The federal government funds a wide array of programs intended to provide benefits and services or both to individuals, families, and households needing financial assistance or other social supports. Representing a range of programs available through federal and state partnerships, the seven programs in this review have different goals and purposes, and, thus, provide a range of benefits and services to specific target populations. For example, the Food Stamp Program provides nutrition assistance to low-income individuals, while the CSE program helps custodial parents, regardless of income, collect child support payments from noncustodial parents. Table 1 provides a brief description of each of the programs covered in this report. The programs included in this review also represent a wide range of spending, from $2.9 billion for Adoption Assistance to $37 billion for UI. For fiscal year 2004, total spending, including administrative and all other spending, for the seven programs was $119 billion. Additionally, each of the seven selected programs is administered or overseen by one of three different federal departments. Table 2 shows the agency responsible for each program and total program expenditures for fiscal year 2004, the most current year available. The programs covered by this review have varying federal-state relationships in administering and funding the programs. The level of government with responsibility for designing the rules, services, and processes varies by program. Some programs have federally standardized designs while other programs provide states with flexibility to develop their own eligibility criteria, benefit levels, and program rules. All of the programs are funded through some form of federal-state partnership; however, the rules governing funding responsibility vary widely by program. Table 3 summarizes the level of government with which responsibility for the design and funding resides for each of the seven programs. An individual low-income family is likely to be eligible for and participate in several human service programs. For example, in 2001, 88 percent of families receiving TANF also received food stamp benefits and 98 percent received Medicaid. The programs are typically administered out of a local assistance office that offers benefits from several programs. Depending on the administrative structure of the local assistance office, a family or individual might provide necessary information to only one caseworker who determines eligibility and benefits for multiple programs, or they might work with several caseworkers who administer benefits for different programs. Because eligibility determination as well as other activities are often conducted jointly for multiple programs, some programs require states to have a process to ensure that costs are appropriately charged to the correct federal programs for federal reimbursement purposes. The cost allocation process is the formal process for sharing the costs of activities that are performed jointly for more than one program. Formal “cost allocation plans” specify how costs for those activities are to be covered by the various programs. For example, when a local eligibility worker determines that an applicant is eligible for TANF, food stamp benefits, and CCDF, the cost of her or his time is allocated across these programs in accordance with the state’s approved cost allocation plan. These costs are then reported as administrative or programmatic costs, depending on the laws and regulations governing funding for each of the programs. Across the seven programs in our review, the legal definitions and the federal funding rules for administrative costs vary. The statutes and regulations for each program define administrative costs differently, even though many of the same activities are performed to administer the programs. The laws for each program also include different mechanisms for state and federal participation in funding administrative costs, including specific matching rates, block grants, and spending caps, which can affect state decisions on administrative spending. Although many of the programs we reviewed conduct similar activities to administer the program, not all of the activities are defined in laws and regulations as administrative costs for financial reporting purposes. Based on our analysis of information collected from state and local officials, we identified several categories of administrative activities that are common across many of these programs. In particular, we found that the administration of each program involves at least (1) determining who is eligible to participate in the program or processing applications for new participants, (2) monitoring program quality, (3) conducting general program management and planning, (4) developing and maintaining IT systems, and (5) training employees, either at the state or local levels. All of the programs also issue benefits or provide services to eligible participants, with the exception of CSE, which generally collects and distributes payments from noncustodial parents to custodial families. Additional activities, such as case management and outreach, are performed in only some of the programs or some states. However, the statutes and regulations for each program differ on which of these activities are defined as administrative costs and which are not. For example, the TANF regulations and CCDF statute defining administrative costs specifically exclude costs associated with providing direct program services, while Food Stamp statute specifically includes the costs of providing direct program services, such as certifying applicant households and issuing food stamp benefits, as administrative costs. In addition, some statutes and regulations are more comprehensive in identifying which activities or items are specifically included or excluded from the definition of administrative costs. For example, while UI legislation allows for amounts “necessary for the proper and efficient administration” of state programs with few other qualifiers, the Food Stamp legislation and regulations list dozens of specific costs, including such items as audit services, advisory councils, building lease management, and certain advertising costs. Appendix II identifies the activities and items that are specifically included in the definitions of administrative costs in the statutes and regulations for each program. Nonetheless, most of the lists of activities in program statutes and regulations are only illustrative and not exhaustive. Phrases such as “these activities may include but are not limited to…” are commonplace and leave the exact definitions of administrative costs somewhat ambiguous. Such ambiguity may lead to inconsistent interpretation of the definitions of administrative costs. Our prior work on administrative costs in the Adoption Assistance and Foster Care programs found that state program officials and HHS regional offices make different decisions as to what costs are appropriate to claim as administrative. The statutes and regulations defining administrative costs differ across the programs in part because these programs have evolved separately over time and have different missions, priorities, services, and clients. The CSE program, in particular, differs from the other programs in our review in that CSE does not provide public financial benefits to its participants; rather, CSE services include collecting and distributing payments from noncustodial parents to custodial families, other states, and federal agencies. In addition, although the programs conduct similar activities, differences in missions and priorities may add to differences in spending on particular activities. For example, the Food Stamp Program’s extensive requirements for monitoring program quality may result in more spending on this activity than for a program with few quality control requirements. The number of congressional committees and federal agencies involved in developing laws and regulations for these programs has also contributed to differences in the definitions of administrative costs and can make coordination across programs difficult. The division of legislative and executive responsibility allows multiple points of access for Members of Congress, interest groups, and the affected public, but the various legislative committees and executive agencies do not necessarily collaborate with each other to develop consistent laws and regulations across programs. Federal legislation for all of the programs in our review, except the Food Stamp Program, is under the jurisdiction of the Senate Finance Committee and the House Ways and Means Committee, although some aspects of these programs are under the jurisdiction of other congressional committees. Federal regulations for Adoption Assistance and Foster Care, CCDF, CSE, and TANF are developed by various offices within the HHS Administration for Children and Families; Food Stamp Program regulations are developed by the U.S. Department of Agriculture (USDA) Food and Nutrition Service; and UI regulations are developed by the DOL Employment and Training Administration. Federal and state officials we interviewed disagreed on whether it was problematic to have different definitions of administrative costs across programs. According to officials from the OMB, whose role is to improve administrative management of federal programs, differences in legal definitions of administrative costs across programs are not a barrier to program management. OMB officials stated that it is important to accept that programs are different and that it may not be possible to compare costs across programs. A number of state budget officials responsible for financial reporting, however, described how the variation in definitions of administrative costs creates difficulties. For example, one budget official stated that it can be difficult to develop coding for accounting and budgeting that can be used across programs and, as a result, it can be difficult to monitor costs accurately. A budget official in another state argued, similarly, that having consistent definitions of administrative costs and consistent caps on administrative spending would help to simplify the process for allocating costs across programs and, therefore, might reduce costs. On the other hand, state officials responsible for developing program policies and overseeing local implementation of the programs reported fewer difficulties with the differences in administrative cost definitions. Several of these officials reported that they pay little attention to which aspects of their jobs are defined as administrative activities and which are not. Federal and state participation in funding the administrative costs of human service programs is governed by federal laws that establish matching rates, block grants, spending caps, and other funding mechanisms. These funding mechanisms, described below, play an important role in managing the federal government’s risk and can affect states’ spending behavior by producing financial incentives and funding restrictions. Matching rates—In programs funded through federal matching rates, the federal government covers a portion of states’ spending on program administration. For example, if a program has a 50-percent matching rate, the federal government is obligated to reimburse states for 50 percent of their spending on administration, as defined in law. Funding of Foster Care, Adoption Assistance, CSE, the Food Stamp Program, and a portion of CCDF include matching rates. Block grants—Block grants provide states with a statutorily fixed amount of funding. TANF and a portion of CCDF are funded through block grants. The TANF block grant does not change when caseloads change, nor is it adjusted for inflation.