[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
HEARING TO REVIEW QUALITY CONTROL
SYSTEMS IN THE SUPPLEMENTAL
NUTRITION ASSISTANCE PROGRAM
SUBCOMMITTEE ON DEPARTMENT OPERATIONS,
OVERSIGHT, NUTRITION, AND FORESTRY
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
JULY 28, 2010
Serial No. 111-59
Printed for the use of the Committee on Agriculture
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COMMITTEE ON AGRICULTURE
COLLIN C. PETERSON, Minnesota, Chairman
TIM HOLDEN, Pennsylvania, FRANK D. LUCAS, Oklahoma, Ranking
Vice Chairman Minority Member
MIKE McINTYRE, North Carolina BOB GOODLATTE, Virginia
LEONARD L. BOSWELL, Iowa JERRY MORAN, Kansas
JOE BACA, California TIMOTHY V. JOHNSON, Illinois
DENNIS A. CARDOZA, California SAM GRAVES, Missouri
DAVID SCOTT, Georgia MIKE ROGERS, Alabama
JIM MARSHALL, Georgia STEVE KING, Iowa
STEPHANIE HERSETH SANDLIN, South RANDY NEUGEBAUER, Texas
Dakota K. MICHAEL CONAWAY, Texas
HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska
JIM COSTA, California JEAN SCHMIDT, Ohio
BRAD ELLSWORTH, Indiana ADRIAN SMITH, Nebraska
TIMOTHY J. WALZ, Minnesota DAVID P. ROE, Tennessee
STEVE KAGEN, Wisconsin BLAINE LUETKEMEYER, Missouri
KURT SCHRADER, Oregon GLENN THOMPSON, Pennsylvania
DEBORAH L. HALVORSON, Illinois BILL CASSIDY, Louisiana
KATHLEEN A. DAHLKEMPER, CYNTHIA M. LUMMIS, Wyoming
Pennsylvania THOMAS J. ROONEY, Florida
BOBBY BRIGHT, Alabama
BETSY MARKEY, Colorado
FRANK KRATOVIL, Jr., Maryland
MARK H. SCHAUER, Michigan
LARRY KISSELL, North Carolina
JOHN A. BOCCIERI, Ohio
SCOTT MURPHY, New York
WILLIAM L. OWENS, New York
EARL POMEROY, North Dakota
TRAVIS W. CHILDERS, Mississippi
WALT MINNICK, Idaho
Robert L. Larew, Chief of Staff
Andrew W. Baker, Chief Counsel
April Slayton, Communications Director
Nicole Scott, Minority Staff Director
Subcommittee on Department Operations, Oversight, Nutrition, and
JOE BACA, California, Chairman
HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska,
STEVE KAGEN, Wisconsin Ranking Minority Member
KURT SCHRADER, Oregon STEVE KING, Iowa
KATHLEEN A. DAHLKEMPER, JEAN SCHMIDT, Ohio
Pennsylvania CYNTHIA M. LUMMIS, Wyoming
TRAVIS W. CHILDERS, Mississippi
Lisa Shelton, Subcommittee Staff Director
C O N T E N T S
Baca, Hon. Joe, a Representative in Congress from California,
opening statement.............................................. 1
Prepared statement........................................... 2
Fortenberry, Hon. Jeff, a Representative in Congress from
Nebraska, opening statement.................................... 3
Prepared statement........................................... 4
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, prepared statement.................................. 6
Paradis, Julie, Administrator, Food and Nutrition Service, U.S.
Department of Agriculture, Washington, D.C..................... 6
Prepared statement........................................... 8
Brown, Kay E., Director, Education, Workforce, and Income
Security Issues, U.S. Government Accountability Office,
Washington, D.C................................................ 12
Prepared statement........................................... 13
Fong, Hon. Phyllis K., Inspector General, Office of Inspector
General, U.S. Department of Agriculture, Washington, D.C....... 24
Prepared statement........................................... 25
Winstead, Jr., Don E., Deputy Secretary, Florida Department of
Children and Families, Tallahassee, FL; on behalf of American
Public Human Services Association.............................. 30
Prepared statement........................................... 32
Weill, James D., President, Food Research and Action Center,
Washington, D.C................................................ 47
Prepared statement........................................... 48
Faber, Scott E., Vice President for Federal Affairs, Grocery
Manufacturers Association, Washington, D.C..................... 53
Prepared statement........................................... 54
Hatcher, Jennifer, Senior Vice President, Government Relations,
Food Marketing Institute, Washington, D.C...................... 63
Prepared statement........................................... 65
Submitted questions.............................................. 79
HEARING TO REVIEW QUALITY CONTROL SYSTEMS IN THE SUPPLEMENTAL
NUTRITION ASSISTANCE PROGRAM
WEDNESDAY, JULY 28, 2010
House of Representatives,
Subcommittee on Department Operations, Oversight,
Nutrition, and Forestry,
Committee on Agriculture,
The Subcommittee met, pursuant to call, at 10:00 a.m., in
Room 1300, Longworth House Office Building, Hon. Joe Baca
[Chairman of the Subcommittee] presiding.
Members present: Representatives Baca, Kagen, Schrader,
Dahlkemper, Fortenberry, and Lummis.
Staff present: Liz Friedlander, Tyler Jameson, John Konya,
Clark Ogilvie, James Ryder, Lisa Shelton, Rebekah Solem, Pam
Miller, Mary Nowak, Jamie Mitchell, and Sangina Wright.
OPENING STATEMENT OF HON. JOE BACA, A REPRESENTATIVE IN
CONGRESS FROM CALIFORNIA
The Chairman. I would like to now call to order the
Subcommittee on Department Operations, Oversight, Nutrition,
and Forestry to review the quality control systems in the
Supplemental Nutrition Assistance Program.
I will begin with an opening statement, and then I will
turn it over to the Ranking Member for his statement.
Good morning. I want to thank you for being here with the
Subcommittee to examine quality control systems within SNAP
programs. With a record number of Americans relying on the
vital nutritional safety net, it is important that we ensure
SNAP is meeting the needs of those who depend on it. It is also
important that we ensure that the program is operating
efficiently and cost-effectively.
As we anticipate the farm bill's reauthorization in 2012,
what we learn here today may inform us on long-term policies or
decisions that we have to make. These are tough economic times.
While our economy is showing some signs of recovery, we still
face a significant deficit and other challenges that have
slowed the economy's growth. The truth of the matter is, we
will most likely have no new funding available for the
Agriculture Committee on programs for the next farm bill.
The difficult situation only underscores the urgency of
making careful accounting--and I state careful accounting--of
SNAP, which is the largest program in USDA. We are very
fortunate in the 2008 Farm Bill to have the resources to
strengthen and modernize nutritional programs like SNAP and
TEFAP. I am also proud of those changes, and, gratefully, they
were in place during the recent economic crisis.
But, again, these are very difficult times. Today, we face
a huge challenge by serving a record number of SNAP
beneficiaries. Over 40 million people per month depend on the
supplemental support program, and there are many others that
are still eligible that have not even utilized the SNAP
On top of the individual pressure, the unprecedented number
of enrollees places tremendous stress on USDA and the states so
that, although we are stretched, we must take time to carefully
examine how these programs function under duress.
In fact, this is the ideal time to be certain every dollar
that we spend on SNAP is getting full value--and we state full
value--used effectively, and for the right purpose. Because,
right now, there is simply no margin for error. We must
adequately meet the needs of those Americans who are struggling
to put food on the table, as we still see the unemployment very
high in many of the states. And in my State of California,
unemployment is still around 12.3 percent.
But as a father and a grandfather, I also know that we must
not leave our current budgetary mess for future generations to
deal with. And that is why we are having this hearing, to look
and examine ways that we can be cost-effective and still
Again, I want to thank all of you for your willingness to
participate in today's hearing. I want to thank the panelists
for being here this morning. Thank you very much. It is
important that you share your candid thoughts with us. We are
here to listen and learn so that we can make the best policies,
And now I am pleased to yield to my Ranking Member, Jeff
Fortenberry, for opening comments. And I just want to state for
the record that there may be times where Jeff Fortenberry and I
will have to leave, but there will be someone else who will be
here. Because there are so many committee meetings that are
going on right now, it is important that we be at most of those
that we can. But we also believe that this is very important
for us, as well.
[The prepared statement of Mr. Baca follows:]
Prepared Statement of Hon. Joe Baca, a Representative in Congress from
Good morning, and thank you for being here before this
Subcommittee--to examine quality control systems within the SNAP
With a record number of Americans relying on this vital nutrition
safety net, it is important that we ensure SNAP is meeting the needs of
those who depend on it.
It is also important that we ensure the program is operating
efficiently and cost-effectively.
As we anticipate farm bill reauthorization in 2012, what we learn
here today may inform long-term policy decisions.
These are tough economic times. While our economy is showing some
signs of a recovery--we still face a significant deficit and other
challenges that have slowed economic growth.
The truth of the matter is--we will most likely have no new funding
available for Agriculture Committee programs for the next farm bill.
This difficult situation only underscores the urgency of making a
careful accounting of SNAP, which is the largest program at USDA.
We were fortunate in the 2008 Farm Bill to have the resources to
strengthen and modernize nutrition programs like SNAP and TEFAP.
I am proud of those changes and grateful they were in place during
this recent economic crisis.
But, these are different times.
Today, we face a huge challenge by serving a record number of SNAP
beneficiaries--over 40 million people per month depend on this
On top of individual pressures, this unprecedented number of
enrollees places tremendous stress on USDA and the states.
So, although we are stretched, we must take the time to carefully
examine how this program functions under duress.
In fact, this is the ideal time to be certain every dollar we spend
on SNAP is getting full value.
Because, right now there is simply no margin for error.
We must adequately meet the needs of those Americans who are
struggling to put food on the table.
But as a father and a grandfather--I also know we must not leave
our current budgetary mess for future generations to deal with.
Again, I thank all of you for your willingness to participate in
It is important that you share your candid thoughts with us.
We are here to listen and to learn so we can make the best policy
I am now pleased to yield to our Ranking Member, Rep. Jeff
Fortenberry for his opening comments.
The Chairman. So, at this time, I would turn it over to our
OPENING STATEMENT OF HON. JEFF FORTENBERRY, A REPRESENTATIVE IN
CONGRESS FROM NEBRASKA
Mr. Fortenberry. Thank you, Mr. Chairman.
The Chairman is right. We are all heading home for our
district work periods shortly, so time has became very
compressed. So we beg your indulgence if we have to go back and
But I thank you for holding the hearing today on the
Supplemental Nutrition Assistance Program, or, as we like to
call it, SNAP. I appreciate the witnesses' time, as well, and
look forward to your testimony.
The SNAP program is one of USDA's programs that enables
vulnerable individuals to access food supplies for themselves
and their families. Without the support of programs like SNAP,
many families encountering a season of challenges might go
without food. For this reason, I applaud all of you who
participate in implementing this program for your public
service, as you provide valuable information about this program
One important aspect of SNAP is the need for careful
allocation of Federal funds, as the Chairman emphasized. I
raise this issue because of the Government Accountability
Office, GAO, report which stated that, in Fiscal Year of 2009,
$2.2 billion of SNAP funds were spent on improper payments. Of
that amount, $1.8 billion, or 82 percent, was in the form of
According to GAO, SNAP payment errors are caused by various
factors, such as case workers failing to act on new
information, or the misapplication of program rules at the
state and community level, or by beneficiaries failing to
report required information without intervention by
caseworkers. On this point, I am hopeful that this hearing will
address any solutions to any future mismanagement of SNAP
funds, and I look forward to hearing your suggestions.
Additionally, I am interested in protecting the good health
of our program beneficiaries. In America today, obesity is an
epidemic, rising at almost pandemic rates, and it affects \1/3\
of our population. I understand this is similarly the case
among SNAP participants. Because obesity is a forerunner to
national killers and chronic diseases like diabetes, heart
disease, stroke, and various cancers, I am curious to know if
there is a possible method to protect and improve SNAP
beneficiaries' nutrition quality while participating in these
programs, perhaps through prevention of these lifestyle-related
diseases, ideally through preventing obesity. Any suggestions
or insight as to the nutritional quality of the SNAP program
would be very interesting to hear.
Like all of our witnesses here today, I want to maintain
the integrity of the SNAP program. I believe we can have a
program that serves those who are most vulnerable among us who
temporarily need assistance, while maintaining sound program
eligibility standards and improving efficiencies in its
I recognize that the use of the electronic benefit transfer
card, the EBT card, was one very successful implementation to
achieve these objectives. And I am impressed and pleased that
error rates have been reduced significantly since EBT cards
I would like to hear proposals for further methods to
reduce inefficiencies, either through electronic means or
through improved systems of case working. Like all Federal
programs, SNAP is paid for by the taxpayers, and we have a
responsibility to them, as well as to those who do need food
assistance. I look forward to hearing from you, our witnesses,
today to learn more about how the quality control measures have
been operating and how we can further improve the program.
Thank you, Mr. Chairman, and I yield back.
[The prepared statement of Mr. Fortenberry follows:]
Prepared Statement of Hon. Jeff Fortenberry, a Representative in
Congress from Nebraska
Mr. Chairman, thank you for holding this hearing today to review
the Supplemental Nutrition Assistance Program, or SNAP. I appreciate
the witnesses' time and testimony on this important subject, and I look
forward to today's discussion.
The SNAP Program is one of the USDA programs that enables
vulnerable individuals to access food supplies for themselves and their
families. Without the support of programs like SNAP, many families
encountering a season of challenges might go without food. For this
reason, I applaud those of you who participate in implementing this
program, and who provide valuable information about this program to
One important aspect of SNAP is the need for careful allocation of
Federal funds. I raise this issue because of the Government
Accountability Office (GAO) report which stated that in FY 2009, $2.2
billion of SNAP funds were spent on improper payments. Of that amount,
$1.8 billion, or 82 percent, was in the form of overpayments to SNAP
beneficiaries. According to the GAO, SNAP payment errors are caused by
various factors, such as caseworkers failing to act on new information,
or the misapplication of program rules at the state and community
levels, or by beneficiaries failing to report required information
without intervention by caseworkers. On this point, I am hopeful this
hearing will address solutions to any future mismanagement of SNAP
funds, and I look forward to hearing your suggestions.
Additionally, I am interested in protecting the good health of our
program beneficiaries. In America today, obesity is an epidemic rising
at almost pandemic rates, and affects at least \1/3\ of the population.
I understand this is similarly the case among SNAP participants.
Because obesity is a forerunner to national killers and chronic
diseases like diabetes, heart disease, stroke, and various cancers, I
am curious to know if there is a possible method to protect and improve
SNAP beneficiaries' nutrition quality while participating in this
program, perhaps through the prevention of these lifestyle-related
diseases, ideally through preventing obesity. Any suggestions or
insight as to the nutrition quality of the SNAP program would be very
interesting to hear.
Like all of our witnesses here today, I want to maintain the
integrity of the SNAP program. I believe we can have a program that
serves those who are most vulnerable among us, who temporarily need
assistance, while maintaining sound program eligibility standards and
improving efficiencies in its administration. I recognize that the use
of the electronic benefit transfer (EBT) cards was one very successful
implementation to this end, and I am impressed and pleased that error
rates have been reduced since EBT cards were implemented. I would like
to hear proposals for further methods to reduce inefficiencies, either
through electronic means, or through improved systems of case working.
Like all Federal programs, SNAP is paid for by the taxpayers and we
have a responsibility to them as well as those who need food
assistance. I look forward to hearing from our witnesses today to learn
more about how the quality control measures have been operating and how
we can further improve the SNAP program, and prevent waste, fraud and
Again, Mr. Chairman, I thank you for holding this hearing, and I
look forward to the insight our witnesses will provide on this topic.
The Chairman. Thank you very much.
At this point, I would like to recognize any other Members
for opening statements.
Okay, at this time, I am going to turn the chair over to
Mr. Kagen, who will conduct the rest of the meeting in order of
the agenda here.
And if you have an opening statement, you can begin with an
Mr. Kagen. [presiding.] Thank you, Chairman Baca. It is an
honor to be sitting in your chair. It is good to hear your
interest in obesity. Jeff and I have this ongoing battle of who
is going to lose the most weight. We won't reveal the results
yet until it is all over. So it is always a work in progress.
Thank you for being here on this most important issue of
the nutrition of those who need it most, those who are in need
of our assistance.
There has been an enormous demand for services and foods in
the Food Stamp Program and in SNAP, an enormous increase in
this countercyclical policy, which is probably one of the
finest in the world in terms of guaranteeing adequate nutrition
to people who require it.
It really is an honor for me to say that, not just as a
physician, not only as a Member from Wisconsin, whose state has
had a great record of accuracy and improvements recently in the
SNAP administration, but now is the time that we need the most
judicious use of our tax dollars. And I can't think of a better
way to spend the morning than listening to how we are going to
improve an already great program.
With that, I would ask that Members submit their opening
statements for the record so we can begin the testimony and
have ample time for questions.
[The prepared statement of Mr. Peterson follows:]
Prepared Statement of Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Thank you, Chairman Baca, for holding today's hearing to look at
the control measures currently in place to ensure effective and
efficient use of Federal funding for the Supplemental Nutrition
Assistance Program quality. The economic downturn has increased the use
of SNAP and other Federal nutrition assistance, making them more
important than ever for the 40 million Americans who use these programs
Nutrition assistance programs receive the lion's share of this
Committee's budget authority, and they are the largest programs
administered by the U.S. Department of Agriculture.
This Committee increased the baseline for nutrition assistance
programs significantly in the 2008 Farm Bill. Now, I want to hear how
implementation of these changes is proceeding and how we can continue
to improve USDA's nutrition programs.
Today's hearing is especially timely given our country's current
budgetary conditions. As a nation, we no longer have the luxury of
ignoring our deficits, and I do not expect to see any increases in the
2012 Farm Bill baseline. Therefore, it is important to hear from our
witnesses today about how we can better serve those using these
programs using the money we have.
Again I look forward to the testimony and thank the witnesses for
taking the time to be here today.
Mr. Kagen. And, at this time, I will recognize Ms. Paradis
STATEMENT OF JULIE PARADIS, ADMINISTRATOR, FOOD AND NUTRITION
SERVICE, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.
Ms. Paradis. Good morning, Mr. Chairman, Ranking Member
Fortenberry, and the other Members of the Committee. As the
Administrator of the Food and Nutrition Service at USDA, I am
pleased to be here to discuss our work to ensure the integrity
of SNAP, and our commitment to reach all eligible families with
the assistance that they need.
SNAP is the largest program in the U.S. nutrition
assistance safety net. It enables over 40 million low-income
people in this country to buy nutritious food with EBT cards at
nearly 207,000 authorized retail stores. And while SNAP is
operated by state governments, as you know, the Federal
Government pays the full cost of SNAP benefits, more than $50
billion for 2009, as well as approximately half of the expenses
incurred by states to administer the program.
I have spent most of my career working to promote and
improve our nation's nutrition assistance programs, including
my work at the Department, in the nonprofit sector, and as a
staff member in support of this Committee back in the 1990s. I
know the critical importance of these programs to the lives of
millions of low-income people across our country and their
reflection of America's commitment to ensure that, whatever
other hardships they face, our people should not have to
I want to talk to you about program integrity in that
context. I have long recognized that the ongoing mission of
SNAP, and other nutrition assistance programs, is not separable
from strong and sustained attention to program integrity and
stewardship of Federal funds. Waste and abuse draw scarce
program resources away from the people who need them the most,
and we cannot afford such losses. These programs are ultimately
unsustainable without continued public confidence that we
manage with integrity those benefits that go to those who
qualify for them, that they are used appropriately, and that
they achieve their intended purposes. This matter is one of
FNS's fundamental responsibilities, and one of my top
Our discussion of these issues, as the Chairman mentioned,
comes at a time of new challenges. There has been a substantial
increase in participation in SNAP over the last few years. In
April 2010, more than 40.4 million people, one in eight people
in this country, received SNAP benefits. The number of people
receiving SNAP benefits has grown by more than 12 million in
the last 24 months alone, an increase of nearly 44 percent.
The program is designed to respond to economic conditions,
and the increase in participation reflects that it is, indeed,
responding as intended. However, these increasing caseloads
have made it quite challenging for our partner state agencies,
many of whom have been coping with staffing reductions and
dramatic budget cuts to meet the demands.
In spite of these tremendous challenges, on June 24th
Secretary Vilsack announced that the SNAP national payment
accuracy rate for Fiscal Year 2009 had reached an all-time high
of 95.64 percent. In fact, payment errors are less than half
what they were 10 years ago, dropping from 9.86 percent in 1999
to 4.36 percent last year. Kudos to the states for this
It is critical that SNAP payments are correct and that
those who are eligible for the benefits receive the proper
amount. For the most part, resolving errors is not about
eliminating benefits to the wrong people; it is about getting
the amount of the benefit correct. In fact, 98 percent of those
certified for SNAP are eligible for some level of benefit.
When errors do occur, SNAP also has systems in place to
aggressively recover erroneously issued benefits from SNAP
recipients. In fact, in Fiscal Year 2009, states established a
total of over $367 million in new claims for over-issuances to
households. The Treasury Offset Program offers another way to
recover over-issuances by reducing income tax refunds or other
Federal payments to repay delinquent SNAP debt.
Trafficking, the illegal sale of SNAP benefits for cash,
has also decreased. It has decreased significantly over the
past 15 years. It has decreased from $811 million in 1993 to
$241 million in our most recent review. This dramatic decrease
in trafficking is largely credited to the replacement of paper
coupons with EBT cards.
Mr. Chairman, our Department is very proud of the progress
we have made in ensuring that SNAP benefits provide nutrition
assistance, and are efficiently and accurately delivered to the
nation's needy families. We appreciate our very strong working
relationship with the Department's Office of Inspector General
in fighting SNAP fraud and abuse. And we are also thankful for
our relationship with GAO, which has provided useful
recommendations on how to improve our strategies to combat
We continue to seek opportunities and strategies that
result in improved program administration, and we look forward
to working with you as preparations get under way for the 2012
And, as intended in the President's recent Executive Order
on improper payments, USDA is doing this in a way that is
responsive to the President's directive that emphasizes
transparency, accountability, and strong compliance incentives,
while also continuing to focus on removing barriers and
increasing access for those who are eligible but not yet
Mr. Chairman, this concludes my remarks. Thank you so much.
And I would be happy to answer any questions at the appropriate
[The prepared statement of Ms. Paradis follows:]
Prepared Statement of Julie Paradis, Administrator, Food and Nutrition
Service, U.S. Department of Agriculture, Washington, D.C.
Good morning, Mr. Chairman and Members of the Committee. As the
Administrator of the Food and Nutrition Service (FNS) at the United
States Department of Agriculture (USDA), I am pleased to be here to
discuss our work to ensure the integrity of the Supplemental Nutrition
Assistance Program (SNAP) and our commitment to reach all eligible
families with the assistance that they need and to which they are
SNAP is the largest program in the United States nutrition
assistance safety net. It enables low-income families to buy nutritious
food with electronic benefit transfer cards (or EBT cards) at
authorized retail stores. SNAP ensures access to a more nutritious,
healthful diet for over 40 million Americans each month. In addition,
SNAP provides nutrition education to those eligible for and
participating in the program. The goal of SNAP's nutrition education
component is to improve the likelihood that persons eligible for SNAP
will make healthy food choices within a limited budget and choose
physically active lifestyles consistent with the Dietary Guidelines for
Americans and MyPyramid.
While SNAP is operated by state governments, the Federal Government
pays the full cost of SNAP benefits, more than $50 billion for FY 2009,
as well as approximately half of the expenses incurred by the states to
administer the program. Given this substantial national investment, one
of FNS's primary responsibilities is to ensure that SNAP benefits are
accurately directed in the correct amounts to those, and only those,
who are eligible for them. FNS manages a nationwide Quality Control
system that measures state performance for payment accuracy, provides
bonuses for high-performing states, and directs corrective action for
those with accuracy problems. Through this system of performance
measurement and incentives, as well as other ongoing payment accuracy
initiatives, FNS works actively with states to protect and maximize the
impact of the taxpayer investment in this program.
The Critical Role of Public Confidence
Those of you who know me are aware that I have spent much of my
career working to promote and improve our nation's nutrition assistance
programs, including my work at the Department, in the private nonprofit
sector, and in support of this Committee. I know the critical
importance of these programs to the lives of millions of low-income
people across our country, and their reflection of America's commitment
to ensure that, whatever other hardships they face, our people should
not have to experience hunger.
I want to talk to you about program integrity in that context. For
I have long recognized that the ongoing mission of SNAP and other
nutrition assistance programs is not separable from strong and
sustained attention to program integrity and stewardship of Federal
funds. Waste and abuse draw scarce program resources away from the
children and low-income people who need them the most--and we cannot
afford such losses. Just as importantly, these programs are ultimately
not sustainable without continued public confidence that their benefits
go to those who qualify for them, are used appropriately, and achieve
the purposes for which they are intended. My tenure as Administrator
has only reinforced my conviction in this area. We simply cannot
sustain the nation's commitment to these programs without honoring and
fulfilling the expectation that we can manage them with integrity. I
recognize this matter is one of my, and one of our Agency's,
The Challenge of Rising Caseloads
Our discussion of these issues comes at a time of new challenges.
There has been a substantial increase in participation in SNAP over the
last few years. In April 2010, more than 40.4 million people received
SNAP benefits, an increase of approximately 310,000 people from March.
April is the seventeenth consecutive month that more people received
SNAP benefits than at any time previously in the history of the
program. The number of Americans receiving SNAP benefits has grown by
more than 12 million in the last 24 months alone, an increase of nearly
44 percent. SNAP served more than one in eight Americans in April 2010.
The Program is designed to respond to economic conditions, and the
increase in participation reflects that it is responding as intended.
That is the good news; however, these increasing caseloads have made it
quite challenging for state agencies--many of whom have been coping
with staffing reductions and budget cuts--to meet the demands. Yet, on
June 24, Agriculture Secretary Tom Vilsack announced the SNAP national
payment accuracy rate for FY 2009 had reached an all time high of 95.64
percent. The Secretary remarked that ``program integrity is critical as
participation in SNAP continues to grow to meet the nutrition needs of
the most vulnerable Americans, and these results deliver on President
Obama's directive to decrease improper payments and protect taxpayer
dollars . . . We are improving the accuracy and efficiency of program
delivery while working to deliver on Obama Administration efforts to
reduce hunger and improve nutrition for people across the country.''
We are pleased to share this historic achievement with our state
partners who are committed, along with FNS, to ensuring those who are
eligible to participate in this critical nutrition assistance program
receive the correct amount of benefits--not too much, not too little.
In fact, payment errors are less than half what they were 10 years
ago, dropping from 9.86 percent in FY 1999 to 4.36 percent in FY 2009.
For the second straight year, SNAP's national negative error rate also
improved. Negative error rates measure whether states correctly deny,
suspend, or terminate benefits.
Also on June 24, the Secretary awarded $30 million in performance
bonuses to eleven states for exemplary achievement in payment accuracy
in FY 2009. The eight states with the best payment accuracy rates and
the two states with the most improved payment accuracy rates received a
total of $24 million. An additional $6 million was provided to the four
states with the lowest negative error rates and the two states with the
most improved negative error rates.
This morning, I would like to give you an overview of how FNS and
the states work together to prevent misuse of program benefits, while
making every effort to make them readily accessible to eligible
households. I will begin by describing our quality control process--
this looks at how accurately states calculate the eligibility and
benefits of households seeking SNAP help. Then, I will discuss the
Administration's and USDA's current focus in ensuring quality control
and payment accuracy. Finally, I will address our work with state
partners related to intentional program violations by recipients as
well as how we monitor retailers and guard against trafficking, the
illegal exchange of benefits for cash or other non-allowable items.
The SNAP payment accuracy rate is developed from a long-standing
program integrity process called Quality Control (QC), a system
mandated by the Food and Nutrition Act to determine the accuracy of the
benefits authorized. In fact, in terms of eligibility, 98 percent of
those certified for SNAP in FY 2009 were eligible for some level of
Every year, each state conducts a QC review of a random sample of
its participating SNAP households and reports the findings to FNS. A QC
review consists of a detailed examination of household non-financial
and financial circumstances, including income, resources and
deductions, to determine whether benefits were accurately authorized
for active cases or improperly denied or terminated for negative cases.
Subsequent Federal subsample reviews of a subsample of the states'
reviews verify the accuracy of the states' determinations. A
statistical adjustment uses both the Federal and state data to
establish the error rates for each state. The National payment error
rate is determined by calculating the weighted average of all of the
individual state error rates.
FNS and organizations such as the National Association for Program
Information and Performance Measurement (NAPIPM), an affiliate of the
American Public Human Services Association (APHSA), work together to
improve and enhance the QC performance measurement system.
As I mentioned earlier, both over-issuances and under-issuances are
important concerns to FNS. It is critical that payments are correct and
that those who are eligible for the benefits receive the proper
amount--not too much and not too little. So, for the most part,
resolving errors is not about eliminating benefits to the wrong people,
it is about getting the amount right. And that is where our payment
accuracy initiatives come into play. The National Payment Accuracy Work
Group, a group of subject matter experts from FNS headquarters and
regional offices, monitor and evaluate payment accuracy progress,
analyze error rate data, and exchange information on payment accuracy
best practices and program improvement strategies. The group makes
timely and useful payment accuracy-related information and tools
available across regions and states.
An early detection system targets states that may be experiencing a
higher incidence of payment errors based on preliminary QC data. States
are arrayed based on error rate performance so that FNS can effectively
and consistently deploy limited FNS resources for intervention and
technical assistance to specific states in most need.
State partners must continue and renew their leadership commitment
to excellence in payment accuracy. USDA provides leadership through
interactions with state policy makers, including participation in
meetings with state leaders; presentations at national, regional, and
state conferences; and sponsoring regional meetings with state
commissioners and SNAP directors with a direct focus on payment
The State Exchange Program provides funds for states to travel to
see where ideas for improvement have been successfully implemented and
to participate in conferences where such ideas are presented.
When errors do occur, SNAP also has systems in place to
aggressively recover erroneously issued benefits from SNAP recipients.
Claims are established by state agencies against households which have
received more SNAP benefits than they should have. Households may pay
back overissued benefits through reductions in their SNAP allotments or
in a lump sum. In Fiscal Year 2009, states established a total of over
$367 million in new claims for over-issuances to households and
collected just under $300 million. The Treasury Offset Program (TOP)
offers another way to recover over-issuances by reducing income tax
refunds or other Federal payments to repay the SNAP debt. Since the
establishment of TOP in 1992, FNS has collected more than $1.2 billion
in delinquent SNAP recipient claims.
On November 20, 2009, President Obama issued an Executive Order on
Improper Payments intended to rein in improper payments while making
sure that those who are eligible for government assistance continue to
have access to these important Federal programs. One of the key
messages of the Executive Order recognizes the interaction between
program access and integrity. At USDA, we have a long standing
commitment to these twin goals.
In addition, the Administration is committed to improved
communication and collaboration among Federal agencies and departments
which ultimately benefits clients who receive multiple Federal benefits
and state workers who administer multiple benefit programs.
We are also working with the Office of Management and Budget, as
well as many other Federal agencies and other stakeholders, on the
Partnership Fund for Program Integrity Innovation (the Partnership
Fund). The purpose of the Partnership Fund is to identify and test
pilot projects to improve service delivery, payment accuracy and
administrative efficiency for Federal assistance programs, including
those administered by states or local agencies, while protecting access
for program beneficiaries. The Partnership Fund will transfer resources
to lead Federal agencies to execute selected pilots, and the results
will be carefully evaluated. OMB has already set up a website called
``Partner4Solutions.gov'' where states, organizations, and members of
the public can submit their best practices and innovative ideas.
Intentional Program Violations
Only a very few households engage in intentional program violations
(IPVs), such as purposely under-reporting their income or overstating
their household size in order to qualify for more benefits than they
are entitled to receive. Such IPVs occur when a recipient intentionally
makes false or misleading statements; misrepresents or withholds facts
when applying for benefits; or commits any act that constitutes a
violation of the Food and Nutrition Act, the SNAP regulations, or any
state statute for the purpose of using or trafficking benefits. States
are responsible for investigating and prosecuting IPVs. When state
investigators find evidence of an IPV, a disqualification action
against the accused is initiated. Individuals found to have committed
an IPV are disqualified from participation in SNAP for a period of time
ranging from 12 months to permanently, depending on the type of offense
or number of offenses committed. Overpayments as a result of IPVs must
be returned and the recipient is subject to criminal or administrative
penalties. In Fiscal Year 2009, 50,145 recipients were disqualified
from SNAP for IPVs. In Fiscal Year 2009, more than $60 million in
claims associated with IPVs were collected by state agencies. To defray
their administrative costs and as an incentive to pursue IPVs, state
agencies are allowed to retain 35 percent of the amount they collect
for such claims.
Trafficking, the illegal sale of SNAP benefits for cash or other
non-allowable items, has decreased significantly over the past 15
years. The first trafficking assessment determined that $811 million in
program benefits were trafficked during Fiscal Year 1993. The most
recent estimate, for the period 2002-2005, determined that trafficking
diverted $241 million in program benefits annually, or roughly, 1 cents
of each benefit dollar. USDA is currently updating the trafficking
study to cover the period 2006 through 2008. This study will be
complete in Fiscal Year 2011.
The national implementation of electronic benefit transfer (EBT) as
the issuance system for SNAP instead of paper coupons is credited in
large part for the decrease in trafficking. While the overall rate of
trafficking has declined, USDA has increased the number of retailers
disqualified for trafficking. From 2000-2009, USDA permanently
disqualified 7,677 retailers for trafficking--a 44 percent increase
from the previous 10 year period, 1990-1999, when 5,338 retailers were
permanently disqualified for trafficking.
SNAP uses a retailer fraud detection system, the Anti-Fraud Locator
for EBT Retailer Transactions (ALERT) system, to monitor electronic
transaction activity and identify suspicious retail grocers for
analysis and investigation. To continue strengthening our retailer
fraud detection capabilities, USDA has begun moving toward a next
generation ALERT system with new, more advanced technology and
analytical tools available in the private sector. FNS has hired a
contractor to develop this system and engage in continuous data mining
efforts. The first phase of the next generation system, a database
redesign which will support all other efforts, is expected to debut in
calendar year 2011. Eventually, higher level analytics, such as link
analysis, predictive models, and geo-spatial analysis will be
introduced in subsequent steps.
The authorization of retail food stores for participating in SNAP
and the oversight of these stores is a direct Federal function
conducted by USDA. As of March 2010, there were close to 207,000
authorized retailers nationwide. In addition, USDA SNAP has a team of
investigators across the country that conduct undercover investigations
of stores suspected of trafficking or of not complying with program
rules. Annually, over 4,000 investigations are conducted. Over 30
percent of these investigations result in civil monetary penalties and/
or disqualifications for the sale of ineligible items or trafficking in
benefits. Investigators inform overall USDA retailer integrity efforts
with intelligence gathered on the ground, thereby helping USDA to
further gauge the types of fraud found in the universe of licensed
FNS has a strong working partnership with the Department's Office
of Inspector General (OIG) in fighting SNAP fraud and abuse. Their help
and commitment has been and continues to be invaluable to our work
protecting the program's integrity and public confidence in the
In 2006, the Government Accountability Office (GAO) conducted a
study of SNAP trafficking. In the study, GAO acknowledged FNS for
having taken advantage of EBT and technology to detect trafficking and
disqualify retailers. GAO recommended however, that USDA better target
its limited compliance monitoring resources by developing criteria to
identify stores most likely to traffic, and to use this criteria to
conduct risk assessments and provide more targeted and earlier
oversight of stores most likely to engage in trafficking. Since this
report was published, USDA began implementing a risk-based approach to
the licensing, reauthorization, and monitoring of SNAP retailers. GAO
also recommended that USDA develop a strategy to increase the penalties
for trafficking. The statutory penalty at the time for trafficking was
permanent disqualification. As a result of GAO's recommendation, USDA
pursued and received authority through Section 4132 of the 2008 Farm
Bill to assess significant monetary penalties in addition to the
permanent disqualification of trafficking retailers.
Finally, GAO recommended that USDA promote state efforts to pursue
recipients suspected of trafficking. States are required to follow up
on all cases of suspected recipient trafficking; however, the state
determines whether or not they can make a case against a recipient for
trafficking. FNS field offices work with states to share suspected
recipient trafficking information and encourage states to use the EBT
transaction data to follow up on suspected traffickers. Many states,
however, struggle to devote scarce resources to investigating suspected
traffickers. FNS continues to work with state partners to emphasize the
importance of program integrity at every opportunity.
Mr. Chairman, our Department is very proud of the progress we have
made in ensuring that SNAP benefits provide nutrition assistance and
are well targeted and efficiently and accurately delivered to the
nation's needy families. We appreciate our partnerships with state
agencies and USDA's OIG to meet our goals in proper administration of
the Program. We continue to seek opportunities and strategies that
result in improved program administration and look forward to working
with you as preparations get underway for the 2012 Farm Bill. We are
committed to maintaining public confidence in our nutrition assistance
programs by ensuring that Federal dollars are used for the purpose for
which they were intended. And, as intended in the President's Executive
Order, we are doing this in a way that is responsive to the President's
directive that emphasizes transparency, accountability, and strong
compliance incentives while also continuing to focus on removing
barriers and increasing access for those who are eligible but not yet
participating, especially those from underrepresented populations such
as seniors and Latinos. Throughout the history of SNAP, USDA has been
committed to achieving both access and integrity in the program and
that commitment remains strong today.
Mr. Chairman, this concludes my remarks. I would be happy to answer
any questions at this time.
Mr. Kagen. Thank you very much. And please do hang around.
There will be questions in due course.
Ms. Kay Brown, Director of the Education, Workforce, and
Income Security Issues of the United States Government
Accountability Office, thank you for joining us. And you have 5
STATEMENT OF KAY E. BROWN, DIRECTOR, EDUCATION, WORKFORCE, AND
INCOME SECURITY ISSUES, U.S.
GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, D.C.
Ms. Brown. Mr. Chairman, Ranking Member, and Members of the
Subcommittee, thank you for inviting me here today to discuss
our work on the integrity of the Supplemental Nutrition
SNAP has experienced remarkable growth in recent years,
responding to increased demand during a recession. And, true to
its design, the program has played a critical role in assisting
families facing hardships. Given this growth, along with the
boost in benefit size that is funded through the Recovery Act,
this is an important time to focus on the integrity of this $50
My remarks are based on updates of three GAO reports: the
first on erroneous payments to SNAP participants; trafficking
of SNAP benefits; and, finally, categorical or automatic
eligibility tied to TANF services.
First, regarding erroneous payments: USDA and the states
have made nearly continuous progress over the last decade in
decreasing their rate of payments made in error. The steps they
have taken are consistent with internal control practices that
are known to reduce improper payments. For example, USDA has
sent a clear message from the top that states will be held
accountable, levied financial penalties and awarded progress,
and also shared lessons learned about the causes and ways to
In addition, states have taken advantage of options to
simplify the process for determining eligibility. Complex
eligibility requirements increase the risk that caseworkers
will make errors, so efforts to simplify the process can help
bring down the error rate.
However, despite this encouraging process, SNAP's rate of
improper payments is still among the highest in the government,
highlighting the need for continued commitment to further
Next, regarding trafficking: We know that the estimated
rate of trafficking declined from the early 1990s to 2005. In
2007, we made multiple recommendations to USDA to improve its
use of EBT data to detect trafficking, and the Department has
implemented almost all of these.
For example, it has taken steps to develop a more
sophisticated analysis of SNAP transactions, and to assess each
retailer's risk of trafficking. As retailers develop new
schemes to avoid detection, these actions can help USDA more
quickly identify them. Also, consistent with our
recommendation, USDA received in the last farm bill authority
to impose larger financial penalties on stores that traffic.
USDA has not estimated the rate of trafficking since 2005,
but when a new estimate is available, hopefully next year, it
will be important to carefully assess progress and lessons
Third, regarding automatic eligibility tied to TANF
services: States have the option to grant automatic SNAP
eligibility to households when they are found eligible for TANF
services. Some of these TANF services are available to a fairly
broad population, and may simply include receipt of an
informational brochure or toll-free number. USDA has encouraged
states to take advantage of this option, and 39 have done so,
It is important to note that, even though these households
are automatically eligible, states must still determine their
SNAP benefit amount. Some may receive the minimum benefit
amount or no benefit at all. However, because of the
differences between TANF and SNAP eligibility criteria, some
households that may not otherwise be eligible for SNAP benefits
could receive them.
This option is another way to simplify or streamline the
eligibility process, and USDA believes it has resulted in
reduced administrative burdens, increased access, and could
potentially reduce payment errors. However, we don't yet know
enough about the extent of these results, or how these
automatically eligible participants compare to more traditional
In conclusion, at this time of fiscal stress and looming
deficits, it is more important than ever to ensure that
benefits are paid in the right amount, and that scarce
resources are targeted to those most in need.
This concludes my prepared statement. I would be happy to
answer any questions you may have.
[The prepared statement of Ms. Brown follows:]
Prepared Statement of Kay E. Brown, Director, Education, Workforce, and
Income Security Issues, U.S. Government Accountability Office,
Supplemental Nutrition Assistance Program_Payment Errors and
Trafficking Have Declined, but Challenges Remain
Highlights of GAO-10-956T (http://www.gao.gov/new.items/
d10956t.pdf), a report to the House Subcommittee on Department
Operations, Oversight, Nutrition, and Forestry, Committee on
Why GAO Did This Study
The U.S. Department of Agriculture's (USDA) Supplemental Nutrition
Assistance Program (SNAP) is intended to help low-income individuals
and families obtain a better diet by supplementing their income with
benefits to purchase food. USDA's Food and Nutrition Service (FNS) and
the states jointly implement SNAP. Participation in the program has
risen steadily over the last decade to an all time high of more than 33
million in Fiscal Year 2009, providing critical assistance to families
This testimony discusses GAO's past work on three issues related to
ensuring integrity of the program: (1) improper payments to SNAP
participants, (2) trafficking of SNAP benefits, and (3) categorical
eligibility for certain individuals or households.
This testimony is based on prior GAO reports on categorical
eligibility (GAO-07-465), payment errors (GAO-05-245), and food stamp
trafficking (GAO-07-53), developed through data analyses, case file
reviews, site visits, interviews with officials, and a 50 state survey.
GAO also updated data where available and collected information on
recent USDA actions and policy changes.
What GAO Recommends
FNS generally agreed with GAO's prior recommendations to address
SNAP trafficking and categorical eligibility issues and has taken
action in response to most of them.
View GAO-10-956T or key components (http://www.gao.gov/products/
For more information, contact Kay Brown at [redacted].
What GAO Found
The national payment error rate reported for SNAP, which combines
states' overpayments and underpayments to program participants, has
declined by 56 percent from 1999 to 2009, from 9.86 percent to a record
low of 4.36 percent. This reduction is due, in part, to options made
available to states that simplified certain program rules. In addition,
FNS and the states GAO reviewed have taken several steps to improve
SNAP payment accuracy that are consistent with internal control
practices known to reduce improper payments such as providing financial
incentives and penalties based on performance. Despite this progress,
the amount of SNAP benefits paid in error is substantial, totaling
about $2.2 billion in 2009 and necessitating continued top-level
attention and commitment to determining the causes of improper payments
and taking corrective actions to reduce them.
FNS estimates indicate that the national rate of food stamp
trafficking declined from about 3.8 cents per dollar of benefits
redeemed in 1993 to about 1.0 cents per dollar during the years 2002 to
2005 but that trafficking occurs more frequently in smaller stores. FNS
has taken advantage of electronic benefit transfer to reduce fraud, and
in response to prior GAO recommendations, has implemented new
technology and categorized stores based on risk to improve its ability
to detect trafficking and disqualify retailers who traffic. FNS also
received authority to impose increased financial penalties for
trafficking as recommended; however, it has not yet assessed higher
penalties because implementing regulations are not yet finalized. FNS
is considering additional steps to encourage states to pursue
recipients suspected of trafficking but limited state resources are a
Categorically eligible households do not need to meet SNAP
eligibility requirements because their need has been established under
the states' Temporary Assistance for Needy Families (TANF) program. As
of June 2010, 36 states have opted to provide categorical eligibility
for SNAP to any household found eligible for a service funded through
TANF and, in 35 states, there is no limit on the amount of assets
certain households may have to be determined eligible, according to
FNS. Households can be categorically eligible for SNAP even if they
receive no TANF funded service other than a toll-free telephone number
or informational brochure. However, the amount of assistance eligible
households receive is determined using the same process used for other
SNAP recipients. According to FNS officials, increased use of
categorical eligibility by states has reduced administrative burdens
and increased access to SNAP benefits to households who would not
otherwise be eligible due to asset or income limits. However, little is
known about the extent of its impact on increased access or program
SNAP has played a key role in assisting families facing hardship
during the economic crisis, but given fiscal constraints and program
growth, it is more important than ever to understand the impact of
policy changes, and balance improvements in access with efforts to
Mr. Chairman and Members of the Subcommittee:
Thank you for inviting me here today to discuss issues related to
the integrity of the U.S. Department of Agriculture's (USDA)
Supplemental Nutrition Assistance Program (SNAP), formerly the Food
Stamp Program. SNAP is intended to help low-income individuals and
families obtain a better diet by supplementing their income with
benefits to purchase food. Participation in SNAP has risen steadily
over the last decade in response to economic conditions and has played
a critical role in assisting families facing hardship. In Fiscal Year
2000, SNAP provided about $15 billion in benefits to about 17 million
individuals while in Fiscal Year 2009, it provided more than $50
billion in benefits to nearly 34 million individuals. The recent
economic crisis has sharply increased demand for such assistance, with
participation in SNAP increasing by 22 percent from June 2008 to June
2009 alone. Currently, almost one in every 11 Americans participates in
the program. Further, the American Recovery and Reinvestment Act of
2009 provided a temporary across-the-board increase to the SNAP benefit
amount.\1\ This recent growth highlights the importance of ensuring
program integrity. Every year, more than $1 billion in benefits are
paid incorrectly. Further, SNAP recipients exchange hundreds of
millions of dollars in benefits for cash instead of food with
authorized retailers across the country, a practice known as
trafficking. In addition, concerns have been raised about a policy
option allowing state to give households automatic eligibility for SNAP
if they are eligible for minimal services financed with Temporary
Assistance for Needy Families (TANF) funds (a type of categorical
\1\ Pub. L. No. 111-5, 101 (2009).
The information I am presenting today is based on past work,
updated with current information where available, on three issues
related to ensuring integrity of the program: (1) improper payments to
SNAP participants, (2) trafficking of SNAP benefits, and (3)
categorical eligibility for SNAP benefits.\2\ The payment error and
trafficking findings are based on past analyses of program quality
control data, case file reviews, data analysis of the Food and
Nutrition Service (FNS) retailer database, and interviews and site
visits with program stakeholders, including Federal agency and state
and local officials. The categorical eligibility findings are based on
a 2007 survey of state SNAP administrators, an analysis of household
characteristic data collected from 21 states, and interviews and site
visits with Federal and state officials. More complete information on
the scope and methodology for our prior work is available in each
published report. In addition, we updated data where available,
reviewed recent USDA policy changes and actions taken in response to
our recommendations, and discussed the implications of these actions
and changes with USDA officials. We also reviewed relevant Federal laws
and regulations. We conducted this work in accordance with generally
accepted government auditing standards. Those standards require that we
plan and perform the audit to obtain sufficient, appropriate evidence
to provide a reasonable basis for our findings and conclusions based on
our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions.
\2\ GAO, Food Stamp Program: States Have Made Progress Reducing
Payment Errors, and Further Challenges Remain, GAO-05-245 (http://
www.gao.gov/new.items/d05245.pdf) (Washington, D.C.: May 5, 2005); GAO,
Food Stamp Trafficking: FNS Could Enhance Program Integrity by Better
Targeting Stores Likely to Traffic and Increasing Penalties, GAO-07-53
(http://www.gao.gov/new.items/d0753.pdf) (Washington, D.C.: Oct. 13,
2006). GAO, Food Stamp Program: FNS Could Improve Guidance and
Monitoring to Help Ensure Appropriate Use of Noncash Categorical
Eligibility, GAO-07-465 (http://www.gao.gov/new.items/d07465.pdf)
(Washington, D.C.: Mar. 28, 2007).
SNAP is jointly administered by FNS and the states. FNS pays the
full cost of SNAP benefits, shares the states' administrative costs,
and is responsible for promulgating program regulations and ensuring
that state officials administer the program in compliance with program
rules. States administer the program by determining whether households
meet the program's eligibility requirements, calculating monthly
benefits for qualified households, and issuing benefits to participants
through an Electronic Benefits Transfer (EBT) system.
As shown in Figure 1, program participation has increased sharply
from Fiscal Years 1999 to 2009, and indications are that participation
has continued to increase significantly in Fiscal Year 2010. According
to FNS, the downturn in the U.S. economy, coupled with changes in the
program's rules and administration, has led to an increase in the
number of SNAP participants.
Figure 1: SNAP Participation Has Increased Over the Last Decade
Determination of Eligibility and Benefits
Eligibility for SNAP is based primarily on a household's income and
assets. To determine a household's eligibility, a caseworker must first
determine the household's gross income, which cannot exceed 130 percent
of the Federal poverty level for that year as determined by the
Department of Health and Human Services. A household's net income
cannot exceed 100 percent of the poverty level (or about $22,056
annually for a family of four living in the continental United States
in Fiscal Year 2010). Net income is determined by deducting from gross
income a portion of expenses such as dependent care costs, medical
expenses for elderly individuals, utilities costs, and housing
A household's assets are also considered to determine SNAP
eligibility and SNAP asset rules are complex. There is a fixed limit,
adjusted annually for inflation, on the amount of assets a household
may own and remain eligible for SNAP. Certain assets are not counted,
such as a home and surrounding lot. There are also basic program rules
that limit the value of vehicles an applicant can own and still be
eligible for the program.
Categorical Eligibility for SNAP
Federal regulations require states to make households categorically
eligible for SNAP if the household receives certain cash benefits, such
as TANF cash assistance or Supplemental Security Income. States must
also confer categorical eligibility for certain households receiving,
or authorized to receive, certain TANF non-cash services that are
funded with more than 50 percent Federal or state maintenance of effort
(MOE) funds and serve certain TANF purposes.\3\ In addition, in certain
circumstances, states have the option to confer categorical eligibility
using TANF non-cash services funded with less than 50 percent Federal
TANF or state MOE funds. The intent of categorical eligibility was to
increase program access and reduce the administrative burden on state
agencies by streamlining the need to apply means tests for both TANF
\3\ TANF funding includes both TANF block grant and state
maintenance of effort (MOE) funds--non-Federal funds that states are
required to spend in order to receive the entire Federal TANF block
grant. FNS regulations state that households in which all members are
receiving benefits or services from a program designed to meet the
program goals of TANF and which are funded with more than 50 percent of
Federal TANF or state maintenance of effort funds are generally
categorically eligible for SNAP. A state may, at its discretion, in
certain circumstances, confer categorical eligibility to households in
which all members are receiving similar benefits or services from a
program funded with less than 50 percent Federal TANF or state
maintenance of effort funds.
FNS's Quality Control (QC) System
Improper payments (or payment errors) occur when recipients receive
too much or too little in SNAP benefits. FNS and the states share
responsibility for implementing an extensive quality control system
used to measure the accuracy of SNAP payments and from which state and
national error rates are determined. Under FNS's quality control
system, the states calculate their payment errors annually by drawing a
statistical sample to determine whether participating households
received the correct benefit amount. The state's error rate is
determined by dividing the dollars paid in error by the state's total
issuance of SNAP benefits. Once the error rates are final, FNS is
required to compare each state's performance with the national error
rate and imposes financial penalties or provides financial incentives
according to legal specifications.\4\
\4\ The SNAP error rate is calculated for the entire program, as
well as every state, and is based on overpayments to those who are
eligible for smaller benefits, overpayments to those who are not
eligible for any benefit, and underpayments to those who do not get as
much as they should.
Trafficking and FNS Authorization and Monitoring of Retailers
Trafficking occurs when SNAP recipients exchange SNAP benefits for
cash instead of food with authorized retailers.\5\ Under the EBT
system, SNAP recipients receive an EBT card imprinted with their name
and a personal account number, and SNAP benefits are automatically
credited to the recipients' accounts once a month. In legitimate SNAP
transactions, recipients run their EBT card, which works much like a
debit card, through an electronic point-of-sale machine at the grocery
checkout counter, and enter their secret personal identification number
to access their SNAP accounts. This authorizes the transfer of SNAP
benefits from a Federal account to the retailer's account to pay for
the eligible food items. The legitimate transaction contrasts with a
trafficking transaction in which recipients swipe their EBT card, but
instead of buying groceries, they receive a discounted amount of cash
and the retailer pockets the difference.
\5\ In Fiscal Year 2009, about 190,000 retailers were authorized to
accept SNAP benefits.
FNS has the primary responsibility for authorizing retailers to
participate in SNAP. To become an authorized retailer, a store must
offer, on a continuing basis, at least three varieties of foods in each
of the four staple food categories--meats, poultry or fish; breads or
cereals; vegetables or fruits; and dairy products--or over 50 percent
of its sales must be in a staple group. The store owner submits an
application and includes relevant forms of identification such as
copies of the owner's Social Security card, driver's license, business
license, liquor license, and alien resident card. The FNS field office
program specialist then checks the applicant's Social Security Number
against FNS's database of retailers, the Store Tracking and Redemption
System, to see if the applicant has previously been sanctioned in the
SNAP program. The application also collects information on the type of
business, store hours, number of employees, number of cash registers,
the types of staple foods offered, and the estimated annual amount of
gross sales and eligible SNAP sales.
In addition to approving retailers to participate in the program,
FNS has the primary responsibility for monitoring their compliance with
requirements and administratively disqualifying those who are found to
have trafficked SNAP benefits. FNS headquarters officials collect and
monitor EBT transaction data to detect suspicious patterns of
transactions by retailers. They then send any leads to FNS program
specialists in the field office who either work the cases themselves or
refer them to undercover investigators in the Retailer Investigations
Branch to pursue by attempting to traffic SNAP benefits for cash.
States Have Made Significant Progress in Reducing Payment Errors
The SNAP Payment Error Rate Has Declined to a Record Low
The national payment error rate--the percentage of SNAP benefit
dollars overpaid or underpaid to program participants--has declined by
about 56 percent over the last 11 years, from 9.86 percent in 1999 to
4.36 percent in 2009, in a time of increasing participation (see Figure
1).\6\ Of the total $2.19 billion in payment errors in Fiscal Year
2009, $1.8 billion, or about 82 percent, were overpayments.
Overpayments occur when eligible persons are provided more than they
are entitled to receive or when ineligible persons are provided
benefits. Underpayments, which occur when eligible persons are paid
less than they are entitled to receive, totaled $412 million, or about
18 percent of dollars paid in error, in Fiscal Year 2009.
\6\ Our 2003 analysis of FNS' quality control data found that
almost \2/3\ of SNAP payment errors are caused by caseworkers, usually
when they fail to act on new information or when they make mistakes
when applying program rules, and \1/3\ are caused by participants, when
they unintentionally or intentionally do not report needed information
or provide incomplete or incorrect information. (GAO-05-245 (http://
www.gao.gov/new.items/d05245.pdf)) We did not update this analysis for
Figure 2: SNAP Payment Errors Have Dropped to a Record Low
The decline in payment error rates has been widespread despite the
significant increase in participation. Error rates fell in almost all
states, and 36 states reduced their error rates by over 50 percent from
Fiscal Years 1999 to 2009. In addition, 47 states had error rates below
six percent in 2009; this is an improvement from 1999, when seven
states had error rates below six percent. However, payment error rates
vary among states. Despite the decrease in many states' error rates, a
few states continue to have high payment error rates.
Program Simplification Has Been Shown to Reduce Error Rates, but the
Program Remains Complex
State use of simplified reporting options has been shown to have
contributed to the reduction in the payment error rate. Several options
are made available to the states to simplify the application and
reporting process, and one such option is simplified reporting.\7\ Of
the 50 states currently using simplified reporting, 47 have expanded it
beyond earned income households, according to a recent FNS report. Once
a state has elected to use simplified reporting, eligible households in
the state need only report changes occurring between certification and
normally scheduled reporting if the changes result in income that
exceeds 130 percent of the Federal poverty level.\8\ This simplified
reporting option can reduce a state's error rate by minimizing the
number of income changes that must be reported between certifications
and thereby reducing errors associated with caseworker failure to act,
as well as participant failure to report changes.
\7\ The Farm Security and Rural Investment Act of 2002 (2002 Farm
Bill) also gave states the option of adopting provisions that could
simplify program administration and possibly reduce error rates. These
options include simplifying income and resources, housing costs,
deductions, reporting requirements, and utility allowances. Pub. L. No.
107-171, Title IV (2002). See GAO, Food Stamp Program: Farm Bill
Options Ease Administrative Burden, but Opportunities Exist to
Streamline Participant Reporting Rules among Programs, GAO-04-916
(http://www.gao.gov/new.items/d04916.pdf) (Washington, D.C.: Sept. 16,
\9\ Households subject to reporting on a periodic basis must submit
reports not less often than once every 6 months.
Despite these simplified reporting options, program eligibility
requirements remain complex. This complexity increases the risk that
caseworkers will make errors when considering all the factors needed to
determine eligibility. Our previous work has shown that the financial
eligibility of an applicant can be difficult to verify in means-tested
programs, further increasing the risk of payment to an ineligible
recipient.\9\ For example, caseworkers must verify several types of
household assets to determine eligibility and benefit amounts, such as
bank accounts, property, and vehicles. While additional efforts to
simplify the program may further reduce payment error, it could also
reduce FNS' ability to target the program to individual families'
needs. Moreover, participant-caused errors, which we earlier reported
constitute \1/3\ of the overall national errors, are difficult to
\9\ See GAO, Improper Payments: Progress Made but Challenges Remain
in Estimating and Reducing Improper Payments. GAO-09-628T (http://
www.gao.gov/new.items/d09628t.pdf). Washington, D.C.: April 22, 2009.
FNS and States Have Taken Steps to Increase Payment Accuracy
We found that FNS and the states we reviewed have taken many
approaches to increasing SNAP payment accuracy, most of which are
consistent with internal control practices known to reduce improper
payments.\10\ Often, several practices are tried simultaneously, making
it difficult to determine which have been the most effective.
\10\ See GAO, Strategies to Manage Improper Payments: Learning From
Public and Private Sector Organizations, GAO-02-69G (http://
www.gao.gov/new.items/d0269g.pdf) (Washington, D.C.: October 2001).
Tracking state performance. FNS staff use Quality Control
(QC) data to monitor states' performance over time; conduct
annual reviews of state operations; and where applicable,
monitor the states' implementation of corrective action
plans.\11\ FNS, in turn, requires states to perform management
evaluations to monitor whether adequate corrective action plans
are in place at local offices to address the causes of
persistent errors and deficiencies. In addition, in November
2003, FNS created a Payment Accuracy Branch at the national
level to work with FNS regional offices to suggest policy and
program changes and to monitor state performance. The branch
facilitates a National Payment Accuracy Work Group with
representatives from each FNS regional office and headquarters
who use QC data to review and categorize state performance into
one of three tiers.\12\ Increased intervention and monitoring
approaches are applied when state error rates increase and
states are assigned to tier 2 or tier 3.
\11\ States with error rates of six percent or more are required to
develop and implement corrective action plans to improve payment
accuracy that are monitored by the FNS regional offices.
\12\ Tier 1 states have an error rate under six percent, and tier 2
states have an error rate of six percent or greater but do not fall
into tier 3. States are assigned to tier 3 when the lower limit of
their error rate estimate at the 90 percent confidence level is higher
than 105 percent of the national error rate estimate.
Penalties and incentives. FNS has long focused its attention
on states' accountability for error rates through its QC system
by assessing financial penalties and providing financial
incentives. However, since 2000, USDA leadership has more
explicitly established payment accuracy as a program priority.
High level USDA officials visited states with particularly high
error rates, and FNS has collected a higher percentage of
penalties from states compared with prior years. For example,
from Fiscal Year 1992 to 2000, FNS collected about $800,000 in
penalties from states. In the next 5 years, FNS collected more
than $20 million from states.
In Fiscal Year 2009, three states (Maine, West Virginia, and New
Mexico) were notified that they had incurred a financial
liability for having a poor payment error rate for at least 2
consecutive years. An additional nine states and territories
(Connecticut, Maryland, Indiana, Wisconsin, Louisiana, Texas,
Iowa, Alaska, and Guam) were found to be in jeopardy of being
penalized if their error rates do not improve. Ten states and
territories received bonus payments for the best and most
improved payment error rates in Fiscal Year 2009 (Delaware,
Florida, Georgia, Guam, Maine, Nebraska, Ohio, South Dakota,
Information sharing. FNS also provides and facilitates the
exchange of information gleaned from monitoring by training
state QC staff, presenting at conferences, publishing best
practice guides, supporting the adoption of program
simplification options, and providing states policy
interpretation and guidance.
At the time of our 2005 study, states we reviewed adopted a
combination of practices to prevent, minimize, and address
payment accuracy problems, such as:
Increasing the awareness of, and the accountability
for, payment error. For example, some states set error rate
targets for their local offices and hold staff accountable
for payment accuracy.
Analyzing quality control data to identify causes of
common payment errors and developing corrective actions.
Making automated system changes to prompt workers to
obtain complete documentation from clients.
Developing specialized change units that focus on
acting upon reported case changes.
Verifying the accuracy of benefit payments calculated
by state SNAP workers through supervisory and other types
of case file reviews.
Despite this progress, the amount of SNAP benefits paid in error is
substantial, totaling about $2.2 billion in 2009. This necessitates
continued top-level attention from USDA management and continued
Federal and state commitment to determining the causes of improper
payments and taking corrective actions to reduce them.
Estimates Suggest Trafficking Has Declined, but FNS Could Further
Enhance Program Integrity
FNS Estimates Suggest That the Rate of SNAP Trafficking Has Declined
The national rate of SNAP trafficking declined from about 3.8 cents
per dollar of benefits redeemed in 1993 to about 1.0 cents per dollar
during the years 2002 to 2005, as shown in Table 1. However, even at
that lower rate, FNS estimates that about $241 million in SNAP benefits
were trafficked annually in those years. FNS has not completed an
updated estimate of trafficking since 2005.
Table 1: FNS Estimates Suggest That the Trafficking Rate Has Declined
Millions of dollars
Estimated Estimated amount of
Calendar year trafficking SNAP benefits issued benefits trafficked
period rate annually annually
1996-1998 3.5 a 19,627 657
1999-2002 2.5 a 16,139 393
2002-2005 1.0 a 23,213 241
Source: FNS studies and GAO calculation.
a FNS reported that it annualized redemption data over the period of the
study but did not provide the annualized figures. We calculated the 3
and 4 year average of benefits redeemed for comparative purposes.
Note: The data from 2002-2005 are the most recent available.
Overall, we found that the estimated rate of trafficking at small
stores was much higher than the estimated rate for supermarkets and
large groceries, which redeem most SNAP benefits. The rate of
trafficking in small stores was an estimated 7.6 cents per dollar and
an estimated 0.2 cents per dollar in large stores in 2005.
FNS Has Used EBT Data to Improve Retailer Monitoring
With the implementation of EBT, FNS has supplemented its
traditional undercover investigations by the Retailer Investigations
Branch with cases developed by analyzing EBT transaction data. The
nationwide implementation of EBT, completed in 2004, has given FNS
powerful new tools to supplement its traditional undercover
investigations of retailers suspected of trafficking SNAP benefits. FNS
traditionally sent its investigators into stores numerous times over a
period of months to attempt to traffic benefits. However, in 1996
Congress gave FNS the authority to charge retailers with trafficking in
cases using evidence obtained through an EBT transaction report,\13\
called ``paper cases.'' A major advantage of paper cases is that they
can be prepared relatively quickly and without multiple store visits.
\13\ Pub. L. No. 104-193, 841 (1996).
These EBT cases now account for more than half of the permanent
disqualifications by FNS. Although the number of trafficking
disqualifications based on undercover investigations has declined,
these investigations continue to play a key role in combating
trafficking. However, as FNS's ability to detect trafficking has
improved, the number of suspected traffickers investigated by other
Federal entities, such as the USDA Inspector General and the U.S.
Secret Service, declined, according to data available at the time of
our review. These entities have focused more on a smaller number of
high-impact investigations. As a result, retailers who traffic are less
likely to face criminal penalties or prosecution.\14\
\14\ On top of civil penalties, retailers who traffic may be
permanently disqualified from participating in the program. A civil
penalty may be imposed in lieu of permanent disqualification, however,
in certain circumstances in which the store owner was not aware of and
was not involved in the trafficking. In addition, individuals who are
determined to have intentionally committed an act in violation of the
SNAP statutes (such as by trafficking) lose eligibility to participate
in the program for a specified period of time, depending on the
circumstances. There are also potential criminal penalties (including
fines and possible imprisonment) for knowingly trafficking.
FNS Has Taken Action to Improve Retailer Monitoring and Increase
In response to our prior recommendation that FNS improves analysis
and monitoring, FNS has implemented new technology to improve its
ability to detect trafficking and disqualify retailers who traffic,
which has contributed to more sophisticated analyses of SNAP
transactions and categorization of stores based on risk. Specifically,
FNS implemented a revised store classification system to systematically
compare similar stores in order to better identify fraudulent
transaction activity for investigation. FNS also increased the amount
of data available to review and changed its monitoring of transaction
data from reviewing monthly data to reviewing these data on a daily
basis. FNS also implemented a new tool that assesses each retailer's
risk of trafficking. FNS reports that these changes have assisted with
early monitoring and identification of violating stores and allocation
of its monitoring resources.
Consistent with our recommendation that FNS develop a strategy to
increase penalties for trafficking, FNS received new authority to
impose increased financial penalties for trafficking. The Food,
Conservation, and Energy Act of 2008 expanded FNS authority to assess
civil money penalties in addition to or in lieu of
disqualification.\15\ It also provided authority for FNS, in
consultation with the Office of the Inspector General, to withhold
funds from traffickers during the administrative process, if such
trafficking is considered a flagrant violation. Regulations to
implement this provision are being developed and FNS expects the
proposed rule to be published in July 2012. According to FNS, the rule
that will address addition of monetary sanctions to disqualification is
targeted for publication in September 2011. Until the policy is
implemented, the impact of this change will not be known.
\15\ Pub. L. No. 110-234, 4132 (2008).
Despite Progress, Vulnerabilities Still Exist
Despite the progress FNS has made in combating retailer
trafficking, the SNAP program remains vulnerable.
Limited inspection of stores. FNS authorizes some stores
with limited food supplies so that low-income participants in
areas with few supermarkets have access to food, but may not
inspect these stores again for 5 years unless there is some
indication of a problem.
Varied state efforts. Some states actively pursue and
disqualify recipients who traffic their benefits while inaction
by other states allow recipients suspected of trafficking to
continue the practice. We recommended in our October 2006
report that FNS promote state efforts to pursue recipients
suspected of trafficking by revisiting the incentive structure
to incorporate additional provisions to encourage states to
investigate and take action against recipients who traffic. We
also recommended that FNS ensure that field offices report to
states those recipients who are suspected of trafficking with
disqualified retailers. However, FNS officials told us they
have taken few recent steps to increase state efforts to pursue
recipients suspected of trafficking, in part because of state
resource constraints, but will continue to examine the impact
of financial incentives in preparation for the expected
upcoming program reauthorization.
States Can Provide Automatic SNAP Eligibility to Individuals Authorized
to Receive TANF Services
Many States Confer Categorical Eligibility Using No Asset Limit and
Income Limits Above Regular SNAP Rules
States that confer TANF non-cash categorical eligibility use a
variety of TANF services to qualify participants for SNAP benefits.
According to FNS, as of June 2010, 36 states are using broad-based
policies that could make most, if not all, TANF non-cash households
categorically eligible for SNAP because the households receive TANF/MOE
funded benefits, such as brochures or information referral services.
This is an increase from the 29 states that conferred this type of
categorical eligibility at the time of our 2007 report. Other states
have more narrow policies in place that could make a smaller number of
households categorically eligible for SNAP because they receive a TANF/
MOE funded benefit such as child care or counseling.
These categorically eligible households do not need to meet SNAP
eligibility requirements such as the SNAP asset or gross income test
because their general need has been established by the TANF program.
For example, in 35 of the states that confer categorical eligibility
for all TANF services, there is no limit on the amount of assets a
household may have to be determined eligible, according to a FNS
report. In addition, the gross income limit of the TANF program set by
these states ranged from 130 to 200 percent of the Federal poverty
level, according to a FNS report. As a result, households with
substantial assets but low income could be deemed eligible for SNAP
under these policies.
Even though households may be deemed categorically eligible for
SNAP, the amount of assistance households are eligible for is
determined based on each household's income and other circumstances
using the same process used for other SNAP recipients. Some families
determined categorically eligible for the program could be found
eligible for the minimum benefit. However, FNS noted in a recent report
that families with incomes above 130 percent of the Federal poverty
level and high expenses (shelter costs, dependent care expenses, and
medical costs) could receive a significant SNAP benefit.
Households can be categorically eligible for SNAP even if they
receive no TANF funded service other than a toll-free telephone number
or informational brochure. For example, one state reported to FNS that
it included information about a pregnancy prevention hotline on the
SNAP application to confer categorical eligibility. Other states
reported providing households brochures with information about
available services, such as domestic violence assistance or marriage
classes, to confer categorical eligibility. Receipt of the information
on the SNAP applications or on the brochures can qualify the household
to be categorically eligible for SNAP benefits. However, the amount of
the SNAP benefit is still determined in accordance with SNAP rules by
the eligibility workers using information on income and expenses.
In 2007, we reported that six states may not have been following
program regulations because they were not using certain TANF noncash
services to confer SNAP categorical eligibility.\16\ These services
included child care, transportation, and substance abuse services,
which may have been funded by more than 50 percent Federal TANF or
state MOE funds. In addition, some states reported that they did not
specifically determine whether an individual needs a specific TANF
noncash service before conferring SNAP eligibility. We recommended that
FNS provide guidance and technical assistance to states clarifying
which TANF noncash services states must use to confer categorical
eligibility for SNAP and monitor states' compliance with categorical
eligibility requirements. In September 2009, USDA released a memorandum
encouraging states to continue promoting noncash categorical
eligibility. FNS reported that four of the six states currently are
using the required noncash services to confer categorical eligibility.
\16\ GAO-07-465 (http://www.gao.gov/new.items/d07465.pdf).
FNS and States Cite Several Advantages to Use of Expanded Categorical
FNS has encouraged states to adopt categorical eligibility to
improve program access and simplify the administration of SNAP.
According to FNS officials, increased use of categorical eligibility by
states has reduced administrative burdens and increased access to SNAP
benefits to households who would not otherwise be eligible for the
program due to SNAP income or asset limits. Adoption of this policy
option can provide needed assistance to low-income families, simplify
state policies, reduce the amount of time states must devote to
verifying assets, and reduce the potential for errors, according to
FNS. FNS recently also encouraged states that have implemented a broad-
based categorical eligibility program with an asset limit to exclude
refundable tax credits from consideration as assets.
In our previous work, we found that many of the states' SNAP
officials surveyed believed eliminating TANF non-cash categorical
eligibility would decrease participation in SNAP.\17\ Many of the
states' SNAP officials we surveyed also believed that eliminating TANF
non-cash categorical eligibility would increase the SNAP administrative
workload and state administrative costs. Some common reasons state
officials indicated for the increase in SNAP administrative workload
\17\ Our analysis of data from states in 2006 showed that a vast
majority of TANF noncash households may remain eligible for SNAP
benefits without noncash categorical eligibility because their income
and/or asset levels are within the regular SNAP limits. Other
households may lose eligibility for SNAP because their income and/or
asset levels are too high. GAO-07-465 (http://www.gao.gov/new.items/
increase in verifications needed,
increase in error rates as required verifications increase,
changes to data systems,
increase in time to process applications, and
changes to policies and related materials.
While FNS and the states believe categorical eligibility has
improved program access and payment accuracy, the extent of its impact
on access and program integrity is unclear.
Over the past few years, the size of the Supplemental Nutrition
Assistance Program has grown substantially, both in terms of the number
of people served and the amount paid out in benefits, at a time when
the slow pace of the economic recovery has left many families facing
extended hardship. At the same time, due largely to the efforts of FNS
working with the states, payment errors have declined and mechanisms
for detecting and reducing trafficking have improved. However, little
is known about the extent to which increased use of categorical
eligibility has affected the integrity of the program. Further,
improper payments in the program continue to exceed $2 billion and
retailer fraud remains a serious concern, highlighting the importance
of continued vigilance in ensuring that improvements in program access
are appropriately balanced with efforts to maintain program integrity.
As current fiscal stress and looming deficits continue to limit the
amount of assistance available to needy families, it is more important
than ever that scarce Federal resources are targeted to those who are
most in need and that the Federal Government ensure that every Federal
dollar is spent as intended.
Mr. Chairman, this concludes my prepared statement. I will be happy
to answer any questions you or Members of the Subcommittee may have.
Contact and Acknowledgements
For future contacts regarding this testimony, please contact Kay
Brown at [redacted]. Key contributors to this testimony were Kathy
Larin, Cathy Roark, and Alex Galuten.
Related GAO Products
Domestic Food Assistance: Complex System Benefits Millions, but
Additional Efforts Could Address Potential Inefficiency and Overlap
among Smaller Programs. GAO-10-346 (http://www.gao.gov/new.items/
d10346.pdf). Washington, D.C.: April 15, 2010.
Improper Payments: Progress Made but Challenges Remain in
Estimating and Reducing Improper Payments. GAO-09-628T (http://
www.gao.gov/new.items/d09628t.pdf). Washington, D.C.: April 22, 2009.
Food Stamp Program: FNS Could Improve Guidance and Monitoring to
Help Ensure Appropriate Use of Noncash Categorical Eligibility. GAO-07-
465 (http://www.gao.gov/new.items/d07465.pdf). Washington, D.C.: March
Food Stamp Program: Payment Errors and Trafficking Have Declined
despite Increased Program Participation. GAO-07-422T (http://
www.gao.gov/new.items/d07422t.pdf). Washington, D.C.: January 31, 2007.
Food Stamp Trafficking: FNS Could Enhance Program Integrity by
Better Targeting Stores Likely to Traffic and Increasing Penalties.
GAO-07-53 (http://www.gao.gov/new.items/d0753.pdf). Washington, D.C.:
October 13, 2006.
Improper Payments: Federal and State Coordination Needed to Report
National Improper Payment Estimates on Federal Programs. GAO-06-347
(http://www.gao.gov/new.items/d06347.pdf). Washington, D.C.: April 14,
Food Stamp Program: States Have Made Progress Reducing Payment
Errors, and Further Challenges Remain. GAO-05-245 (http://www.gao.gov/
new.items/d05245.pdf). Washington, D.C.: May 5, 2005.
Food Stamp Program: Farm Bill Options Ease Administrative Burden,
but Opportunities Exist to Streamline Participant Reporting Rules among
Programs. GAO-04-916 (http://www.gao.gov/new.items/d04916.pdf).
Washington, D.C.: September 16, 2004.
Food Stamp Program: States Have Made Progress Reducing Payment
Errors, and Further Challenges Remain. GAO-05-245 (http://www.gao.gov/
new.items/d05245.pdf). Washington, D.C.: May 5, 2005.
Mr. Kagen. Thank you very much.
Next, we have the Honorable Phyllis Fong, Inspector
General, the Office of Inspector General in the U.S. Department
Thank you for joining us.
STATEMENT OF THE HON. PHYLLIS K. FONG, INSPECTOR
GENERAL, OFFICE OF INSPECTOR GENERAL, U.S.
DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.
Ms. Fong. Thank you, Mr. Chairman, and Members of the
Subcommittee. We appreciate the opportunity to testify today
about the OIG's oversight of the SNAP program.
As you may know, IG investigators conduct criminal
investigations into alleged fraud perpetrated against the
program, while IG auditors look at reviews of SNAP that are
intended to improve FNS overall management controls of the
program. So let me start with a brief summary of our
investigative work overseeing SNAP.
As long as USDA has been providing food assistance, there
have been individuals who have sought to exploit the program
for their own gain. Because of the importance of ensuring the
integrity of the program, we devote about 35 percent of our
investigative resources to SNAP-related criminal
investigations. Our main focus is on fraud that is committed by
retailers; although, when we find that individual recipients
have violated the program requirements, we do work with state
and local prosecutors to address those violations.
Over the past 2\1/2\ years, our investigations of the SNAP
program have led to 472 convictions and monetary results of
over $77 million. Some of the most significant kinds of SNAP-
related misconduct that we look at involve trafficking and
abuse of point-of-sale equipment. In addition, we have seen
cases that involve funneling stolen money outside the United
States. We have seen cases involving employee abuse of SNAP,
cases involving retailers who are involved in multiple types of
criminal activity, and we have seen recipient fraud.
Let me spend a moment on the trafficking and abuse of
One of the most common abuses that we investigate involves
the trafficking of SNAP benefits, which is the illegal exchange
of food assistance benefits for cash. In this kind of scheme,
retailers will pay recipients for their SNAP benefits. For
instance, they may pay recipients $50 in cash and then charge
the EBT card for $100 in sales. Recipients are then free to
spend the cash any way they like, while retailers profit
because they are reimbursed by USDA for these so-called sales.
This kind of illegal exchange harms the program because it
prevents FNS from accomplishing its main objective of feeding
Our investigations of these schemes have led to multiple
positive outcomes. There was a recent case in Florida involving
some store owners who illegally trafficked SNAP benefits for
cash. And we recently received a conviction there of 74 months'
imprisonment for the two store owners, and an order of
restitution of $3.2 million to be repaid to USDA.
With respect to abuse of point-of-sale equipment, many
times we find that store owners and others who are not
authorized retailers may work in conspiracy, or in conjunction,
with authorized retailers to defraud the program.
We had a recent case in Chicago, where a store owner
conspired with five other retailers, which involved relocating
the point-of-sale equipment from an authorized store to an
unauthorized location and swiping multiple transactions. As a
result of our investigation, the store owners were sentenced to
serve over 83 months in prison and pay $6.3 million to USDA in
I want to note here that OIG is very appreciative of the
close collaboration that we receive from our FNS colleagues,
GAO, state and local prosecutors, and our colleagues at the
Department of Justice in bringing these cases to fruition.
In addition, as you may know, we conduct audits of the SNAP
program. We have done audits in the last few years of the
electronic systems that USDA depends on to run the program,
namely the ALERT and the STARS systems. We are also engaged--
under the Improper Payments Act, we are required to look at
FNS's plans to address improper payments. And we will be
reporting to the Secretary and the Congress on those efforts
within the next 6 months.
Under the Recovery Act, because SNAP receives substantial
increases in funds for that program, we are required, as the IG
office, to oversee and look at the delivery of those benefits.
We have a significant number of audits ongoing in that program,
and we have produced four reports recently. We expect to
produce numerous more reports in the next few years.
So that concludes my remarks, and I welcome any questions.
[The prepared statement of Ms. Fong follows:]
Prepared Statement of Hon. Phyllis K. Fong, Inspector General, Office
of Inspector General, U.S. Department of Agriculture, Washington, D.C.
Good morning, Mr. Chairman, Ranking Member Fortenberry, and Members
of the Subcommittee. Thank you for the opportunity to testify about the
Office of Inspector General's (OIG) work on the Supplemental Nutrition
Assistance Program (SNAP). My testimony today will provide background
concerning SNAP, and then summarize a number of our most significant
audits and investigations.
Overview of the Supplemental Nutrition Assistance Program
SNAP is USDA's largest program, both in terms of the dollars spent
and the number of recipients who participate in the program. In Fiscal
Year (FY) 2009, recipients redeemed close to $50 billion in benefits--
up 45 percent from 2008. The latest available data show that in April
2010 more than 40 million people received $5.4 billion in SNAP
benefits. SNAP is also an important part of the food safety net for
Americans, especially during times of economic hardship. During the
recent recession, SNAP participation increased by about 20,000 persons
daily--the program helped feed one in eight Americans and one in four
In order to receive SNAP benefits, potential recipients may visit
their local SNAP office to apply, or they may apply online in 25
states. As part of their application, they submit information regarding
their income and resources \1\ and, if they are determined to be
eligible, they can begin receiving food assistance. SNAP recipients can
receive up to $200 monthly, though the average benefit a recipient
receives is about $125 per month.\2\ Once new recipients are enrolled
in the program, they can exchange their benefits at thousands of FNS-
authorized retailers for breads and cereals; fruits and vegetables;
meats, fish, and poultry; and dairy products. They cannot use SNAP
benefits to buy alcohol, tobacco, or non-food merchandise such as
\1\ Including cash in a bank account
\2\ FNS assumes that a household should be spending 30 percent of
its income on food, so it therefore adjusts a recipient's maximum
benefit based on his or her income. Our calculations are based on a one
To be eligible to become an authorized retailer in SNAP, a retailer
must sell a variety of qualifying staple food items or 50 percent of
its sales must be in a staple group such as meat or bakery items. After
retailers apply to participate in SNAP, FNS then visits their store to
determine if they meet the program's requirements. About 85 percent of
all SNAP benefits are used at supermarkets and big-box stores, though
they make up only 20 percent of all authorized retailers. Many smaller
stores also accept SNAP benefits, and FNS allows recipients to use
their benefits at non-traditional authorized retailers, such as gas
stations, convenience stores, and farmers' markets.
FNS administers SNAP in partnership with the states. While FNS
develops overall program policies such as eligibility thresholds for
recipients and reviews how programs are being run in individual states,
the states themselves administer their own programs by determining if
households meet SNAP eligibility requirements and by calculating and
issuing monthly benefits to recipients. Not only does the Federal
Government pay the full cost of the benefits, but it also shares with
the states the administrative costs of the program. FNS officials see
this approach as providing flexibility for administering SNAP--they
acknowledge that each state is different and has unique needs that the
states themselves best understand. OIG agrees that FNS' decentralized
approach is flexible, but we note that with decentralization come
potential control problems. Even preventing a recipient from receiving
benefits from two states can be difficult when FNS does not gather all
recipients' information from each state.
SNAP is still known as the ``food stamp program'' to many in the
public, although it was officially renamed in 2008. FNS has also moved
away from using paper food coupons to providing benefits through
Electronic Benefits Transfer (EBT) systems. Under EBT systems,
recipients receive a plastic card, similar to a bank card, which they
may use at FNS-approved retailers to redeem their benefits. In addition
to eliminating cumbersome paper food coupons, EBT creates an electronic
record that makes it easier to identify trends that may indicate the
potential misuse of SNAP benefits. As of July 2004, all 50 states, the
District of Columbia, Puerto Rico, the Virgin Islands, and Guam
operated state-wide, city-wide, and territory-wide EBT systems to issue
food assistance benefits.
OIG Oversight of SNAP
In providing oversight of the SNAP program, OIG employs a two-
pronged approach involving audits and criminal investigations. OIG
Investigations staff conducts criminal investigations into alleged
fraud perpetrated against the program, while OIG Audit staff conducts
reviews of SNAP intended to improve FNS' overall management controls
for the program.
As long as USDA has been providing food assistance, there have been
individuals who have sought to exploit the program for their own gain.
In fact, the first retailer was caught abusing food stamps in October
1939, just a few months after the program started. As the Food Stamp
Program (and later SNAP) evolved over the years, there have been high-
profile cases of fraud against FNS. Concerns about food stamp abuse
prompted movements to cut or reform the program in the 1980s and 1990s.
Given the importance of ensuring the integrity of SNAP, OIG devotes
about 35 percent of its investigative resources to SNAP-related
criminal investigations--this is our largest allocation of
investigative resources. Our main focus is on fraud committed by
retailers, primarily because FNS is responsible for directly
reimbursing retailers while states are responsible for ensuring that
individual recipients are eligible to receive benefits and that they
use those benefits appropriately. Our investigations of retailers,
however, often disclose individual recipients who have violated SNAP
program requirements, and we work with the states and local prosecutors
to respond to these violations. With few exceptions, our investigations
yield tangible and direct benefits to the government, including
criminal prosecution, significant fines and penalties, restitution, and
asset forfeiture. From FY 2008 to the first half FY 2010, as a result
of SNAP investigations, OIG obtained 472 convictions and monetary
results totaling $77.1 million. Detailed below are examples of the most
significant types of SNAP-related misconduct that we investigate.
Trafficking in SNAP benefits
One of the most common abuses OIG investigates is the
trafficking of benefits, which is essentially the illegal
exchange of food assistance benefits for cash. In this scheme,
retailers will pay recipients for their SNAP benefits; for
instance, they might exchange $50 in cash for $100 in benefits.
Some recipients prefer to sell their benefits in this way
because they are then free to spend the cash however they like,
while retailers profit after they have been reimbursed by USDA.
This illegal exchange harms SNAP because it prevents FNS from
accomplishing its main objective of feeding needy families.
Recent investigations of these sorts of schemes have resulted
in significant positive outcomes for USDA and the Federal
Government. In early 2008, the owner of a convenience store in
St. Paul, Minnesota, was sentenced in Federal court to serve 2
years in prison, and was ordered to pay more than $750,000 in
joint restitution \3\ for exchanging almost $850,000 in SNAP
benefits for cash--his employees also faced prison time and
significant penalties.\4\ Similarly, an OIG investigation in
Miami, Florida, revealed that two store owners illegally
exchanged SNAP benefits for cash at an estimated loss to USDA
of $3.3 million. In December 2008, a Federal court in the
Southern District of Florida sentenced the store owners to a
total of 74 months of imprisonment and ordered them to pay $3.2
million in restitution.\5\
\3\ This penalty was shared with the store's manager.
Abuse of EBT Point of Sale Equipment
OIG has found that EBT systems provide an important oversight
tool for our investigators and auditors; however, the point of
sale devices used to electronically redeem benefits can also be
abused by criminals intent on illegally profiting from SNAP. As
part of our ongoing efforts to combat large-scale SNAP benefit
trafficking in Chicago, Illinois, we found that a store owner
and clerk--who were not authorized by FNS to participate in the
program--conspired with at least five other retailers to
defraud the program of approximately $6.3 million. This scheme
involved relocating point of sale devices from authorized
stores to an unauthorized store where SNAP recipients would
sell their benefits. The subjects of our investigation were
ultimately indicted on wire fraud and criminal forfeiture
charges, and were sentenced to serve a total of 83 months of
imprisonment and pay $6.3 million in restitution.\6\
Funneling Stolen SNAP Funds Outside the United States
Retailers who abuse SNAP sometimes funnel their illegal
proceeds out of the United States. A joint investigation
between OIG and the FBI identified a small Somali-owned store
in Ypsilanti, Michigan, that was trafficking in SNAP and Women,
Infants, and Children (WIC) benefits, and then transferring
money overseas, generally to persons located in the Middle East
and the Horn of Africa. The store owners and employees pled
guilty to over $750,000 in SNAP and WIC fraud. In May 2010,
they were sentenced to spend a total of 48 months in prison and
pay almost $2 million in restitution.\7\
Employee Abuse of SNAP
On occasion, state employees take advantage of their
positions and commit fraud against SNAP benefit programs--OIG
continues to investigate and seek prosecution of such persons.
For example, a caseworker with the Missouri Department of
Social Services pled guilty and was sentenced for accepting
bribes in exchange for authorizing ineligible persons to
receive SNAP and other welfare benefits. This individual was
sentenced to serve a year and a day in Federal prison, and was
ordered to pay $2,058 in restitution.\8\
Retailers Involved in Other Criminal Activities Related to SNAP
Individuals engaged in SNAP benefit fraud often participate
in other criminal activities as well. For example, one
investigation focused on gang activity, drug activity, fencing
operations, and SNAP fraud in Greenville, North Carolina. The
investigation resulted in the arrest and indictment of six
individuals on Federal conspiracy charges for the interstate
transportation of stolen property and theft of government
program funds. Four of these individuals pled guilty and were
sentenced to prison terms of between 6 and 20 months.\9\ Also
as a result of our investigation, the three stores used to
facilitate this illegal activity were taken over temporarily by
the city and eventually closed permanently.\10\
\9\ Legal action is pending against the fifth, and charges against
the sixth were dropped.
\10\ AT-2748-2015 and AT-2748-2016.
Crimes Committed by SNAP Recipients
As I have mentioned, the preponderance of OIG's investigative
work does not focus on recipients, although we occasionally
investigate recipients who illegally exchange their benefits
for cash. By sharing this information with the relevant state
law enforcement agencies, we help states pursue prosecution or
disqualify recipients from the program. We also sometimes
investigate recipients who provide false information to receive
benefits. As an example of this type of case, OIG found that a
man living in Arlington, Virginia, failed to accurately report
his income and therefore received thousands of dollars in SNAP,
Medicaid, and other Federal assistance. He was sentenced to 60
days in prison and ordered to pay $97,865 in restitution to
USDA, the U.S. Department of Housing and Urban Development, and
the U.S. Department of Health and Human Services.\11\
In a similar vein, OIG continues to run Operation Talon, a
law enforcement initiative made possible by the Personal
Responsibility and Work Opportunity Reconciliation Act of
1996.\12\ This Act includes a provision that individuals who
are fleeing to avoid prosecution, custody, or confinement after
conviction are ineligible to receive Federal program benefits,
including SNAP benefits. The Act authorizes state social
service agencies to provide addresses of SNAP recipients to any
Federal, state or local law enforcement officer for official
purposes. Operation Talon matches law enforcement agencies'
outstanding felony fugitive files with the social service
agencies' SNAP records. As a result, law enforcement officers
are able to locate and apprehend fugitives who may also be
illegally receiving SNAP benefits. As of September 20, 2009,
Operation Talon has resulted in 14,645 arrests of fugitive
felons wanted for a wide variety of offenses, including murder,
arson, assault, burglary, motor vehicle theft, assorted drug
charges, robbery, fraud, forgery, driving under the influence,
extortion and blackmail, sex offenses, domestic violence,
larceny, stolen property, and weapons violations. In the second
half of FY 2009, OIG agents conducted Talon operations in five
states, making a total of 264 arrests.
\12\ Public Law 104-193, August 22, 1996.
Criminal investigations of the sort described are OIG's ``bread and
butter'' when it comes to overseeing SNAP. Through our collaborative
efforts, we work cohesively to identify and resolve potential
vulnerabilities in the processes that allow retailers to participate in
the SNAP program. Such collaboration is often very fruitful, as when we
worked with FNS and the Department of Justice to include language in
the 2008 Farm Bill that would enable FNS to suspend, during an ongoing
investigation, retailers involved in especially flagrant program abuse.
As we look to identify potential future problems, OIG notes that
FNS has recently changed its process for certifying retailers to
participate in SNAP, and now allows them to complete this certification
process online. In the past, store owners who wished to participate in
SNAP were required to attend a training program which outlined program
requirements and retailer responsibilities. Direct, face-to-face
attendance also ensured that FNS verified the owners' identity and
required the owners to certify that they understood the program's
requirements. Since FNS now conducts these training programs online,
store owners do not certify in person that they understand how the
program is designed to work. This development concerns OIG because some
prosecutors have indicated reluctance to charge retailers with fraud
when the retailers did not certify their understanding of program
In another effort to prevent future problems, we are currently
monitoring non-traditional retailers--such as gas stations, convenience
stores, and farmers' markets--and their involvement in SNAP to help
reduce the potential for illegal benefit trafficking.
OIG performs audits of FNS' management controls that are designed
to improve how the agency delivers benefits to recipients and oversees
authorized retailers. Prior to the American Recovery and Reinvestment
Act of 2009 (Recovery Act),\13\ OIG had completed audits related to
improving two of the automated systems FNS relies on to administer
SNAP. One review found that the watch list FNS uses to monitor
retailers could be improved to help in the detection of fraud by adding
information such as the type of store.\14\ Another review found that
FNS needed to strengthen the information system it uses to store data
on retailers who redeem SNAP benefits, including improving physical
security and updating its contingency plan for its computer
facility.\15\ For both audits, OIG and FNS agreed on the necessary
actions to correct these problems.
\13\ Public Law 111-5, February 17, 2009.
\14\ 27099-32-SF, ``Food and Nutrition Service Food Stamp Program--
ALERT Watch List,'' July 2006.
\15\ 27501-02-HY, ``Application Control Review of the Food and
Nutrition Service's Store Tracking and Redemption System II,'' March
OIG has also been actively auditing FNS and state implementation of
EBT systems. Most states have adequately implemented EBT, but one audit
found that Colorado did not use available management reports to monitor
its program for improper activity, and did not establish fraud
detection units to assist in prosecuting benefit trafficking. FNS and
OIG reached agreement on the actions necessary to correct these
\16\ 27099-68-HY, ``Electronic Benefits Transfer System, State of
Colorado,'' June 2008.
When Congress passed the Recovery Act, it provided for a 13.6
percent increase in the maximum Thrifty Food Plan amount provided to
SNAP recipients, which resulted in participating households of four
receiving an increase of $80 in benefits monthly. The Recovery Act also
required OIG to oversee how FNS uses the additional funds. The overall
objectives of OIG's audit oversight of the Recovery Act monies have
been to ensure that: (1) USDA Recovery Act-related programs are timely
and effectively implemented; (2) proper internal control procedures are
established; (3) program participants meet eligibility guidelines; (4)
participants properly comply with program requirements; (5) agencies
establish effective compliance operations; and (6) performance measures
are properly established and supported to ascertain whether program
objectives have been achieved.
To meet these objectives, OIG has initiated four audits in the SNAP
area. We have also established a reporting process for expeditiously
notifying agency managers of problems identified in our audits. The
products of this expedited reporting process are known as FAST reports.
One of our Recovery Act audits reviewed the Thrifty Food Plan
(TFP), which FNS uses to establish the maximum SNAP benefits families
can receive. Essentially, TFP incorporates food consumption data, food
price data, and dietary guidelines to establish ``market baskets''--a
selection of foods that reflects current dietary recommendations. Our
review of this plan found no reportable concerns with the data inputs,
constraints, and modeling used in developing TFP. We also found that
the Recovery Act legislative increase in SNAP benefits was not related
to an update or an adjustment of TFP.\17\
\17\ 27703-01-KC, ``SNAP Benefits and the Thrifty Food Plan,''
Also as part of our Recovery Act audit work, OIG evaluated how well
FNS is monitoring state fraud detection units to ensure that they can
effectively prevent fraud, waste, and abuse. We found that neither
state we visited--New Jersey and Florida--had developed a fully
effective fraud detection unit, and that FNS had not conducted periodic
reviews of the states' fraud detection efforts to verify their
effectiveness. According to FNS, such reviews were not necessary
because information collected by states for the annual State Activity
Report was sufficient for agency officials to ensure that states were
devoting sufficient resources to their fraud detection efforts. Since
FNS' assessment of state fraud detection activities could be limited by
the accuracy of the state-reported information, OIG recommended in a
FAST report that FNS identify and implement a process for periodically
and independently assessing the states' fraud detection units. FNS and
OIG are working to reach agreement on this recommendation.\18\
\18\ 27703-02-HY (1), ``State Fraud Detection Efforts for the
Supplemental Nutrition Assistance Program,'' July 2010.
Another audit found that FNS was not being fully transparent
concerning the costs associated with the Recovery Act and SNAP. The
agency did not timely report on its Recovery Act website that the
estimated cost of the additional Recovery SNAP benefits would increase
from $19.8 billion to $48 billion--FNS did not update its website until
January 2010, even though the revised figure was determined in June
2009. In our FAST report, we recommended that USDA work with the Office
of Management and Budget and the Recovery Accountability and
Transparency Board to establish a process for consistently and timely
reporting changes in budget estimates for all USDA programs that
received Recovery Act funding. USDA officials generally agreed with
\19\ 27703-02-AT (1), ``Recovery Act Impacts on the Supplemental
Nutritional Assistance Program,'' March 2010.
OIG is also initiating a review of FNS' compliance with the
Improper Payments Improvement Act of 2002.\20\ Like other executive
agencies, FNS is required to identify any of its programs that are
susceptible to improper payments, estimate the annual amount of
improper payments, and submit those estimates to Congress. The Office
of Management and Budget has determined that several of FNS' largest
programs--including SNAP and the National School Lunch Program--are at
high risk of improper payments. Executive Order 13520 requires
Inspectors General to assess the level of risk associated with such
programs, determine the extent of oversight warranted, and provide the
agency head a report with recommendations for modifying the agency's
methodology, improper payment reduction plans, program access, and
\20\ Public Law 107-300, November 26, 2002.
\21\ Executive Order No. 13,520, 74 Federal Register 62201,
November 25, 2009.
In FY 2009, FNS reported improper payments totaling $3.86 billion,
including $1.7 billion within SNAP, or a five percent improper payment
rate. To reduce SNAP's rate of improper payment, FNS intends to require
states that have high improper payment rates to develop a quality
control corrective action plan addressing their deficiencies. Our
review will determine if FNS' steps to decrease these improper payments
On July 22, 2010, President Obama signed into law the Improper
Payments Elimination and Recovery Act.\22\ This legislation focuses
more attention on improving management controls and recovering
identified improper payments. It also requires Inspectors General to
perform an annual compliance review to ensure that agencies are in
compliance with the Act. We anticipate that our future compliance
reviews of FNS will assist the agency in its efforts to decrease its
rate of improper payments.
\22\ Public Law 111-204, July 22, 2010.
This concludes my written statement. I want to again thank the
Chair and the Subcommittee for the opportunity to testify today. We
welcome any questions you may have.
Mr. Kagen. Thank you. That was almost exactly 5 minutes.
You must have been practicing. Either that or you have been
doing this too long.
Our next is Don Winstead, Deputy Secretary, Florida
Department of Children and Families, on behalf of the American
Public Human Services Association.
Thank you for joining us.
STATEMENT OF DON E. WINSTEAD, Jr., DEPUTY SECRETARY, FLORIDA
DEPARTMENT OF CHILDREN AND FAMILIES,
TALLAHASSEE, FL; ON BEHALF OF AMERICAN PUBLIC HUMAN SERVICES
Mr. Winstead. Thank you, Mr. Chairman, and Members of the
Subcommittee. I appreciate the opportunity to testify this
morning about the SNAP program.
My name is John Winstead, and I am Deputy Secretary of the
Department of Children and Families. And we are the state
agency that administrators SNAP, as well as other programs
serving low-income and vulnerable children, adults, and
As you said, Mr. Chairman, I am appearing this morning on
behalf of the American Public Human Services Association. My
written statement includes APHSA's assessment of the current
status of SNAP and quality control, as well as some of
Florida's experiences in improving the performance integrity of
this vitally important program.
We appreciate the opportunity to make recommendations for
reauthorization of SNAP that supports sound program integrity,
administration, and customer service.
In my written statement, I provide a more detailed
discussion of recent trends in SNAP, as well as the success
that states have had in improving payment accuracy, program
integrity, and program performance in the face of unprecedented
increases in participation and declines in state resources. I
have also included a comprehensive set of recommendations from
the people who administer this program on your behalf, the
local and state administrators of APHSA. For the sake of time,
I will summarize my comments with a few key points.
SNAP has seen unprecedented growth in the number of people
qualifying for benefits. Nationally, the number of people
served has increased by over 50 percent in the past 3 years. In
my state, the number of people has more than doubled, growing
from 1.2 million people in April 2007, to over 2.7 million
people last month.
In spite of the growth of the program, payment accuracy is
at an all-time high. Nationally, payment errors declined to
4.36 percent in 2009. And I am proud to tell you that Florida
had the highest payment accuracy in the nation for each of the
past 2 years. And, in 2009, our payment error rate was \7/10\
of 1 percent.
The positive changes in the quality control system made in
the 2002 legislation have worked. Providing incentives for high
performance and encouraging improvement has been a success, and
suggests that even greater success could be achieved by
expanding that approach.
States take the challenge of improved performance very
seriously. In my written testimony, I described Florida's
automated quality management system that has been an important
part of our success. This is but one example of the innovative
ways that states are improving program management and program
results. In our state, we diligently and persistently track
performance from the individual worker level to statewide. We
can spot error trends in real-time and quickly take action to
Increased automation has improved both access and
integrity. Over 90 percent of SNAP applications in Florida are
submitted electronically, and we provide 24/7 access to the
program. We have processed over 298,000 electronic data
exchanges each month to assure that information is known and
States are learning from one another. Through state
exchange funds, FNS has encouraged the transfer of best
practices. We have visited a number of other states to learn
from them, and over 40 states have visited Florida to see our
Policy reforms have worked. States have used the policy
options and administrative flexibility that you have provided
to simplify, modernize, and improve the operation and
administration of the program.
But much more can be done. Among many steps I could name, a
more sustained method of supporting state administrative
investments, such as those supplied last year through the
Recovery Act and the DOD appropriations bill, must be put in
place. Speaking more broadly, through providing more options to
states, we can achieve even greater levels of program access,
program performance, and public credibility.
The SNAP quality control program is important to our
success, but even more critical are the continuing
simplification of program rules, having better ways to work in
concert with other public programs, and having a more rational
mix of financial supports and incentives.
Mr. Chairman, thank you for the opportunity to share our
thoughts on these important issues. We at APHSA stand ready to
work with you and with FNS to continue to improve the nation's
most important nutrition assistance program.
[The prepared statement of Mr. Winstead follows:]
Prepared Statement of Don E. Winstead, Jr., Deputy Secretary, Florida
Department of Children and Families, Tallahassee, FL; on Behalf of
American Public Human Services Association
Chairman Baca, Ranking Member Fortenberry, and Members of the
Subcommittee, thank you for the opportunity to testify this morning
about the Supplemental Nutrition Assistance Program (SNAP), including
its quality control policies. My name is Don Winstead and I am Deputy
Secretary of the Florida Department of Children and Families, the state
agency that administers the Supplemental Nutrition Assistance Program
as well as other programs serving low-income and vulnerable children,
adults, and families.
I am appearing this morning on behalf of the American Public Human
Services Association (APHSA). My statement includes APHSA's assessment
of the current state of SNAP and quality control, as well as some of
Florida's experience in improving the performance and integrity of this
vitally important program. We appreciate the opportunity to make
recommendations for the upcoming reauthorization of SNAP that will
support sound program integrity, administration, and customer service.
APHSA is an 80 year old nonprofit, bipartisan organization
representing the nation's state and local public human service
agencies. As those who administer and implement public human service
programs, including SNAP, we have an important and highly relevant
point of view we urge the Subcommittee to consider. APHSA has testified
about SNAP before Congress on a number of occasions, but we are
especially concerned about the 2012 reauthorization of this essential
nutrition assistance program. We strongly believe SNAP is one of the
most important means of supporting the well-being of low-income
individuals and families, and that it must remain a viable way to help
those in need. To continue this good record, SNAP law must support
sensible and cost-effective administration and review of the program.
SNAP (the new name for the Food Stamp Program) is supervised by the
U.S. Department of Agriculture (USDA) and administered by the state and
local human service agencies. In Federal Fiscal Year 2009 it served an
annual average of 33.7 million persons, an increase of nearly 19
percent over FY 2008. In April 2010 (the most recent month available),
participation reached 40.4 million persons, another all-time record,
and 42 percent higher than the FY 2008 average.
The number of states experiencing caseload increases of 25 to 40
percent is unprecedented, with some states more than doubling their
caseloads since April 2007. In the past 3 years, the number of people
served nationally grew by over 50 percent. In my state, Florida's SNAP
served 1.2 million individuals in April 2007 and now, as of June 2010,
is serving more than 2.7 million individuals--an extraordinary increase
of 126 percent. At the same time states have and continue to face
extreme pressures on finances resulting in cutbacks in human service
staffing--hiring freezes, furloughs, and layoffs. Florida experienced a
reduction of 43 percent of its staff between FY 2003 and 2006.
Considering these conditions, it is a testament to the commitment of
public human service agencies that we have achieved the highest payment
accuracy level in the history of the program for FY 2009 at 95.64
percent. How was this possible? It involved the joint efforts of
Congress, the Department of Agriculture, and state and local
administrators as well as the commitment of thousands of dedicated
In Florida, we have worked aggressively to improve program access
and integrity. We learned early on that technology was the key to
reaching large numbers of people and assuring quick and accurate
eligibility determinations. Over 90 percent of our applications are
received electronically from customers' homes, businesses, agency
offices and a network of over 3,000 community partners. Through a great
partnership with USDA, we developed new policies, procedures, and
waivers to get the right amount of benefits to people quickly, while
saving taxpayers more than $83 million in recurring annual costs for
program administration. We use telephone interviews in concert with
electronic data exchanges to assure program integrity. We process over
298,000 data exchanges each month from sources such as the Social
Security Administration and state unemployment agency to assure income
is known and correctly counted. We match all our customers against the
Social Security database to confirm Social Security Numbers and
identity, enabling us to find and validate other income and prevent
duplicate payments. This spring, our legislature authorized expanded
access to the Department of Motor Vehicles database, enabling
eligibility staff to view driver's license data, signatures, and
customer photographs. These combined uses of technology have helped us
achieve our objectives in payment accuracy and proper stewardship of
Improved Payment Accuracy in SNAP
SNAP has a remarkably successful history in reducing improper
payments. Payment accuracy is measured through a quality control system
operated by the states and monitored by the Food and Nutrition Service
(FNS). Policy options, simplifications, and administrative practices
affect payment accuracy in the program. Although states were making
great progress in increasing payment accuracy in the decade before the
2002 Farm Bill, the reforms made by that bill in both policy and
performance measurement, plus its incentive bonuses for high
performance, greatly enhanced program performance. States have reduced
the SNAP error rate (a rather broad label for the total of over-
issuances plus under-issuances) from 6.64 percent in FY 2003 to 4.36
percent in FY 2009. At the same time, program participation has
increased from 60.4 percent of those eligible in 2004 to 67 percent in
2008. This approach dramatically demonstrates that, with the right mix
of policies, it is possible to both reduce improper payments and
protect program access.
My state provides an excellent example of what can be achieved. As
a national leader in eligibility modernization, DCF turned its
attention to accuracy and quality of service in 2006 and targeted key
components necessary for improvement. Florida, the fourth largest state
in the nation, achieved the best payment accuracy in the nation for the
last 2 years, reducing the error rate from over eight percent to 0.85
percent and then 0.70 percent. In addition to improving accuracy, each
year we have also improved the timeliness of eligibility decisions in
spite of rising caseloads.
Florida's emergence as the most successful state in the nation when
it comes to improving SNAP performance was not attained by sleight of
hand. Rather it is due to persistent and thorough analysis of program
performance, followed by immediate corrective action. We combined the
Quality Control and Quality Assurance functions to enhance state
oversight, align focus, and improve policies and casework. We believe
case review and analysis are critical to managing program performance
and developed an electronic web-based case reading tool, Quality
Management System (QMS), to combat errors. This tool uses technology to
select cases for review using an error-prone profile that can be
adjusted based on new data and trends. It allows the state to track, in
real time, error trends among all levels, i.e., worker, unit, circuit,
region, and state. The data is continually analyzed at the local,
regional, and state levels to detect problems and fix cases
immediately--before benefits are issued incorrectly. This proactive
approach enabled Florida to rapidly and dramatically improve program
accuracy and maintain our standing as a national leader in program
The QMS case reading tool has been supported by FNS and introduced
to and shared with several other states. Just like Florida, many states
have discovered the direct link of case reviews to accuracy improvement
and maintenance. Florida has recognized the increased need to keep a
pulse on performance during stressful caseloads to avoid a breakdown in
program integrity. The commitment to this effort statewide resulted in
3 consecutive years of enhanced funding bonus payments. FNS has also
actively supported the sharing of innovative practices through state
exchange funds. Our staff have visited other states to learn their best
practices, and over 40 states have visited Florida to learn about our
improvements in technology and practice; in this time of rapid growth
and sparse funding, we and other states know the necessity of fresh and
effective new avenues to continue assuring program integrity.
Policy and Process Reforms
The groundwork for these remarkable achievements was laid in the
significant policy reforms of the 2002 and 2008 Farm Bills. Prior to
the 2002 bill, the program was overburdened with requirements that
caused some states to adopt procedures such as monthly reporting to
capture all the detailed household information the law required about
household circumstances. In addition, excessive Federal
micromanagement, a lack of state flexibility, and conflicts with the
Temporary Assistance for Needy Families (TANF) program and Medicaid
were among the problems that contributed to a sharp decline in SNAP
participation from 1995 to 2001, to high administrative costs, and to
increased QC errors.
The 2002 and 2008 laws' nutrition titles included many important
changes designed to improve SNAP administration and enhance access for
applicants and recipients. They reflected many of the reforms that
APHSA had advocated for years, particularly simpler procedures and
additional administrative options. Some of the significant changes
included allowing states to exclude certain types of income and
resources in conformity with TANF or Medicaid; providing for a
simplified utility standard; providing an option for semi-annual
reporting available to most households, with requirements to report
only significant changes during the 6 month period; and transitional
benefits for families moving from welfare. Several of these options
were extended to cover additional households and circumstances in 2008.
The USDA has augmented these and other important policy and process
reforms through flexibility in providing waivers and through sharing
and encouraging use of policy and administrative options such as
categorical eligibility. Its recent support of the use of telephone
interviews has been particularly helpful to states in handling the
In Florida, this has been an exceptionally important process and we
are thankful for the great relationship we have with the regional and
national offices of the Food and Nutrition Service. We have worked
collaboratively to understand issues and create real solutions to real
problems. Several Federal options, waivers, and demonstrations were
used to improve customer service and accuracy. Real and active
communication has been vital to exceptional performance.
As a leader of a state human service agency, I naturally take the
greatest pride in what states have done to take advantage of the policy
options and administrative flexibility available to us as well as to
develop modern administrative practices. Fifty states and jurisdictions
have adopted semi-annual reporting; 39 have implemented broad-based
categorical eligibility; 40 have adopted a simplified utility standard;
36 have adopted simplified definitions of income and resources; and 19
have adopted transitional benefits with more expected following the
recent publication of regulations that provide greater flexibility for
the option. In addition, over half the states currently use telephone
interviews waivers--a prime example of a policy that should be changed
to a state option. States have also made a significant commitment to
redesigning their business processes to take advantage of technology as
resources permit. States are adopting both internal and external web
applications; electronic case files through the use of document
imaging; call centers; closer relationships with community partners
that support the program; and business process redesign to eliminate
redundancies, obsolete requirements, and unnecessary activities.
Florida led the way for the now-national move to modernize program
services, with a complete redesign of an antiquated service delivery
model. Florida used strong technology innovations, waived old processes
and policy constraints, and built a community partner relationship that
has been modeled by other states. Florida created a 24/7 accessible web
application, virtual case files via document imaging, specialized call
centers for information, change reporting portals, and web-based
systems for use by internal staff and community partners. Without this
modern system and the badly needed American Recovery and Reinvestment
Act administrative funding, we would have been unable to provide
anywhere near timely services during the recession. With the system, we
were able to withstand an unprecedented increase in our caseload as we
improved accuracy and speed of determinations. Not just one option, but
the full package of all options and opportunities, was employed to
build this strong and effective system.
Program Performance Reforms
Prior to the 2002 program reauthorization, the quality control
system was the only program performance measure that received major
attention. The QC system required precise prediction and tracking of
participants' income and circumstances despite the volatility of those
factors among low-income families. The system was particularly unsuited
for fairly evaluating earned income, which often fluctuates for this
population and is therefore difficult to forecast and report. States
that exceeded the error tolerance were subject to significant
penalties. Those that were below the error tolerance were rewarded with
an enhanced administrative match. These factors drove states to adopt
policies like monthly reporting, short certification periods, and
strict verification of all eligibility factors, which made the program
complex and time-consuming for both staff and households and created a
significant barrier to participation and effective administration.
The 2002 legislation established a program performance system that
included several positive changes to the QC system and created a new
system of bonuses for states with high performance in not only benefit
accuracy but also other activities including application timeliness,
program access, and administrative processing of ``negative actions''
(denials, closures, and benefit suspensions). This served to broaden
the focus of the program to include areas of client service in addition
to benefit accuracy. This broadened approach plus reforms made to the
QC system have resulted in a welcome expansion of focus--at both the
Federal and state levels--on access and customer service and not just
the error rate. This more inclusive approach to program assessment has
in turn reinforced much of the program's recent policy and process
The most welcome QC system reform provided that only states with
persistently high error rates would face liabilities (in general, those
states where the error rate exceeds 105 percent of the national average
for 2 consecutive years). Also, USDA was given the ability to waive all
or part of a liability, and/or require up to 50 percent to be
reinvested in the program, and/or require 50 percent to be set aside
and either paid or forgiven depending on state performance. In
addition, the 2002 law provides $48 million in bonuses to be awarded
each year to the states with high performance in the established
measures. Over half of the amount is directed to states with the best
and most improved payment accuracy ($24 million) and correctness of
negative actions ($6 million); the remainder is divided among the best
states in application processing timeliness ($6 million) and program
access ($12 million). These changes have achieved their purpose of
sanctioning only ``outliers'' while encouraging steadily better
performance, and are surely a major factor in the remarkably improved
program integrity record states have turned in since then.
While the farm bills achieved substantial simplification,
additional changes are needed if we are not only to maintain but
enhance these remarkable achievements and keep errors low. For example,
states could benefit greatly from optional standardization in the area
of expense deductions. The program also needs other reforms designed to
reach the elderly and disabled, who remain a severely underserved
population. One of the most useful would be making the Combined
Application Projects (CAPs), under which SSI recipients can
automatically receive SNAP benefits, a nationally available option
rather than the currently approved small number of demonstration
projects. The existing CAP projects are simple, inexpensive, and far
more accessible to the elderly and disabled than the regular SNAP
program. Many of them have been in place for years, and this highly
successful model should no longer be considered experimental. For
example, Florida has been a successful CAP state for years, yet is
still required to perform separate evaluative reviews and provide
reports to FNS, and these cases are also subject to the Quality Control
sample. The documented success of the program should now alleviate the
states from persistent and ongoing excessive reviews and yearly
The program's continuing complexities also contribute to the fact
that SNAP still reaches just 67 percent of eligibles despite the recent
dramatic surge in the caseload. One of the major high performance bonus
categories in which states now compete is the increase in their
participation rate, yet even the best outreach efforts still run
headlong into SNAP's numerous eligibility requirements and ongoing
Performance Measures and Administrative Support
The high performance bonus system is insufficiently funded; it
provides only $48 million for all measures, an amount that is less than
the pre-2002 enhanced funding system had been paying out for low errors
alone. It also remains too entwined with process measures. For example,
the $6 million for the negative error rate primarily measures paperwork
and administrative processes rather than the true validity of denials
to ineligible persons. States should also always be allowed to choose
reinvestment of any sanction, rather than leaving that option to USDA.
Further reforms in SNAP administrative requirements and performance
measurement must be accompanied by corresponding improvements in SNAP
administrative cost reimbursement policy. The program's overall
administrative costs remain among the highest of any government program
due to its complexity and stringent QC oversight. Before 1998, the
Federal Government reimbursed states 50 percent of these costs.
However, enactment of cost-allocation provisions that year (which were
made permanent in the 2008 Act) have since cut the average nationwide
reimbursement of SNAP administrative costs to about 47 percent, and
some states receive barely above 40 percent. Since 1998, states have
lost nearly $200 million per year--a cumulative total so far of over $2
billion--in SNAP administrative reimbursements compared to previous
policy. These losses have greatly exacerbated the difficulty states
have in administering this program. The fresh infusions of
administrative funds in ARRA and in last year's Defense Appropriations
measure were most welcome and necessary, but only began to make up for
Another particularly important need in SNAP administrative cost
reform is modernization of the program's automated systems. While other
major human service programs enjoy enhanced match for automation--as
high as 90 percent--there has been no enhanced SNAP match since the
early 1990s. In that time, states have lost ground in their ability to
upgrade their SNAP information systems and take full advantage of new
technology that is far superior to the legacy systems still in place in
many states. The most common reason states report being unable to take
full and prompt advantage of simplification options and process
redesign is their lack of automation capacity and funding. Another
critically necessary step in automated system reform is a simple,
uniform, and responsive cross-agency procedure for approving Advance
Planning Document requests.
Our Vision for SNAP
The combination of unprecedented demand and declining state and
local capacity further highlights the need for program improvements
that APHSA has advocated for many years. While Congress and the
Department of Agriculture have made many significant SNAP reforms in
recent years, we strongly recommend additional program simplification
and removal of access barriers; additional administrative support, such
as that provided last year in ARRA and the Department of Defense
appropriations measure; a focus on accuracy in outcomes rather than
process; additional linkages with and coordination among other Federal
assistance programs; stronger support for nutritious food choices and
nutrition education; and far greater encouragement of program
Our recommendations for your consideration follow. While they are
grouped into categories, many serve multiple purposes; for example,
changes that reduce administrative barriers improve program access,
streamline the workload for program administrators, and enhance payment
accuracy. We also believe that simplified program rules and less red
tape will help families access more of the benefits to which they are
entitled and thus choose costlier but more nutritious foods, something
that will help in the fight against childhood obesity.
We appreciate the opportunity to provide this testimony and will be
pleased to answer any questions you have. We look forward to working
closely with the Subcommittee and full Committee as you develop
legislative proposals for SNAP reauthorization, and will be pleased to
assist you in any way to help make this critically important safety net
program stronger, more responsive, and more manageable.
Supplemental Nutrition Assistance Program_APHSA Recommendations for the
2012 Farm Bill
Enhancing Program Access
Amend SNAP law and provide funding so that states can
conduct pilot programs to test a variety of innovative methods
and alternative application strategies that remove additional
barriers and further streamline the eligibility and benefit
determination process, including a single portal for accessing
multiple programs or a human services electronic home.
Incorporate the Combined Application Projects into SNAP law
as a standard state option rather than continuing them as
demonstration projects; allow states to test CAP for additional
categories of households; and provide the funding necessary for
the Social Security Administration to support projects where
automated approval of the standardized SNAP benefit is based on
information shared electronically by SSA.
Restore eligibility for legal non-citizens by reinstating
the non-citizen policies in effect prior to the enactment of
welfare reform in August 1996.
Make permanent the state option in the American Recovery and
Reinvestment Act to suspend the 3 month participation limit on
Able-Bodied Adults without Dependents.
Allow up to 36 month certification periods for elderly/
disabled households with no earned income.
Reducing Program Complexity
Authorize a significant number of new demonstration projects
that drastically simplify the eligibility and benefit
calculation, including such examples as coupling presumptive
eligibility to new health care reform eligibility tests; basing
the benefit on income with only a deduction from earned income
and using an altered benefit reduction rate or an additional
standard deduction based on household characteristics; an
option patterned on the Minnesota Family Investment Plan to
allow a standardized SNAP benefit to TANF cash assistance
recipients; and optional use of a standard medical expense and
a standard deduction for medical insurance premiums for all
Remove barriers in current law that prevent the exchange of
data among public assistance programs that would streamline
application processing and simplify multi-program
Adjust the law to allow flexible interview requirements that
will support successful business process redesigns which may
currently be implemented only under waiver authority.
Establish a process of regular and systematic collaboration
among FNS, ACF, and CMS on projects that coordinate
administrative processes and projects, including a project to
rationalize income policy in four areas: (1) definitions of
countable income, including what is treated as earned or
unearned income; (2) verification of income; (3) budgeting
income (prospective, retrospective, period of income to use);
and (4) calculation of self-employment income, including
agreement on self-employment disregards or establishment of a
standard percentage deduction for self-employment disregards.
Supporting Nutritious Food Choices and Nutrition Education
Assure that SNAP nutrition education (SNAP-Ed) funding
continues to be available at current usage and projected growth
levels, and that no SNAP-Ed funding is used to offset increases
in other programs; and align nutrition education requirements
across all Federal nutrition programs so that they provide a
consistent nutrition message.
Expand the initiatives in the 2008 Farm Bill to identify and
implement positive incentives for recipients to choose
nutritious foods, particularly those that will impact the
problem of childhood obesity.
Provide strong positive incentives for health care programs
and providers to include nutrition counseling as a part of
well-child care and for persons suffering from obesity-related
Encourage non-traditional food providers to accept SNAP
benefits by developing or identifying funding to provide EBT
equipment and by eliminating current rules that discourage
these types of providers from applying to be authorized
Increase the annual funding for the USDA Community Food
Projects Competitive Grant Program and require USDA to actively
solicit projects that have a plan for involving SNAP recipients
as both customers and project participants.
Providing Adequate Funding for Nutrition Benefits
Retain the ARRA provision that continues the increased SNAP
benefit until the regular annual inflation adjustment exceeds
the 13.6 percent benefit increase.
Adopt the pre-1996 inflation adjustment formula that set
benefits at 103 percent of the cost of the Thrifty Food Plan
the previous June.
Strengthening Support for Administration and Systems Improvement
Continue annual allocations of 100 percent Federal
administrative funds, as has been done in 2009 ARRA and the DOD
appropriations legislation, as long as the present severe
fiscal conditions require.
Restore the normal SNAP administrative match rate to its
historic 50 percent level in place prior to the 1998 Balanced
Budget Act cost-allocation reductions.
Provide an increased, standard Federal match for automation
for SNAP and all other human service programs.
Direct FNS, ACF, and CMS to immediately and thoroughly
streamline and reform the badly outdated Federal Advance
Planning Document requirements.
Ensure that electronic benefit transfer and other electronic
payments will continue to be exempt from Regulation E
requirements and from any other mandates that would increase
costs for program recipients or for state and local agencies.
Increase funding for SNAP performance bonuses to allow more
states to be rewarded for exemplary performance and to shift
the performance oversight system toward one based on positive
Provide a mechanism for funding state-private partnerships
to provide inexpensive equipment to nonprofits that assist
people to apply for human services benefits online.
Mr. Kagen. Thank you very much.
I appreciate all of your testimonies.
Let me begin with a question to Madam Fong. You had
mentioned in your written remarks that there was an error rate
of about five percent of improper payments, to the tune of
about $1.7 billion.
And let me give you a little backdrop to this. When I
travel around my Congressional district, if I want to check the
pulse of the economy, I go into the grocery store and I talk to
the manager. And I ask him or her to compare for me this year
versus last year, what percent of your overall business is on
food stamps through the SNAP program?
And you just pointed out, Mr. Winstead, that in Florida it
has gone up dramatically. Well, in my Congressional district,
one store went from 22 percent of overall business to 50
percent; another store, from 25 percent to 48 percent. So, more
and more districts and rural areas, particularly in Wisconsin
and elsewhere, people are much more dependent now on gaining
their nutrition from this program.
So there will always be a highlight not in how well it is
working, but to focus--which is the oversight committee's
responsibility--to focus on what can be improved. So can you
make a few comments about the way in which we can improve and
prevent the improper payments, what you are doing, what you
think should be done?
It is an open microphone.
Ms. Fong. Well, we have done some audit work in the SNAP
area, and we have focused primarily on looking at the EBT
systems that SNAP uses to deliver the program. We have made
some recommendations to FNS on how the ALERT system and the
STARS system can be tightened up and improved. We are working
with FNS to deal with those kinds of issues and are optimistic
We also are going to be starting a significant effort in
the improper payments arena, as I mentioned earlier. Under
those laws--one was just enacted last week--we have to work in
conjunction with FNS to help make recommendations on how
improper payments can be addressed, how they can be reduced,
what effective ways there are going to be to really get to that
problem. Because if we can deal with improper payments in the
program, that just makes more money available to truly needy
Mr. Kagen. Let me direct that same question to Ms. Paradis
and also Mr. Winstead.
Ms. Paradis. Thank you, Congressman.
Well, there are a number of things that can be done and
that we are doing. And we are very grateful to both OIG and GAO
for giving us the kind of support and guidance and
recommendations that can be very helpful. They have a fresh
view and a different view from ours on occasion, and so we find
that actually very helpful.
But we already do things within FNS. For example, we have a
national payment accuracy working group. They are reviewing all
of the states. We get QC data month to month, and so this group
actually takes a look at that. And when they see a state that
is starting to get into trouble on payment accuracy, we can
jump in right away with our staff to work with that state and
make sure we can get the error rate down. And that has actually
been quite successful.
We have a State Exchange Program, where we actually have
some funds, a limited amount of funds, where we can actually
cover the costs of state officials to go to other states to see
what they are doing, go to conferences to see what they are
doing in the area of payment accuracy. So we have found that to
be extraordinarily useful, as well.
Of course, our biggest thing is the carrot and stick of our
QC system. We give performance bonuses to those states that are
at the very top, in terms of success. We also give bonuses to
the two top states that are most improved. And we have the
stick of liabilities for those states that are really
continuing to struggle and just aren't operating up to par.
We are actively working with states on business process
reengineering so that they can become more effective in what
they are doing and more efficient, and find ways to reduce
errors. We constantly are reminding them of ways that they can
make administrative differences, simplification policies that
we allow, and waivers.
And, of course, this Administration has done a number of
things that I think are going to help us to even focus better,
and that is the President's Executive Order on improper
payments. There are eight working groups now very, very
aggressively looking at these issues. FNS is on seven of those
And there is also something called the Partnership Fund for
Program Integrity, about $37 million that is going to be made
available to various agencies. We are seeking suggestions from
anyone in any quarter, from individuals to organizations, to
make recommendations in terms of how we might be able to
improve our processes.
And so, there is a lot going on. This is something that is
very important to FNS, and we are excited about the potential.
Mr. Kagen. Mr. Winstead, this state and Federal
partnership, how well is it working?
Mr. Winstead. Thank you, Mr. Chairman.
I think it is working very well. And, as I mentioned in my
testimony and as the Administrator indicated, I think the state
exchange and collaboration and partnership, both between the
Federal agency and states as well as states helping each other,
But, the way that we leverage that and the way we make it
consistent is we have to go from top to bottom and bottom to
And to give you a quick illustration, for example, in
quality control in Florida, we pull a little over 1,000 cases
in the active roles, about 800 negative cases, so maybe 1,800
cases are in an annual sample. We have 4,000 eligibility staff.
So if I am an eligibility worker, I may or may not get a case
pulled by quality control this year. So, in terms of my
performance, I need something else to give me good feedback.
And in our quality management system last year, we
reviewed, second-party reviewed in validation, 149,205 cases.
This year so far through June, we have reviewed 82,358. You can
see those large numbers. That way we are able to take the
trends that we learn about from the national trends from our
state analysis at QC, particularize it, and make sure that it
touches the day-to-day work of every eligibility worker and
supervisor in our state and guides their action in the
assessment of their performance throughout the month.
Mr. Kagen. Thank you very much.
Mr. Fortenberry. Thank you.
Ms. Fong, I would like to start with you. In fact, I like
the phrase--it is an unfortunate reality--about the trafficking
of SNAP benefits. You had suggested that there is money being
Two questions, is the trafficking of SNAP benefits more
pronounced in a particular area of our country, or is it a
widespread problem, geographically diverse? And which countries
are involved in money being transferred or funneled overseas?
Ms. Fong. I would say that we don't necessarily see
trafficking in any particular identifiable locations. We do see
it across the country. We have big investigations going on in
the Midwest, in Florida, on the West Coast, up in the
Northeast. So I don't think it is confined to any particular
region of the country. Wherever there are stores and retailers,
we are going to probably see those kinds of issues.
Mr. Fortenberry. Well, I was hopeful you would say this
doesn't happen in a place like Nebraska.
Ms. Fong. I can't think of a big case in Nebraska.
Mr. Fortenberry. Okay. Thank you.
Ms. Fong. You are welcome.
In terms of monies going overseas, we don't know exactly
where they end up, but we do see them moving to countries in
the Middle East, around the Horn of Africa, and some of the
lesser-developed countries across the ocean.
Mr. Fortenberry. Is there some different criminal process,
other than simply selling the SNAP card for cash, as you
suggested in your earlier testimony? Is there some other way of
conniving the benefit to be transferred overseas?
Ms. Fong. Well, what we have seen, the kinds of schemes we
have seen involve trafficking, where people will bring their
card in, swipe it for cash, and then the retailer will take
that money, and sometimes that will get funneled overseas.
There are also situations involving the use of Hawala,
which are money transfer systems--it is a way of transferring
funds from one country to another without using the formal
banking system. And in those kinds of situations, we coordinate
with the FBI and with the Department of Justice to work those
Mr. Fortenberry. So this is just another manifestation of
the original type of theft that is going on at the retail
level, where you have two people conniving to basically get the
benefit for cash at some discount agreed upon by the retailer?
Ms. Fong. Right. They are all variations on the same
Mr. Fortenberry. Okay.
Mr. Winstead, you had talked about Florida having the
highest payment accuracy rate in the nation?
Mr. Winstead. Yes, sir.
Mr. Fortenberry. Now, why is that?
Mr. Winstead. I think there are multiple reasons, and the
chief among those is the really diligent hard work of a whole
lot of people. But, as I indicated, I think our quality
management system is an important part of that. I think we have
worked very closely with FNS on program simplifications.
And another big reason is our automated system. We have
completely retooled our automated system so that we have good
controls and good responsiveness, and we are able to do a lot
of electronic exchanges. We do external data checks with about
20 other systems to verify the accuracy of the information that
people are telling us. I think all of those are part of the
Mr. Fortenberry. Ms. Paradis, would you consider Florida to
be an optimal model for state implementation, in terms of
Ms. Paradis. Oh, yes, I absolutely do. One of the things
that I think works so terribly well, as Mr. Winstead mentioned,
is that we actually do have the ability to have states share
their good news with other states around the nation. And I dare
say state exchange has been a significant factor in terms of
bringing the payment accuracy rate up and the improper payment
rate down, because states have been able to get together.
I have been at meetings with the various states when they
get together, and there is great collaboration, respect, and
understanding. And so, I think that Florida can, indeed, be a
model and is a model.
Mr. Fortenberry. Other than goodwill and people who are
acting with integrity in their efforts at public service, what
incentive is there for a state to implement more aggressive
programs that ensure the integrity of the delivery of the
Ms. Paradis. Well, our traditional QC system, which has
been in existence for decades, as I mentioned earlier, does
provide both a carrot and a stick. States get performance
bonuses if they are among the top, if they have great success
at the top. And even those who are most improved get bonuses.
States who are at the very bottom, who are not as
successful in keeping their error rates down, actually are
assessed penalties. And over a course of time, if they are not
able to improve, we do collect those monies. And so that is a
very powerful incentive for states.
Mr. Fortenberry. All right. Thank you.
Mr. Winstead. Mr. Chairman, if I could quickly add, just as
an illustration, in 2006 we received one of those penalty
letters telling us if we didn't do better, that we were going
to face stiff financial penalties. And that certainly got our
And then, as a result of the actions that we implemented,
we received $5.48 million in 2007, over $7 million in bonus
recognition in 2008, and in 2009 we received $11.5 million.
That not only gets our attention in a very positive way, but
also the attention of the Florida Legislature as they consider
the job we are doing.
Mr. Fortenberry. Good. Thank you.
Mr. Kagen. The chair now recognizes Mr. Schrader.
Mr. Schrader. Thank you, Mr. Chairman. I appreciate it.
I would like to follow up on Congressman Fortenberry's line
of inquiry. How many states now currently have the type of
automated system that Florida does?
I direct that to Ms. Paradis or Mr. Winstead, if he knows.
Ms. Paradis. I am sorry, I am not able to answer that
question. We will be happy to take a look and do a review of
our states and get that information back to you.
Mr. Schrader. Mr. Winstead, any----
Mr. Winstead. I also need to check. I don't know how many
specifically. I know that there are a number of states, over 40
states, that have visited our state to look at our systems and
learn. And there are a couple of states that my staff have gone
to where they say that what they are doing is even farther
advanced than what we are doing.
So, there are a number of states, and the ones that don't
have these systems are rapidly moving in that direction. As
much as--I mean, the limitation there is, of course, many
states are in very deep difficulty right now, financially, and
that is a concern.
Mr. Schrader. Well, the reason I raise that is that,
perhaps one of the incentives, I don't know if you are
empowered to do it now--would be to provide a bonus if one does
go to a more automated system, so that the states might be able
to find some money, as long as there is Federal assistance, as
part of your bonus program. I am just trying to be thoughtful.
With the study that is going on right now about the 2006,
2008 errors in trafficking and stuff, what does the Department
expect to find? I mean, I guess that is coming due next year.
Do you have any idea? I mean, it has gone down dramatically. Do
you have a feel for where you are going to end up?
Ms. Paradis. We don't know yet. But we are really looking
forward to what we can learn from that study. You know, we
constantly are studying across a whole range of these issues,
constantly trying to study what we can learn about them, so
that we can better respond and improve the effectiveness and
the efficiencies of these systems.
Mr. Schrader. When was the EBT card system put in place? I
don't know that. I am a new----
Ms. Paradis. Oh, it started many years ago. It took some
time for all of the states to come onboard. I think the final
state came onboard in 2004. And just about a year ago, we
disbanded any possible use of any remaining food coupons that
are out and about.
Mr. Schrader. Okay. So then I would optimistically assume
that the rate would come down even further than in your more
recent study, hopefully.
Ms. Paradis. We are certainly hopeful.
Mr. Schrader. Is there a tipping point, if you will? I
mean, error rates are error rates, and errors do happen.
Florida seems to be exceptional; having an error rate at less
than one percent is amazing.
Is there a point at which you get diminishing returns in
terms of the amount of money either Congress or the state
spends trying to reduce errors? Is there a goal that the
Department has in mind?
Ms. Paradis. I appreciate that question. We have for the
entire history of the Food Stamp Program tried to find the
proper balance between accessibility--making sure that eligible
people are participating--and program integrity.
I will tell you that I was absolutely stunned when I
learned that our payment inaccuracy rate had gone down to 4.36
percent. I never dreamed I would see it below five percent.
When we reached that, I thought, ``We have gone about as far as
we can go.'' So I am now wondering what might happen next year,
if we can maintain that same level of success.
If you look at the participation rate, which is about 66
percent of those people who are eligible--and that is a major
part of what we are about, is trying to make sure that every
single eligible person in this country gets the nutritional
benefits that they deserve--we really have a lot of work to do
on that side of the shop, as well.
I think we have it in pretty good balance right now. We
have had a lot of practice at it. But it is something that we
are constantly mindful of.
Mr. Schrader. Last question, and I know it will come up at
some point, but what percentage of problems do you have with
unauthorized immigrants in this country accessing SNAP
benefits, given the new system you have?
Ms. Paradis. Well, of course, you know that illegal
immigrants are not eligible. They never have been eligible for
this program. And President Bush, working with Chairman Baca
and the Congress in 2002, did restore eligibility to legal
immigrants, who had been removed from the program in 1996.
Just like when any other applicant tries to defraud the
system, the states are empowered to investigate those cases if
the concern comes up as the application is being looked at by a
certification worker. It can also come up, perhaps, in a QC
review of ongoing cases. And then those recipients can be
prosecuted at the state level.
Mr. Schrader. Thank you.
I yield back.
Mr. Kagen. Thank you very much.
Mrs. Lummis. Thank you, Mr. Chairman.
Ms. Brown, you mentioned that, in spite of some states like
Florida that have extraordinary accuracy rates, that there are
still inaccuracy rates that exceed what should be acceptable.
Do you make recommendations on how states that are under-
performing can accelerate their level of accuracy?
Ms. Brown. Well, first, I would like to say that one of the
things we have noticed over time as the error rate has gone
down is that the spread between the states in the error rate
has become smaller. When we first started looking at this, some
states had 10-12 percent error rates, and now I believe only
five states have higher than six percent, and it is just a
little above six. I think that is an important thing to note,
as far as the progress goes.
The recommendations that we make are typically
recommendations to USDA, and recognizing that they then have
the responsibility to work with the states to try to improve,
continue to improve the error rate.
Mrs. Lummis. Thank you.
So, turning then to USDA, who is primarily responsible, who
is on the front lines of accuracy in eligibility? Is it the
states, or is it the USDA?
Ms. Paradis. The people on the front line, of course, are
those thousands of caseworkers across our country who have the
responsibility of taking those applications and making those
Mrs. Lummis. So it is the states.
Ms. Paradis. But we have the responsibility to give every
type of assistance that we possibly can to the states. So, we
actually see it as a very robust partnership.
It is important to us. The American people are our bosses,
and we have responsibility for those Federal taxpayer dollars,
and we take it extraordinarily seriously. And so we are very
aggressive in working with the states, and have been for many,
many, many years, in terms of giving them every kind of
assistance we possibly can to get those error rates down.
Mrs. Lummis. But is it fair to say that because the states
are subject to carrots or sticks for under-performance or
exceptional performance, that it is the states that are really
on the front lines?
Ms. Paradis. I think that is fair to say.
Mrs. Lummis. Okay. Then I want to turn a question to Mr.
Are you familiar with the National Governors Association's
Center for Best Practices?
Mr. Winstead. Yes, Congresswoman, very familiar.
Mrs. Lummis. And could you explain why you are familiar,
and whether Florida has participated as a state that uses best
practices with regard to this particular program to help other
states with their compliance?
Mr. Winstead. As your question indicates--first of all,
there are two aspects of it that I would underscore. First of
all, the National Governors Association does have a Center for
Best Practices that helps bring states together and learn from
one another and facilitate that action. Of course, my agency,
the Department of Children and Families, we administrator
multiple human services programs, and we have worked with the
NGA Center on Best Practices in a number of those programs.
The other thing I would add, too, is that the organization
that I am a member of and represent today, the American Public
Human Services Association, performs a similar function for
states. This is the association of the folks who run the human
services agencies in each state.
We at APHSA link very closely with the National Governors
Association because the Governors are our bosses, so we work
hand in hand. And APHSA and through our various affiliates,
including the directors of the SNAP programs around the
country, all work very closely together on improving program
performance, and including idea-sharing in that agenda.
Mrs. Lummis. And for all the panelists, I am still a little
baffled by the fact that expanding eligibility from TANF to
SNAP actually improves accuracy. In some ways, that is a little
counterintuitive because, in my mind, I am thinking maybe a
double-check would ferret out mistakes that may have been made
in determining, initially, eligibility for TANF. Could you help
disabuse me of my thinking?
Ms. Paradis. They are all looking at me, so I guess I have
to take the first crack at that.
The way that it can affect error rates and bring error
rates down is because it is a significant simplification of the
application process, both for the recipient as well as the
caseworker. Occasionally, we will have recipients who make
unintentional errors when they are applying for the program.
And we have caseworkers who also unintentionally make mistakes.
Those kinds of errors can be reduced quite dramatically by this
And it also does simplify the program in a way. For years,
we have been looking for ways to simplify the program. There
been any number of people who have called for many years that
we take a look at the wide range of Federal programs that we
offer to low-income people here. And this is a way where TANF
and the SNAP program are working very well together.
Mrs. Lummis. Thank you, Mr. Chairman. I yield back.
Mr. Kagen. Thank you. Mrs. Dahlkemper from Pennsylvania.
Mrs. Dahlkemper. Thank you, Mr. Chairman. Thank you all for
joining us today. I have a number of different questions, but I
am very interested, as I know all of us are, in trying to
improve the nutritional quality of the SNAP program. One of
those things that we have been trying to do is increase access
to farmers markets. So I want to start with Ms. Brown, because
in your findings I know you said errors have been higher, more
frequent in smaller stores. And nothing--I didn't really see
anything about farmers markets. And so has there been any study
on the farmers market issue?
Ms. Brown. We haven't done any studies on farmers markets
in error rates. I don't know if you have any information.
Mrs. Dahlkemper. Does anyone else have any information on
Ms. Paradis. I don't have that information with me this
morning, I am sorry. I am more than happy to take a look at
what data we do have and share that with you.
Mrs. Dahlkemper. Because I know one of the issues obviously
is trying to get EBT available in farmers markets. If you have
any of that information I would be very interested.
Ms. Paradis. I would be happy to share that with you. As
you probably already know, in the President's proposed budget
for 2011 we had requested $4 million for equipment for farmers
markets. Our goal is to have every farmers market in the
Mrs. Dahlkemper. Another question I wanted to ask, I have a
number of questions, but, Mr. Winstead, you had mentioned in
your testimony that the elderly and disabled are those who we
are having most difficulty reaching who are currently eligible.
And so if you can maybe expand a little bit on what you think
could be done to try to reach them.
Mr. Winstead. Sure. Yes, ma'am. I think, and particularly
coming from Florida, where we have such a large elderly
population, this is a particular concern for us.
Mrs. Dahlkemper. I am from Pennsylvania and I think we are
like number two after you.
Mr. Winstead. A couple of things there. And of course we
work very closely with our colleagues in the Florida Department
of Elder Affairs that helps us with a lot of outreach. They
also administer a number of feeding programs for the elderly.
Two things that we have done that are important. First of all,
we have the SUNCAP waivers, what we call it, a waiver so that
individuals can get SNAP benefits as part of their application
for SSI. I think that is a way to make it easier for people to
be able to access the program.
Many states use that strategy. That is also an area where
we feel it would be a step forward, because that is a waiver
that we have to renew periodically, and we have to meet certain
cost neutrality requirements and all. I think if that were just
more of an option rather than a waiver program that would be a
step forward in improving access.
The other thing that we do is we partner very closely with
over 3,000 community partners who provide automated access to
the program, including aging resource centers and programs that
serve the elderly and disabled to try to make sure that we
reach everybody who is potentially eligible. We want to make
sure they understand the benefits of the program in a context
that is familiar to them, and doesn't involve coming to another
government office and filling out another piece of paper.
Mrs. Dahlkemper. Thank you. I want to ask Ms. Paradis, the
question is sort of a little bit off of what we have been
talking about today, but it has to do with education and SNAP-
Ed. And that on the website you have a recipe finder database
and a guide, Eat Right When Money's Tight. But I am concerned
that not enough of our SNAP recipients would have access to
this. I am from the Commonwealth of Pennsylvania, a state with
a lot of elderly. Many of them do not have access to the
Internet. Those who are low-income often do not have access to
So what I am wondering is perhaps if there could be some
way to better reach these beneficiaries, and have you thought
about that? Maybe offering something in the grocery stores
where you have a large number of SNAP recipients. And so maybe
you can let me know if there is anything going on in that
Ms. Paradis. I am happy to. We provide millions of dollars
to states so that they can conduct SNAP education in various
communities. It has been very, very successful. Every single
state has a SNAP-Ed program. And that is the way to sort of get
this into communities. I think some states do exactly as you
have suggested, have things in grocery stores. I am always
amazed when I go and meet with folks who are engaged in our
SNAP-Ed program at the state and local level at the wide range
of activities that they are engaged in.
So we are very, very pleased with our SNAP-Ed efforts. It
is a big part of what we do at FNS, it is a big part of what we
focus on, working with those organizations that get those funds
to make sure that the kind of activities, and the type of
education that they are involved in and providing, are
appropriate, follow the dietary guidelines, and follow the
nutritional guidance. We believe that that is a powerful way to
make sure that SNAP recipients are indeed making the most
nutritious purchases possible.
Mr. Kagen. Thank you very much, and your time has expired.
And if any panel member has any other questions they can submit
them in writing. I am sure that our guests and witnesses would
be happy to respond. Thank you very much, panel one. You are
I now call to the panel Mr. James Weill, Scott Faber, and
Jennifer Hatcher. Thank you for joining us this morning. We
will first hear from James Weill, President of Food Research
and Action Center, Washington, D.C. Welcome, Mr. Weill.
STATEMENT OF JAMES D. WEILL, PRESIDENT, FOOD RESEARCH AND
ACTION CENTER, WASHINGTON, D.C.
Mr. Weill. Thank you. We appreciate the opportunity to
testify here this morning. The Food Research and Action Center
is committed to ending hunger in this country. And last year 18
percent of households reported to Gallup that there had been
times in the last 12 months when they didn't have enough money
to buy the food that they or their family needed.
So a strong SNAP program is absolutely essential to reduce
hunger, and the role of SNAP has become even more essential as
the recession has continued. There are now more than 40 million
recipients, a majority of them children and seniors, and that
is up nearly a third from 2 years ago.
SNAP delivers benefits in a very efficient way because it
relies on regular commerce. Recipients use EBT cards at regular
grocery outlets. And economists report that dollar for dollar
SNAP is almost certainly the strongest countercyclical anti-
recession program the nation has, as you alluded to earlier.
Thus, SNAP is fundamentally a strong program. But keeping
it strong requires that the public policymakers and
beneficiaries have confidence in its integrity. The quality
control system, especially with the modifications made in the
2002 Farm Bill and since, is an effective tool to create a
basis for any needed corrective actions, and also to assure the
public and policymakers of SNAP's fundamental integrity.
States partnering with USDA have made great progress in
reducing errors. Indeed, the 2009 payment accuracy rate, as
indicated earlier, was at an all time high. And I want to give
you a different number, an additional number, from that 2009
report. The percentage of benefit dollars that went to eligible
people was 98.81 percent, almost 99 percent. And even among the
relatively few incorrect payments, many of course are not
overpayments but are underpayments or incorrect denials of
eligibility. When hungry people don't receive benefits that
they need, that hurts health and productivity and children's
development and learning.
There are also other quality problems that don't fall
within the ambit of the definition of quality control, strictly
defined, but nevertheless have an equally important impact on
program performance and access among eligible people.
Despite progress in recent years, SNAP still is missing \1/
3\ of eligible people. You asked, Representative Kagen, earlier
how the program can be improved. We need continued efforts to
address barriers to access. Earlier the question of diminishing
returns also came up, but simplification of the program can
produce more returns in terms of both access and integrity.
More simple criteria and processes are essential under both
Federal and state rules.
States need to be more responsive in taking the many
options they have under current law to reduce red tape and
unnecessary steps, and simplify the program. And delays in
making eligibility determinations are another serious problem.
Federal rules require states to process SNAP applications
within 30 days, 7 days for the neediest households, and states
have to do better. But this also requires more administrative
support, adequate numbers of case workers and adequate computer
Congress can help on all this in important ways now, and in
the farm bill coming up. One key step is addressing the
adequacy of benefits. The monthly SNAP allotment is predicated
on the Thrifty Food Plan, which was developed in the 1930s. It
is a restricted diet for emergency use. It typically carries
even the most careful families only about \3/4\ of the way
through the month. Our written testimony lays out a number of
steps to make benefits more adequate. But among them are
maintaining the value of the boost and benefit amounts that was
included in the Economic Recovery Act, not letting that higher
level erode with food cost inflation, and also certainly not
letting the boost be rolled back, as some want to do, to use
the money as an offset for other purposes.
Other key steps on the benefit front include increasing the
minimum benefit and improving earnings disregards. And there
are also ways to get better access to healthy, reasonably
priced food through development of supermarkets and other
outlets in food deserts, and by equipping farmers markets with
Our testimony also addresses a number of access problems
that should be dealt with in the coming years, including
several strategies. I will only mention two here. One is
allowing all states to use the CAP model that seamlessly
enrolls elderly and disabled SSI recipients into SNAP that
Florida is using. All states should be allowed to use it.
And second, providing adequate resources to states and
community partners for outreach in nutrition education.
So we thank the Committee for the opportunity to testify
[The prepared statement of Mr. Weill follows:]
Prepared Statement of James D. Weill, President, Food Research and
Action Center, Washington, D.C.
Chairman Baca and Members of the Subcommittee, thank you for the
opportunity to testify here today.
I am Jim Weill, President of the Food Research and Action Center
(``FRAC''). The Food Research and Action Center has been working for 40
years to reduce poverty and end hunger in this country. Through
research, policy advocacy, outreach, public education, and training and
technical assistance for state and local advocates, public agencies,
officials and providers, we seek to strengthen the nation's public
nutrition programs--have them reach many more people in need and do so
with adequate benefits that support health and well-being.
FRAC has been instrumental in helping to launch, improve and expand
the Supplemental Nutrition Assistance Program (SNAP, formerly Food
Stamps), WIC, school breakfast, after school food, summer food and
other nutrition programs.
We appreciate your oversight hearing today to review SNAP Quality
Control (QC) provisions and will offer views on payment accuracy as
well as other related indicators of SNAP effectiveness.
Program access and integrity are important to SNAP's success in
addressing hunger and food insecurity and promoting good nutrition and
healthy outcomes for vulnerable Americans. We all are well-served when
a program is not over-utilized or underutilized, and when the public,
policymakers and beneficiaries have confidence in the integrity of the
workings of a program.
The SNAP QC system assesses the degree to which payments are going
correctly to eligible people and in the correct amounts. The SNAP QC
system--especially with the program modifications from the 2002 Farm
Bill and since--is one effective tool Federal and state policymakers
and administrators have to evaluate SNAP's delivery of benefits as
intended under program rules, and on which to base corrective actions
In the 2002 Farm Bill, Congress made a series of improvements to
the Food Stamp Program (the name changed to SNAP in 2008), including:
improving QC tests for payment accuracy measurement; prioritizing the
imposition of QC sanctions onto states that register persistently high
payment error rates; directing USDA to provide a total of $48 million
in bonus awards to states for effective program administration; and
giving states greater options to streamline application certification
procedures and better coordinate certification rules with those in
other means-tested benefit programs.
Since the 2002 Farm Bill, states, partnering with USDA, have
continued to make considerable progress in reducing errors in benefits
issuance and keeping error rates low, and fewer states have been in a
liability-for-sanction status. Indeed, in June USDA announced that the
FY 2009 SNAP rate of payment accuracy was 95.64 percent, an all-time
high. More progress is especially needed to lower the ``negative error
rate'' (which measures the percentage of households improperly denied
or terminated), but the trend in that measure also is encouraging. For
FY 2009, the negative error rate declined for the second year in a row.
Strengthening SNAP is Important for Needy Households and the Nation as
Strengthening SNAP is important because the program is so important
to struggling households and to the nation and its economy. Hunger in
our midst offends Americans of every party, religion, ethnicity, and
income. But hunger also is, in its practical effect, one of the most
fundamental problems our nation faces. It adversely affects health,
early child development, educational opportunities, productivity and
family dynamics. Americans can't learn, live, grow and prosper if they
don't have adequate, healthy nutrition.
Even before the recession began there was widespread food
insecurity in the U.S. The recession obviously has made this situation
far worse. According to Census Bureau/U.S. Department of Agriculture
official data, 36 million people in the U.S. lived in ``food insecure
households'' in 2007, before the recession, and 49 million did so in
2008 (2009 data are not yet available)--a big jump in the first full
year of the downturn. The government classifies households as ``food
insecure'' when they cannot afford to purchase a minimally adequate
diet on a consistent basis. Many, but not all, of them are skipping
meals and frequently experience hunger.
Moreover, there are more recent data, from Gallup polling analyzed
by FRAC, which show that 18 percent of American households (24 percent
of households with children) reported in 2009 that there had been times
in the past twelve months when they did not have enough money to buy
food that they or their family needed. This ``food hardship'' is found
in every congressional district in America. In 311 Congressional
Districts 15 percent or more households answered ``yes'' to Gallup's
question. (For a breakdown of food hardship by state, metropolitan
statistical area, and Congressional district, see http://frac.org/pdf/
SNAP is the largest nutrition program and the nation's best defense
against hunger. Even before the recession the program was among the
largest and strongest public programs that provide economic and
nutrition support to low-income Americans. But the role of the program
has become even more essential as the recession has deepened. In April
2010 (the latest month for which there are data) there were more than
40.4 million SNAP/food stamp recipients, compared to 28.2 million 2
SNAP also boosts the economy. Dollar-for-dollar, it is almost
certainly the strongest countercyclical program the nation has. The
money goes to very needy people who have trouble paying their food and
other bills, and who therefore spend these funds quickly, so that they
go immediately into the economy with very positive multiplier effects.
Based on USDA research, every Federal SNAP dollar generates nearly
twice that in economic activity.
Most SNAP beneficiaries are children (49 percent) or persons 60
years of age or older (9 percent). They are in households with very low
incomes: Only 13 percent of all SNAP households have income above the
Federal poverty line; nearly 41 percent have incomes at or below half
of the poverty line.
Many are in working families. In 2008, 40 percent of SNAP
participants lived in households with earnings, double the percentage
of working households in 1989.
USDA reports that SNAP benefits comprise nearly 24 percent of the
monthly funds available to the typical SNAP household (gross income
plus SNAP). Less than 11 percent of all SNAP households receive cash
benefits through the Temporary Assistance for Needy Families (TANF)
Program; another five percent receive cash benefits through General
Assistance (GA). Programs targeted to elderly persons and persons with
disabilities also assist SNAP participants. Twenty-six percent receive
Supplemental Security Income (SSI), 25 percent receive Social Security,
and ten percent receive both of those benefits.
SNAP delivers vital benefits in an efficient manner in large part
because it relies on regular streams of commerce. SNAP shoppers spend
their benefits at regular grocery stores. Moreover, their benefits are
loaded onto Electronic Benefit Transfer (EBT) cards that operate much
like the other debit and credit cards that other customers use to make
their purchases at food retailers. This public-private partnership
aspect of SNAP is valuable: relying on existing private sector
retailers and EBT processing systems saves the government from having
to develop and maintain separate distribution systems for getting food
to more than 40 million needy people each month and allows SNAP
recipients more dignity in their use of the benefits.
These and other strengths of SNAP have earned broad bipartisan
public and policymaker support. Indeed, a couple of years ago, the
National Journal ran a lengthy piece on ``10 Successes [and] 10
Challenges'' in American society--major issues in the public and
private sectors. Alongside cleaner air, American entrepreneurship, and
seven other successes was food stamps, described as ``A Government
Reform That Worked.''
SNAP is very important and very effective, but its reach is
undermined by gaps in access and adequacy of benefits as well as by
administrative burdens. Even with the boosts provided in the American
Recovery and Reinvestment Act (ARRA), the average SNAP benefit per
person per day is only about $4.50. And only two in three eligible
people actually participate in the program.
Maintaining Low Error Rates and Getting Accurate Data to Policymakers
and the Public is Key to Maintaining Confidence in the Value of
Public confidence in program integrity--and ultimately in the worth
of the program--depends on maintaining low error rates and on having
accurate facts about SNAP and its operations. QC helps lower error
rates and publicize these facts, and shows there is a high level of
Unfortunately, there is an all-too common misimpression that even
the relatively small number of cases in the SNAP QC error rate all
represent ``fraud.'' This equivalence is misplaced.
The QC payment accuracy rate measures whether SNAP payments go to
eligible people and whether payments are in correct amounts (not too
high, and not too low). Moreover, erroneous payments count toward the
error rate whether they are the result of unintentional or intentional
mistakes. And the errors do not belong to beneficiaries alone. Far from
reflecting client mistakes, many SNAP payment errors result from
unintentional mistakes by caseworkers. Overall, the breakdown in SNAP
cases between agency-caused errors and client-caused errors is 70
percent to 30 percent.
Similarly, almost all clients who receive SNAP benefits are
eligible for some amount, so that even many QC-countable errors that
favor clients are simply computational errors in benefits to eligible
people. In FY 2009 98.59 percent of SNAP cases were eligible for a
benefit. The percentage of benefit dollars that went to eligible people
was even higher (98.81 percent).
Moreover, SNAP benefit overpayments can lead states to recoup the
excess amounts by deducting benefits from clients' future allotments.
This is so (1) even if the clients did not cause the errors
intentionally, and (2) even if the caseworkers, not the clients, caused
the errors. The amounts at issue can be large, and first notifications
clients receive about the problems and the recoupments can come long
after errors have occurred. The recoupment of past benefits can be an
unsettling process for SNAP households struggling to make their current
benefits last through the month.
Finally, benefits are used overwhelmingly for the purpose for which
they are distributed-food purchases. This has become even truer with
the advent of EBT in place of paper coupons. That transition in
distribution method has had positive ramifications for curtailing the
illegal sale of SNAP benefits for cash (so called ``trafficking''). New
technologies have given Federal and state administrators tools to
identify unusual patterns of EBT redemptions and to target
investigative resources for maximum impact.
Many Errors Disadvantage SNAP Clients
As noted above, the notion that SNAP clients always or typically
benefit from erroneous payments when errors occur is far from the case.
A significant portion of the overall SNAP payment error rate reflects
underpayments, Federal funds that were intended for needy eligible
people and instead were not expended. While that result may be lower
Federal expenditures, it is hardly a happy--or appropriate--result for
SNAP households or the program itself. Some of those clients abandon
the process and never receive benefits; others are forced to go through
the application process again. In the meantime they miss out on
benefits for weeks or months while their renewed applications are being
Nor are negative errors good news for states. A preliminary USDA
review of improperly denied or terminated cases suggests that within 6
months of denial, approximately half of the denied or terminated
households reapply and are found eligible. This results in 1\1/2\ times
the work for offices to process those same households, duplicative
effort few if any SNAP agencies can afford in light of tight state
budgets and the enormous demands for assistance driven by severe
We appreciate the focus USDA and its state partners are placing on
reducing the too high negative error rate and identifying best
practices for making progress on this front.
Other Indicators of Program Operations
There are other quality control problems--small ``q'' and small
``c'', as it were--that aren't within the traditional SNAP QC
definition per se but have important impacts on payment accuracy and
overall program performance. They include too-complicated rules built
into the program or maintained by some states, despite options to do
otherwise; delays in state action; problems caused by under staffing;
and other similar problems.
Congress and USDA agree that we must tackle these problems as well.
Pursuant to the 2002 Farm Bill authority, USDA's bonus payments to
states for program performance include not only ``best'' and ``most
improved'' in payment accuracy and ``best'' and ``most improved'' on
negative error rate, but also ``best'' and ``most improved'' on the
percentage of eligible low-income residents participating in SNAP, and
best on state processing SNAP benefits in a timely manner.
Options to simplify and streamline eligibility determinations and
determinations of benefit amounts, such as the 2002 Farm Bill
provisions which allow states to align various benefit program
definitions for income and assets, help address some of the factors
that lead to errors. States need to be more responsive in taking the
many options they have under current law to simplify the program. But
more simple criteria and processes are needed--a strategy to improve
the situation for states, hungry people and taxpayers. As GAO has
noted, ``multiple variations in approaches to identifying recipients'
income for determining program eligibility [in different means-tested
benefit programs] are likely contributing factors'' to payment
errors.'' (Testimony before the Subcommittee on Federal Financial
Management, Government Information, Federal Services, and International
Security, Committee on Homeland Security and Governmental Affairs, U.S.
Senate, Progress Made but Challenges Remain in Estimating and Reducing
Improper Payments, Statement of Kay L. Daly, Director Financial
Management and Assurance, GAO (delivered 4/22/09), GAO-09-628T, at p.
Correct outcomes in case processing--eligibility and benefit
determinations that are correct and timely--also entail having
sufficient administrative support, adequate numbers of trained
caseworkers, and adequate computer systems. The additional
administrative funding provided in both the American Recovery and
Reinvestment Act and the FY 2010 Defense spending bill were important
to assist states in processing SNAP applications at a time of acute
economic need and rapid increases in requests for SNAP. Ensuring
adequate supports to states for SNAP administration should remain a
high priority for achieving goals in both the access and integrity
areas. This is true both in the short and medium term as unemployment
and SNAP applications are likely to remain high, and in the longer term
since many of these problems predate the recession in many states.
Timeliness is one key piece of this. Federal rules require states
to process SNAP applications within 30 days (or within 7 days for
expedited benefits for households with very few other resources to
purchase food). These standards are in recognition of the reality that
food is a basic need and delays in access to it spell less adequate
health and nutrition and more hunger for vulnerable people. In recent
months, the depth of economic need has led to record numbers of SNAP
applications and record high enrollment, but in many areas that also
has contributed to delays in states and counties getting SNAP benefits
out to eligible people. Some of the delays have led USDA to work with
the states on corrective steps; and some have led to litigation and
Processing delays leave clients without benefits for weeks or
months when they should be receiving them, add to state and county
administrators' workloads as increased calls about the status of
applications stream into SNAP assistance offices and call centers, and
deprive local economies of the immediate boosts that the missing
Federal dollars could be providing. We encourage USDA and states to
continue to identify and implement options and practices that reduce
unnecessary questions on applications, reduce unnecessary verification,
and otherwise streamline the certification process and reduce workload
as part of the effort to achieve timeliness in processing. Moreover, we
urge states to invest in additional staffing where needed to reduce
backlogs in applications and to provide more adequate client service.
Once a household is certified for SNAP, that household may become
disconnected at recertification for what often is coded as ``procedural
reasons.'' Unfinished or lost paperwork and difficulty in scheduling or
making recertification interviews--not an improvement in financial
circumstances that render the household no longer needy and eligible--
are common factors in SNAP households becoming disconnected from the
program. As mentioned with respect to the negative error rate, a
household that is denied or loses SNAP certification even though it is
eligible is highly likely to reapply as a new case, leading to more
work for the clients and the caseworkers. Investing in adequate
staffing and procedures at recertification can help reduce case
``churning'' (on, off, on again) that affects SNAP Program
effectiveness, including the resources to ensure payment accuracy, and
Finally, another way to measure SNAP ``qc'' is the extent to which
SNAP overall is reaching those who are eligible, not just applicants,
as measured by USDA. Participation rates among eligible people dropped
precipitously in the last half of the 1990's, a trend that has
partially been turned around. Still, despite progress in recent years,
SNAP is missing \1/3\ of eligible people. Continued efforts to address
barriers to access are vital. These include eliminating unnecessary
paperwork and trips to assistance offices, eliminating arbitrary rules
and procedures, streamlining eligibility through Categorical
Eligibility and SSI Combined Application Projects, and supporting
outreach and application assistance (such as through community-based
Congress can help in important ways now, and in the upcoming farm
bill. One key step is addressing the adequacy of the benefit. The
monthly SNAP allotment is predicated on a food plan (the ``Thrifty Food
Plan'') which was developed during the Depression in the 1930s ``as a
restricted diet for emergency use.'' The allotment typically carries
even the most careful of families only \3/4\ or \4/5\ of the way
through the month. The amount of the Federal Government's own Low-Cost
Food Budget--the lowest of three government budgets for normal use--is
approximately 25 percent higher than the Thrifty Food Plan, and should
be the basis for SNAP allotments. That Low-Cost Food Budget is
generally in line with what low and moderate-income families report
that they need to spend on food, as opposed to the lower amount a food
stamp allotment would provide. Steps to address benefit adequacy
maintaining the value of the ARRA benefit boost and not
allowing that level to erode with food cost inflation; this
includes rejecting any effort to roll back the boost and use
the money--literally food taken out of the months of
beneficiaries--as an offset for other purposes;
adjusting benefit amounts in a timely manner; while the
benefit allotment is adjusted for inflation each year, the
increases come only after a time lag, so the allotment reflects
not current prices but the prices of the (already inadequate)
Thrifty Food Plan from between 4 and 16 months earlier;
increasing the minimum benefit ($16 per month under the ARRA
boost) so that elderly households receive at least an amount
that is equivalent in value to the floor set in the 1970s;
fully allowing SNAP benefits to be adjusted when high
housing costs consume more of a family's income; and
improving earnings disregards and other benefit computation
In addition to steps to improve benefits, other changes are
important to help reach more households in need. Congress should:
extend the program to needy people now excluded from
benefits by arbitrary eligibility rules, including by restoring
eligibility to all legal immigrants, dropping the lifetime ban
on benefits for drug felons who are making a new start in
society, and removing time limits on receipt of SNAP by certain
jobless adults seeking work;
allow all states to operate the SSI CAP model that
seamlessly enrolls SSI recipients into SNAP, and encourage
other data matching initiatives;
provide adequate resources to states and community partners
for administration of SNAP and outreach and nutrition education
(these should include restoring a greater Federal share in
administrative expenses and enhanced Federal matches for state
investments in operational improvements); and
promote increased access by low-income people to nutritious
food in neighborhoods, including by fostering development of
supermarkets and outlets in ``food deserts,'' and by equipping
all farmers' markets with EBT capability.
Mr. Kagen. Thank you for your testimony. We look forward to
partnering with you to improving the farm bill and the SNAP
Now, Mr. Faber.
STATEMENT OF SCOTT E. FABER, VICE PRESIDENT FOR
FEDERAL AFFAIRS, GROCERY MANUFACTURERS
ASSOCIATION, WASHINGTON, D.C.
Mr. Faber. Thank you, Mr. Kagen, and thank you for the
opportunity to testify on the Supplemental Nutrition Assistance
Program. GMA strongly supports SNAP and we look forward to
working with you to ensure that SNAP meets the hunger and
nutritional needs of low-income Americans.
As we have heard, SNAP has never been more important than
during the current recession. The program is currently
supporting the nutritional needs of more than 40 million
Americans in more than 18 million households, an all-time high.
And the reach of the program is extraordinary. One in four
children rely on SNAP to meet their basic food needs. And yet
despite this rapid growth in SNAP expenditures, food stamp
error rates are at an all-time low, and that is because SNAP
has one of the most rigorous quality control systems of any
public benefit program.
As Jim has just alluded to, USDA has found that more than
98 percent, nearly 99 percent, of benefits are issued to
eligible households, and recently announced the national error
rate was just 4.36 percent, which of course includes
underpayments as well as overpayments.
Clearly SNAP is the cornerstone of America's nutrition
safety net, but the food industry also has an important role to
play as we struggle to address hunger. Each year food
manufacturers donate more than 310 million pounds of food to
national and local food banks through the Feeding America
network. In 2010 our members committed to increase our
donations by 20 percent, or by 60 million pounds.
The food industry also has an important role as we struggle
to promote healthy diets and lifestyles, and that is why we
share the Administration's goals of both eliminating childhood
hunger by 2015, and ending childhood obesity within a
Just as we are doing our part to address hunger, our
industry is doing our part to promote healthy diets and
lifestyles. In recent years we have changed the ingredients in
more than 10,000 of our products to reduce calories, fats,
sugars and sodium without sacrificing the taste, convenience
and affordability that consumers demand. We are also working
with the Administration to devise new food labels that will
make information about calories and other nutrition facts
clearer for consumers, including low-income consumers.
Government has an important role to play as well. For
example, government can do much more to promote physical
activity in school, as Chairman Baca has proposed in H.R. 4457.
Government can also set science-based standards for the foods
that are sold in the school environment, as has been proposed
in child nutrition legislation. Government can do much more to
promote nutrition education, not only in our schools, but in
the marketplace and the workplace. And government can do much
more to promote greater access to healthy foods by bringing
grocery stores and farmers markets to underserved areas.
Increasing nutrition knowledge and providing more healthy
choices, not limiting choices, should be the focus of our
efforts to build healthy diets and lifestyles. And SNAP can be
an important tool in this effort. Studies have found that
children in low-income households have a far lower risk of
being overweight if they participate in certain Federal
nutrition programs. However, limiting SNAP choices, as some
have proposed, would not reduce the risk of obesity and would
dramatically increase program cost and complexity. Instead,
policymakers should expand SNAP education efforts and support
incentives to encourage healthier choices such as the Healthy
Incentives Pilot created by the 2008 Farm Bill. Studies have
shown that a 20 percent reduction in the price of fruits and
vegetables would reduce daily consumption to 2.2 cups.
In conclusion, the Grocery Manufacturers Association
strongly supports SNAP, we applaud the temporary increase in
benefits made through the Recovery Act, and we look forward to
working with this Committee and the Administration to ensure
that SNAP contributes to the nutritional needs of low-income
Americans. Thank you.
[The prepared statement of Mr. Faber follows:]
Prepared Statement of Scott E. Faber, Vice President for Federal
Affairs, Grocery Manufacturers Association, Washington, D.C.
Thank you for the opportunity to testify on the Supplemental
Nutrition Assistance Program.
My name is Scott Faber and I am Vice President for Federal Affairs
of the Grocery Manufacturers Association (GMA), which represents more
than 300 food, beverage, and consumer product manufacturers and
retailers. GMA strongly supports the Supplemental Nutrition Assistance
Program (SNAP) and we look forward to working with you to ensure that
SNAP meets the hunger and nutritional needs of low-income Americans.
SNAP has never been more important than during the current
recession. As you know, the program is currently supporting the
nutritional needs of more than 40 million Americans in more than 18
million households--an all-time high. The reach of the program is
extraordinary--one in four children rely on SNAP to meet their basic
food needs. Unprecedented growth in the SNAP program is not only
meeting the nutritional needs of millions of additional Americans
impacted by the recession but has also provided a significant stimulus
for the economy. For every dollar spent on SNAP benefits, GDP is
increased by nearly $2 \1\--one of the strongest economic stimulus
provisions included in the American Recovery and Reinvestment Act.
\1\ Hansen and Golan, Effects of Changes in Food Stamp Expenditures
Across the U.S. Economy, Food Assistance and Nutrition Research Report
26-6, USDA, August 2002.
Despite rapid growth in SNAP expenditures, food stamp error rates
are at an all-time low. SNAP has one of the most rigorous Quality
Control systems of any public benefit program. As you know, states
review the accuracy of the eligibility and benefits of a representative
sample of SNAP recipients and are subject to penalties if error rates
remain above the national average. USDA has found that more than 98
percent of benefits are issued to eligible households and recently
announced that the national error rate was just 4.36 percent, which
includes underpayments as well as overpayments.
Food Stamp Error Rates
Fiscal Years 1990-2009
In addition, the use of Electronic Benefit Transfer (EBT) cards to
provide benefits to SNAP recipients has significantly reduced food
stamp trafficking. Retailers or recipients who defraud the program by
trading food stamps for money or non-food items face tough criminal
penalties, and sophisticated programs have been established to monitor
transactions for patterns that may suggest abuse.
SNAP is the cornerstone of America's nutrition safety net. But, the
food industry also has an important role to play as we struggle to meet
nutritional needs of hungry Americans. Each year, food manufacturers
donate more than 310 million pounds of food to national and local food
banks through the Feeding America network--more than 80 percent of the
donations made to Feeding America. In 2010, our members have committed
to increase our donations by 20 percent--or by 60 million pounds.
Food and beverage manufacturers and retailers share the President's
goal of eliminating childhood hunger by 2015 and share the First Lady's
goal of ending childhood obesity within a generation.
In particular, our industry is doing our part to promote healthy
diets and lifestyles. In recent years, we have changed the ingredients
in more than 10,000 of our products to reduce calories, fats, sugars
and sodium without sacrificing the taste, convenience and affordability
that consumers demand. We are also working with the Administration to
devise new labels that will make information about calories and other
nutrition facts clearer for consumers. And, we have changed the
messages we deliver to promote healthier diets and active lifestyles.
Government also has an important role to play. Government can do
more to promote physical activity in school and after school, as
Chairman Baca has proposed in H.R. 4557. Government can do more to
promote nutrition education--not only in school, but in the marketplace
and the workplace as well. Government can set science-based standards
for foods sold in the school environment, as has been proposed in Child
Nutrition legislation. And, government can do more to promote greater
access to healthy foods by bringing grocery stores to underserved
To end childhood obesity in a generation, we must provide parents
and children with more healthy choices, promote healthy diets and
provide new opportunities for physical activity. As the First Lady has
said, ``This is not like a disease where we're still waiting for a cure
to be discovered--we know the cure for this. We have everything we
need, right now, to help our kids lead healthy lives.'' Everyone has a
role to play in this fight: the public sector, private industry and
parents. We pledge to do our part by continually changing the way we
develop and market our products.
Providing more healthy choices--not limiting choices--and enhancing
nutrition knowledge should be the focus of efforts to build healthy
diets and lifestyles. SNAP can be an important tool in this effort.
Studies have found that children in low-income households have a lower
risk of being overweight if they participated in certain Federal
nutrition programs.\2\ However, limiting SNAP choices, as some have
proposed, would not reduce the risk of obesity and would dramatically
increase program costs and complexity.\3\ Instead, policymakers should
expand SNAP education efforts and support incentives to encourage
healthier choices, such as the Healthy Incentives Pilot created by the
2008 Farm Bill.
\2\ Jones S., Jahns L., Laraia B.A., Haughton B. School-aged food
insecure children who participate in food assistance are less likely to
be at risk of overweight: Results from the Panel Study of Income
Dynamics Child Development Supplement. Arch. Pediatr. Adolesc. Med.
\3\ USDA, Food and Nutrition Service, Implications of Restricting
the Use of Food Stamp Benefits, March 2007 (attached).
In conclusion, the Grocery Manufacturers Association strongly
supports SNAP and USDA's sound oversight of taxpayer dollars through
this programs. We applaud the temporary increase in benefits made
through ARRA and look forward to working with this Committee and the
Administration to ensure that SNAP continues to meet the nutritional
needs of low-income Americans. We look forward to working with you to
better address the nation's hunger and health needs.
USDA--Food and Nutrition Service
March 1, 2007
Implications of Restricting the Use of Food Stamp Benefits_Summary
By most standards, almost all American diets are in need of
improvement. Given interest in using Federal nutrition assistance
programs to promote healthy choices, some suggest that food stamp
recipients should be prohibited from using their benefits to buy foods
with limited nutritional value. However, there are serious problems
with the rationale, feasibility and potential effectiveness of this
No clear standards exist for defining foods as good or bad, or
healthy or not healthy.
Federal dietary guidance uniformly applies to the total
diet--there are no widely accepted standards to judge the
``healthfulness'' of individual foods.
Foods contain many components that can affect health, and
diets contain many foods. As a result, it is challenging to
determine whether--and the point at which--the presence or
absence of desirable nutrients outweighs the presence of
nutrients to be avoided in ruling a food ``in'' or ``out''.
Implementation of food restrictions would increase program
complexity and costs.
There are more than 300,000 food products on the market, and
an average of 12,000 new products were introduced each year
between 1990 and 2000. The task of identifying, evaluating, and
tracking the nutritional profile of every food available for
purchase would be substantial. The burden of identifying which
products met Federal standards would most likely fall on an
expanded bureaucracy or on manufacturers and producers asked to
certify that their products meet Federal standards.
Responsibility for enforcing compliance would rest in the
hands of employees at check-out counters in 160,000 stores
across the nation. While many have modern scanning and
inventory control systems, others--especially small stores and
specialty markets--do not.
New effort would be needed to help participants avoid the
rejection of purchases at the check-out counter, an event with
the potential to reduce productivity at the register and
Restrictions may be ineffective in changing the purchases of food
About 70 percent of all food stamp participants--those who
receive less than the maximum benefit--are expected to purchase
a portion of their food with their own money. There is no
guarantee that restricting the use of food stamps would affect
food purchases--other than substituting one form of payment
(cash) for another (food stamps).
No evidence exists that food stamp participation contributes to
poor diet quality or obesity.
There is no strong research-based evidence to support
restricting food stamp benefits. Food stamp recipients are no
more likely than higher income consumers to choose foods with
little nutritional value; thus the basis for singling out low-
income food stamp recipients and restricting their food choices
is not clear.
There are better ways to work towards the goal of healthier diets
that do not require such restrictions. Incentives--rather than
restrictions--that encourage purchases of certain foods or expanded
nutrition education to enable participants to make healthy choices are
more practical options and likely to be more effective in achieving the
dietary improvements that promote good health.
Implications of Restricting the Use of Food Stamp Benefits
By most standards, almost all American diets are in need of
improvement, and obesity has emerged as the nation's most pressing
health and nutrition issue. Because of concerns about poor diet,
overweight, and obesity among low-income Americans, there is
considerable interest in using Federal nutrition assistance programs to
promote healthy choices. Some argue that food stamp recipients should
be prohibited from using their benefits to buy foods with limited
nutritional value (commonly described as ``junk'' foods).\1\ The Food
Stamp Act currently places few limits on the use of food stamp
benefits, as long as they are used to buy food to eat at home.
\1\ This suggestion actually has a rather long history. The House
Committee on Agriculture considered and rejected an amendment to
eliminate foods with negligible or little nutritional value in its
deliberations that led to the Food Stamp Act of 1977, saying that the
amendment was ``a cure worse than the disease of so-called `junk food'
'' (House Report No. 95-464, page 333, June 24, 1977).
The idea of restricting the use of food stamp benefits may be
appealing on its face. However, upon closer examination, serious
concerns emerge regarding the feasibility and rationale for the
No clear standards exist to define foods as good or bad, or
healthy or not healthy;
Food restrictions would pose major implementation challenges
and increase program complexity and costs;
Restrictions may not change the nature of participants' food
No evidence exists which indicates that food stamp benefits
directly contribute to poor food choices and negative dietary
outcomes, such as obesity.
Making Distinctions among Foods
It is not a simple task to draw a bright line between foods that
contribute to a healthy diet and those that do not. Common sense
suggests avoiding foods that are low in nutrients but high in some
combination of calories, fats, added sugars, and salt. In practice,
however, drawing the distinction between healthy and unhealthy foods is
far more difficult.
The Dietary Guidelines for Americans, MyPyramid, the American
Dietetic Association, and most nutritionists take a total diet approach
to communicate healthful eating advice, placing emphasis on the overall
pattern of food eaten, rather than any one food or meal. Mainstream
nutrition guidance embodies the concept that ``there are no bad foods,
only bad diets.'' Thus, the most common advice is to ``go easy'' on or
limit foods with limited nutritional value and stay physically active
to maintain a healthy weight.\2\ If food stamp policy is to move away
from the consensus of the nutrition community and instead draw a line
between good foods and bad foods, decisions are needed on several
difficult issues. For example:
\2\ Specifically, the Dietary Guidelines for Americans urge
consumption of a variety of nutrient-dense foods and beverages within
and among the basic food groups while choosing foods that limit the
intake of saturated and trans fats, cholesterol, added sugars, salt,
Should standards for a healthy diet be applied to individual
foods? The Dietary Guidelines for Americans and the Dietary
Reference Intakes provide benchmarks for determining
nutritional adequacy in the United States. All of these
standards apply to the total diet, however. It is not clear
that the same standards should apply to individual foods, nor
how such a thing could be done. There are recommended limits,
for example, on the amount of fat in a healthy diet. Yet there
are individual foods--such as some meats and nuts--that are
generally recognized as making positive contributions to a
balanced diet, but which have a high proportion of fat. To
simply eliminate such foods would not necessarily result in a
net improvement in a person's diet.\3\
\3\ Various local, state, and national organizations have
established criteria to control individual foods sold in competition
with meals provided through the National School Lunch and Breakfast
Programs. However, there are some fundamental differences between
voluntary guidelines that limit foods in school and statutory limits on
food stamp purchases. Most importantly, the number and range of
``competitive'' foods available in schools is much smaller than the
variety of foods in grocery stores.
If the standards for individual foods are different than the
standards for the total diet, how does one determine the
appropriate benchmarks? Key issues to be resolved include:
Which nutrients or ingredients should be considered?
Scientists have identified dozens of vitamins, minerals,
amino acids, fatty acids, and other nutrients that play an
essential role in human nutrition. The larger the number of
ingredients or nutrients considered, the more difficult it
may be to find foods that simultaneously satisfy multiple
criteria for ``healthfulness''. Although it may be more
practical to limit consideration to a handful of nutrients
of public health concern--assuming a consensus on which
nutrients qualify as public health concerns--such limits
may unintentionally exclude foods high in nutrients not
Are ``healthy'' foods characterized by the absence of
nutrients to be avoided, the presence of desirable
nutrients, or a combination of both? The choice here is not
straightforward. Diet sodas, for example, may pass a test
based only on the absence of undesirable nutrients: they
have no fat or sugars, are low in calories, and contain
little sodium. Based on these criteria alone, they would
appear preferable to orange juice. Similarly, some brands
of potato chips have less sodium per serving than some
popular brands of breakfast cereal. Characterizing foods
based on the presence of desirable nutrients can be
similarly problematic. Doughnuts are not often a source of
desirable nutrients, but at least one manufacturer offers a
``SuperDonut'' fortified with protein, vitamins, and
minerals--along with significant calories, fat, and added
sugars. Finally, if both characteristics are important, one
needs to determine the point at which the benefit of
desirable nutrients outweighs the presence of nutrients to
be avoided or consumed in moderation. Some fortified
breakfast cereals, for example, contain relatively high
levels of added vitamins and minerals, but are also high in
added sugars and sodium. (See Appendix A for more
examples). The question then becomes which foods should be
permitted, and which should not?
What is the most appropriate means of assessing the
nutritional value of any given food? In general, the basis
for classifying foods must be sufficiently sophisticated to
make objective distinctions based on the nutritional value
of the vast number of foods available for sale. It must
also be sufficiently simple to be workable. A number of
options are available: common sense, expert or stakeholder
opinion, and formula-driven assessments of ingredients or
nutrient content (see Appendix B for more detail). None is
without significant shortcomings.
Some have suggested giving each state the option to develop its own
definition of allowable foods. This option is problematic for several
reasons. First, there is no scientific basis for allowing nutrition
standards to vary from place to place within the United States. Second,
a state option does not eliminate special-interest pressures; it simply
shifts the location of the debate and gives greater weight to local--
sometimes parochial--interests. And third, variation in state
requirements will complicate retail industry compliance and increase
the cost of doing business.
Even if decisions could be made that distinguish allowable foods
from restricted foods, there are still difficult implementation
challenges. Part of the difficulty stems from the enormous variety and
scale of the American food sector. The typical supermarket carries
about 40,000 products on its shelves. There are more than 300,000 food
products available in the marketplace nationwide; an average of about
12,000 new food items were introduced each year between 1990 and
2000.\4\ Program participants make roughly one billion food purchase
transactions each year.\5\
\4\ Harris, J. Michael. ``Food Product Introductions Continue to
Decline in 2000.'' FoodReview, Volume 25, Issue 1, 24-27, Spring 2002.
\5\ Olander, Carol, Erika Jones, and Steven Carlson. An Analysis of
Food Stamp Benefit Redemption Patterns. Report prepared by the Food and
Nutrition Service, USDA, June 2006. Available at www.fns.usda.gov/oane.
The scale of the food sector creates three types of administrative
and implementation problems: identifying the specific foods (or food
categories) that are allowed or excluded, supplying current information
on allowable foods to retailers and participants in a form that enables
them to comply with the rule, and monitoring and enforcing compliance.
Identifying, evaluating, and tracking the nutritional
profile of every food product available for purchase in the
constantly changing market would be an enormous undertaking.
Taken literally, the task would require judgments about the
nutritional quality of every existing and new food product.
There is no existing data base--one that uniquely identifies
every food product and links it to a nutritional profile
(through the Nutrition Facts panel, for example)--that could
support this operation; new data--and the resources and
capacity to process these data--would be needed. This implies a
significant expansion of government responsibility and
associated bureaucracy, at a significant cost.
The burden and cost for the Federal Government could be reduced,
but only by shifting it to private business and, ultimately,
consumers. For example, food manufacturers and producers could
be required to certify that their product meets the Federal
standard for food stamp purchases. These entities would be
expected to pass the cost of complying with this requirement on
to consumers in the form of higher prices. It also raises the
question of whether--and if so, how--the Federal Government
should monitor and verify such certifications. And unless
certified products are labeled as such, there is still need to
inform authorized retailers in a manner that enables them to
update their point-of-sale systems.
In addition, one could choose to declare entire food categories--
such as carbonated beverages, candy and gum, salty snack
foods--as unallowable rather than individual foods.\6\ Unless
the boundaries between categories are sharply drawn, however,
this approach would simply shift the burden and responsibility
of determining which products fall into the broad categories
and which do not to retailers and their employees. Some
boundaries--the distinctions between some candy bars and
fortified energy bars, or between carbonated soft drinks and
flavored sports drinks, for example--may never be as sharp as
they need to be.
\6\ National School Lunch Program regulations, for example,
prohibit the sale of food of minimal nutritional value (FMNV) in
competition with school meals. Foods are prohibited by category: soda
water (carbonated beverages), water ices, chewing gum, and certain
candies. The definition of FMNV focuses on eight nutrients: protein,
vitamin A, vitamin C, niacin, riboflavin, thiamine, calcium, and iron.
FMNV can be exempted from the prohibition if they provide more than
five percent of the Reference Daily Intakes per serving and per 100
calories (foods that are artificially sweetened are assessed only on
nutrients per serving).
New restrictions on the use of food stamps place the burden
of enforcing compliance in the hands of store employees at
check-out counters across the nation. This may be feasible in
stores with modern scanning and inventory control systems.
However, some of the 160,000 stores authorized to accept food
stamps--especially small stores and specialty markets--do not
have such system, posing a major employee training challenge
for those entities. Even in those stores with modern scanning
equipment, implementation would require development of means to
periodically notify retailers of allowable foods and
modification of in-store systems to implement the distinctions.
Moreover, confusion at the register about allowable items (by
either employees or recipients) would reduce productivity at
Food stamp recipients would face increased complexity and
potential for embarrassment if restrictions on the use of
benefits are substantially expanded. The imposition of new food
restrictions would require more effort by recipients to
understand which foods are allowed and which are not--
suggesting that substantial resources would be needed to
educate participants on allowable food choices. Even with such
efforts, however, it is likely that some recipients will not
always be able to keep track of which foods are allowed, thus
increasing the chances that some purchase transactions will be
rejected at the check-out counter. This has the potential to
stigmatize participants by singling them out as food stamp
recipients, and may discourage some eligible low-income persons
from participating in the program.
Finally, a new definition of ineligible items increases the
likelihood of compliance violations. Retailers that sell
ineligible items can be disqualified from the program or
assessed a monetary penalty. Recipients that purchase
ineligible items may be sanctioned. Expanding the pool of
ineligible items increases opportunities for non-compliance,
expands the need for oversight, and may increase the number of
retailers or recipients found in violation of program rules.
Effects of Restricting Food Stamp Benefits on Food Purchases
It is not clear that a limit on the acceptable uses of food stamp
benefits would actually change the nutrition profile of food purchases.
Restricting the use of food stamps would not limit consumer choice at
all if food stamp recipients continue to purchase any food they want
using their own money. While food stamp benefits make up a substantial
share of the food budget in most food stamp households, they do not
necessarily provide the entire food budget, nor are they expected to do
so.\7\ There is no way to know--other than through carefully designed
and evaluated pilot tests--to what extent the proposed restriction
would have the desired effect of reducing purchases of foods with
limited nutritional value. But it is difficult to justify the
substantial cost and other burdens associated with identifying and
enforcing new food restrictions given the very real possibility that
individuals would simply substitute one form of payment (cash) for
another (food stamps) in order to purchase unallowable foods.
\7\ Roughly 70 percent of all food stamp households receive less
than the maximum food stamp benefit, and so are expected to contribute
a portion of their cash income to food purchases (see Table A-1 in
Characteristics of Food Stamp Households: Fiscal Year 2005). According
to the Consumer Expenditure Survey, average food expenditures by low-
income households (for both food at home and away from home) exceeded
the average food stamp benefit by about 40% in FY 2004. While not all
low income households are necessarily food stamp recipients, this data
does suggests that some food stamp households have money for food
expenditures which could be used for purchase of prohibited items.
One should also be wary of the possibility of unanticipated or
unintended consequences. Limits on the definition of allowable foods
may create incentives for manufacturers to reformulate products to
satisfy the new rule. This may be a positive development if the
industry finds ways to improve the nutritional profile of the American
food supply. It is not clear, however, that simply fortifying more
foods is a desirable response to the obesity epidemic.\8\ Similarly,
blanket restrictions on the purchase of higher fat foods may not serve
the needs of families with young children. Dietary advice to reduce the
level of fat in food consumed does not apply to very young children
(who need fat for healthy development).
\8\ There are instances when fortified foods may be advantageous.
These include providing additional sources of certain nutrients that
might otherwise be present only in low amounts in some food sources,
providing nutrients in highly bioavailable forms, and where the
fortification addresses a documented public health need.
Relationship between Food Stamps, Food Consumption, and Dietary
The body of research on the Food Stamp Program does not support the
view that restricting food choices will result in more healthful food
purchases and consumption or improved dietary outcomes. Research
clearly indicates that participation in the program increases household
spending on food. Food stamp recipients shop frequently and use careful
shopping practices--such as comparing prices across stores, looking for
store specials and stocking up on bargains--in order to stretch their
food buying resources. A majority of benefits are spent on basic food
items: vegetables, fruits, grain products, meat and meat alternatives
account for nearly \3/4\ of the money value of food used by food stamp
\9\ U.S. Department of Agriculture, Food and Nutrition Service.
Making America Stronger: A Profile of the Food Stamp Program. September
2005. Available at www.fns.usda.gov/oane.
Preliminary findings from a forthcoming USDA analysis of national
food consumption data indicate that food stamp recipients are somewhat
less likely to have adequate intakes of many key nutrients--including
Vitamins A, B6, C, and E; thiamin; riboflavin; folate;
magnesium; iron, and zinc--than are higher-income individuals. But
these differences are not the result of greater consumption of foods
which would be likely targets for restrictions. For example, food stamp
recipients are no more likely to consume soft drinks than are higher-
income individuals, and are less likely to consume sweets and salty
\10\ Special preliminary tabulations of 1999-2002 data from the
National Health and Nutrition Examination Survey prepared for the Food
and Nutrition Service by Abt Associates.
Percent of Persons
Percent of Food Stamp with Income over
Food Category Program Participants 130% of Poverty
Consuming at Least Consuming at Least
Once per Day Once per Day
Soft Drinks (Regular and 61.0 59.2
Sweets 61.6 72.1
Salty Snacks 29.6 36.5
Sweets include jello, candy, ice cream, pudding, Ice/popsicles, muffins,
sweet rolls, cake/cupcakes, cookies, pies/cobblers, pastries and
doughnuts. Salty snacks include corn-based salty snacks, pretzels/
party mix, popcorn, and potato chips.
* Difference is not statistically significant.
Finally, no evidence exists that Food Stamp Program participation
causes obesity. While poverty is associated with obesity in some
population groups and Food Stamp Program participation is closely
linked with poverty, the independent effect of program participation on
obesity is unknown.\11\
\11\ Linz, Paul, Michael Lee, and Loren Bell. Obesity, Poverty, and
Participation in Nutrition Assistance Programs. Report prepared by Alta
Systems for the Food and Nutrition Service, USDA, February 2005.
Available on-line at www.fns.usda.gov/oane.
Taken together, this research suggests that achieving dietary
improvement among food stamp recipients is a complex challenge. It is
not likely to be met by prohibiting use of benefits for a group of
foods perceived as having limited nutritional value. Low-income
consumers and food stamp recipients are subject to the same factors
that influence food choices throughout our society--including marketing
strategies, cultural preferences, the value of convenience, and
personal tastes. Restricting the use of food stamp benefits would
change only one variable in the complex calculus that results in a
more--or less--healthful diet. More fundamentally, as the problems of
poor food choices, unhealthy diets, and excessive weight characterize
all segments of American society, the basis for singling out low-income
food stamp recipients and imposing unique restrictions on their food
choices is not clear.
The idea of restricting the food choices of food stamp recipients
as a means of promoting dietary improvement among low-income Americans
has serious conceptual and practical flaws. There are better
alternatives for promoting healthier diets. One could, for example,
consider incentives--rather than restrictions--to encourage purchases
of selected foods (fruits and vegetables or whole grains, for example)
by food stamp participants. Or one could expand and strengthen
nutrition education and promotion to make sure that participants have
the knowledge, skills, and motivation they need to make healthy
choices. These approaches are more practical, and likely to be more
effective than restricting choice in achieving the dietary improvements
that promote good health.
USDA's 2007 Farm Bill proposals include a $100 million investment
to establish a 5 year competitive grants demonstration program targeted
at developing and testing solutions to the rising rates of obesity.
These efforts would include rigorous independent evaluations to
identify effective approaches, such as incentives at point-of-sale for
purchases of fruits and vegetables by food stamp participants, grants
to connect food stamp shoppers with farmers markets, and integrated
communication and education programs to promote healthy diets and
appendix a: the slippery slope of characterizing foods
Why is it so hard make distinctions among individual foods?
Part of the problem is that foods contain many components that
singly or collectively can affect health, and diets contain many foods.
Attention paid to the presence or absence of single nutrients and to
the relationship between those nutrients and particular diseases often
comes at the expense of attention to the overall dietary pattern. For
example, at the substantial risk of oversimplification, concerns about
obesity may lead one to focus on calories and added sugars; concerns
about chronic heart disease may lead to a focus on saturated fats,
trans fats, and cholesterol; and concerns about hypertension may lead
to a focus on sodium. Too narrow a focus, however, can lead one onto a
slippery slope with puzzling results.
Consider these examples, derived from information on the Nutrition
Soft drinks have less total fat, saturated fat, and sodium
per serving than some granola bars.
One manufacturer markets a low-calorie carbonated beverage
fortified with calcium and real fruit juice that has fewer
calories and total sugars (though more added sugars) per
serving than a typical serving of orange juice.
Some brands of potato chips have less sodium per serving
than some of the most popular brands of breakfast cereal.
Some candy bars have a lower percentage of calories from fat
and less saturated fat than a serving of cheddar cheese.
At least two cautions apply to these comparisons. First, each is
based on the serving size listed on food labels. While subject to
regulation, serving sizes do not always reflect consumption patterns;
comparisons of food as actually consumed may produce different results.
Second, some of the foods listed here have other beneficial nutrients,
and some do not. Drinkable yogurts, for example, can provide 25 percent
or more of a wide range of vitamins and minerals in each serving; most
soft drinks are not a significant source of any nutrient other than
appendix b: means of assessing nutritional value
Even if agreement can be reached in principle on a conceptual
approach to distinguish allowable foods from restricted foods, there
remains the challenge of putting such definition into practice. Several
approaches could be considered; however, each has significant
Expert and/or Stakeholder Opinion: One could rely on
``common sense'' or the judgment of expert panels made up of
dietetics professionals, physicians, public health researchers,
and other stakeholders (consumers, producers, manufacturers,
retailers). The problem with common sense and expert or
stakeholder panels is that both can be influenced by a number
of factors, not all of which are necessarily related to the
nutritional value of the food under consideration. It is also
unlikely that expert panels could render judgment on over
300,000 separate food items; they are more likely to recommend
exclusion of broad categories (soft drinks, cookies, cakes,
salty snacks, for example). This simply defers the item-by-item
decisions that need to be made to implement a restriction at
the check-out counters.
Foods of Minimal Nutritional Value: National School Lunch
Program regulations prohibit the sale of food of minimal
nutritional value (FMNV) in competition with school meals.
Foods are prohibited by category: soda water (carbonated
beverages), water ices, chewing gum, and certain candies
(including hard candies, jellies and gums, marshmallow candies,
fondant, licorice, spun candy, and candy-coated popcorn). The
definition of FMNV focuses on eight nutrients: protein, vitamin
A, vitamin C, niacin, riboflavin, thiamine, calcium, and iron.
FMNV can be exempted from the prohibition if they provide more
than five percent of the Reference Daily Intakes per serving
and per 100 calories (foods that are artificially sweetened are
assessed only on nutrients per serving). This approach is a
conservative one, identifying a limited set of foods that make
the least contribution to a healthy diet.
A 5/20 Rule: The Food and Drug Administration advises
consumers to limit certain nutrients listed on the Nutrition
Facts panel while consuming adequate amounts of others.\12\
Foods providing five percent or less of the daily value (DV)
are considered low in particular nutrients; foods that have 20
percent or more of the DV are considered high in the nutrient.
Thus, for example, an allowable food could be defined as one
which contains no more than 20 percent of the DV of total and
saturated fats, cholesterol or sodium and no less than five
percent of the DV of at least one of these nutrients: dietary
fiber, vitamin A, vitamin C, calcium, and iron.\13\ One serious
limitation of this approach is the absence of a daily reference
value for added sugars and trans fats.\14\ In addition, some
nutrients of concern across the lifespan are not required on
the food label (such as potassium). Application of this
approach may also conflict with current health recommendations
for certain foods (such as certain nuts and fish high in omega-
3 fatty acids). In practice, relatively few snack foods would
fail the 20 percent threshold for total fats and for saturated
fat, and many of those that pass the five percent threshold
would do so on the basis of their fiber content.
\12\ Food and Drug Administration. (2004). How to Understand and
Use the Nutrition Facts Label, available on-line at www.cfsan.fda.gov.
\13\ Note that this is intended only as an illustration, and
alternate levels of the thresholds and combinations of nutrients could
\14\ Note also that the sugars listed on the Nutrition Facts label
include naturally occurring sugars (like those in fruit and milk) as
well as those added to a food or drink.
Food Composition Rules: An analysis of foods under this
approach would assess the level of selected ingredients
contained in foods. This approach directly addresses the
association between over consumption of certain food components
and current public health problems. In practice ingredients
could be assessed by their relative position on the ingredient
list. Foods in which selected ingredients--including, for
example, caloric sweeteners (including sugar and high-fructose
corn syrup), hydrogenated oils, or salt--appear among the
primary listed ingredients would fall onto the restricted list.
This approach gives no weight to the presence of desirable
nutrients. In addition, because ingredients are listed by
weight, some foods that provide a relatively large proportion
of the daily value of nutrients that should be avoided or
consumed in moderation--the salt in potato chips, for example--
may not fall onto the restricted list.
Nutrient Density Measures: Drewnowski (2005) reviews various
attempts to define and quantify the nutrient density of foods.
Past efforts to quantify nutrient density have been based on a
variety of calories-to-nutrient scores, nutrients-per-calorie
indexes, and nutrient-to-nutrient ratios. Drewnowski proposes a
naturally nutrient rich score based on the mean percentage
daily values for 14 nutrients in 2000 kcal of food.\15\ In
addition to requiring significant computational resources, the
measure as defined is limited by the exclusion of all fortified
foods. In addition, saturated fat, sodium, and other nutrients
whose consumption should be limited, do not enter into the
\15\ Drewnowski, A. ``Concept of a nutritious food: toward a
nutrient density score.'' American Journal of Clinical Nutrition, Vol.
82, No. 4, 721-732. October 2005.
Mr. Kagen. Thank you for going under 5 minutes. I
appreciate all that you are doing.
STATEMENT OF JENNIFER HATCHER, SENIOR VICE
PRESIDENT, GOVERNMENT RELATIONS, FOOD MARKETING INSTITUTE,
Ms. Hatcher. Good morning. On behalf of the Food Marketing
Institute and the families served by the 26,000 food stores
operated by our members, thank you for the opportunity to
testify about SNAP. SNAP EBT is a very positive example of a
public-private partnership that works and that has added
efficiency for all stakeholders in the program. Supermarket
retailers are proud of our partnership with USDA and the state
agencies to deliver safe, healthy and affordable foods to
customers in need of assistance.
FMI testified before this Subcommittee in 1999 and urged
that you pass the Interoperability and Portability Act to
ensure that EBT recipients could use their benefits across
state lines, just as they had been able to use paper coupons.
You passed this provision, and it was successfully tested and
was critically important to the thousands of people displaced
by Hurricanes Katrina, Rita, Ike, and Isabel.
In the previous reauthorization of the farm bill you
protected the SNAP program from expensive but unnecessary
interchange fees. The SNAP program is now 100 percent
electronic and runs successfully without any interchange fees
charged to the state, merchants or consumers, and serves as a
strong model for other government programs.
One of the greatest efficiencies in the SNAP program has
been the conversion to electronic benefits transfer, as EBT
transactions reduce the time in lane and cut down on the
potential for human error. EBT has also been a positive
development in the fight against SNAP fraud. Prior to EBT,
paper vouchers were easily exchangeable for cash or other goods
since they could be used anonymously. One area in need of
improvement in the EBT system would be to lessen the number of
processor or carrier outages by utilizing redundant systems.
When a carrier who helps to facilitate the processing of SNAP
transactions experiences technical issues, retailers cannot run
the transactions at the checkout and the merchant is put at
greater risk for fraud.
If all SNAP customers were issued benefits on the first day
of the month stores would have significant inventory issues
with widely purchased perishable products like milk and
bananas. Thankfully, all but ten states have staggered issuance
of benefits over a period of days. We encourage all states to
provide enhanced staggered issuance of benefits each month,
looking at models like those in Missouri and New Mexico, which
spread their issuance over 20 days.
Food choice: Another area that could work to decrease
efficiency would be limiting food choices for SNAP recipients.
An average store contains in excess of 40,000 items. Roughly
half of these items are currently eligible to be purchased with
SNAP benefits. All items are coded electronically as either
eligible or ineligible, and there is very little confusion
about what is eligible and what is not.
We are beginning to collect survey data from our members on
the purchasing habits of customers paying for their groceries
with SNAP benefits versus all payment types. The initial
results show that the purchasing habits are very similar. While
our current data is based on the periods of time that are not
the same for each company, and are thus not able to be
consolidated, our initial findings are worth reporting. We
believe a more comprehensive study on the buying habits of
customers controlled for time of month, time of year, and how
better to incent them to healthier choices should be initiated,
and we intend to try to do this.
Two products were on every list for both SNAP and non-SNAP
customers, bananas and milk. Other product purchases were
similar. Strawberries, cucumbers, corn and avocados were on
several lists for both SNAP and non-SNAP customers. Rather than
imposing penalties, or a ban on a particular food or category
of food, we believe in educating and encouraging positive
choices. It would cause much confusion and inconsistency to
impose food limitations without a USDA-managed, comprehensive,
real-time Universal Product Code database that could be
downloaded directly into a retailer system to ensure a
continued integrity of product selection. A SNAP database would
be an expensive and challenging undertaking. USDA is, however,
beginning the setup of the Healthy Incentive Pilot that has
encouraging positive choices as its goal, and they will
announce the location of the pilot in August. Several of our
member companies are working on ways that they can participate
in the pilot of this program.
In closing, thank you for inviting FMI to share our
thoughts on the SNAP program. I would be pleased to answer your
[The prepared statement of Ms. Hatcher follows:]
Prepared Statement of Jennifer Hatcher, Senior Vice President,
Government Relations, Food Marketing Institute, Washington, D.C.
Good morning. Chairman Baca and Ranking Member Fortenberry, on
behalf of the Food Marketing Institute and the families served by the
26,000 stores operated by our retail and wholesale members, I want to
thank you for the opportunity to testify today on the Supplemental
Nutrition Assistance Program (SNAP).
My name is Jennifer Hatcher and I am Senior Vice President of
Government Relations at the Food Marketing Institute (FMI). I have
served as the primary staff contact for FMI's Electronic Payments
Systems Committee for the past 11 years through the transition from
paper Food Stamps to electronic benefits transfer and now the new
program name, SNAP.
SNAP EBT is a very positive example of a public-private partnership
that works and that has added efficiency for all stakeholders in the
program--the state agencies, the retailers and the customers.
Supermarket retailers are proud of our partnership with USDA and the
state agencies to deliver safe, healthy and affordable foods to
customers in need of assistance.
FMI testified before this Subcommittee in 1999 and urged that you
pass the Interoperability and Portability Act to ensure that EBT
recipients could use their benefits across state lines, just as they
had been able to use paper coupons in any state. You passed this
provision, and it was successfully tested and was critically important
to hundreds of thousands of people displaced by Hurricanes Katrina,
Rita, Ike and Isabel.
In the previous reauthorization of the farm bill, you protected the
SNAP program from expensive, but unnecessary interchange fees. The SNAP
program is 100% electronic and runs successfully without any
interchange fees charged to the state, merchants or consumers and
serves as a strong model for other government programs. This was yet
another step this Committee took to ensure continued efficiency.
Our analysis of the SNAP program is that it is working very
efficiently, particularly when you consider the many new and first time
recipients who have received benefits in the past 2 years. With one in
eight Americans currently enrolled in the SNAP program--more than ever
before in the history of our nation--it is critical that we continue to
increase efficiencies in this already smoothly operating program in
order to ensure low benefit administration costs, and most importantly
to continue to ensure access to healthy and affordable foods for
participants enrolled in the SNAP program.
Today in my testimony, I will highlight examples of the
efficiencies that have been achieved, and I will share some
recommendations on ways to continue to improve the retail operations
side of the SNAP program.
Electronic Benefit Transfer
One of the greatest efficiencies in the SNAP program has been the
conversion to Electronic Benefit Transfer (EBT) delivery systems as EBT
transactions reduce the time in lane and cut down on the potential for
human error by cashiers.
Additionally, EBT is an affordable payment solution that helps keep
costs low throughout the system compared to other electronic payments,
such as credit and debit cards, which have high-cost fees associated
EBT has also been a positive development in the fight against SNAP
fraud because it creates an electronic record for each transaction that
makes fraud easier to detect. Prior to EBT, paper vouchers were easily
exchangeable for cash or other goods since they could be used
anonymously. SNAP EBT transactions are protected by a user's personal
identification numbers (PIN) so they are much more secure than paper or
even credit cards, which do not require this added level of
One area in need of improvement in the EBT system would be to
lessen the number of processor or carrier outages. When a carrier, such
as AT&T, who helps facilitate the processing of SNAP transactions,
experiences technical issues, or their systems fail to remain up,
retailers have problems running EBT transactions at the checkout.
Problems with system uptime, or availability, and lack of a back-up
solution puts merchants at greater risk for fraud. We would encourage
the enforcement of 99.99% uptime standards and the implementation of a
back-up solution by the state to help correct this inefficiency. A
retailer would ensure availability by running redundant systems, and a
processor or carrier should be required to do the same.
Portability and Interoperability
One of the greatest benefits to SNAP EBT users is that they have
the flexibility of shopping across state borders. Take for example, the
D.C., Maryland and Virginia area. A working mom on SNAP benefits may
live in Maryland, but commutes to Virginia for work. If right after
work is the only time that day she can run to the grocery store, she
will still be able to use her SNAP benefits in Virginia. Portability in
the SNAP program provides a great convenience to SNAP benefit users,
and puts SNAP customers on a level playing field with customers paying
with every type of tender. Additionally, flexibility in shopping
location also affords SNAP benefit users greater flexibility to shop in
stores where they feel they are able to stretch their dollars the
Portability and interoperability are critical components of the
SNAP program everyday, but they are also invaluable assets to the
program when regions of our country deal with natural disasters, such
as hurricanes, floods or snowstorms. For example, during Hurricane
Katrina, SNAP benefit users from Louisiana were able to redeem benefits
in Texas, Missouri or even Washington, D.C., where they were relocated
or were staying with relatives.
A few additional steps would enhance the efficiency of these
portable benefits in the event of a disaster:
1. Provide a floor limit of $25 per day for SNAP EBT transactions
with guaranteed payment to an authorized store when EBT systems
are not functioning as a result of a disaster.
2. Provide an automatic hot food waiver for SNAP recipients in
disaster relief areas. Without electricity, recipients can not
cook many of the foods available in a retail food store, and
waivers issued while computers or telecommunication systems are
unavailable may not be effectively communicated.
3. Release SNAP benefits early to ensure that storm-impacted
residents have an adequate food supply during the disaster
aftermath and recovery period.
If all SNAP customers were issued benefits on the first day of the
month, stores would have significant inventory issues with widely
purchased perishable products like milk and bananas.
To address this, many states issue benefits over staggered days on
the first 7-10 days of the month based on the case number, a digit of
the user's Social Security Number, a card number or by other means. All
but ten states stagger benefits, and while the staggering of benefits
distribution is helpful to retailers to spread inventory needs over a
series of days, we encourage states to provide enhanced staggered
issuance of benefits each month. Benefits in states such as Missouri
and New Mexico are made available throughout a period of around 20 days
every month, as opposed to just the first 7-10. This allows for greater
convenience for SNAP participants and helps address retailers'
inventory concerns. A chart detailing the current benefit distribution
schedule by state is attached in the appendix of my written testimony.
Another area that could work to decrease efficiency would be
limiting food choices for SNAP recipients. An average store contains in
excess of 40,000 items; roughly half of those items are currently
eligible to be purchased with SNAP benefits. All items are coded
electronically as either eligible or ineligible and there is very
little confusion about what is eligible and what is not eligible. We
rarely have a customer--even a first time SNAP recipient--who comes
through the line with an ineligible item. SNAP is at its core a hunger
program and recipients need to be taught both how to stretch a dollar
and how to do this in the most nutritious way possible.
We are beginning to collect survey data from our members on the
purchasing habits of customers paying for their groceries with SNAP
benefits versus all payment types. The initial results show that the
purchasing habits are very similar. While our current data is based on
periods of time that are not the same for each company and are thus not
able to be consolidated, our initial findings are worth reporting. We
also believe a more comprehensive study on the buying habits of
customers, controlled for time of month and time of year, and how to
better incent them to healthier choices should be considered.
Two products were on every list for both SNAP and non-SNAP
customers--bananas and milk. Some of the milk purchased was whole milk,
which could be fine if it was purchased for a 1-2 year old child, but
whole milk would not be the best choice for an adult. Strawberries,
cucumbers, corn and avocados were on several lists for both SNAP and
non-SNAP customers when the store reported data from a summer
collection time period. An earlier collection time period produced a
list that included canned green beans and canned corn. White bread was
on a few of the lists for SNAP purchases, and while that may not be the
most nutritious choice, it may be a very economical option for a family
who is working to ensure that they are not hungry.
Rather than imposing penalties or a ban on a particular food or
category of food, we believe in educating and encouraging positive
choices. It would cause much confusion and inconsistency to impose food
limitations without a USDA-managed, comprehensive, real-time Universal
Product Code (UPC) database that could be downloaded directly into an
authorized retailer's computer system. A SNAP database would be an
expensive and challenging undertaking. For the last 10 years, USDA has
been working on designing a UPC database for a much smaller list of
eligible products for the Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC) and has not yet gotten the database
to be fully operational. While USDA appears to be making significant
progress now, the task has proved to be a significant and demanding
project. USDA is beginning the set up of the Healthy Incentives Pilot
that has encouraging positive choices as its goal, and they will
announce the location of the pilot in August. Several of our member
companies are working on ways that they can participate in the pilot of
Summary: Recommendations for Continued Efficiency
1. Improve uptime and require redundancy for processors and
2. Establish $25 floor limits for disasters.
3. Allow automatic hot foods waivers for disasters.
4. Release benefits early if a disaster is anticipated.
5. Encourage enhanced staggered issuance of benefits.
6. Incent/encourage/educate rather than penalize food choices.
In closing, thank you for inviting FMI to share our thoughts on our
experiences with the SNAP program. Our industry is committed to
ensuring a pleasant and smooth shopping experience for our SNAP
customers, and we welcome the opportunity to work with the Committee to
move toward additional efficiencies in the SNAP program. Thank you.
Food Marketing Institute
State Day(s) of SNAP Distribution
Alabama Benefits are made available from the 4th to the 18th
of every month, based on the last two digits of the
client's case number.
8Alaska0 Benefits are distributed on the first day of the
month. Smaller supplemental issuances for new
applicants and late recertifications occur daily
throughout the month.
Arizona Benefits are distributed over the first 13 days of
the month by the first letter of the recipients'
Arkansas Recipients receive their benefits on the 4th, 5th,
8th, 9th, 10th, 11th, 12th or 13th of each month
based on the last digit of the client's Social
Security Number (SSN).
California Benefits are made available over the first 10 days
of every month, based on the last digit of the
client's case number. Others (i.e., new applicants)
get paid throughout the month depending on when
they were accepted.
Colorado Benefits are distributed on the first 10 days of the
month by the recipient's last digit of their SSN.
Connecticut Benefits and cash are distributed on the first three
days of the month, by the first letter of the
recipient's last name.
Delaware Benefits are made available over 7 days, beginning
with the 5th day of every month, based on the first
letter of the client's last name.
Florida Benefits are available the 1st to the 15th of every
month, based on the 9th and 8th digits of the
Florida case number, read backwards, dropping the
Georgia Benefits are made available from the 5th to the 14th
of every month, based on the last digit of the
client's case number.
Hawaii Benefits are made available on the 3rd and the 5th
of every month, based on the first letter of the
client's last name.
8Idaho0 Benefits are made available on the first day of
Illinois SNAP benefits are made available on the 1st, 3rd,
4th, 7th, 8th, 10th, 11th, 14th, 17th, 19th, 21st,
and 23rd of every month, based on a combination of
the type of case and the case name.
Indiana Benefits are made available on the first 10 calendar
days each month, based on the first letter of the
recipient's last name.
Iowa Benefits are made available over the first 10
calendar days of every month, based on the first
letter of the client's last name.
Kansas Benefits are made available over the first 10
calendar days of every month, based on the first
letter of the client's last name.
Kentucky Benefits are made available over the first 10
calendar days of every month, based on the last
digit of the client's SSN.
LouBenefits are made available between the 5th and the
14th of every month, based on the last digit of the
Maine Benefits are available the 10th to the 14th of every
month, based on the last digit of the recipient's
Maryland Benefits are made available from the 6th to the 15th
of every month, based on the first letter of the
recipient's last name.
Massachusetts Distribution is based on the last digit of each
recipient's Social Security Number and distributed
over the first 14 days of the month.
Michigan Benefits are made available from the 3rd to the 10th
of every month, based on the last digit of the
client's recipient ID number.
Minnesota Benefits are made available from the 4th to the 13th
of every month, based on the last digit of the
client's case number.
Mississippi Benefits are made available from the 5th to the 19th
of every month, based on the last two digits of the
client's case number.
Missouri Benefits are made available over the first 22 days
of every month, based on the client's birth month
and last name.
Montana Benefits are distributed by the last number of the
recipient's case number, over a 5 day period.
Nebraska Nebraska distributes benefits to individuals during
the first 5 calendar days of the month. The day of
distribution is based on the last digit of their
8Nevada0 Benefits are issued on the first day of each month.
8New Hampshire0 New Hampshire benefits are available on the 5th of
New Jersey The monthly allotment is available over the first 5
days of the month.
New Mexico Benefits are made available over 20 days every
month, based on the last two digits of the SSN.
New York Benefits are generally made available over the first
9-14 days of every month, based on the last digit
of the client's case number.
North Carolina Benefits are made available from the 3rd to the 12th
of every month, based on the last digit of the
primary cardholder's SSN.
8North Dakota0 Benefits are made available on the first day of
Ohio Distribution is a staggered schedule between the
first and tenth days of the month.
8Oklahoma0 Benefits issue on the 1st of each month.
Oregon Benefits are distributed on the first 9 days of the
month based on the last digit of the SSN.
Pennsylvania Benefits are made available over the first 10
business days of every month.
8Rhode Island0 Benefits are made available on the first day of
South Carolina Benefits are made available from the 1st to the 10th
of every month, based on the last digit of the SNAP
8South Dakota0 Benefits are made available on the 10th day of every
Tennessee Benefits are made available on the first 10 days of
the month, based on the last two digit's of the
head of house hold's SSN.
Texas Benefits are made available over the first 15 days
of the month, based on the last digit of the
client's SNAP case number.
Utah Benefits are made available on the 5th, 11th, or
15th of every month, based on the first letter of
the client's last name.
8Vermont0 Vermont benefits are available on the first of every
8Virginia0 All recipients are paid on the 1st of the month.
Washington Benefits are staggered over the first 10 days of the
month based on the last digit of the households'
assistance unit number. Weekends and holidays do
not affect the schedule.
West Virginia Benefits are made available over the first 9 days of
every month, based on the first letter of the
client's last name.
Wisconsin Benefits are made available over the first 15 days
of every month, based on the eighth digit of the
Wyoming Benefits are made available from the 1st to the 4th
of every month, based on the first letter of the
client's last name.
Note: 8Highlighted0 states are those that only distribute benefits on
one day a month. There are ten that still do so.
Mr. Kagen. Thank you all for your testimony. And I turn now
to my colleague, the Ranking Member, Jeff Fortenberry.
Mr. Fortenberry. Thank you, Mr. Kagen, and thank you all
for your testimony. The Healthy Incentive Pilot Program that
was put in place in the last farm bill is not going to have
data available for 2 years, from what I understand. So if there
is a delay in implementation or a delay in getting the pilot up
and running, there is going to be a delay in data, and that is
unfortunate. Because it is related to the earlier point that
many of us, Chairman Baca, Mr. Kagen and I, and a lot of
others, are very, very interested in, the correlation between
good nutrition and health care outcomes. When the food stamp
program was started, the idea being to increase caloric--to
have a high level of caloric intake in order to combat hunger
was the main paradigm of the program. Now, as we are seeing
with the epidemic in obesity and other lifestyle-related
diseases that result from poor nutrition, I believe it is
absolutely essential that we look at this very large government
program as to how we can improve outcomes in health, in
addition to its core purpose of preventing hunger in the United
So it is a bit difficult flying in the dark without data on
the Healthy Incentive Pilot. But, Mr. Faber, you raised an
interesting question, and your comments, Ms. Hatcher, were
related, in regards to science-based standards on nutrition.
Thinking a bit out loud about potential policy evolution that
would reap the benefit to improved choice, either through
incentives or rules, how could you foresee that being
developed? In other words, instead of, and let's just take an
example, a SNAP card having $100 on it, a SNAP card would have
100 nutritional points. And that would also be measured as you
buy certain foods. And therefore the market would then respond
to develop food products that would fit easily into the
nutritional categorizations. Or, as we do in the USDA, certify
certain products as organic, could you foresee developing
certain certified SNAP eligible products, because they are
meeting the science-based standards on nutrition, and then that
is a part of the electronic evaluation system?
In my mind, these are creative policy ideas that could be
potentially looked at as we begin to web the outcome of
protecting people, protecting our country from hunger, and
promoting the types of ideas which I think we all share in
terms of good nutritional outcomes.
I would like both of you to respond to these concepts.
Ms. Hatcher. Sure. I think there are some good ideas that
should be tested out there. The challenge is to make sure that
they are operationally not so challenging that they can't be
done within the time period.
Mr. Fortenberry. Let's just stop right there, because you
mentioned that right now in the electronic benefits system
there is a mechanism which flags or allows certain types of
products to be purchased.
Ms. Hatcher. Right.
Mr. Fortenberry. So it seems like the technological hurdle
for the most part has been overcome. It would have to be
adjusted to achieve the ideas that I just said. But it seems
that way to me.
Ms. Hatcher. We can flag products as either eligible or
ineligible. When you start putting the additional parameters,
at least in the Healthy Incentive Pilot, one of the ideas that
have been proposed was similar to like the You Promise Program,
where you get additional points on a separate type of card, and
that those points--you get more points if you purchase a
healthy product or a positive nutritional product. That is one
Perhaps the easiest way that has been done, there have been
a couple of Healthy Incentive Pilots that have been successful
in the WIC program. One of those was in New York State, there
was another one in California, and they were very simple. I
mean, it was a dollar amount, and it was limited to just fresh
fruits and vegetables. And because it was not complex it could
be initiated very quickly. Once they found and identified a
source of funding for it, they put it in place and they could
run it over the period of time that they had and just capture
that data on the purchasing patterns of the customers.
I think you are right, there are some creative
opportunities. The challenges, particularly in a pilot
environment, if you do something that is too technologically
challenging you may spend more funds than you want and more
time on trying to build that program.
Mr. Fortenberry. This is a huge Federal program. We are
spending $50 billion. It is authorized up to $80 billion. It is
a huge program. And it seems like we have lagged in trying to
rethink some of the parameters that would lead to healthy
outcomes, particularly given, again, the pilot program that we
are talking about is now just being implemented. That is
unfortunate, but that is the reality.
Mr. Faber. And I would just add, we will certainly learn a
lot from the pilot program. But we already know a lot about the
elasticity of different kinds of foods and prices. And in
particular we know that as we use coupons or bonuses to reduce
the price of certain foods, including fruits and vegetables and
dairy products, consumption will go up.
USDA's Economic Research Service, a few years ago,
estimated that if we reduce the price of fruits and vegetables
by ten percent then consumption of fruits and vegetables would
go up by six or seven percent. If we reduced it by 20 percent,
as I mentioned earlier, we would get closer to the 3\1/2\ to 5
cups a day of fruits and vegetables.
Mr. Fortenberry. So what foods are inelastic?
Mr. Faber. Some that are convenient and should be enjoyed
occasionally, snack foods, for example, tend to be more
inelastic than foods like dairy and fruits and vegetables. So
the good news is there is an opportunity to provide a bonus or
coupon to encourage consumers to increase their consumption of
fruits and vegetables. I think the hardest challenge, as
Jennifer alluded to, is trying to come up with a system that
looks at hundreds of thousands of SIUs, and that change in the
hourly--literally in the 2 hours we have all been here there
are probably a handful of new products that have been put into
the marketplace. And the most recent number we have is there
are about 12,000 new products that are put into the marketplace
every year. It would be virtually impossible for USDA to come
up with a system that would be credible with nutritionists, and
that could be used by retailers to sort through every
conceivable product and say this product is healthy, this
product is not. And it contradicts USDA policy, which has
always been to focus on a whole diet approach, as opposed to an
individual product approach.
Mr. Fortenberry. Well, that contradiction is part of the
problem here. Again, it goes back to the original intent of the
program where you increase caloric intake on starches primarily
which are cheaper, and as people have to stretch food dollars
that is what gets incentivized for them, and yet we will get
the long-term cost in terms of health. There is going to be a
shift in paradigm, or at least I hope there is.
Mr. Faber. Well, just two things and I will let Jim jump in
here. One important point here is there is no evidence that
low-income Americans who benefit from the SNAP program are any
more susceptible to obesity than other Americans. I think that
is an important point. Every review of the literature, of
USDA's Economic Research Service and others, have found no
correlation between obesity and SNAP participation.
Mr. Fortenberry. I am aware of that statistic. It is an
American problem or a subset of an America problem.
Mr. Faber. And, the other thing we certainly have found is
that where we have made a real investment in nutrition
education we have seen change. And the best example is the
shift from whole milk to low fat and skim. There are other
examples. But clearly Americans are able to change their diets
if they are presented with the right information.
Mr. Fortenberry. Mr. Weill, I am way over time, so I am
going have to let you incorporate your comments to me in
somebody else's question. Sorry. Thank you.
The Chairman [presiding.] At this time I would call on Mrs.
Mrs. Dahlkemper. Thank you, Mr. Chairman. Thank you all. It
is a very interesting subject. I spent 20+ years as a
dietitian, so I dealt with a lot of individuals who received
SNAP benefits over that time. And I also found education was
the key. I actually used to work in early intervention, and I
would work with the parents and take them directly to the
grocery store. And not everyone--obviously, we can't do that
with every person on SNAP, but once the education portion is
brought in, as it is with people who aren't on SNAP, better
choices are made along the way.
One concern I also have is that individuals are on
different, they have different dietary needs who are on SNAP. A
person with diabetes, for example, or the person who is gluten
free, there are all sorts of issues that people are dealing
with. And that is one of the complexities as we go forward.
So I have a couple different questions. But I guess one
question I want to ask is how do we improve the education from
your standpoint as marketers, grocers, manufacturers of
product, how do we improve the education within this program?
Obviously we need to do it for the whole country, but this is a
subset of people that we actually may have some opportunity to
do that with.
Ms. Hatcher. I think the one idea that you mentioned
earlier is a very good idea, which is having more supermarket
retailers partner with the SNAP-Ed programs in the states where
we can put some of the information on healthy recipes, and some
of the purchasing patterns right there in the store. That links
the SNAP-Ed information that they may have received when they
applied for the benefits to their purchase at the time of their
So that is an area that we are working on. That is
something that we are already doing with the WIC program, so it
would only be an extension of that. And it seems to make a lot
of sense to also partner with the schools in some of those
education programs where you involve the children and bring
them into the shopping and cooking decisions. We have seen some
evidence that that really starts to make some impact.
Mrs. Dahlkemper. Mr. Faber.
Mr. Faber. I would just add that clearly we need more
resources for SNAP-Ed. We are concerned about proposals to cut
SNAP-Ed that have been suggested in this session of the
I think there is also a big role here for industry. And as
I mentioned in my testimony, we are working now with FDA and
USDA on new labels that will be clearer for consumers. In order
to make those labels ultimately more effective, we are also
building a public education campaign that will apply to
different demographics, including low-income Americans.
As you mentioned, people have very different diets, they
are using nutrition facts panels in very different ways. We are
working very closely with the Administration to design a public
education strategy around our new labels that will reflect
Mrs. Dahlkemper. They need detail, but they also need
simplification for people. People need to be able to get that
immediate message just from that label. I mean, I was around as
a dietitian when we did the last labeling and they have been
great and helpful, but we still need improvements. I am glad to
Mr. Weill. We do need more and better nutrition education.
As Administrator Paradis said, the program is working well, it
can be made better, but also it needs not to have its funding
cut as has been proposed recently on the Senate side.
But also to get families to have healthier nutrition
requires education, but also requires them to have access to
stores that provide healthy foods. It requires them to have
adequate incomes and benefits so that they can afford a healthy
Mrs. Dahlkemper. I did want to ask you a question on the
issue of access to this, because I know that is certainly
something you have some knowledge on. And in the previous panel
I brought up the elderly and disabled having probably some of
the biggest issues with access. Do you think some of that has
to do with just public perception, the stigma?
Mr. Weill. Yes. Although, I think the stigma in the program
is far less than it was 5 or 10 years ago, which is great. And
even before the recession there was much less stigma in the
upsurge in participation with the recession. And policymaker
support has further reduced stigma.
But if I can now use that question to circle back to your
earlier point. Our concern from the recipient point of view is
that having restrictions on food choice at the checkout counter
is going to make the transaction, and your participation in
SNAP, more visible and drive people out of the program by
And the other thing I would say is that society thinks of
beneficiaries as people--the only money they spend for food is
through SNAP, when in fact we are talking about the senior
citizen who gets $16 a month from SNAP and is spending $100 of
her own money on food. And the working mom who is showing up
with a SNAP card, that is half of her food budget. So when we
talk about restricting food choice we have to think about the
reality of people's lives, what portion of their food budget
SNAP is, what stores they are going to, are there stores that
are available to them that have these healthy choices, and so
Mrs. Dahlkemper. Thank you very much. I appreciate it.
The Chairman. Thank you very much. I have a couple of
questions that I would like to ask Mr. Faber.
One of the questions: in your testimony you make it clear
that you believe that the attempt to limit consumer food
choices through SNAP are more harmful than helpful. Can you
explain to the Subcommittee why you think eliminating SNAP
choices is a bad idea.
Mr. Faber. I think there are four main points I would want
to make. One is it is very hard to come up with a definition of
which foods are healthy, and, therefore, should be eligible for
SNAP; and which foods are unhealthy and should be ineligible.
There are many foods, and Mrs. Dahlkemper is probably much
more--can explain this much more elegantly than I can. That,
for example, nuts that have certain nutritional benefits, that
would be excluded from SNAP because of the amount of fat that
they would have.
So it is very hard to simply say there are good foods and
bad foods. We tend to think that there are good diets and bad
diets. And administratively it would be very difficult to
administer such a program.
The second point is that just the sheer amount of products
that are in the marketplace, there are more than 300,000
different products that are in the marketplace. We are bringing
in the last estimate about 12,000 new products to the
marketplace every year. That is a couple of products an hour.
So it really is--in order for USDA to administratively grade
each of these products over and over and over again would be an
extraordinary administrative challenge.
But the real problem is the one that Mr. Weill alluded to,
that the vast majority of SNAP recipients are spending their
own money in addition to SNAP dollars. And so at the end of the
day the most likely scenario is that they would simply use
their dollars to purchase the things that should be enjoyed
occasionally and SNAP dollars to purchase foods that would be
Ms. Hatcher. And just to add on what Scott was saying, we
have many of our customers that do mixed basket transactions,
so that you would have all of your items go through the line,
and they would be coded as either SNAP eligible or ineligible.
The cashier at the end of the line would ask for the additional
payment for maybe the paper plates or paper towels, or other
items that they would have purchased that would have been
ineligible. So Scott is exactly right in terms of the mixed
basket and the customer using additional forms of payment in
addition to SNAP benefits.
Mr. Faber. So it would be extraordinarily complicated,
extraordinarily costly, and ultimately wouldn't work because
SNAP recipients would generally use their own dollars to buy
the prohibited items.
The Chairman. I just heard all three of you make a
statement here, and I agree to a degree, that we should have
more SNAP education on nutritional education. All of us believe
that is very important as we look at obesity and the problems
that we are having with obesity. And yet, it becomes very
difficult in telling someone the kind of foods that they should
buy and shouldn't buy, because they are looking at rationing
for a month before they are able to go back to a store.
Some discussions have been discussed, and give me your
thoughts on it, besides the money that is needed there and not
cutting the funds there and monies that are already there, for
anyone who is in a SNAP program to have some kind of an
orientation being done for any new eligible person, or if it is
done through the Internet or some kind of mailing or something
that is done, an orientation that needs to be done on what is
good and what isn't, so this way they can make better choices
with what is available. I don't know if that is being done
right now to each and every one of the SNAP recipients. But
that is something that I think we should consider, an
orientation of some sort or another when they are eligible to
receive the SNAP program. Because ultimately we end up paying
at the end through obesity because the effects it has on
diabetes, breast cancer, other forms of illness that come
through diabetes to us, not to mention the life span of an
individual as well.
So I throw the question back up to any one of you three,
since all three of you mentioned nutritional education and
Mr. Weill. I think that most recipients probably receive
some paper nutrition education material when they apply or when
they receive a determination of eligibility. But it would be
infrequent that they would receive a one-on-one counseling
system. Their primary interaction with the agency of course is
through a case worker with a very large caseload just trying to
manage 400 cases. But then from the nutrition education side of
the program there are often classes offered and they
participate that way. It is not like WIC where at the point of
participation and eligibility you get nutrition counseling.
And, looking at a strategy that maybe doesn't go as far as WIC
because the caseload is so much larger, but moves towards
offering nutrition education when people are in the office is a
The Chairman. Because it has to be affordable. We can say
that we can get our educational systems or our manufacturers or
stores, our grocery stores and others, to offer the educational
programs. And I can only speak for myself. You know, I can be
in an educational classroom, but coming from a large family of
15 the classroom taught me everything about nutrition, but when
I got home my parents said this is all I can afford to give
you. So, I am eating the tortillas, the frijoles, the butter,
everything else I shouldn't have. And most of the kids now,
because they are not actively involved with physical fitness
and the kind of activities that we had, most of these kids are
all on computers and using the Internet and spending all kinds
of time, to us we had critical thinking just playing kick the
can. You know, you had to hide, you had to think and you ran
and you did something. But nowadays we are not doing any of
that. And I can just imagine that we can have the educational
programs, which are good and I think that they are needed, but
when I got home my parents said this is all I can afford, we
can't afford to give you anything else.
And I know that, Ms. Hatcher, you have a thing here that
you wanted to recommend a floor limit of $25 per day for a SNAP
EBT transaction where EBT systems are not functioning as a
result of a disaster. And I know that we should decrease it,
but can you explain to this Committee what you mean by that and
how do the limits benefit the SNAP recipient?
Ms. Hatcher. Sure. That suggestion was one that came out of
some of the disaster preparation work that we did after the
last series of hurricanes. And when the systems are down, I
mean the beauty of the electronic system is they work really
well when there is electricity up and running, but in the
aftermath of a hurricane, when you are in the middle of a
disaster and you don't have any communications or computer
systems, it would be very helpful for the retailers to know
that there was an automatic floor limit or a $25 amount. This
way a person could come in and get those basic items to be able
to feed their family for the next day or a couple of days while
the computer systems were down, and they may not be able to
access their balance on their SNAP benefits.
The Chairman. Mr. Weill, I am interested in the $2.2
billion in payment errors in the system. Can you make
recommendations for FNS that will help reduce the $2.2 billion
Mr. Weill. Well, as discussed earlier, a lot of that is due
to agency error, not client error or client fraud. And, part of
it is due to agencies being terribly understaffed, which also
was true before the recession but is more true now. So agencies
need support, they need support in updating computer programs,
many of the computers are vastly outdated, they need more
staff. So that is one strategy. Simplifying the program in key
ways is another strategy.
The Chairman. But why haven't we updated the equipment and
why can't they talk to one another?
Mr. Weill. Well, the states can speak better to that than I
can. But certainly, as you know, states are in a terrible
budget situation, and new expensive computer systems are last
on the list often.
The Chairman. Mrs. Dahlkemper, do you have any additional
questions you would like to ask?
Mrs. Dahlkemper. Thank you, Mr. Chairman. I just have one
additional question. Mr. Faber, how can we reduce the cost of
those foods that we know are most nutritious? I mean, if a
person goes to the grocery store, it was mentioned, Ms.
Hatcher, in your testimony, and they have a choice between
white bread and whole wheat bread, we know the cost difference
can be substantial, yet we know that the whole wheat bread is a
healthier choice. If they have a choice between a gallon of
milk and a large bottle of soda, pop as we call it in my
region, but anyway, the choice that has to be made when you
have a family back home with a bunch of hungry children, so you
try to make those SNAP benefits spread along with whatever
little income you might be bringing in. So how can we reduce
the cost of fruits and vegetables, whole grains, dairy
products, the things that we know are very healthy?
Mr. Faber. Well, that is a complicated question.
Mrs. Dahlkemper. On Federal policy.
Mr. Faber. Yes, I understand. You know, certainly there are
levers in our farm and energy policies that are having an
impact on the cost of ingredients and ultimately the cost of
food. So, for example, we spend significant sums every year
providing subsidies to certain farmers and not to other
farmers. There may be opportunities in the next farm bill to
provide incentives that ultimately increase the production of
some crops at the expense of others, but those are complicated
economic and, ultimately, political questions.
It is also the case that our energy policies are
contributing to modestly higher commodity costs because a
significant amount of corn is being diverted from our food
supplies, and really our feed supplies, into fuel. And so there
are some opportunities in the farm bill and the energy bill to
invest in advanced biofuels that use other feedstocks
ultimately than food ingredients.
But, the good news is that food inflation is very low right
now. And because of the First Lady's leadership, and because
consumers are simply demanding more and more healthy choices,
we are living in a time when there are many, many more choices
in the grocery store than ever before. And as someone who has
worked on these issues for more than 20 years, I am sure you
walk through the grocery store and notice many more low
calorie, low sugar, low sodium products that are more
affordable than ever.
Americans are spending a smaller share of their income on
food than at any time in history. But there is certainly more
progress that we can make. And the farm bill and our energy
policy, and ultimately to some extent our tax policy, could
drive us in that direction.
Mrs. Dahlkemper. Thank you, Mr. Chairman.
The Chairman. Thank you. You know, a thought just came
through my mind. I know that we are offering a lot more
healthier foods and we are making them a lot more available at
a lot of our grocery stores and people have more choices. Is
there a possibility to have some kind of--I know we have
enterprise zones where we give tax incentives to enterprise
zones, but to give the American farmers and farmers that are
producing healthy foods some kind of incentive. This way it
would help in buying an American product, but at the same time
buying healthy products and from those farmers that are willing
to produce those. Has that thought ever come up yet or not? I
Mr. Faber. In the last farm bill, and we do provide some
fairly modest support to provide fruits and vegetables to
schools. That is something that we could certainly expand in
the next farm bill.
The Chairman. They can look at working with farmers because
then that gives them the incentive to say I am going to produce
fresh fruits and vegetables, since I am going get some kind of
a tax break just as we have done for businesses or someone
else. I think I am willing to explore that and look at it. And
we put our own incentive instead of saying an enterprise zone,
we have a farm zone with tax incentives for those farmers that
are producing the kind of healthy food that will reduce the
price. Because ultimately we end up paying at the end in the
area of obesity with the health costs, the effects it has on
us, and the quality of life, too.
Mr. Faber. I think those are interesting ideas. Ultimately
the array of subsidies and insurance programs that we have in
place are not having a really significant impact on the acres
that are ultimately planted to certain crops. That is certainly
true in some parts of the country. But there is ample incentive
to grow fruits and vegetables in California, and there is ample
incentive to grow corn in Illinois and Iowa regardless of the
mix of subsidies that we provide. There are certainly some
parts of the country where if you restructured our farm safety
net you might see a shift from some commodity crops to fruit
and vegetable production, and that might have a marginal impact
on the cost of fruits and vegetables, but probably not a very
The Chairman. We should give an advantage to our domestic
farmers versus importing fresh fruits and vegetables from
outside the country, because we don't know the safety in terms
of the products that we are getting versus our own personal
farmers. And if we provided them that kind of an incentive
people would feel a lot safer because they know that we have
followed all of the CAL OSHA requirements and safety
requirements that are there versus any other products you may
get from somewhere else.
Mr. Faber. One of the great developments this Congress, and
hopefully the Senate will act on this before the recess, is the
passage of food safety legislation. That would set tough new
standards, or allow FDA to set tough new standards for how we
produce fruits and vegetables, not only in the U.S., but
The Chairman. But give the incentive to those that are
compliant here and have those enterprise zones or whatever,
Mr. Faber. Interesting idea.
The Chairman. With that, I want to thank each of the
panelists for being here and taking the time. That concludes
the hearing that we have.
Before we adjourn I just would like to again thank the
witnesses for their participation in the hearing and your
thoughtful testimony. Your knowledge, ideas, and experience I
hope will be used by Congress to ensure adequate nutrition will
be available to the neediest Americans in the most effective
manner. Again, I want to thank you for being here.
With that, I would like to state before we adjourn and I
hit the gavel, under the rules of the Committee the record of
today's hearing will remain open for 10 calendar days to
receive additional materials and supplement your testimony, and
to receive any written responses from the witnesses to any
question posed by Members.
The hearing of the Subcommittee on Department Operations,
Oversight, Nutrition, and Forestry is adjourned.
Thank you very much for being here.
[Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Questions Submitted by Hon. Frank D. Lucas, a Representative in
Congress from Oklahoma
Response from Julie Paradis, Administrator, Food and Nutrition Service,
U.S. Department of Agriculture
Question 1. Have any of you looked at SNAP nutrition education to
see what the results of these efforts have been? Do we know what
tactics are working or not working?
Answer. The Food and Nutrition Service (FNS) has multiple
initiatives to monitor SNAP nutrition education (SNAP-Ed) and to
identify effective practices. In FY 2008, FNS introduced the Education
Administrative Reporting System (EARS). EARS provided, for the first
time, uniform data across states regarding who receives SNAP-Ed, what
kinds of educational services are provided and how resources are
allocated. While not a measure of dietary impacts, this reporting
system makes it possible to profile the key features of SNAP-Ed both
nationally and by state. FNS can use this information to examine
efficiency, service coverage, and consistency with FNS policy
FNS is also evaluating a set of SNAP-Ed demonstration projects to
assess dietary impacts. The demonstration projects were competitively
selected for both their educational promise and their commitment to
rigorous FNS evaluation requirements. Projects include a variety of
approaches, such as Internet-based strategies, social marketing and
classroom lessons. An impact report on the first round of
demonstrations is expected in the fall of 2011.
FNS is sponsoring a review of existing research to assess the
available evidence for alternative approaches to changing children's
dietary behaviors. Pertinent studies are critiqued by a panel of
technical experts to determine the availability of sound research and
the associated results. A series of reports will be produced during
2011 to highlight what intervention features are found to be effective
and what information gaps still exist.
Current FNS policy calls for states to pursue science-based SNAP
nutrition education. Specifically, states are directed to incorporate a
variety of features known to be effective. These include messages that
are behaviorally focused and personally relevant to the target
audience, use multiple channels of communication, actively engage the
audience, and offer multiple exposure to the message.
The SNAP-Ed provision in the Child Nutrition Reauthorization bill
further requires nutrition education activities be science-based and
outcome driven; provides for accountability and transparency through
state plans and collaboration among stakeholders; provides focus on the
issue of obesity; and increases effectiveness of important nutrition
education dollars across various nutrition programs via the connection
to SNAP as a program that serves the low-income community.
Question 2. According to GAO, $1.8 billion was issued in
overpayments for Fiscal Year 2009. Your testimony says that states
established a total of over $367 million in new claims for over
issuances and collected just under $300 million. Does this mean USDA
has only recouped less than $300 million of the $1.8 billion in
Answer. The overpayment rate of $1.8 billion for Fiscal Year (FY)
2009 is an estimate based on a random sample of approximately 52,000
households reviewed as part of the quality control process. It does not
represent identification of actual cases of overpayments, but rather a
statistical projection of possible overpayments to Supplemental
Nutrition Assistance Program (SNAP) households nationwide.
The FY 2009 claims data represent the actual overpayments states
identified and collected in that year. Overpayments can result from
client household or agency errors, as well as recipient fraud. The
states establish claims in accordance with the Food and Nutrition Act
and SNAP regulations.
Legal factors that influence the establishment and collection of
claims in any given fiscal year include:
States can only collect from current SNAP households the
greater of $10 per month or 10 percent of the monthly SNAP
allotment, unless it is a fraud claim which can be $20 or 20
percent a month. This allotment reduction method of collection
can often extend the collection period beyond the current
States are not required to collect claims that are less than
the Federal cost effectiveness threshold amount of $125.
Claims that are delinquent for 180 days must be referred to
the Treasury Offset Program (TOP). TOP collections on claims go
beyond the current fiscal year.
A state agency may compromise a claim or any portion of a
claim if it can be determined that a household's economic
circumstances dictate that the claim cannot be paid in 3 years.
In accordance with common debt collection practices, state
agencies may terminate claims if they are no longer considered
Question 3. What do the states do with the performance bonus money?
Does USDA have any ability to tell the states that receive these
bonuses what it can and can't do with the money?
Answer. The Food and Nutrition Act does not provide USDA with
authority to require that bonus money be used for a specific purpose.
Therefore, states may use bonus money however they wish. Although funds
do not have to be spent on SNAP or any other Federal program, some
states do re-invest their bonus dollars into SNAP.
Question 4. Has the use of broad-based categorical eligibility
played a large role in reducing error rates to an historic low in FY09?
Answer. Errors in the Supplemental Nutrition Assistance Program
(SNAP) are overwhelmingly related to determining the right level of
benefits, neither too much nor too little, for participants rather than
the determination of basic eligibility. In fact, over 98 percent of all
basic eligibility determinations are found to be correct. Categorical
eligibility, both basic and broad-based, while easing eligibility
requirements, still subjects participants to the standard benefit
Categorical eligibility is included as one of the many policies
related to household circumstances that state agencies review as part
of the Quality Control (QC) reviews that they annually conduct on a
sample of their participating SNAP households. QC does not separate
broad-based categorical eligibility from traditional categorical
eligibility which makes households categorically eligible for SNAP
because the household receives TANF, Supplemental Security Income (SSI)
or general assistance cash benefits. As a result there is currently no
mechanism to determine a specific effect that broad-based categorical
eligibility may have on the error rate. Even so, as most errors are
related to determination of the amount of benefits, not determination
of eligibility, the Food and Nutrition Service (FNS) believes that
broad-based categorical eligibility has not had a significant impact on
the error rate.
Question 5. Which of the 36 states that use categorical eligibility
have received bonus payments for low error rates?
Answer. As of October 25, there are currently 40 states with broad-
based categorical eligibility (BBCE). In FY 2009, 29 states had BBCE.
Five of the eight states that received bonuses that year for low error
rates had implemented BBCE (Delaware, Georgia, Ohio, Washington, and
Question 6. Does the Department have data on what SNAP participants
are purchasing with their benefits?
Answer. USDA does not collect administrative data on the kinds of
food that SNAP recipients purchase with their benefits or other food
resources. (Most clients use a combination of SNAP benefits and their
own money to purchase food.)
The Department does conduct periodic studies and analyses of data
from national nutrition surveys to assess the diet quality of SNAP
participants. The most recent analysis, examining data collected
through the National Health and Nutrition Examination Survey between
1999 and 2001, found that the diet quality of SNAP participants, low-
income nonparticipants, and higher-income consumers all fell far short
of the Dietary Guidelines for Americans.
Overall, the similarities between the diets of these groups were
more striking than the differences. All groups had very low intakes of
whole grains, dark green and orange vegetables, and legumes, and high
intakes of fat, saturated fat and added sugars. Among adults, both low
income groups (SNAP participants and low-income nonparticipants) were
less likely to consume foods from eight out of ten food groups than
higher-income consumers. SNAP participants were less likely to consume
fruits or vegetables than nonparticipants, however. Differences between
SNAP participants and nonparticipants were more often observed for
adults and older adults than for children. Over half of all foods
consumed by all groups came from foods that should be consumed only
occasionally; SNAP participants were somewhat more likely than both
nonparticipant groups to consume foods recommended for occasional
consumption and somewhat less likely to consume foods recommended for
selective or frequent consumption.
It should be noted that available data cannot distinguish between
foods that SNAP clients purchase with their benefits, and those they
purchase with other resources.
Question 7. What is the projected cost of the ALERT system? Are
there expectations that this will save the program money once it is
Answer. The projected overall 5 year cost for the ALERT system is
$10.5 million. Overall costs consist of development for a next
generation system, operation and maintenance of the existing and future
systems, data center consolidation, and data mining activities. Prior
to the new contract, operations and maintenance cost $1.5 million
annually for the existing ALERT system with a projected 5 year cost of
$7.5 million. Operations and maintenance for the next generation ALERT
system are projected to cost $4.8 million over the next 5 years,
resulting in an annual savings of 36 percent.
The next generation ALERT system is designed to utilize a robust
data warehouse to support advanced data mining techniques to improve
upon FNS' ability to identify and act upon fraudulent behavior more
quickly and effectively than its current capabilities. Current data
mining efforts allow FNS to move towards more advanced predictive
models to better assess risk, allowing FNS to allocate its resources
more effectively resulting in program savings.
Question 8. When the Department is considering the disqualification
of a retailer, does it consider whether or not there are other
retailers that will accept SNAP benefits in that area?
Answer. In all instances where violations leading to
disqualification did not include trafficking (i.e., exchanging SNAP
benefits for cash or consideration other than eligible food) in
benefits, FNS makes a determination as to whether client hardship
exists before a disqualification is imposed. If there are not a
sufficient number of stores that stock similar products in the area, a
store subject to sanction is given the option to pay a hardship civil
money penalty in lieu of serving a disqualification period.
If trafficking has occurred in a store, a hardship civil money
penalty is not considered. Trafficking is the most egregious Program
violation, and allowing stores to pay a monetary penalty and continue
to participate is not allowed by regulation.
Response from Kay E. Brown, Director, Education, Workforce, and Income
Security Issues, U.S. Government Accountability Office
October 1, 2010
Hon. Frank D. Lucas,
Ranking Minority Member,
House Committee on Agriculture,
Dear Representative Lucas:
The enclosed information responds to the post-hearing questions in
your letter of September 21, 2010, concerning our testimony before your
Committee on July 28, 2010, on quality control measures in the
Supplemental Nutrition Assistance Program. If you have any questions or
would like to discuss this information, please contact me at
Education, Workforce, and Income Security Issues,
U.S. Government Accountability Office.
The enclosure provides your questions and our responses for the
record and supplements information provided to your Committee in our
testimony, Supplemental Nutrition Assistance Program: Payment Errors
and Trafficking Have Declined, but Challenges Remain (GAO-10-956T,
Washington, D.C.: July 28, 2010).
Question 1. Have any of you looked at SNAP nutrition education to
see what the results of these efforts have been? Do we know what
tactics are working or not working?
Answer. We last reviewed USDA's nutrition education efforts,
including SNAP nutrition education, in 2004. In our April 2004 report,
we found that USDA programs' administrative structures hindered
coordination among the USDA nutrition education efforts and that little
was known about the outcomes of these services because of limited
monitoring and evaluation. In response to this report, FNS reported
taking steps to improve coordination, systematically collect reliable
data, and identify and disseminate lessons-learned for its nutrition
education efforts. Several years have passed since the time of this
study, however, and we do not know whether USDA's efforts were
effective. We have not been asked to update our report. (GAO-04-528)
More recent information about SNAP nutrition education efforts can
be found on this FNS website: http://www.fns.usda.gov/ora/menu/
Question 2. Your testimony says that it is unclear what effect
categorical eligibility has on QC rates, but if states are using
categorical eligibility to give SNAP benefits to otherwise ineligible
recipients does it not stand to reason that state error rates would be
Answer. State efforts to simplify program rules can reduce
caseworker errors and reduce states' error rates. However, we are not
aware of studies that have specifically looked at the effect of state
use of expanded categorical eligibility on payment error rates.
Question 3. Your testimony states that households with substantial
assets but low income could be eligible for SNAP under broad-based
categorical eligibility policies. Do you know how many, or what
percentage, of households have been deemed eligible for SNAP due to
categorical eligibility that might not otherwise qualify under regular
Answer. We do not know how many, or what percentage, of households
deemed eligible for SNAP due to categorical eligibility would otherwise
not qualify under regular SNAP rules. We conducted an analysis of the
potential effect of eliminating TANF noncash categorical eligibility in
2006, but this report doesn't specifically address your question.
Further, state use of expanded categorical eligibility has increased in
recent years, so circumstances may be much different now compared to
the time we conducted this study. (GAO-07-465)
Response from Hon. Phyllis K. Fong, Inspector General, Office of
Inspector General, U.S. Department of Agriculture
Question 1. Have any of you looked at SNAP nutrition education to
see what the results of these efforts have been? Do we know what
tactics are working or not working?
Answer. Food and Nutrition Service (FNS) data indicate that there
has been significant growth in nutrition education over the last
several years. The number of state agencies with approved Nutrition
Education Plans increased from seven in 1992 to 52 in 2007. Federal
funds approved for Food Stamp (now SNAP) Nutrition Education also grew
from $661,000 in 1992 to over $270 million in 2007.
This is an area in which we have not performed any audits.
Currently we are conducting a multi-phase audit of Recovery Act Impacts
on the Supplemental Nutrition Assistance Program. In our second phase,
we plan to review state plans for the use of funds authorized by the
American Recovery and Reinvestment Act of 2009 (Recovery Act). OIG
could include a review of state use of funds for nutrition education,
after considering such factors as the amount of funding states have
allotted for this purpose. This review will be conducted later in
Fiscal Year (FY) 2011.
Question 2. From a December 3, 2009, OIG report titled,
``Supplemental Nutrition Assistance Program Benefits and the Thrifty
Food Plan'' it states that, ``We did not perform work to validate
participant eligibility for SNAP benefits, nor did we verify the
accuracy of benefits received by individual participants. Reviews of
these participant aspects of SNAP will be conducted separately as part
of our overall examination of Recovery Act fund expenditures.'' Is this
Answer. The work is not yet underway. As mentioned above, OIG is
conducting a multi-phase audit of Recovery Act Impacts on the
Supplemental Nutrition Assistance Program. The second phase of the
audit, which will be conducted later in FY 2011, will include a review
of participant eligibility and accuracy of benefits.
Question 3. With the increase in the amount of participants and
SNAP benefits, have you seen an increase in waste and abuse in the
Answer. Yes, we have seen an increase in the amount of potential or
alleged fraud within the program. Our OIG hotline, which is the vehicle
commonly used by the public to report fraud, waste, and abuse in USDA
programs, received approximately 1,000 complaints alleging SNAP fraud.
This is a significant increase over the number of complaints we
received last year. The complaints are referred to OIG Investigations
or directly to FNS for appropriate action. Additionally, for every year
since 2007, OIG Investigations has initiated approximately 140
investigations a year involving allegations of SNAP fraud. During FY
2010, however, that number rose to nearly 300, thus doubling the amount
of SNAP fraud investigations opened in the past 3 years.
Question 4. You testified that the two states you audited for
Recovery Act purposes did not have adequate or effective fraud
detection units and that FNS had not conducted periodic reviews of the
states. Could this be a reason that the QC rates are historically low?
Could it be that the QC rates are not accurate? Have you audited the QC
Answer. OIG has not conducted a recent audit of the QC rates and
therefore has no work upon which to answer your specific questions. We
do plan, however, to include an evaluation of the QC process in our
audit on SNAP improper payments starting later in FY 2011.
Response from Jennifer Hatcher, Senior Vice President, Government
Relations, Food Marketing Institute
Question 1. Do retailers work with the states and others who carry
out SNAP nutrition education to reach consumers at the point of sale
and encourage healthier buying patterns?
Answer. Retailers are increasing efforts to address nutrition
education and promote healthier buying habits with all their customers,
not just SNAP customers. We would welcome additional opportunities to
work with states and nonprofits on SNAP education projects. We are
currently working on a large nutrition education project to coincide
with the new front-of-package labeling system at FDA as it is
developed. While education efforts at the store level are very
effective, education outreach efforts are rarely, if ever, implemented
specifically at the point of sale for a couple of reasons. First,
reducing the time in the checkout lane is a top priority for retailers
as low checkout wait time is considered a primary factor of customer
satisfaction with their trip to the store. Additionally, by the time
the customer is at the point of sale, they have completed their
shopping and have made all their purchase decisions. Efforts to
influence purchases when the customer enters the store, and throughout
the shopping experience, are more likely to influence consumer behavior
during that shopping trip.
Question 2. According to GAO, rates of trafficking SNAP benefits
are higher in smaller stores. Why do you think rates of trafficking are
higher in small stores as compared to large stores? Do you have
suggestions for reducing or eliminating trafficking in smaller stores?
Answer. We have no knowledge of any of our member companies large
or small being implicated in any trafficking investigations. Should
there be a rogue employee involved in one of these schemes, we would
fully support USDA in prosecuting these crimes. The EBT card has
eliminated most all of the fraud and related crimes we were seeing
under the paper system and has dramatically improved the integrity of
the program for vendors and customers alike.
Response from James D. Weill, President, Food Research and Action
Question. You mentioned that states need to be more responsive in
taking the many options they have to simplify the program. Do you think
state options should be eliminated and instead have the Department
setting the policies for administering the program?
Answer. In many respects the SNAP program is strengthened by its
roots both in federalism and the public-private partnership it entails.
A mix of Federal and state policy action generally improves the
effectiveness of SNAP in serving needy people.
In some instances, however, Federal standards have been or would be
helpful. Whether a Federal standard rather than a state option may be
more appropriate depends on the particular program aspect at issue.
For example, Federal mandates established by Congress and
administered by the Department of Agriculture ensure that SNAP
Electronic Benefit Transfer (EBT) cards are interoperable across state
lines (previously not a mandate) and that the foods that are eligible
for purchase with those benefits are the same across state lines. Those
national standards help to promote the efficient delivery of assistance
through regular channels of private sector commerce--both through
grocery retailers and through EBT processing systems.
We recognize that some discretion for states to adapt SNAP policies
and practices to fit particular state circumstances can be useful. For
example, caseworker intake models often vary from state-to-state. In
some cases these variations reflect different needs to establish
cooperation with other Federal and state benefits programs operating in
states. An example, however, where a Federal standard might be more
appropriate than leaving policy to state discretion is the
certification period for elderly and disabled households, whose
financial circumstances are very stable. States now have discretion to
set those periods anywhere from 3 to 24 months. Making 24 months the
standard time for the certification period for those households could
promote continuity of benefits for a very vulnerable population and
reduce the drain on the Federal and state administrative costs entailed
with shorter certification periods and more frequent case processing.