Building a better food stamp program

Today, with an emphasis on good management as well as on service to clients, the Food Stamp Program is being run more like a business than at any time in its history.

More attention is being given to reducing losses from errors, waste, and program abuse, saving valuable dollars that can be put to use helping people in need. At the same time, the program is serving a record-high number of people, and the average food stamp benefit is greater than ever before.

One measure of improved management is the program's error rate, which reflects the percentage of benefits incorrectly issued. During the past 2 years, the national payment error rate went down substantially, saving approximately $115 million.

Savings from other efforts, such as improved monitoring of grocers and banks, stepped-up anti-fraud activities, and more widespread use of sophisticated technology, have also yielded substantial savings and contributed to a better run program. Working together in new ways...

Much of this success stems from USDA and state managers working together in new ways. Through a nationwide campaign called Operation Awareness, USDA has been encouraging states to share expertise, ideas, and information on new technology and effective management strategies.

As part of Operation Awareness, USDA has brought together food stamp managers in regional and national conferences. Federal reference guides, newsletters, and technical assistance packages have supplied details of innovative ways to cut losses and improve service. A federally funded exchange program has allowed state managers to see good ideas at work in other parts of the country.

As a result, states, counties, and cities now have the information, the methods, and the incentive to try to make their food stamp programs as efficient and error free as possible. Many are putting their creative ideas into action.

West Virginia, for example, has been a leader in client education with its "informercials"--pre-recorded messages that are piped into food stamp waiting rooms. The messages, which are interspersed with music, define terms used in certification and help clients learn what is expected to them.

South Carolina has had great success recovering claims from overpayments through Project FAIR (Fighting Abuse Through Investigations and Recoupment). Since the state implemented Project FAIR in October 1982, it has recouped more than $1.5 million in claims.

New York has gotten results with one of the most sophisticated wage matching systems in the county, a program called CINTRAK, which verifies income information for its food stamp, AFDC (Aid to Families with Dependent Children), and other welfare caseloads. By March 1983, New York had conducted 16 quarterly matches involving some 17.2 million records for a savings of $88.5 million.

Other states have had similar successes in these and other program areas. Improvements in many areas

The emphasis on accountability has had a documented positive impact on program integrity. Not only has the state overpayment error rate dropped dramatically, other areas of program management show tremendous strides forward as well.

Food stamp issuance losses are way down. Losses resulting from authorization-to-participate (ATP) cards being lost, stolen, or wrongfully replaced went from $12.0 million in 1981 to $5.2 million in 1983. The rate of loss of food stamps issued by mail was cut in half, even though there was an increase in the number of food stamp recipients getting their benefits in the mail.

Likewise, state anti-fraud activity stepped up dramatically between 1981 and 1983. The number of food stamp fraud investigations at the state level more than tripled, with more than 100,000 investigations completed in 1983. The number of prosecutions doubled. Nearly twice as many administrative fraud hearings were held, resulting in three times more people being disqualified.

This means in part that states are making successful use of the increased administrative funding USDA offers for states to conduct anti-fraud activities and to computerize their food stamp operations. To help states aggressively pursue fraud and reduce errors, USDA offers federal funds to cover up to 75 percent of state costs for food stamp fraud investigations, prosecutions, and fraud hearings.

USDA also will pay for up to 75 percent of state costs to design, develop, and install computer systems. Computerization has been helpful in reducing errors as well as in detecting fraud in many states.

To encourage states to recover overpayments, USDA allows them to keep 50 percent of claims collected for cases involving fraud on the part of recipients. In instances where recipients unintentionally misreported information, states can keep 25 percent of claims collected.

These incentives, coupled with some innovative systems implemented by a number of states, have made a big difference. Many states are doing a better job of collecting outstanding claims. In 1983, states collected nearly $19 million, a 72-percent increase over 1981. Reducing errors a high priority

Reducing the number of errors made by caseworkers and applicants in the certification process has been a major objective in recent years. USDA monitors these errors through a quality control (QC) system which not only measures the number, kind, and dollar amonts of errors states make, but helps states come up with ways to correct the problems.

The quality control system has been in operation since 1974. It provides fiscal sanctions for states that do not reach their error rate goals without good reason, and incentives (in the form of increased administrative funding) for states that do well in reducing the error in their programs.

The need for such system is clear, since in 1982 the estimated overpayments made in the Food Stamp Program nationally totalled approximately $950 million. The system is important to the client as well-during the same year an estimated $242 million in food stamp benefits were underissued.

Error rates have become an even more crucial concern in recent years because Congress has mandated that food stamp error rates meet national goals of 9, 7, and 5 percent in 1983, 1984, and 1985 respectively. Prior to 1983, USDA worked with states to set up appropriate individual error rate goals.

"Error rates can be lowered, but it takes commitment, resolve, and adequate resources devoted to getting the job done," says Food and Nutrition Service (FNS) Administrator Robert E. Leard.

"We believe one of the best ways to reduce these costly errors is to concentrate our corrective efforts on preventing ineligibles from being certified for food stamps in the first place. It's a lot cheaper to prevent overissuance than it is to recoup it." States work on problems

The dramatic decrease in the overall error rate nationwide testifies to the fact that many states are committed to this goal. For example, California is one of several states using specially trained investigators "up front" to prevent fraud cases from being certified.

The state is saving money by having caseworkers send cases with dubious or unclear household circumstances to investigators when the applications come in. The investigators act right away on these referrals.

Utah is another state using investigators, both during and after certification. Between July and October 1983, the investigators saved the state over $400,000 in closed and denied food stamp and Aid to Families with Dependent Children (AFDC) cases. This works out to a savings of almost $17,000 per investigator, a return of $2.00 in savings for every $1.00 spent on their salaries.

Other states like North Carolina are using specially trained verification workers to prevent errors from getting into the system. These caseworkers conduct intensive interviews with applicants from errorprone households. A study conducted by the state indicates this strategy has the potential to save North Carolina counties more than $200,000 annually.

Efforts to reduce errors have to be tailored to fit each state. "Our objective," says Leard, "is to reduce states' error rates without an inordinate increase in administrative costs." He stresses targeting error-reduction efforts, which means concentrating efforts on techniques that get the best results.

"One common characteristic shared by all states having low error rates or those consistently reducing error, is a strong commitment by the top state program administrators to do something about he problem," Leard explains.

"State administrators must be innovative and must devote resources to the effort, or it will be difficult, if not impossible, to reach the error rate goals set by Congress." Special efforts are recognized

At the second national conference on program management sponsored by USDA in May, Leard commended Montana for reducing its error rate by 55 percent in 1 year. Montana accomplished this by hiring five regional supervisors to provide policy guidance, corrective action direction, and general supervision.

The state also started doing quality assurance reviews and cyclical program training, and set up a state-level corrective action panel, which meets monthly to talk about action plans for reducing errors.

Leard also mentioned Maryland, where a federally conceived corrective action plan called ERRAR has played a major role in lowering the state's error rate. Because of ERRAR, Maryland has local office supervisors reviewing caseworker actions, focusing on the kinds of cases where errors are most likely to occur.

Supervisors try to do the reviews before benefits are authorized. When errors are found, supervisors send the cases back to eligibility workers for further verification, more information, and any needed corrections.

Leard also commended seven other states for outstanding management:

* Virginia was cited for increasing its fraud prosecution and its recovery of food stamps overissued to recipients. State managers accomplished this by stressing sound policy direction, technical support, and training in their work with local agency staff.

* Hawaii received an award for reducing its error rate by half in a single year. The state's success results from a corrective action plan that requires caseworkers to analyze the cause of every error found, determine how to avoid making that error, and share information with fellow caseworkers at monthly meetings.

* Nevada was cited for consistently having a low food stamp error rate and for overall excellence in managing the program. During the past 2 years, Nevada's percentage of food stamp dollars issued in error has been the lowest in the nation.

The state attributes its success to a system which established very detailed work performance standards for eligibility workers and ongoing reviews of work by supervisors to assure that the performance standards are being met.

* Wisconsin was given an award for reducing its error rate from 16.5 percent to 11.0 percent. The state accomplished this by identifying problems through a targeted review, and initiating corrective action through a successful team effort that used county, state, and federal personnel.

* Arkansas was cited for a concentrated effort to reduce its error rate resulting in a 16-percent reduction in dollars overissued. As part of its effort, the state analyzed quality control data and targeted error-prone geographical areas.

* North Dakota, which reduced its error rate from 8.7 percent in 1980 to 4.2 percent in 1983, was recognized for superior performance in the area of certification. The state's operating procedures are well thought out and problems are anticipated and resolved before they become serious.

* Tennessee was recognized for cutting in half the number of errors made in food stamp eligibility determinations. The state has implemented long-term management improvements, including supervisory review plans, quality circles, interviewing training that teaches caseworkers to look into questionable circumstances, and enhanced computer services. Projects test other approaches

To test more ways to reduce errors and run local programs more efficiently, USDA is sponsoring a series of demonstration projects. States submit proposals to USDA to compete for the federal funding.

For this year's projects, USDA selected North Carolina, Vermont, and Maryland to test different ideas for cutting costs and reducing errors.

North California will test a new computer-assisted interview for people applying for food stamps. In Vermont, eligibility workers will be trained to detect fraud and errors through improved interviewing skills. Maryland plans to use brochures and videotapes designed by advertisers to reach food stamp recipients. These messages will tell food stamp applicants what information they must report to the caseworkers.

States need to take full advantage of the many new and exciting ideas being generated to combat errors, says Leard. "Although error rates are coming down, they need to be reduced still further if states are to meet the legislated goals." Operation Awareness encourages exchange

One way for states to improve their management is to find out what other states are doing successfully. Through Operation Awareness, USDA has streamlined this process of information sharing.

USDA now provides a Catalog of Program Improvement Activities, a reference guide for state and local program managers. The catalog is a compilation of anti-fraud, waste, and abuse activities, with more than 200 items currently listed. Using the catalog, states can quickly identify promising techniques that other areas are using.

Another valuable reference guide is a newsletter called State to State that highlights successful initiatives by state and county governments. One story in State to State described Nevada's highly successful caseworker review and training techniques. After the article appeared, 15 states called Nevada and 9 states sent people to study its system.

USDA has also sponsored a state exchange project to stimulate communication among the states. Through this project, USDA picks up the tab for state and local personnel to visit other states and learn successful methods of handling all sorts of food stamp problems.

In 1983, USDA spent $70,000 on the exchange project. There were 35 exchanges, some of which as many as seven states attended. Almost all states participated in the project in some way. In 1984, USDA increased funding for the exchanges to $100,000.

"We are thrilled with the results," says Leard. "For example, Virginia adopted Minnesota's claims tracking system, and Wisconsin adopted Illinois' issuance methods. Hawaii visited Arizona to study the automated claims recovery system which has increased Arizona's recoveries from $450 to $10,000 a month. These are just a couple of success stories." Computers help spot problems

Other success stories have come about as states match wage information by computer to detect fraudulent or erroneous information on applications. Wage matching has been mandatory for states since January 1983, so most states have some type of system underway. A number of states have come up with especially creative applications for this technology.

For example, Massachusetts was the first state to use computer matching to detect unreported assets in bank accounts. Michigan is doing a jail match, in which prison rolls are checked against welfare rolls to determine if jailed persons are receiving food stamps at their home addresses. North Carolina is conducting a motor vehicle match, and Texas, a boat match.

Interstate matches can serve as a deterrent to recipients who might consider filing for food stamps in more than one place. The eight Southeastern states are involved in an interstate match to identify food stamp recipients who may be receiving benefits in more than one state.

The project is designed to identify potential cases of "double dipping" through computer matching of Social Security numbers, names, and birth dates. Initial checks by the Florida Division of Public Assistance found that fewer than half of 1 percent to the total people getting benefits the eight states may be guilty of duplicate participation--a reassuring finding.

The Philadelphia District Attorney's office runs another program called "drug match." When police there have a drug bust, all those people caught with large sums of money are checked against food stamp and AFDC rolls. So far, almost 50 percent of those arrested for drug-related offenses are claiming welfare illegally. The city expects to nab up to 100 offenders this year through this match. Preventing errors through education

To complement the use of systems for detecting erros, many states are getting information out so that people don't make mistakes or try to defraud the program to begin with. A state initiative called Project Integrity is another part of Operation Awareness that tries to do just that.

Through media coverage, letters to recipients, home visits, wage matches, tax record checks, and employee contacts, the project tries to make good stamp recipients more aware of their responsibilities to report accurate information to certification offices.

South Carolina and Kentucky were the first states to put Project Integrity into action. Between January and June 1982, the operation saved the two states nearly $750,000--far more than the $112,000 it cost the state and federal government to conduct it.

Because of the success of Project Integrity, seven other states are now using the idea: Georgia, Florida, Connecticut, New Hampshire, Iowa, South Dakota, and Idaho. Alabama, Tennessee, and North Carolina have also expressed interest in the idea. New delivery system tested

While USDA is working with states to help them improve their day-to-day program management, this fall the Department is beginning to test a new method of delivering food stamp benefits that could make that management task somewhat simpler.

In Reading, Pennsylvania, USDA is trying out electronic benefit transfer (EBT), a computerized system which is expected to remove some of the opportunities for fraud presented by the paper coupon.

Under the system, each eligible household has its own computerized food stamp account and gets a benefit card with a magnetic strip (like a credit card). The card has the recipient's picture and account number laminated on it. The household also gets a secret identification number which must be used with the card at the grocery store. The identification number helps to secure the electronic system against fraud.

At the grocery checkout station, the clerk inserts the card into a telephone-size computer terminal, and the food stamp recipient enters the household's personal identification number into an accompanying keyboard. The recipient's account is automatically debited by the amount of the food purchase, and the grocer's account at a bank is credited with the same amount.

"If plastic cards become a feasible alternative to paper food stamps, we will go a long way toward solving our problems with fraud, waste, and abuse. We're going to pay close attention to the project," Leard says. We've come a long way

Electronic transfer of benefits may be the direction of the future, but the theme of the present day Food Stamp Program is prevention of error and fraud through early detection.

"Operation Awareness will help us restore and protect the integrity of the Food Stamp Program. And we are proud that the success stories we've mentioned--from reducing the national error rate and cutting ATP and mail issuance losses, to increasing state anti-fraud activities--have all been accomplished without any loss or reduction in benefits to eligible recipients," Leard says.

He praises the dedication and hard work of state and local administrators. "Thanks to the efforts, cooperation, and creative thinking of program managers across the country, we've come a long way toward getting the Food Stamp Program back on the right track," he says. "And that benefits not only low-income and needy people, but all Americans."

COPYRIGHT 1984 U.S. Government Printing Office
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