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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 disability 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 percentThe 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 a 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 HEW 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 E&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.

ENCLOSURES FROM GAO REPORT

CHART 1-PERCENTAGE AND CLASSIFICATION OF IMPROPER DETERMINATIONS DISCLOSED IN STATES' QUALITY CONTROL REVIEWS OF NON-PUBLIC-ASSISTANCE CASES FOR THE 6 MONTHS ENDED JUNE 30, 1974

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CHART II. PERCENTAGE OF SAMPLED PARTICIPATING HOUSEHOLDS CONSIDERED INELIGIBLE AS A RESULT OF STATES' QUALITY CONTROL REVIEWS OF NONPUBLIC-ASSISTANCE CASES

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PROSPECT OF FRAUD

Definite client errors made up a small part of the waste situation in the Food Stamp Program.

Mr. Samuel Bauer, Director of the County Welfare Department. in Cleveland said:

I would like to take a minute to comment on a portion of my statement, "to administer the program justly." This is where I feel a large improvement in the Food Stamp Program can be made. We are facing a situation where the rules and regulations which are continually being added, amended, and deleted are making it increasingly difficult for the low income person to become eligible for food stamps, while at the same time increasing the likelihood of the person not in need to obtain assistance fraudulently. In addition, those same rules and regulations make it increasingly difficult for those of us who administer the program to provide adequate service to those citizens who are in need and eligible. Food stamp regulations question many areas of an individual's financial situation, which is at best marginal in their importance. When the computations are completed, that individual is often found ineligible. Yet another individual applies for assistance and does not mention these areas of his financial situation and is found eligible.

Clearly some fraud does exist in the program. The news media has reported many instances where fraud has been exposed by both private and public efforts.

The Department of Argiculture has effectively pointed up some of the problems they have encountered.

Officials of the Department of Agriculture have testified before Congressional Committees that the food stamp program has almost no incidence of fraud.

In June 1973, Assistant Secretary of Agriculture Clayton Yeutter testified before the Senate Select Committee on Nutrition and Human Needs that the food stamp program had been "remarkedly free from fraud." In the first three quarters of 1973, he said, "the percentage of fraudulently participating households, as related to total participating households, equaled 24 thousandths of one percent."

In May 1975, the Agriculture Department, in a report to the Senate Agriculture and Forestry Committee, indicated that the degree of fraud in the program has not increased significantly since the Yeutter testimony. The report stated that during fiscal 1974, claims were made against 17,480 food stamp recipients for bonus coupons that were received in excess of their entitlement. The dollar value of these claims was approximately $3.8 million. In the first two quarters of fiscal 1975, claims were established against 13,952 households for a total dollar value of $2.3 million.

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