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INTRODUCTION TO SUBCOMMITTEE REPORT ON FOOD

STAMP PROGRAM EFFICIENCY

This report represents the final product resulting from 3 days of oversight hearings on Food Stamp Program efficiency held by the Federal Spending Practices, Efficiency, and Open Government Subcommittee on April 28, 29, and May 2.

The main concern of the subcommittee in initiating the oversight hearings was that the present Food Stamp Program administration hampered its efficiency and effective implementation of the congressional mandate of the Food Stamp Act. It was the specific intent of Congress through the Act to establish a nationwide policy to "safeguard the health and well-being of the Nation's population and raise levels of nutrition among low-income households."

More recent concerns of the recession and the plight of the newly unemployed have only served to heighten the subcommittee's suspicions that program objectives are not being achieved due to chaotic administrative morass. The recent phenomenal skyrocketing growth of the Food Stamp Program from 15.5 million participants in March 1974 to the most recent figure of 19.2 million in March 1975, further illustrate a definite need for congressional reevaluation of present statutes and regulations that perpetuate a complex and fragmented system.

The subcommittee finds no fault, and actually started with the premise, that the basic intent of the Food Stamp Program to help low-income households obtain a nutritionally adequate diet by supplementing their food budgets is certainly sound and worthwhile. Closer scrutiny of the mechanics for food stamp program administration, however, showed a system that did not work administratively, 80, consequently, the intended benefits were not passed on to the people with the need.

The program, as illustrated by USDA quality control figures and a recent GAO study, has omitted many needy people, provided excess benefits to some recipients, and did not provide adequate benefits to others. How many eligible recipients forego attempts to become certified because of the "stigma" attached to the Food Stamp Program as just another "welfare handout" cannot be calculated. For other potentially eligible recipients, it is either not worth their while to attempt to participate in the program or they simply cannot afford the few dollars required to pay for their stamp allotment. The administrative roadblocks thrown up in front of potential recipients multiply the costs that hamper efficient implementation of the program.

In an attempt to remedy the administrative morass causing many roadblocks in the application process, the subcommittee found three glaring disincentive factors preventing many potentially eligible recipients from taking advantage of the program:

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(1) Administrative problems cause delays from the time food stamp applicants initially request food stamp assistance and the time they actually receive such benefits;

(2) The process of applying to participate in the food stamp program causes many to not even bother applying since it is not worth their time or trouble; and,

(3) Administrative morass can be linked to the poor jobs the States are doing in executing the Outreach aspects of the program which insure that potential and eligible recipients are made

aware of and are encouraged to participate in the program. For a program designed as a valuable mechanism for preventing malnutrition among the poor and the elderly, the price of administrative costs due to inefficiency and errors has risen alarmingly. USDA figures show an overall nationwide error rate for program requirement areas of 18 percent for the 6-month period ending June 30, 1974. Further statistics relate that for the same period 11 percent of eligible recipients were overcharged for their stamps and 26 percent were undercharged. A total of 7 percent of all recipients were found to have been improperly denied benefits. Clearly the waste and redtape spawned by inefficient administration not only detracts from the program in the eyes of the taxpayer, but, more importantly, the big loser is the recipient.

A quick look at the program shows that Congress legislatively mandates the program, Agriculture (USDA) sets the regulations to conform to the legislative intent, and the actual implementation of the program is left in the hands of State welfare agencies to carry the program out on the local level. State agencies many times are left alone to interpret, digest, and enforce a never-ending stream of regulations and court decisions.

The end result is that the Food Stamp Program is plagued by fragmented and inconsistent regulations that cause program duplication and complexity. The duplication contributes to waste and an errorridden program that neither helps the recipient nor is conducive to efficient administration.

The subcommittee had to tread a thin line in probing the issue of food stamp administrative practices. While, hopefully, we would come up with recommendations making program administration more efficient, we were wary that in the process we did not sacrifice the benefits and rights of recipients. Perhaps a portion of the testimony from Marilyn Katz explains the subcommittee position best:

I do believe that if we streamline, we not only save money for the department, which in a sense is not my primary goal. My primary goal is to see that all of those who are eligible receive their proper entitlement. But I think the secondary goal of saving money by administering the program more efficiently within the State, in a sense, serves my goal, because it will not get this type of criticism that the Food Stamp Program now gets. It all boils down to providing benefits to the people who need them.

The subcommittee's report examining Food Stamp Program efficiency is the result of a new mandate established by the 94th Congress to "investigate the efficiency and economy of federal spending practices as applied to meet agency statutory charter and program objectives." Jeff Kirsch of Food and Research Action Center said of the subcommittee's efforts that “the Food Stamp Program needs a fresh perspective. It needs to be looked at through different eyes. I think

the subcommittee is looking for ways in which efficiencies can really serve the program and the recipients that depends on the program for food assistance."

Finally, the subcommittee was not out to consider only the critical aspects of the program. The purpose of the hearings was to help pin

point problems in the existing program and seek constructive pro. posuls to remedy these deficiencies. The subcommittee was in a unique

position of not having to consider any specific legislation so it could listen objectively to a wide range of testimony containing both constructive criticism and productive proposals.

OVERVIEW

The subcommittee feels the congressional mandate for the Food
Stamp Program is well enunciated and apparent-to provide a nutri-
tious diet to those in need and to prevent hunger. The Senate Select
Committee on Nutrition estimates that 38 million potential recipients

are eligible to receive food stamp assistance, yet only 19 million are de presently participating in the program.

It was felt that before the program continued to roll on like a juggernaut that inefficiently expends funds, aggravates present recipients, and doesn't reach many needy who should be participating in the program, an effort should be made to rectify the increasing administrative complexities of the program. In light of the present plight of the needy and the newly unemployed, the subcommittee decided a good hard look was needed into (1) the present law, (2) the Federal Government's role and responsibility, and (3) local administration.

Although the subcommittee is deeply concerned about the plight of recipients, we are equally serious about asking the crucial questions and coming up with responses towards correcting the inconsistencies and complexity in the present Inws and regulations. If not we would be doing a disservice not only to the recipients who desperately need the food stamp assistance but the American people who expect proper and efficient administration of Federal programs. The subcommittee recognizes that it cannot provide all the answers towards alleviating waste and inefficiency in program administration, but hopefully, this report will provide an information base to be used in correcting the abuses inherent in some aspects of meeting program objectives.

THE NEED FOR CHANGE Virtually every witness who testified before the subcommittee suggested some positive changes that should be made in the program. A. CERTIFICATION PROCESS AND ELIGIBILITY DETERMINATION PERIOD

Senator Lawton Chiles keynoted this aspect of concern as he explained in his opening statement.

The subcommittee's limited investigation of the certification process has turned up some interesting facts:

There is little uniformity in certification periods from state to state and from county to county within the state.

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The certification system is complex, far too complex for many clients to understand. The complexity leads to inconvenience for applicants, a high rate of certification errors and many inequities in the distribution of program benefits. Ineligible persons receive benefits while a high percentage of eligible persons are improperly

turned away Mr. Henry Eschwege, testifying for the General Accounting Office, raised valid concerns about data on the certification forms.

Question. Of what value is the data collected from the forms?

Mr. EschwEGE. We are not asking that there be a lot of additional data obtained, but rather that some of the data that is already being obtained, and possibly for other programs, should be classified, summarized, analysed and reported to the Food and Nutrition Service to provide a more meaningful data base on program participants.

Much of the information that is being obtained concerns the applicant's identity, household compensation, income, assets and expenses, information which is necessary to determine his eligibility now and to figure out the amount of stamps the applicant is authorized to buy and how much it will cost.

So what we are really saying is that this data is available and, in some of the counties, actually being reported. But we need to assemble it, not collect it, and analyze it, probably on a sampling basis.

Mr. Norman Davis, President, American Data Systems, Inc., noted that his firm had conducted several studies aimed at cutting down the application form and aiding in eliminating errors caused by multiple computation.

I might mention some of the benefits of this new proposed system to the recipient. It would have a benefit to the recipient by eliminating the current time consuming application procedure. The self esteem of the recipient will be enhanced. He will no longer have to bring in all of his receipts for every individual expense he has had. All recipients in similar financial situations will be treated equitably. The number of eligible food stamp participants will increase. Variations in the application and interpretation of policy by case technicians will be eliminated. Long waiting lines could be significantly reduced or eliminated.

Benefits to the State administration: Eligibility determination and redetermination will be vastly simplified. All expense computation errors will be eliminated. Food stamp personnel will have greater time to spend on recertification and improvement of eligibility statistics. The number of transactions processed by food stamp personnel will decrease. Consolidated standards may be easily updated. Ineligible, overpayment and underpayment statistics will improve. Quality control can concentrate on eligibility errors in gross income verifications. Administrative costs will decrease significantly.

At the Federal administrative level, administrative costs will decrease considerably. Publicized abuses will decrease because the error rate will significantly improve.

From a business administration of financial control, more accurate financial projections can be made, Consolidated Standards Systems are more amenable to computer adaptation. Consolidated Standards can be easily updated to reflect changes in cost of living from year to year.

Elaborating, Mr. Davis revealed results from a study that his company accomplished which showed the value of a simple system of certification.

Eighty-two percent of State Administrators indicated that waiting lines were excessively long while only 18 percent felt lines were acceptable. The current USDA Food Stamp eligibility certification was considered grossly inefficient by 29 percent, somewhat inefficient by 50 percent and adequate by 21 percent.

Other significant findings relating to eligibility or certification were:

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