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The difficulties encountered by State caseworkers in dealing with deductions from income are borne out by the results of State quality control reviews. Nationally, for active cases reviewed for the 6 months ended June 30, 1974, errors relating to deductions accounted for about 43 percent of all errors involving overpayment or underpayment and 30 percent of all errors in all categories combined. For the preceding 6 months, the error situation was about the same.
The Service took an initial step to simplify program requirements by issuing regulations in July 1974 allowing the States to use standardi utility allowances in determining deductions for shelter costs. The Service must approve these standards, and the State must agree to review them annually to identify deviations from actuals. The standards must also take into account any significant seasonal variations. The State must use actual utility costs if the participant requests they be used and can
verify such costs. Mr. Perry, Center Director of the Ansonia Community Action, Inc. voiced strong disagreement with the concept of standard deductions.
Mr. Perry, noted:
We are strongly opposed to the proposal on at least two counts. One, it will heavily penalize recipients who pay high rents in urban areas.
Two, it will further penalize recipients in northern areas of the country where heating bills are skyrocketing, for example, in Connecticut, the State Department of Welfare has a policy whereby FPC recipients are compelled to offset the escalating cost of heating and utilities by a system in which the cost of food stamps is reduced to supplement the cost of fuel.
This system has failed many families who have been confronted with fuel bills several times greater than their food stamp allocation.
Although Mr. Perry's objections are duly noted and do have justification, it was felt by the subcommittee that a first step had to be taken in this situation.
In an effort to accommodate regional differences and concerns, section 5(b) of the proposed legislation allows the Secretary of Agriculture to modify the deduction based on the variation in the cost of living in each region.
PROBLEMS INVOLVING INELIGIBLE RECIPIENTS
The Subcommittee on Federal Spending Practices, Efficiency and Open Government heard much testimony regarding ineligible persons and found the General Accounting Office's Report to be the best authority on the subject, but it is admittedly incomplete as it's drawn from the quality control system of USDA.
The Quality Control Systems were instituted by States 4 years ago and the GAO report suggests several things that need to be done:
(1) The degree to which the system has been implemented varies from State to State, and the Service needs to give additional attention and assistance to States experiencing difficulties in implementing the system.
(2) Quality control coverage needs to be extended to certain households and program areas not presently being checked.
(3) Better analysis and reporting of quality control results are needed to provide more meaningful information on the significance and causes of program errors.
(4) A more critical evaluation and followup of proposed corrective action is needed to decrease errors and improve program integrity.
(5) Improperly estimating and verifying deductions from individuals' gross incomes leads to clearly identified program
errors. Proper operation of the system should consider the following:
The Service's quality control system is a technique for evaluating the extent to which program certification is done accurately. Sample cases are to be selected randomly by the States from two groups--one group is to comprise households receiving food stamps and the other is to comprise household that have been denied participation or dropped from the program. The sample sizes are predetermined by the Service so that each will be statistically representative of the total caseload from which selected and the results can be projected to the entire caseload with statistical reliability.
Each active case selected is to be reviewed by a State or local quality control staff, through an analysis of case records and a field investigation, to verify eligibility and such payment factors as the numbers and ages of household members and their earnings and resources and to determine eligibility and correctness of stamp payments and allotments. For other cases, the field investigation is discretionary. The States are required to report to the Service the results of these reviews and the actions they propose to take to reduce identified program errors. The Service has procedures for validating the States' reports,
AN EVALUATION OF PROGRAM ERRORS
The data which the General Accounting Office worked with may not be statistically reliable for some States because of various systems employed by those States.
GAO made some rough calculations to get an idea of the total monthly value of food stamp benefits that might be applicable to ineligible households. The average monthly bonus (food stamp benefit) received by households found to be ineligible by quality control reviews was $66.39 for the January to June 1974 period. If the 18 percent error rate and the above bonus amount were representative of all non-public-assistance households in the program in June 1974, the total amount of bonus improperly received by these households for that month would be about $23 million-compared to a total monthly bonus of $120 million received by all participating non-public-assistance households.
Summary statistics of errors in food stamp determinations
18 Eligible, overcharged for stamps.
11 Eligible, undercharged for stamps
26 Eligible, improperly denied benefits.
Noting that the quality control system is based on a 50–50 sharing between the state and national government, Mr. Eugene Sanchez, Florida's Food Stamp Administrator, said:
As a Food Stamp Program Administrator, I feel that while a great need exists for this type of federal leadership and commitment toward improved performance in this program, I also feel apprehension. The provisions for judging the state's program performance, and subsequent imposition of fiscal sanctions, if not carefully implemented, could result in a decline in Food Stamp services. Most states would be unable to appropriate additional general revenue funds to cover Federal funds which would be lost as a result of the sanctions.
One of the primary criteria for judging the administrative effectiveness and efficiency in the proposed regulation is the result of Quality Control Reviews. The concept of utilizing quality control as a management tool to assist in improving program administration is a well established principle; however, to use it as a basis for levying financial sanctions is objectionable. If Quality Control findings are used as a form of punishment, it will result in unreliable and ineffective statistics being generated for the purpose of showing good performance rather than areas for improvement.
I will suggest changes to the Quality Control Program that could result in a more reliable and meaningful criteria for judging the program's administration later in my presentation.
Other information supplied by Mr. Sanchez revealed the following: STITE OF FLORIDA, DivisioN OF FAMILY SERVICES, CORRECTIVE ACTION PLAN
FOR THE QUALITY CONTROL REVIEW PERIOD JANUARY-JUNE 1974 Quality Control findings for the period January 1974 through June 1974 showed improvement over the previous reporting period in the following categories:
Total error rate; eligibility error rate; cases with under issuance errors; negative case action reviews with invalid decisions, and number of procedural The following categories showed a slight degradation in error rate over the previous reporting period:
Cases with over charges;
Cases with over issuance. Tolerance limits set by the USDA, FNS-FS Instruction 732–2 were exceeded in the following categories:
Eligibility: 23 percent.
Overcharges: 13.9 percent.
Undercharges: 33.1 percent. Major factors that contributed to the excessive eligibility error rate were:
Agency error in failure to register applicable households for employment with the Florida Employment Service –9.7%.
A sub-sample of quality control reports from the same review universe revealed that approximately 70% of the households that were reported in this category were composed of individuals in the 58-65 age bracket and receiving Social Security benefits. Many of these households were not registered because local employment service offices convinced the Food Stamp offices that to register this category of individual was futile paperwork that tended to degrade their effectiveness.
Approximately 2% of the cases in the sub-sample had strikers as household members who were not registered for the same reason indicated above.
In another 11% of the sub-sample cases the Certification Worker felt the applicant was physically disabled for employment but did not document the reasons for their decisions and the QC Reviewer could find no obvious dis
ability nor obtain medical information to support a disability exemption, Procedural Errors: 2.4 percent
The majority of the procedural errors in the sub-sample were the result of missing dates or signatures by either the applicant or the worker. Although these are accurately recorded as errors, there is little relationship to the actual eligibility of the individual household to participate in the Food
Stamp Program. Client error in declaring work registration, resource or income status: 6.7 percent (combined)
This category of error rate showed an improvement over previous reports. However, continual improvement will be difficult to maintain because it is not reasonable to expect that the unhurried, indepth review technique, employed by QC workers will fail to uncover discrepancies that the Certification worker cannot detect in the hurried, pressure-packed atmosphere of
the average Certification interview. Factors that contributed to the number of invalid derisions were 14.5 percent
The majority of errors credited to the invalid derisions category were caused by poor documentation by Certification workers or complete absence of the reason for denial on the worksheet for cases placed in pending that were subsequently denied after the thirty-day expiration period. Major factors that contributed to the unsatisfactory Basis of Issuance error Category
Cases with overcharges: Agency error: 3.7 percent; recipient error: 6.2 percent; combined errors: 4.0 percent; total: 13.4 percent.
The majority of errors in this category were client misstatements of income, resources or expenses that could not be detected in the Certification interviews, but were uncovered in the Quality Control Review process. A contributing factor to this category of error is the differences that will be arrived at by the Certification worker applying the “as paid” concept at : point in time and the Quality Control worker utilizing the “as paid” concept at a later point in time.
The most consistent and outstanding characteristic of the "average" Food Stamp household is that their income and expenses are usually of a normal, monthly fluctuating nature. Obviously, it is impossible for either a recipient or a certification worker to anticipate the exact amount for each month of a certification period. Even if a certification worker uses an “average” figure, it has been found that the income and expenses are so widely fluctuating that the regulation in effect during this reporting period of not considering changes in gross income of $10 or less as being in error was totally unrealistic. Furthermore, this $10 “leeway" was not applicable to expenses and thus compounded the lack of a realistic approach in formulating the regulations.
Due to the QC Review procedure applied during this reporting period of considering fluctuating income as received and fluctuating expenses as paid in the review month and considering any differences as errors, it must be concluded that a majority of the errors, in the basis of issuance were totally unavoidable. Of the 35 cases reported as overcharges and the 93 reported as undercharges, 19 of the overcharges (54%), and 51 of the undercharges (55%) fell into this "unavoidable” category.
Furthermore, although impossible to determine statistically, it is strongly felt that those remaining cases in which these types of errors were considered as contributing errors, rather than the primary error, many of them very possibly had a strong enough affect on the basis of issuance to have been the primary contributing factor in several cases being ultimately reported as in error, when otherwise they would have very conceivably not resulted in a basis of issuance error.
Cases with undercharges: Agency error: 10.0 percent; client error: 14.2 percent; combined agency and client error: 8.9 percent; total: 33.1 percent.
The reasons for errors in this category are the same as those listed above for cases with overcharges. Mr. Cecil F. McCarthy, Director, Food Stamp Program for Connecticut explained his position on the Quality Program thusly:
USDA insists on using a verbatim copy of the same ÌEW Quality Control System that has been criticized by Welfare Administrators nationally, as unrealistic in its reporting of welfare cases, which cases have a tendency to remain far more static in the areas of household circumstances and income than do the non-welfare households, whose income circumstances are much more subject to variation.
Carried into the more fluid non-public assistance area, the supposed error factor increases greatly because the mechanics of the system have very little relation to practicality and, sometimes, to fact.
Many States have repeatedly protested the system and resultant misleading statistics, but to date we have been unable to effect a change.
The quality control sample does not examine the eligibility study and determination. It does not-indeed it cannot tell whether the procedures used and the computations made were correct. It cannot give the present status of the case. The Quality Control System can do little else than exaraine household circumstances at a month in time after the certification period began but before the certification ended. Often the actual month in which this examination is made is not the month which is being validated.
Note, too, that a certification worker has approximately one-half hour, and certainly no more than one hour, to interview and evaluate a household for eligibility for the Food Stamp Program. The quality control worker spends up to one and one-half days per household in checking out the factors required for quality control reporting.
What has resulted is the erroneous impression that states are lax in their administration of the Food Stamp Program and that the beneficiaries of the program are dishonest more than 50 percent of the time. It is a wrong impression, made up of ghosts created by the failure of two mutually incompatible systems to interact, and it should not be allowed to be the kingpin on which the entire É & E System turns.
It appears to us that USDA has chosen to ignore the intent of the amendment as it relates to operating staff and to over-react on the balance of elements needed for effective and efficient operation.
Given an adequate operating staff and a Quality Control System based on reality, any state can have an effective and efficient Food Stamp Program and, beyond a normal administrative staff, would not need the top-heavy administrative structure that the new regulations seem to mandate for control and correction and reporting purposes.
USDA should be instructed to consult with the states to arrive at a basis for adequate staff loads especially as they concern state population, economics and geography.
in Connecticut, the Food Stamp Program has been a simple and direct way to help eligible households to obtain an adequate diet. It has worked well and we have been able to account for our operation in all aspects.