Automating the food stamp program

Automating the Food Stamp Program

In Alaska, information from food stamp applicants is entered directly into a statewide computer system. In Reading, Pennsylvania, food stamp recipients use a plastic debit card instead of paper coupons to purchase groceries. At a Minnesota computer complex, 27 workers process redemption information on 230,000 grocery stores taking part in the program.

Across the country today, automation is changing the face of the Food Stamp Program, presenting opportunities and challenges for food stamp managers at all levels.

"There is no question that as we approach the 21st century, much of the entire food stamp delivery system will be automated," says Joseph Leo, deputy administrator for management at USDA's Food and Nutrition Service (FNS). It makes sense, he says, because one of the best applications of computers is keeping track of and analyzing large quantities of data.

"For the Food Stamp Program you're talking in the neighborhood of 20 million people getting monthly benefits. A program serving that size population is a perfect home for the computer," Leo says. "In addition, when you have a time-sensitive process, such as meeting the needs of hungry families, you want to be as responsive as possible."

Accountability also important

A multi-billion dollar program also demands accountability. Computers offer tremendous opportunities to streamline benefit delivery systems and improve accountability.

Some states have automated virtually every aspect of the food stamp delivery process--from certification and issuance, to follow-up investigations and claims collections. This has helped cut down on errors, prevent ineligible people from being certified, and track down people who are receiving benefits fraudulently.

At the federal level, FNS is finding new ways to use automation in tracking the 2-1/2 billion food coupons which each year move through retail stores and the banking community. The agency is also using computers with its quality control system, which monitors errors made in a sample of more than 65,000 cases handled in certification and issuance office across the nation.

In time, computers may revolutionize the way FNS and states work together to keep track of program information, such as participation and coupons issued. Today, most of this data comes to FNS on paper forms, but the agency is laying the groundwork for receiving this data electronically from the states.

A system like this would relieve the current paradoxical situation where some states take information from their automated systems, enter it onto paper forms, and mail it to FNS--all to have FNS employees key it into the agency's computer system.

"Clearly in the not too distant future the potential for moving all this information is there," Leo says. "What's happened so far is the tip of the iceberg. The changes food program staff will see between now and 1990 will be nothing short of an automation phenomenon they've never seen before."

States encouraged to move ahead

Many state and local agencies have already seen a lot of changes. "Right now all the states have active projects going on to automate their programs," Leo says. "Naturally, some are more advanced than others."

Ironically, some states that got into automation early in the 1970's now are lagging behind with outdated equipment. Others, like Alaska, Vermont, and Texas, have vaulted to the forefront with more recent, state-of-the-art systems.

In the past few years, for example, Texas has automated its client information intake process by installing more than 3,300 computer work stations in its certification offices. Computers guide the eligibility workers through the interview, perform the calculations needed to determine eligibility, calculate the food stamp allotment or AFDC (Aid to Families with Dependent Children) grant, and produce a copy of the information for placement in the client's case folder.

To encourage states to automate their programs, FNS provides up to 75-percent enhanced administrative funding for development of computer systems. Once the systems become operational, funding goes back to the standard 50-50 federal-state sharing of administrative costs.

To get enhanced funding, a state first submits a proposal to FNS. FNS regional staff work with the state to make sure the proposal meets program requirements, is cost-effective, and is technologically likely to succeed. Projects involving more than $1 million must be approved by an executive committee at FNS headquarters chaired by Joe Leo.

Sharing information helpful to many

FNS strongly encourages the transfer of successful systems from one state to another when possible. North Dakota, for example, successfully adapted Alaska's advanced computer system with relatively little modification. Such transfers make good fiscal sense because development costs for automated state welfare systems can run into many millions of dollars.

The agency also emphasizes the need for states to develop systems that integrate food stamp, AFDC, and Medicaid programs. Where complete integration would not be cost-effective, as perhaps in a small state, FNS insists on an automated link--a system that can communicate with the computers in the other welfare programs in the state--before enhanced funding will be granted.

Many states are taking advantage of FNS automated data processing (ADP) funding. In fiscal year 1984, 27 states received developmental funding at the 75 percent level, and 47 received 50 percent operational funding for ADP. In all, FNS provided more than $40 million for state computer system costs.

In addition to funding, FNS has provided states with technical assistance packages to help them make better use of their systems' capabilities. A recent package outlined the decisions and issues facing states developing automated claims systems. Another package described how states can use automated systems to verify applicants' social security numbers.

FNS has also provided states with a catalog of automated "front-end" verification techniques, which describes strategies for detecting fraud and errors on applications before food stamp benefits are issued. This is in addition to a catalog of program improvement activities, updated and distributed each year, which describes many automated projects in use around the country.

Survey shows various uses

Because of the importance of state and local progress in automation, FNS has established a computer data base that allows the agency to track how the states are doing in applying automated technology to their programs.

According to that survey, about 45 states currently have automated the eligibility and benefit calculation process. In more than half these states, the automated system not only is the sole method of calculating benefits, but goes further and makes the financial eligibility determination for the caseworker.

More than 40 states have automated case record files, and a similar number have automated preparation of some reports and notices such as monthly reports and notices of case actions. More than half the states have integrated databases for food stamps and AFDC.

Cross-checking information applicants provide against other sources of data has proven to be a very effective application for computer technology.

About half the states have some degree of automated "front-end" verification systems in operation. Nine of these do immediate on-line matches with state unemployment compensation wage data. Most states also do computerized verification after benefits are authorized.

To follow up on cases involving fraud or error, about 20 states have statewide automated claims tracking systems. Oregon's automated system for tracking and collecting food stamp claims, for instance, has helped the state triple the number of claims established each month.

New delivery systems tried

Most states have automated some part of their issuance systems as well. In some areas, computers generate the authorization-to-participate (ATP) cards. In other instances, automated systems stuff coupons in envelopes sent to issuance sites or print labels for mail issuance.

Ten states use on-line issuance systems, primarily in urban areas. San Francisco's Food Stamp Automated Issuance and Reporting System (FAIR) is typical of these systems, which eliminate the need for ATP cards.

With on-line issuance, recipients get a permanent plastic magnetic strip card which they present at the issuance office. The issuing agent runs the card through a terminal, and the computer indicates the amount of the client's food stamp allotment. The coupons are issued and the transaction is entered into the computer. The system dramatically cuts down on duplicate transactions.

To date, the ultimate automated issuance system is being tested in Reading, Pennsylvania, where the food stamp coupon has been eliminated. Recipients have plastic, magnetic strip cards which they use at the grocery store. The clerk runs the card through a telephone-size terminal on the counter and the recipient punches a secret four-digit number into a hand-held keypad.

Use of the correct number authorizes the transaction. The food purchase is rung up on the cash register, and a central computer debits the recipients' electronic food stamp account and credits the grocer's bank account. No food stamp coupons are used at all.

Pennsylvania will run the Reading project, known as Electronic Benefit Transfer (EBT), through early 1988. Preliminary results from the project show that most retailers find the system easier to deal with than the coupons. Like the grocers, three-fourths of the Reading food stamp recipients prefer the electronic system. They like not dealing with the coupon books and not having to go to the bank to exchange an ATP card for coupons.

For USDA, the EBT system offers potential for reducing fraud in the program and for saving the cost of handling and processing billions of food stamp coupons each year. Final evaluation results from the first phase of the project are expected later this year.

More changes in the future

Just how electronic will the future Food Stamp Program be? It is too soon to tell. But trends indicate that in the near future more states will move to on-line issuance systems such as those in use in California and Michigan.

More eligibility workers will be equipped with automated work stations and will enter information provided by applicants directly into computers. Caseload information will be compiled in central data files, but managed by mini- and microcomputers in various locations around the state rather than by large central mainframe units.

USDA will continue to encourage automated systems integrating various welfare programs, increased use of front-end verification to prevent fraud and errors before benefits are issued, and better use of automation in follow-up wage matching to help focus investigative efforts on the most serious cases of fraud and abuse.

This year, for the first time ever, the legislation authorizing the Food Stamp Program sets a specific schedule for USDA and the states to move ahead in automating program operations.

The Farm Bill, passed in December, calls for USDA to set up and work with a state advisory group on a model plan for automating data processing and computerizing information systems. This plan must be developed and made available for comments by October 1, 1986. USDA has until February 1, 1987 to consider the comments and complete the plan.

Using the model plan as a guide, each state will then develop and submit an individual plan, which will become part of the state's overall plan of operation. States must submit their plans by October 1, 1987.

By April 1, 1988 USDA must submit to Congress an evaluation of the states' plans. This report will include an analysis of any additional steps states must take to make their systems cost-effective and efficient. States must begin putting their plans into effect no later than October 1, 1988.

This means that within 2 years, food stamp managers in every state will have given considerable thought to how they will automate their programs. Automating will become even more of a priority than it already is.

Monitoring efforts greatly improved

Just as FNS is providing enhanced funding to states to improve their automated systems, the agency is investing in improvements at the federal level as well.

The oldest use of automation in the Food Stamp Program nationally has been to monitor the redemption activity of the retail food stores that take part in the program.

The Redemption Certificate Automation Program (RCAP) located in FNS' Minneapolis computer center keeps track of important information on the 230,000 retailers authorized to accept food stamps. This information includes basic identifying information, estimated sales activity, investigative history, and amount of coupon redemptions. RCAP also keeps track of information on food stamp redemptions as they are processed by banks.

One quarterly report the system generates identifies stores that redeem more than $1,000 each month in food stamps and have twice the average redemptions of a group of stores of similar size. These stores are checked out by the FNS field offices to find out why they have unusually high redemption levels. If the field officers find unexplained irregularities, the stores are referred for investigation by FNS compliance officers.

Several recent developments are helping to streamline this process. To enhance the computer screening by the RCAP system, FNS is developing an error-prone profile--a set of selection criteria to enable the computer to better identify stores likely to violate program rules. This profile will help target investigative efforts.

In addition, the 72 FNS field offices recently have been equipped with microcomputers that allow them to access the RCAP system. Field offices can now enter information on newly authorized stores directly into the Minneapolis system, instead of filling out and mailing a form with the information.

Likewise, they can access historical information about stores' redemption patterns to help them in determining which stores should be referred for investigations.

FNS area compliance offices have also recently been equipped with microcomputers. Workers at the six compliance offices can now electronically enter information about stores being investigated into a system known as the Investigative Field Office Activities Reporting System, or IFOARS, which is also housed in Minneapolis.

When a compliance office gets a case for investigation, the data is entered into IFOARS. The system automatically pulls background on the store being investigated from the RCAP system. The IFOARS computer case record is updated continuously as the investigation proceeds. With the new on-line microcomputers, this is being done faster and more efficiently than ever before.

FNS will soon be testing yet another automated link in this system. Starting this summer, two compliance investigators will begin testing the use of portable computer terminals to keep track of their management information. The size of a briefcase, the computers will be equipped with a keyboard and screen, and will be able to transmit information to the area compliance office microcomputer over telephone lines.

The compliance investigators pose as food stamp shoppers in stores suspected of possible violations, such as selling ineligible items, like cigarettes or alcoholic beverages; buying or selling food stamps; or giving unauthorized amounts of cash as change.

With the portable computers, investigators will be able to transmit daily reports with complete information on the inventory of food stamp coupons used and cash change received in their investigations.

Currently, the 50 investigators spend about 10 percent of their time keeping track of the more than $300,000 in coupons they use each year. Other types of reports--such as details of cases worked on, miles driven, and hours worked--will also be easier with the portable units.

Other steps also improve monitoring

Each year the 230,000 authorized retailers accept about 2-1/2 billion coupons of varying denominations from food stamp participants in exchange for eligible food items. The retailers count and bundle the coupons by denomination in packages of 100 and submit them as part of their regular bank deposit along with a redemption certificate, a form supplied by FNS.

There are about 10,000 financial institutions that accept these deposits and submit them with the redemption certificates and a summary accounting document to one of 37 Federal Reserve banks. About 700,000 forms are used annually to make these transfers.

The Federal Reserve banks count the coupons, pass credits to the financial institutions, check for counterfeit coupons, and destroy the coupons. They, in turn, charge the United States Treasury for coupons redeemed and destroyed, and submit all accounting documents to FNS.

While the coupons are carefully checked by the Federal Reserve banks against the accounting documents submitted by the financial institutions, the amount of the redemption certificates differs from the coupons because of restrictions on how coupons must be bundled for submission.

FNS has improved the accountability of this system through a bank monitoring project developed in 1982 and fully implemented in April 1985. The project changed the redemption certificate to an easier-to-complete form which could be read by an optical scanner at the Minneapolis computer center. It also changed and improved the flow of paperwork to FNS.

The changes require banks to be stricter about checking the redemption certificates supplied by retailers. This has helped to some extent, says Ray Pugh, deputy administrator for financial management at FNS.

He points out that in fiscal year 1981 banks redeemed $200 million in food stamp coupons that could not be identified with specific retailers. Currently, the gap has dropped to about $40 million. "However," he says, "the system still falls short of being a full-blown accounting system for food stamp redemptions."

To counter that problem, FNS has pulled together a task force made up of seven major banks, the American Bankers Association, the U.S. League of Savings Institutions, the Federal Reserve System, and agency representatives. The task force's goal is to come up with an automated system that would effectively keep track of redemption data and streamline current procedures.

"We are examining approaches that would reduce paper flow, give us an accurate accounting for redemption activity by retailers, cut down the staff workload at the Minneapolis computer center, and apply the technology that is currently available to the government and banking industry," says Pugh.

The task force has carefully documented the redemption process and has considered a number of alternatives for an improved system. The system will be pilot tested and evaluated before being applied on a broad scale.

"While early in the process, the idea has potential for some exciting things," says Pugh. "It's an interim step that fits in between where we are now and a paperless, EBT-like system down the road. It represents something you can do right now to provide a dramatic improvement in food stamp redemption accountability."

Automation is at the forefront

With the agency looking into more sophisticated electronic bank monitoring at the same time it builds an automated network for other kinds of program information, the outlines of Joe Leo's vision of a fully automated electronic flow of information begin to take shape.

"When you look at what our partners in the states are doing in automating, then at what FNS is doing, you can see that automation is clearly at the forefront of our future management of this program," Leo says.

Is it worth the investment in capital to set up an electronic system to run the Food Stamp Program? "I believe unequivocally that automation can return in service and in productivity more than $1.50 to $2.00 for every $1.00 invested," Leo answers.

Automation will not necessarily replace people, he says. It will help them do their jobs better--"working smarter, not harder," as Leo puts it.

"We are always going to need people to make sense out of all this data, to make decisions, to do the interpretation and analysis. Basically, automation frees the worker from mundane bean counting. It extends human capability by providing an electronic tool.

"The agency's mission is to deliver food assistance in an efficient and effective way," Leo says. "The bottom line is that today you really can't do that without automation."

COPYRIGHT 1986 U.S. Government Printing Office
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