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Record Low Error Rates at the Food Stamp Program

Situation Before: For decades, the Food Stamp Program has been the cornerstone of the Nation’s effort to ensure access to nutritious food for every household in America. However this history of accomplishment has been coupled with a perception that the program too often permits ineligible people to receive benefits, or provides benefits in the wrong amount – wasting taxpayers dollars that were intended to help those most in need.  Though the vast majority of food stamps (98 percent) reach people who are eligible for at least some benefit, the perception of an error-ridden program has at times been matched by a troubling reality; in 1998, the program’s rate of payment errors reached 10.7%.

Actions Taken:

  • A robust performance measurement system. For years, Congress has authorized and funded, and USDA has carefully managed a rigorous system of sampling and review of food stamp certifications to identify errors.  Indeed, the Food Stamp Program is one of the few Federal programs in full compliance with the Improper Payments Information Act (IPIA). The Quality Control system provides detailed data about the rates and types of errors that are made by caseworkers in each State. This provides a strong feedback loop to program operators seeking to understand and improve performance. And it is backed by a system of rewards and penalties to keep everyone working towards continuous improvement: states that exceed the national error rate for two years in a row are subject to sanction, while states that perform well in areas of payment accuracy, program access and timeliness share $48 million in bonus money annually.

    In recent years, the Department used these data as an early detection system to target States that may be experiencing a higher incidence of errors based on preliminary reports. Actions are then taken by regional offices to address these situations in the individual States.
  • Simpler program rules. Because virtually all households receiving food stamps are eligible for some benefit, much of the problem of erroneous payments is less one of determining eligibility, and more one of finely targeting benefits to the complicated and changing circumstances of low-income households. The complexity of the rules designed to tailor benefits to these circumstances increased the potential for error. In some cases, they had an additional, unintended consequence – increased burden for some groups, such as working families, which may have discouraged them from participating in the program.

    During the reauthorization of the program through the Farm Bill in 2002, USDA worked closely with Congress to reduce burdensome program rules by giving States options to simplify reporting requirements and better align rules across programs. This reduced the potential for error and eased administrative burden for families and State agencies.
  • Results-focused partnerships with the States that operate the program. While food stamp funding and policy direction are Federal responsibilities, the program simply cannot succeed, much less excel, without the attention and engagement of the State agencies that deliver benefits to the customer. In recent years, USDA leadership has worked closely with State agency leadership on the importance of improving payment accuracy. At the staff level, efforts such as the Partner Web (an extranet for State Food Stamp agencies) and the National Payment Accuracy Work Group (consisting of representatives from USDA headquarters and regional offices) make timely and useful payment accuracy-related information and tools available, and share best practice methods and strategies across regions and States.

Results: The U.S. Department of Agriculture has succeeded in achieving record-low error rates for six straight years, reaching a low of 5.8 percent –a combination of both benefit payments that were too high (“overpayments”) and benefit payments that were too low (“underpayments” ) based on the client’s eligibility. 2005 was the program’s seventh consecutive year of improvement, representing a 45% in reduction in the error rate.

To place this improvement in a financial perspective, if the FY 1998 overpayment error rate of 7.6 percent had not decreased to 4.5 percent in FY 2005, nearly $900 million more in food stamp benefits would have been issued in error.

Significantly, these improvements did not come at the expense of access to program benefits. The program served over 9 million more low-income people in 2006 than it did in 2001. And 60% of those eligible to participate in the program did so in 2004, compared with 53% in 2001.