ÆäÀÌÁö À̹ÌÁö
PDF
ePub

CONTRIBUTIONS BY WITNESSES

Most witnesses heard by the subcommittee made recommendations for various ways to simplify the certification process. The major issues were:

1. Replacing the individual itemized deduction schedule with a simpler "standard deduction" or "consolidated deduction" method.

2. Simpler forms, eliminating dual certification interviews for public assistance clients who are automatically eligible.

3. Providing aid to the States for adequate manpower to eliminate long waits for approval.

4. Allowing States to experiment with more efficient and effective administrative mechanisms.

Testimony was received from Ms. Jodie Allen of Mathematica, Inc., which has completed two recent studies for USDA concerning improvement of the administration and regulations of the food stamp program. A major highlight of her testimony concerned the impact of using a "standard deduction" method of income determination.

Ms. Allen suggested that in setting the appropriate level of the standard deduction and purchase requirement, the criteria of equity, target efficiency and cost control should be kept in mind.

One particular feature which should be given consideration is the provision of an extra monthly deduction for any household with an aged member. This particular feature is a practical necessity to avoid adverse effects on aged participants who tend to have high shelter and other currently deductible costs relative to their income and family size. But it is also consonant with the generally preferred treatment afforded the aged in both our tax and income transfer programs.

Ms. Allen further advocated using the standard deduction as an effective means to eliminate program errors.

According to Ms. Allen, verification of claimed expenses is not only difficult and time consuming for both administrators and recipients, but the source of about 40 percent of errors in benefit payments.

Ms. Allen also suggested that with implementation of a simplified standard deduction method, a monthly income redetermination could be effectively implemented. She reported on the results of such rapid redetermination by several states and in income maintenance experiments conducted by her firm. Her testimony maintains that the system is workable with minimum paperwork and would produce significant savings from those participants who return to work or go on and off working status several times a year without changing their food stamp eligibility.

Ms. Allen is also recommending changes in USDA regulations which favor small families in computing purchase requirements.

Mr. Eugene Sanchez, State Administrator of the Food Stamp Program in Florida, saw the standardizing of shelter, utility, medical and educational deductions as a means of speeding up the interview process and reducing verification requirements.

The position of the General Accounting Office on the issue was outlined in its report (Feb. 28, 1975) which read, in part:

USE OF STANDARD DEDUCTIONS COULD SIMPLIFY PROGRAM ADMINISTRATION AND REDUCE PROGRAM ERRORS

Program requirements for determining monthly net income for food stamp purposes are administratively complex and many errors are made in their application-particularly with regard to the determination of allowable deductions from income. These deductions include:

(1) Work allowances of 10 percent, not to exceed $30 a month, of compensation for services performed as an employee or received as a training allowance;

(2) Mandatory deductions, such as Federal and State income tax withholdings, social security taxes, mandatory retirement payments, and union dues;

(3) Medical expenses if in excess of $10 a month;

(4) Child care expenses;

(5) Tuition and mandatory fees assessed by educational institutions;

(6) Support and alimony payments;

(7) Unusual expenses arising from disasters or casualty losses, even if subsequently reimbursed; and

(8) Shelter costs, including utilities and any mortgage payments in excess of 30 percent of income after all other allowable deductions have been made.

To be deductible, expenses generally must be incurred by, and paid for by a household member and must be paid, or anticipated for payment, during the certification period in which the deduction is claimed. By considering amounts paid in the past, anticipated changes in the future, and other information available, the caseworker must estimate deductible expenses as accurately as possible and must determine what the monthly net income will be for the total certification period. A further complication is that the expenses reported by applicants will not necessarily be in terms of monthly amounts. In such event, caseworkers must make proper conversions on either an average or an actual basis. The potential for error in applying these and other related requirements is great.

Food stamp regulations also require participants to report any changes in income or deductible expenditures above specified amounts to the local food stamp office. Such changes could make the household ineligible for further participation or could result in a recomputation of the amount the household will have to pay for its stamps. Several State officials commented to the General Accounting Office on the difficulties in making program determinations relating to income deductions and attributed much of their program's high error rates to these difficulties. Colorado, in commenting in its quality control report on eligibility errors relating to medical expenses, said that estimating these expenditures was always arbitrary and that the different circumstances of health and frequencies of treatments made it almost impossible to accurately estimate medical deductions. The State concluded that frequent differences between the determinations of the regular caseworkers and the subsequent determinations of quality control reviewers are almost inevitable.

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 standard 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

SOURCE. GAO study of State quality control reviews-non-public assistance cases only.

Percent of sampled households participating in program:

Ineligible, but issued stamps-

Eligible, overcharged for stamps--
Eligible, undercharged for stamps..
Eligible, improperly denied benefits..

18

11

26

[ocr errors]

57-400-75—3

[merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][subsumed][merged small][subsumed][merged small][subsumed][merged small][merged small][merged small][subsumed][ocr errors]

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: STATE 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

errors.

The following categories showed a slight degradation in error rate over the previous reporting period:

Cases with over charges;

Cases with under charges, and

Cases with over issuance.

Tolerance limits set by the USDA, FNS-FS Instruction 732-2 were exceeded in the following categories:

Eligibility: 23 percent.

Invalid decisions: 14.6 percent.

Basis of issuance error:

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%.

« ÀÌÀü°è¼Ó »