UNITED STATES DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
Testimony of Kate Coler
Deputy Under Secretary
Food, Nutrition, and Consumer Services
Before the Subcommittee on Federal Financial Management
Government Information and International Security Committee
on Homeland Security and Governmental Affairs
United States Senate
July 12, 2005
Good afternoon, Mr. Chairman and Members of the Committee. I am Kate Coler,
Deputy Under Secretary for Food, Nutrition, and Consumer Services (FNCS) at the
United States Department of Agriculture (USDA). I am pleased to be here to
describe to you how our hard work at USDA has significantly lowered the error
rate of the Food Stamp Program (FSP) over the last five years. I believe our
efforts will assist you in your oversight examination of the Improper Payments
Information Act of 2002.
To begin, I would like to share some thoughts about the Food Stamp Program and
the people it serves. The FSP ensures access to a nutritious, healthful diet for
households through nutrition assistance and nutrition education. This access
provides the opportunity for low-income recipients to consume a diet consistent
with the Dietary Guidelines for Americans. It enables low-income households to
obtain a more nutritious diet by issuing monthly allotments of benefits
redeemable for food at authorized retail stores.
Eligibility and allotment amounts are based on household size, income, and
expenses; eligibility is also based on assets, citizenship or legal immigration
status, work requirements, and other factors. Benefit levels are based on the
cost of the Thrifty Food Plan. The Federal Government pays the full cost of
benefits—$24.6 billion for FY 2004--and funds approximately half of the expenses
incurred by the States to administer the program.
Today’s hearing focuses upon how important it is to make sure those benefits are
accurately targeted and delivered in the correct amount. The Office of
Management and Budget completed a Program Assessment Rating Tool (PART) review
of the Food Stamp Program in 2003. The review showed that food stamp benefits
are well targeted to low-income beneficiaries, and are virtually always spent
for their intended purpose. The program achieves its annual performance goals to
reduce payment error while still keeping the program accessible to eligible
people.
Also, in May of this year, the Government Accountability Office issued a report
on error reduction efforts in the Food Stamp Program. This report noted the
significant recent decline in error rates and suggests that continued attention
from top USDA management and on-going efforts by the Food and Nutrition Service
will “…likely continue to be important factors in further reductions.”
Who are the beneficiaries of the Food Stamp Program? USDA’s most recent survey
of food stamp household characteristics, conducted during 2003, indicates that
nearly 60 percent of all participants are children (under 18 years of age) or
elderly (age 60 or older). Nine out of ten households have income below the
poverty level; more than one-third of all food stamp households have income at
or below 50 percent of poverty. Eleven percent of food stamp households have no
countable income of any kind. The proportion of households with earnings reached
an all time high in 2003 while the proportion of households with public
assistance income reached an all time low.
There has been an increase in participation in the Food Stamp Program over the
last four years. This increase is the result of multiple factors including:
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Policy changes that simplified and streamlined the
process of applying for benefits;
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Restoration of benefits for certain legal
immigrants;
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Grants to States and non-profit organizations,
including faith-based and community organizations, to improve access and
provide outreach to those who are eligible, but not currently participating;
-
Education efforts to help those who are eligible
for the program know about the benefits so that they can make an informed
choice about participating in this critical nutrition program that helps
families put healthy food on their tables; and,
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The economy.
The first four factors I mentioned came in large part
as provisions in the 2002 Farm Bill and were championed by President Bush as a
part of his priority to ensure access to food stamp benefits for those who are
eligible for the Program
However, increasing caseloads can make it quite challenging for State agencies
to calculate eligibility with accuracy. And yet, I am proud to report that
States are doing a better job than ever accurately determining benefits.
Three weeks ago, on June 24, Agriculture Secretary Mike Johanns announced that
the Food Stamp Program has achieved an historic 94.12 percent overall payment
accuracy rate—the best performance since the inception of the program and a 34
percent improvement from just five years ago. The result of the combined error
rate reduction from FY 2000 to FY 2004 is an aggregate decrease in erroneous
benefits of nearly $1.4 billion. This improvement in payment accuracy is a
result of strong partnerships with States administering the program as well as
implementation of program simplifications and policy options provided in the
2002 Farm Bill.
The Farm Bill has enabled States to better simplify
shelter cost deductions and reporting requirements, align food stamp income and
resource policy with State TANF and/or Medicaid programs, implement a
transitional benefits alternative, and employ other new program simplifications
and options to streamline eligibility determinations and reduce errors.
On June 24, Secretary Johanns awarded $30 million to 16
States for exemplary administration of the Food Stamp Program in FY 2004. The
seven States with the best payment accuracy rates and the three States with the
most improved payment accuracy rates will divide $24 million. An additional $6
million will be divided between the four States with the lowest negative error
rates and the two States with the most improved negative error rates. Negative
error rates measure whether States correctly deny, suspend, or terminate
benefits. As noted in the FY 2004 Performance and
Accountability Report, the food stamp error rate is developed from a
long-standing program integrity process called Quality Control (QC), a system
mandated by the Food Stamp Act to ensure program integrity. Each State selects
and reviews a statistical sample of its participating food stamp households each
year and reports the findings to FNS, where the findings are validated. The
results are used to calculate a final error rate for each State agency and
weighted to determine a national average combined error rate for the Food Stamp
Program. Erroneous payments are at a record low—less than 4.5 percent overissued
and less than 1.5 underissued—for a combined total of 5.88 percent. We regard
both kinds of error—overissued or underissued—as equally important. It is
critical that payments are correct and that those who are eligible for the
benefits receive the proper amount—not too much, and certainly not too little.
It is important to note in this discussion that 98% of the Food Stamp recipients
are eligible for some benefit—the key is in getting the amount right.
State agencies are required to do corrective action planning whenever their
payment error rate is six percent or greater. Current FSP regulations provide
that corrective action planning shall also be done by a State agency when the
State agency’s negative case error rate exceeds one percent. Corrective action
planning is also required based on the results of reviews, audits or
investigations; when 5 percent or more of the QC sample being coded is
incomplete; or when deficiencies that result in negative actions against
households are caused by State agency rules, practices, or procedures.
The Food and Nutrition Service regional offices work directly with States to
assist them in developing effective corrective action strategies to reduce
payment errors and assure accurate negative case decisions. Regional offices
provide technical assistance to States in data analysis, policy interpretation,
training, development and monitoring of corrective action strategies,
facilitating the information exchange with and among States through annual
payment accuracy conferences, State exchange funding, and specific error
reduction funds.
Additionally, FNS has and will continue to enter into QC settlement agreements
that require poor performing States subject to QC liabilities to undertake
targeted error reduction actions and to commit to specific improvement goals.
FNS also focuses efforts on States with high issuance volume and high payment
error rates. This ensures that special attention and technical assistance are
available to States that have a significant impact on the national payment error
rate.
The Food Stamp Program also has systems in place to recover erroneously issued
benefits from food stamp recipients. Claims are established by State agencies
against households who have received more food stamp benefits than they should
have. A little over 12 years ago, FNS approached its State agencies and
encouraged them to participate in TOP—the Treasury Offset Program. TOP offers a
way to recover food stamp overissuances by reducing a delinquent food stamp
debtor’s income tax refund or other Federal payments. That partnership grew, and
as a result, we have collected more than $800 million in delinquent food stamp
recipient claims.
All of these activities have proved to be very cost efficient and effective
toward protecting the integrity of Federal dollars issued in the form of food
stamp benefits.
Mr. Chairman, our Department is very proud of the progress we have made in
ensuring that food stamp benefits provide nutrition assistance and are well
targeted and efficiently and accurately delivered to the nation’s needy
families. I would like to point out at this time that the 2002 Farm Bill did
make changes that could affect USDA’s ability to ensure continued improvement in
payment accuracy. Those changes reduced the penalties associated with payment
errors and the incentives provided to States who excel in payment accuracy. We
continue to work with States to ensure that these changes do not affect our
mutual commitment to reducing improper payments in the Food Stamp Program.
With that in mind, we continue to seek opportunities and strategies that result
in improved Program administration. For example, recent USDA efforts relating to
program integrity in the Food Stamp Program include:
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Maintaining a National Payment Accuracy Work Group
comprised of program experts from around the nation to ensure continued
error reduction through increased monitoring and analysis of error rate
data, improvements in State corrective actions, and increased technical
assistance to States;
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Providing direct technical assistance to State
agency personnel;
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Cosponsoring and participating in Regional and
State conferences that address payment accuracy;
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Publishing and disseminating information on payment
accuracy “best practices;”
-
Structuring settlement agreements for poor
performing States that include new investment of portions of the liability
amount in activities specifically aimed at error reduction; and
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Managing a State Exchange Program that enables
States to interact with and review successful error reduction strategies
employed by other States.
Sharing “best practices” and information is critical to
the future of our programs.
But I would be remiss if I did not mention one of the key aspects to payment
accuracy—leadership. This Administration has been clear in its expectations of
States to properly administer government programs. That message has clearly been
articulated from the Secretary and the Under Secretary to the States. The States
have, in turn, taken greater ownership of the responsibility for improving
payment accuracy in the Food Stamp Program. The partnership between the Food and
Nutrition Service’s Food Stamp Program and the State Administrators is critical
to our continued success.
Finally, the Department will be holding listening sessions, beginning this
summer, to gather public input on ways to further improve the Food Stamp Program
in preparation for the 2007 Farm Bill. We are committed to maintaining public
confidence in our nutrition assistance programs by ensuring that Federal dollars
are used for the purpose for which they were intended.
Mr. Chairman, this concludes my remarks. I would be happy to answer any
questions at this time.
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