for conducting investigations.

GAO also found that, despite FNS's increased oversight efforts at that time, it did not have consistent and reliable data on states' anti-fraud activities because its reporting guidance lacked specificity. For example, the FNS guidance did not define the kinds of activities that should be counted as investigations, resulting in inconsistent data across states.

In 2014, GAO recommended, among other things, that FNS reassess current financial incentives, detection tools, and guidance to help states better combat fraud. As of May 2016, FNS reported progress in studying current anti-fraud approaches and developing better data on them, and is in the process of developing the final tools and guidance states need to help enhance the integrity of the SNAP program.

section_title: What GAO Recommends
paragraphs: In 2014, GAO recommended that FNS reassess its financial incentives for state anti-fraud efforts and tools for website monitoring; establish additional guidance related to EBT replacement card data; and enhance the reliability of state reporting. FNS agreed with GAO's recommendations and has been taking steps to address them. GAO is not making new recommendations in this testimony statement.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss our work on states’ efforts to  combat Supplemental Nutrition Assistance Program (SNAP) recipient  fraud. In fiscal year 2015, the federal government provided more than $70  billion in benefits to help about 46 million people purchase food through  SNAP. On average, recipient households received about $258 a month in  assistance in that year. The U.S. Department of Agriculture’s Food and  Nutrition Service (FNS), in partnership with states, is tasked with  establishing the proper agency controls that help ensure SNAP program  funds are used for their intended purpose. However, FNS program  officials have had long-standing concerns that some recipients can falsify  information to receive benefits, or misuse their benefits to solicit or obtain  non-food goods, services and cash—a practice known as trafficking.  SNAP recipient fraud can undermine the integrity of the program and the  public’s confidence in the program. Technology has provided new  opportunities to combat as well as commit such fraud. For example,  electronically monitoring recipient transaction data may provide clues to  potential SNAP fraud, while e-commerce and social media websites have  emerged as new venues for trafficking benefits.

State and federal governments share responsibility for addressing SNAP  recipient fraud. State agencies are directly responsible for detecting,  investigating, and prosecuting recipient fraud and FNS is responsible for  providing guidance to states and monitoring their activities. FNS has  traditionally focused on pursuing retailer fraud. We reported on FNS  efforts to combat retailer fraud in 2006 and found that FNS was making  progress in using electronic data to investigate trafficking.

To enhance these efforts, FNS implemented most of our 2006  recommendations, including taking additional steps to target and provide  early oversight of retailers most likely to traffic; developing a strategy to  increase penalties for trafficking; and promoting state efforts to pursue  recipients suspected of trafficking. Since then, the agency has increased  its attention to the recipient side of trafficking. For example, in fiscal year  2012, FNS recommended that states use certain tools, such as analyzing  transaction data for those requesting multiple benefit card replacements  and monitoring websites where traffickers may be attempting to buy or  sell SNAP benefits.

In 2014, we again reviewed the SNAP program and issued a report on  recipient fraud and selected states’ efforts to combat this type of fraud.  My testimony today summarizes: (1) the findings in our 2014 report on  states’ efforts to combat SNAP recipient fraud, and (2) the steps FNS has  taken to address the recommendations in our 2014 report.

For our 2014 report, we focused on federal and state efforts to combat  SNAP recipient fraud for fiscal years 2009 to 2014, a period after the  program received additional funding through the American Recovery and  Reinvestment Act of 2009 (Recovery Act). We reviewed relevant federal  laws, regulations, program guidance and reports, and we interviewed  FNS officials in headquarters and all seven regional offices. We included  11 states in our review—Florida, Maine, Massachusetts, Michigan,  Nebraska, New Jersey, North Carolina, Utah, Tennessee, Texas, and  Wyoming. For all 11 states, we interviewed knowledgeable state and  local officials about their recipient anti-fraud work and obtained related  documentation. We also analyzed fiscal year 2012 replacement card and  transaction data for households in three of the selected states—Michigan,  Massachusetts, and Nebraska—to assess the extent to which certain  analyses could better uncover patterns of potential fraud. Furthermore,  we monitored popular e-commerce and social media websites for certain  periods of time to determine how our selected states could use certain  automated monitoring tools recommended by FNS to detect potential  SNAP fraud. Additionally, we obtained and analyzed documents and  reports relevant to FNS’s program oversight, including their fiscal year  2013 assessments of state anti-fraud work for all 50 states and the  District of Columbia. More detailed information about our objectives,  scope and methodology can be found in our issued report. For this  testimony, we conducted follow-up work to obtain information on the  status of our recommendations from the 2014 report. This involved  contacting agency officials and obtaining relevant documents.

We conducted the work on which this statement is based 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 we obtained  provides a reasonable basis for our findings and conclusions based on  our audit objectives.
subsections: section_title: Background
paragraphs: The goal of SNAP, formerly known as the federal Food Stamp Program,  is to help low-income individuals and households obtain a more nutritious  diet and help alleviate their hunger. It does so by supplementing their  income with benefits to purchase allowable food items. The federal  government pays the full cost of the benefits and shares the responsibility  and costs of administering the program with the states. Specifically, FNS  is responsible for promulgating program regulations and ensuring that  states comply with these regulations by issuing guidance and monitoring  their state activity. FNS headquarters officials are assisted in this  oversight work by federal officials in seven regional offices. FNS also  determines which retailers are eligible to accept SNAP benefits in  exchange for food and investigates and resolves cases of retailer fraud.  State officials, on the other hand, are responsible for determining the  eligibility of individuals and households, calculating the amount of their  monthly benefits and issuing such benefits on an electronic benefit  transfer (EBT) card in accordance with program rules. States are also  responsible for investigating possible violations by benefit recipients and  pursuing and acting on those violations that are deemed intentional.

Trafficking is an intentional program violation that includes acts of fraud,  such as making false or misleading statements in order to obtain benefits  and trafficking (i.e., using benefits in unallowable ways, such as by  exchanging benefits for cash or non-food goods and services or  attempting to do so). For example, recipients can traffic benefits by  selling EBT cards to another person, exchanging the EBT card and the  corresponding Personal Identification Number (PIN) for cash or non-food  goods or services (e.g., rent or transportation). These sales can occur in  person or by posting offers on social media and e-commerce sites.  Recipients can then contact state agencies to report the sold EBT cards  as lost or stolen and receive new cards which can be used for future  trafficking transactions, for example, when the benefits are replenished  the next month.

According to a September 2012 U.S. Department of Agriculture Office of  Inspector General (USDA OIG) report, the magnitude of program abuse  due to recipient fraud is unknown because states do not have uniform  ways of compiling the data that would provide such information. As a  result, the USDA OIG recommended that FNS determine the feasibility of  creating a uniform methodology for states to calculate their recipient fraud  rate. FNS reported that it took action on this recommendation but  ultimately determined that it would be infeasible to implement as it would  require legislative authority mandating significant state investment of time  and resources in investigating, prosecuting and reporting fraud beyond  current requirements.

section_title: Selected States Faced Challenges in Detecting Benefit Fraud, and FNS Lacked Reliable Data about State Efforts
subsections: section_title: To Detect Fraud, Selected States Employed Tools Such As Data Matching, Referrals, Analysis of Transaction Data, and Website Monitoring
paragraphs: In the selected states we reviewed in 2014, officials told us they were  using well-known tools for detecting potential recipient eligibility fraud,  such as data matching and referrals obtained through fraud reporting  hotlines and websites. Specifically, at that time, all 11 states that we  reviewed had fraud hotlines or websites, and all matched information  about SNAP applicants and recipients against various data sources to  detect those potentially improperly receiving benefits, as FNS  recommended or required. (See table 1.)

Beyond the required and recommended data matches, at the time of our  report, Florida, Texas, Michigan, and one county in North Carolina used  specialized searches that checked numerous public and private data  sources, including school enrollment, vehicle registration, vital statistics,  and credit reports to detect potential fraud prior to providing benefits to  potential recipients. Florida officials we interviewed shifted the majority of  their anti-fraud resources to more cost-effective and preventive efforts in  identifying potential fraud by developing tools geared towards detecting  eligibility fraud and improper benefit receipt, such as identification  verification software and profiles that case workers could use to identify  error-prone applications. These state officials stated that this focus on  preventive efforts was key to helping them manage recent constraints on  their investigative budgets.

To track potential trafficking, officials in the 11 states reported that they  analyzed patterns of EBT transactions and monitored replacement card  data and online postings pursuant to FNS’s requirements and guidance.  (See table 2.)

section_title: In 2014, Most Selected States Reported that Their Investigations’ Effectiveness was Hindered by Limited Staffing and Caseload Increases, but Some Leveraged Additional Resources
paragraphs: At the time of our 2014 report, most of the selected states reported  difficulties in conducting fraud investigations due to either reduced or  stagnant staff levels while SNAP recipient numbers greatly increased  from fiscal year 2009 through 2013. (See figure 1.) Furthermore, state  investigators in all 11 states we reviewed were also responsible for  pursuing fraud in other public assistance programs, such as Medicaid,  Temporary Assistance for Needy Families and child care and housing  assistance programs.

However, at the time of our report, some states implemented a strategy to  leverage their available investigative resources. Specifically, four of the  states we reviewed—Florida, Massachusetts, Michigan and Nebraska— had implemented and two states—Maine and North Carolina—were in the  process of implementing state law enforcement bureau (SLEB)  agreements. According to FNS officials, the agency was supportive of  states’ efforts to establish these agreements between state SNAP  agencies and federal, state, and local law enforcement agencies, which  would enable state SNAP investigators to cooperate in various ways with  local, state, and federal law enforcement agents, including those within  the USDA OIG. For example, under these agreements, law enforcement  agencies can notify the SNAP fraud unit when they arrest someone who  possesses multiple EBT cards, and SNAP agencies can provide “dummy”  EBT cards for state and local officers to use in undercover trafficking  investigations.  Officials in one county in Florida told us at the time of  our report that this type of cooperation allowed local police officers to  make 100 arrests in its first undercover operation of recipients who were  allegedly trafficking SNAP benefits.

At the time of our report, some state officials suggested changing the  financial incentives structure to help support the costs of investigating  potential SNAP fraud because some investigative agencies were not  rewarded for cost-effective, anti-fraud efforts that could prevent ineligible  people from receiving benefits. According to GAO’s Fraud Prevention  Framework, investigations, although costly and resource-intensive, can  help deter future fraud and ultimately save money. Officials in one state  told us that it would help its anti-fraud efforts if FNS would provide  additional financial incentives for states to prevent potential fraud at the  time of application beyond what is currently provided for recovered funds.  Specifically, when fraud by a recipient is discovered, the state may  generally retain 35 percent of the recovered overpayment, but when a  state detects potential fraud by an applicant and denies the application,  there are no payments to recover.

section_title: In 2014, Selected States Reported Limited Effectiveness in Using Automated Monitoring Tools for Detecting Online Fraud and Replacement Card Data as a Detection Tool
paragraphs: In our 2014 report, we found that, upon testing, FNS’s recommended  approaches to detecting online fraud were of limited utility and selected  states had limited success with using FNS’s required approach to  replacement card monitoring. Specifically, we found that FNS provided  states with guidance on installing free web-based software tools for  monitoring certain e-commerce and social media websites for online  sales of SNAP benefits, but some officials from the selected states  reported problems with these detection tools. According to FNS, these  tools could automate the searches that states would normally have to  perform manually on these websites, which states reported as being  cumbersome and difficult given limited resources. Of the 11 states we  reviewed, officials from only one reported that the tool worked well for  identifying SNAP recipients attempting to sell their SNAP benefits online.  At the time of our review, FNS officials acknowledged that there were  limitations to the monitoring tools, and stated that they provided these  tools at the request of states to help with monitoring efforts.

In 2014, we tested these automated detection tools for certain periods of  time on selected geographical locations covering our selected states and  found them to be of limited effectiveness for states’ fraud detection  efforts. For example, our testing of the recommended automated tool for  monitoring e-commerce websites found that the tool did not detect most  of the postings found through our manual website searches. Specifically,  out of 1,180 postings we reviewed manually, we detected 28 postings  indicative of potential SNAP trafficking. Twenty-one of these 28 postings  were not detected by FNS’s recommended monitoring tool. We also  found the automated tool for monitoring social media websites to be  impractical for states’ fraud detection efforts, given that, for example, it  could not be tailored to a specific location. We concluded that this could  have potentially limited a state’s ability to effectively determine whether  the postings detected were relevant to the state’s jurisdiction.

In 2014, we also reported that FNS required that states examine  replacement card data as a potential indicator of trafficking, but state  officials we interviewed reported difficulties using the data as a fraud  detection tool. In 2014, FNS finalized a rule requiring states to monitor  replacement card data and send notices to those SNAP households  requesting excessive replacement cards, defined as at least four cards in  a 12-month period. Officials we interviewed in the 11 states reviewed  reported tracking recipients who make excessive requests for  replacement EBT cards, as required by FNS, but said they had not had  much success in detecting fraud through that method. Specifically,  officials in 4 states reported that they had not initiated any trafficking  investigations as a result of the monitoring, officials in 5 states reported  low success rates for such investigations, and officials in 1 state reported  that they had just started tracking the data. Officials in only 1 state  reported some success using the data to detect potential trafficking.  Furthermore, officials from 7 of the 11 states we reviewed reported that  the current detection approach specified by FNS often led them to people  who had made legitimate requests for replacement cards for reasons  such as unstable living situations or a misunderstanding of how to use the  SNAP EBT card. At the time of our report, FNS was aware of states’  concerns about the effectiveness of this effort, but continued to stress that  monitoring these data was worthwhile.

section_title: Targeted Analysis of Excessive Replacement Cards Found Potential Recipient Trafficking
paragraphs: We found that while all of the selected states reported analyzing SNAP  replacement card data to detect fraud as required by FNS, a more  targeted approach to analyzing high-risk replacement card data  potentially offered states a way to better use the data as a fraud detection  tool. Specifically, we analyzed fiscal year 2012 replacement card data in  three selected states—Michigan, Massachusetts, and Nebraska—using  an approach aimed at better identifying SNAP households requesting  replacement cards that are at higher risk of trafficking benefits. Our  approach took into account FNS’s regulation that defined excessive  replacement cards as at least four requested in a 12-month period.  However, we also considered the monthly benefit period of replacement  card requests by focusing on SNAP households receiving replacement  cards in four or more unique monthly benefit periods in a year. Based on  our analysis, we determined that because SNAP benefits are allotted on a  monthly basis, a recipient who is selling the benefits on their EBT card  and then requesting a replacement card would generally have only one  opportunity per month to do so. Thus, if a SNAP recipient was requesting  a replacement card because they had just sold their EBT card and its  associated SNAP benefits, it was unlikely that there would be more  benefits to sell until the next benefit period. As a result, we determined  that additional replacement card requests in the same benefit period may  not indicate increased risk of trafficking.

Using this approach in the three selected states, our 2014 analysis  reduced the number of households that should be considered for further  review compared to the FNS requirement that states look at replacement  cards replaced four or more times in 12 months. We then reviewed fiscal  year 2012 transaction data for this smaller number of households to  identify suspicious activity that could indicate trafficking. We identified  7,537 SNAP recipient households in these three selected states that both  received replacement cards in four or more monthly benefit periods in  fiscal year 2012, and made at least one transaction considered to be a  potential sign of trafficking around the time of the replacement card  issuance, as shown in the table below. We found that these 7,537  households made over $26 million in total purchases with SNAP benefits  during fiscal year 2012. (see table 3.)

We also found that by comparing the number of benefit periods with  replacement cards and the total number of transactions flagged for  potential trafficking, states may be able to better identify those  households that may be at higher risk of trafficking. For example, as  shown in the figure below, while there were 4,935 SNAP households in  Michigan that received an excessive number of replacement cards, we  identified just 39 households that received excessive replacement cards  and made transactions resulting in 10 or more trafficking flags. We  concluded in 2014 that while state SNAP officials may not want to limit  their investigations to such a small number of households, this type of  analysis may help provide a starting point for identifying higher priority  households for further review. Furthermore, we reported that our more  targeted approach may also be particularly helpful given that states had  limited resources for conducting investigations.

section_title: In 2014, We Reported that FNS Had Increased Its Oversight of State Anti- Fraud Activities but Lacked Reliable Data on These Efforts
paragraphs: In 2014, we reported that FNS had increased its oversight of state anti- fraud activities in recent years by issuing new regulations and guidance,  conducting state audits, and commissioning studies on recipient fraud  since fiscal year 2011. For example, in fiscal year 2013, for the first time,  FNS examined states’ compliance with federal requirements governing  SNAP anti-fraud activities through Recipient Integrity Reviews. These  assessments included interviews with state officials, observations of state  hearing proceedings, and case file reviews in all 50 states and the District  of Columbia. Following these reviews, FNS regional officials issued state  reports that included findings and, where appropriate, required corrective  actions.

Despite these efforts, at the time of our report, FNS did not have  consistent and reliable data on states’ anti-fraud activities because its  reporting guidance lacked specificity. For example, through our review of  the 2013 Recipient Integrity Review reports, we also found that FNS had  a nationwide problem with receiving inaccurate data on state anti-fraud  activities through the Program and Budget Summary Statement (Form  FNS-366B). Some federal and state officials we interviewed recognized  that there was not a consistent understanding of what should be reported  on the FNS-366B form because the guidance from FNS was unclear. For  example, on the form in place during the time of our report, FNS  instructed states to report investigations for any case in which there was  suspicion of an intentional program violation before and after eligibility  determination. According to state and federal officials we interviewed, this  information did not clearly establish a definition for what action constitutes  an investigation and should then be reported on this form.

After reviewing states’ reports, we found examples of inconsistencies in  what states reported as investigations on the FNS-366B forms.  Specifically, in fiscal year 2009, one state had about 40,000 recipient  households, but reported about 50,000 investigations. During the same  year, another state that provided benefits to a significantly larger  population (about 1 million recipient households) reported about 43,000  investigations. Officials from the state that served the smaller population,  but had the larger number of investigations, explained that they included  investigative activities such as manually reviewing paper files provided by  the state’s Department of Labor for each SNAP recipient with reported  wages in the state. Officials from the state that served the larger  population said that they counted the number of times a potential fraud  case was actively reviewed by investigators, including interviews with  witnesses and researching of related client information. Given these  differences, state officials said that FNS and states were not able to  compare program integrity performance because there was no  standardization of data collection across states.

section_title: FNS Is Working to Address GAO Recommendations to Enhance Detection Tools and Reporting
paragraphs: As a result of our 2014 findings, we made several recommendations, and  FNS officials agreed with all of these recommendations and are taking  actions to address them. Specifically, we recommended that the  Secretary of Agriculture direct the Administrator of FNS to: explore ways that federal financial incentives can better support cost- effective state anti-fraud activities; establish additional guidance to help states analyze SNAP transaction  data to better identify SNAP recipient households receiving  replacement cards that are potentially engaging in trafficking, and  assess whether the use of replacement card benefit periods may  better focus this analysis on high-risk households potentially engaged  in trafficking;  reassess the effectiveness of the current guidance and tools  recommended to states for monitoring e-commerce and social media  websites, and use this information to enhance the effectiveness of the  current guidance and tools; and  take steps, such as guidance and training, to enhance the consistency  of what states report on their anti-fraud activities.

While FNS agreed with the recommendations and is taking steps to  address them, it has yet to fully develop the detection tools and improved  reporting methods that would address these recommendations.

To explore ways to provide better federal financial incentives, FNS  reported it published a Request for Information in the Federal Register in  2014 to solicit state and other stakeholder input on how it could more  effectively incentivize states to improve overall performance, including in  the area of program integrity, with new bonus awards. However, more  recently, FNS officials reported that, based on the feedback from this  process, they have decided not to pursue bonus awards for anti-fraud and  program integrity activities at this time. At the time of our 2014 report,  FNS officials also stated they could not make changes in the state  retention rate for overpayments without a change to federal law.

FNS officials reported that they have provided states with technical  assistance for how to effectively utilize replacement card data as a  potential indicator of trafficking. Specifically, FNS has worked with seven  SNAP state agencies: New York (Onondaga County), Pennsylvania,  South Carolina, Wisconsin (Milwaukee County), California (Los Angeles  County), Kansas, and Texas to help these states more effectively identify  SNAP recipient trafficking, using models that incorporate predictive  analytics. FNS officials stated that the models use a variety of eligibility  and transaction data, including replacement card data, and have  demonstrated a significant improvement in effectiveness in these states.  According to FNS officials, over 90 percent of South Carolina’s  investigations of potential trafficking resulted in disqualifications from  SNAP, which FNS officials stated is an increase of 29 percent from the  state’s investigation success rate prior to using FNS’s model. Based on  these state results, FNS officials stated that FNS was targeting four  additional states in fiscal year 2016 for technical assistance in  implementing the model: Arizona, the District of Columbia, Utah, and  Washington. Furthermore, as of May 2016, FNS officials had reported  that FNS is conducting a training program for state technical staff to teach  them how to build predictive models that incorporate the use of card  replacement data.

FNS officials also reported that they continue to provide technical  assistance to states on the effective use of social media and e-commerce  monitoring and have further studied the use of these tools. Most recently,  FNS officials reported that, in 2016, the agency conducted an analysis to  evaluate states’ current use of social media in their detection of SNAP  trafficking. Based on the information gained through this analysis, FNS  officials reported that they plan to determine how best to present further  guidance to state agencies on using social media to combat trafficking.

As of May 2016, FNS had also redesigned the form FNS-366B used to  collect consistent recipient integrity performance information and  submitted a draft to the Office of Management and Budget (OMB). FNS  officials anticipate OMB approval of the revised form prior to the end of  fiscal year 2016, and the form is expected to be implemented in fiscal  year 2017. FNS reported it published an interim final rule on January 26,  2016, (effective March 28, 2016), changing the reporting frequency of the  form from an annual submission based on the state fiscal year to a  quarterly submission based on the federal fiscal year. To date, FNS  officials reported that they provided 4 separate trainings to approximately  400 state agency and FNS regional office personnel, covering the new  and modified elements of the final draft form and the corresponding  instructions.  - - - - -  In conclusion, the challenges that states have faced in financing and  managing recipient anti-fraud efforts heighten the need for more efficient  and effective tools for safeguarding SNAP funds. In order to provide  useful guidance to best guide states in these efforts, FNS officials need  reliable information on what can currently be done with available federal  and state resources. As of May 2016, FNS officials have reported  progress in studying current anti-fraud approaches and developing better  data on them but are still in the process of developing the final tools and  guidance for enhancing the integrity of the SNAP program.

Chairmen Meadows and Lummis, Ranking Members Connolly and  Lawrence, and Members of the Subcommittees, this completes my  prepared statement. I would be pleased to respond to any questions you  may have at this time.

section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staff have any questions about this statement, please  contact Kay Brown, Director, Education, Workforce, and Income Security  Issues, at 202-512-7215. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this  statement. GAO staff who made key contributions to this statement  include James Bennett, Kate Blumenreich, Alexander Galuten, Danielle  Giese, Scott Hiromoto, Kathryn Larin, Flavio Martinez, Jessica Orr,  Deborah Signer, Almeta Spencer and Shana Wallace.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.


Question-summary annotations: questions: question: What did GAO find regarding how states detect SNAP fraud?
answer: In 2014, GAO found that selected states employed a range of tools to detect potential Supplemental Nutrition Assistance Program (SNAP) recipient fraud, but they faced challenges, including inadequate staffing levels, that limited the effectiveness of their actions, and the Food and Nutrition Service (FNS) lacked data about the states' efforts.
child_questions: question: What tools did the studied states make use of?
answer: The 11 states GAO studied reported using detection tools required or recommended by FNS, among others, to combat SNAP recipient fraud.

question: What challenges did the selected states face?
answer: However, 8 of these states reported difficulties in conducting fraud investigations due to reduced or stagnant staff levels and funding despite program growth, and some state officials suggested changing the financial incentives structure to help support the costs of investigating potential fraud.

questions: question: What other limitations did GAO find?
answer: GAO also found limitations to the effectiveness of website monitoring tools and the analysis of card replacement data states used, under the direction of FNS, for fraud detection. Specifically, GAO found FNS's recommended website monitoring tools to be less effective than manual searches and impractical for detecting internet posts indicative of SNAP trafficking—the misuse of program benefits to obtain non-food items.
child_questions: question: How may some FNS requirements be unnecessary?
answer: Further, although FNS required states to monitor SNAP households that request at least four replaced electronic benefit transfer (EBT) cards in a year, GAO found that multiple EBT card requests in the same benefit period may not indicate increased risk of trafficking.

question: How could potential fraud be detected more accurately?
answer: GAO found that, by adjusting the analysis to focus on SNAP households that both requested cards in at least four different monthly benefit periods and engaged in suspicious transactions, states could possibly detect potential fraud more accurately.
child_questions: question: How would this new analysis process work in practice?
answer: For example, in 2014, GAO found that 4,935 SNAP households in Michigan received at least 4 replaced EBT cards in a year. However, out of these householders, GAO identified 39 households that both received multiple replacement cards in at least four different monthly benefit periods and engaged in suspicious transactions indicative of SNAP trafficking, resulting in 10 or more trafficking flags.

question: How could this targeted analysis help states in their investigations?
answer: GAO reported that this type of targeted analysis may help provide states with a starting point for identifying higher priority households for further review, which can be particularly helpful given that states had reported having limited resources for conducting investigations.

questions: question: What does this testimony cover?
answer: This testimony summarizes: (1) findings from GAO's 2014 report and (2) the steps FNS has taken since then to address GAO's recommendations.
child_questions: question: How did GAO source data for its report?
answer: For its 2014 report, GAO reviewed relevant federal laws, regulations, guidance, and documents; interviewed officials in 11 states; interviewed federal officials; tested fraud detection tools using fiscal year 2012 program data, the most recent available at the time of GAO's report; and monitored websites for potential trafficking online.

question: To what extent are these results generalizable to all states?
answer: Although GAO's results are not generalizable to all states, the selected states served about a third of SNAP recipient households.

question: How does this report consider the actions FNS has taken on the recommendations?
answer: For this statement, GAO reviewed FNS's actions to date on its recommendations.