Food Stamp Program: States' Use of Options and Waivers to Improve
Program Administration and Promote Access (22-FEB-02,		 
GAO-02-409).							 
                                                                 
To help states administer their Food Stamp Programs, the Food and
Nutrition Service (FNS) offers options and waivers to their	 
program rules and regulations. Almost all states used options or 
waivers in their food stamp eligibility determination process.	 
More than half of the states chose to make households receiving  
Temporary Assistance for Needy Families (TANF) services 	 
automatically eligible for food stamps. Thirty-three states	 
exempted some or all vehicles in the determination of food stamp 
eligibility. Although most states used these options and waivers,
they considered them a cumbersome way to increase access to the  
program for families owning a vehicle. Almost all states used at 
least one option or waiver to change the reporting methods	 
required of food stamp household earnings. The most frequently	 
used reporting waivers exempted recipients from reporting changes
in earned income of $25 or more per month. States used these	 
options and waivers to simplify paperwork requirements for both  
the food stamp recipient and eligibility worker. Although few	 
states were using the new option to provide food stamp benefits  
to families leaving TANF, 20 other states planned to implement	 
the option. No state was implementing or planning to implement	 
all aspects of the simplified program option, which allows states
to merge their TANF and Food Stamp Program for families receiving
both types of assistance. States told GAO that the simplified	 
program option would make administering the programs more	 
difficult because it creates a separate program, covering only a 
subset of food stamp recipients. However, nine states were using 
a portion of the simplified program to align their food stamp and
TANF work or reporting requirements.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-409 					        
    ACCNO:   A02742						        
  TITLE:     Food Stamp Program: States' Use of Options and Waivers to
Improve Program Administration and Promote Access		 
     DATE:   02/22/2002 
  SUBJECT:   Block grants					 
	     Disadvantaged persons				 
	     Eligibility criteria				 
	     Eligibility determinations 			 
	     Food relief programs				 
	     Reporting requirements				 
	     State-administered programs			 
	     Waivers						 
	     Welfare benefits					 
	     Welfare recipients 				 
	     Food Stamp Program 				 
	     HHS Temporary Assistance for Needy 		 
	     Families Block Grant				 
                                                                 
	     Simplified Food Stamp Program			 

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GAO-02-409
     
United States General Accounting Office

GAO Report to the Ranking Minority Member, Committee on Agriculture,
Nutrition, and Forestry, U.S. Senate

February 2002

FOOD STAMP PROGRAM

States' Use of Options and Waivers to Improve Program Administration and
Promote Access

GAO-02-409

Contents

Letter

Results in Brief
Background
States Used Eligibility Options and Waivers Primarily to Increase

Access to Food Stamps States Used Reporting Options and Waivers Primarily to
Reduce

Payment Errors and Simplify Paperwork Many States Planning to Use the
Transitional Benefit Option No State Is Using All Aspects of the Simplified
Food Stamp

Program Option Agency Comments

                                     1

                                    2 3

                                     8

                                   14 17

                                   19 21

Related GAO Products

Table

                   Table 1: Reporting Options and Waivers

Figures

Figure 1: Reasons States Confer Categorical Eligibility to Households 10
Figure 2: Reasons States Replaced Vehicle Asset Rules with TANF-Funded
Program Rules 12 Figure 3: Reasons States Used Categorical Eligibility to
Exempt

Vehicles  13 Figure 4:  Thirty-Five States  Use Change Reporting  Waivers 15
Figure 5: Reasons States Would Use the 3- and 6-Month

Transitional Benefit Alternative 18 Figure 6: Reasons States Are Not
Planning to Use the 3 and 6-Month Transitional Benefit Alternative 19 Figure
7: Reasons States Are Not Using the Simplified Food Stamp Program Option 20

Abbreviations

FNS Food and Nutrition Service
GAO General Accounting Office
TANF Temporary Assistance for Needy Families
USDA U.S. Department of Agriculture

United States General Accounting Office Washington, DC 20548

February 22, 2002

The Honorable Richard Lugar
Ranking Minority Member
Committee on Agriculture, Nutrition, and Forestry
United States Senate

Dear Senator Lugar:

The U.S. Department of Agriculture's (USDA) Food Stamp Program is a
federal entitlement that provided about $15.5 billion in benefits to a
monthly average of 17.3 million low-income individuals during fiscal year
2001. Despite the large number of people served, participation in the Food
Stamp Program by eligible individuals has declined significantly since
1994. USDA's Food and Nutrition Service (FNS) estimates that at least 60
percent of the overall decline in food stamp participation involved
recipients receiving welfare benefits.

Data showing that former welfare families leave the Food Stamp Program
at rates higher than their nonwelfare counterparts has raised concerns that
the federal rules and regulations under which states administer their Food
Stamp Programs do not facilitate participation by low-income working
families who were affected by welfare reform. While states continue to
administer their Food Stamp Programs under these federal rules and
regulations, welfare reform enacted in 1996 gave states flexibility to
administer their welfare programs through Temporary Assistance for
Needy Families (TANF) block grants.

To help states address barriers to participation, and to help them
administer their Food Stamp Programs, FNS offers some flexibility by
providing options and waivers to program rules and regulations. In light of
the reauthorization of the Food Stamp Program in 2002, you asked us to
examine states' use of certain federal food stamp options and waivers.
Most of the options and waivers we looked at were offered to states since
welfare reform. We assessed the extent to which states used specific
program options and waivers related to: (1) determining food stamp
eligibility, (2) reporting changes in household circumstances that may
affect eligibility and benefit amounts, (3) providing food stamps to
households leaving TANF, and (4) aligning food stamp and TANF program
rules for families receiving both types of assistance.

Results in Brief

Our review is based on telephone interviews that we conducted during
September and October 2001 with officials in 50 states, including food stamp
directors, and policy and quality control officials. We also analyzed
federal legislation and regulations as well as FNS data on waivers. In
addition, we reviewed literature and research that had been conducted on the
Food Stamp Program. Our work took place between July and November 2001 in
accordance with generally accepted government auditing standards.

Almost all states used one or more options or waivers to change their food
stamp eligibility determination process. More than half of the states chose
to make households receiving TANF-funded services automatically eligible for
food stamps, thereby eliminating food stamp eligibility requirements for
these families. Thirty-three states used available options to exempt some or
all vehicles from counting as assets in the determination of food stamp
eligibility. Most states implementing these options did so to allow more
households to access the Food Stamp Program, simplify the administrative
process for eligibility workers, and support working families. While most
states used these options and waivers, they considered them a cumbersome way
to increase access to the program for families owning a vehicle.

Almost all states used at least one option or waiver to change the reporting
methods required of food stamp households with earnings. The most frequently
used reporting waivers were those that replaced the requirement that
recipients report changes in earned income of $25 or more per month with
requirements to report larger income changes, increased work hours, or
changes in employment status. Other states chose an option that allowed
households with earned income to report less frequently, either once every 3
months or once every 6 months. States used these reporting options and
waivers in order to reduce their state's payment error rate and to simplify
paperwork requirements for both the food stamp recipient and eligibility
worker. Because some reporting options applied only to specific households,
many states considered them somewhat restrictive. Officials in most states
told us that the effect on their payment error rate was a factor in their
decision to use particular options and waivers.

While only a few states were using the new option to provide food stamp
benefits to families leaving TANF, 20 other states are considering the
option. States using the Transitional Benefit Alternative told us that they
had selected the option to support working families. Congress is

Background

considering legislation that would allow states to offer transitional
benefits for 6 months. Twenty-seven states said they would consider using
this option.

No state was implementing or planning to implement all aspects of the
simplified program option, which allows states to merge their TANF and Food
Stamp Program rules into a single set of requirements for families receiving
both types of assistance. States told us that the simplified program option
would make administering the programs more difficult because it creates a
separate program, covering only a subset of food stamp recipients - those
who receive TANF. However, nine states were using a portion of the
simplified program to align their food stamp and TANF work or reporting
requirements.

The Food Stamp Program provides eligible low-income households with paper
coupons or electronic benefits that can be redeemed for food in stores
nationwide. FNS funds food stamp benefits and about half of the states'
administrative costs and establishes regulations for implementing the Food
Stamp Program. FNS regulations require that states certify household
eligibility at least annually and establish requirements for households to
report changes that occur after they are certified. Recently, FNS introduced
several options and waivers1 to food stamp rules and regulations in order to
increase program access and reduce the reporting burden on working families
while minimizing the potential for payment errors.2 These include options
and waivers related to program eligibility, reporting requirements,
extending food stamp benefits to households leaving TANF, and options
related to TANF recipients. To monitor program accountability, FNS's quality
control system measures states' performance in accurately determining food
stamp eligibility and calculating benefits.

1 Waivers allow states to deviate from a specific program regulation. States
must submit a written request to and obtain approval from FNS before making
a change. "Options" are provided through FNS regulations. States, at their
own discretion, may implement an option; they do not have to request
permission from FNS.

2 FNS estimates that in fiscal year 2000, 43 percent of all food stamp
households with children had earned income.

Determination of Eligibility and Benefits

States implement the Food Stamp Program by determining whether households
meet established limits on gross income and assets, calculating monthly
benefits for eligible households, and issuing benefits to households. The
actual amount of the food stamp benefit is based on household income after
certain deductions-including shelter, dependent care, and child support. To
be eligible for benefits, a household's gross income may not exceed 130
percent of the federal poverty level and the value of its assets may not
exceed $2,000.3 If the household owns a vehicle worth more than $4,650, the
excess value is included in calculating the

4

household's assets.

Recipients of TANF cash assistance are automatically eligible for food
stamps-a provision referred to as "categorical eligibility" - and do not
have to go through a separate food stamp eligibility determination process.
In the wake of welfare reform, many needy families that are no longer
receiving TANF cash assistance may receive other TANF-funded services or
benefits. FNS gave states the option to extend categorical eligibility to
families receiving TANF-funded benefits or services.5 States can determine
which TANF-funded services or benefits confer categorical eligibility to
food stamps.

FNS offers two options that states can use to allow households to own a
vehicle worth more than the amount allowed in current regulations and remain
eligible for food stamp benefits. One option allows states to replace the
federal food stamp vehicle asset rule with the vehicle asset rule from any
TANF assistance program, as long as the rule is more liberal than the
federal rule.6 States adopting the rule of a TANF-funded program

3 Households with disabled or elderly members are exempt from the gross
income limit. In addition, households with elderly members may have assets
valued at $3,000.

4 If a household has no other assets, its vehicle can be worth $6,650.

5 TANF funding includes both TANF block grant and state maintenance of
effort funds - nonfederal 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
would be categorically eligible for food stamps. A state may, at its
discretion, 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.

6 Since welfare reform, many states have used the flexibility provided by
TANF to liberalize their vehicle asset policy for cash assistance. In
addition, other TANF-funded, noncash assistance programs, such as childcare,
have no vehicle asset limits.

must apply it to all applicants for food stamp benefits. States can also use
the categorical eligibility option as a way to exclude all vehicles, as well
as other assets the family may have, from the determination of eligibility
for food stamps. This option affects the food stamp eligibility only of
families authorized to receive a TANF-funded service or benefit.

Certification and Reporting Requirements

After eligibility is established, households are certified to be eligible
for food stamps for periods ranging from 1 to 24 months, with 3-, 6-, and
12-month periods the most common. The length of the certification period
depends on household circumstances, but only households in which all members
are elderly or disabled can be certified for more than 12 months. Once the
certification period ends, households must reapply for benefits, at which
time eligibility and benefit levels are re-determined. Households with
stable income are generally given longer certification periods than
households with fluctuating income. Prior to welfare reform, federal
regulations required households to have a face-to-face interview with an
agency worker at each re-certification. Current regulations give states the
option to require only one face-to-face interview a year regardless of the
length of the certification period.

Between certification periods, households must report changes in their
circumstances-such as household composition, income, and expenses- that may
affect their eligibility or benefit amounts. States determine how frequently
households must file reports. A state may require a household to submit a
monthly report on their financial circumstances along with required
verification even if nothing changed. If a household is not required to file
a monthly report, it is required to report changes in income and other
circumstances as they occur-called "change reporting." States can require
different types of reporting for different household types and generally
require households with earnings to report more frequently than households
with no earned income.

FNS offers alternatives to monthly and change reporting: quarterly and
semiannual reporting. Both of these reporting methods decrease the frequency
with which households with earnings are required to report. FNS also offers
three waivers to change reporting that reduce the reporting burden on
households with earnings. (See table 1.)

                   Table 1: Reporting Options and Waivers

Current policy Option or waiver
Monthly reporting Quarterly reporting waiver

Households submit monthly reports on their Households with earnings are
required to circumstances along with required verification report their
circumstances and provide even if nothing has changed. verification every 3
months. Changes

occurring between the reports do not have to be reported.

Semiannual reporting option

Households with earned income have their benefit set for 6 months and are
required to report only if total monthly income rises above 130 percent of
the poverty line. To use this option, states must certify the family for a
minimum of 6 months.

Change reporting Change reporting waivers Households must report changes in
their * Status reporting
circumstances to the food stamp office within the following changes: 1)
gaining or 10 days, including changes in the total losing a job, 2) moving
from part-time

amount of income greater than $25 per to full-time employment or vice-versa,
month. and 3) experiencing a change in wage rate or salary.

* 5-hour reporting. Households report changes in hours worked if more than 5
hours a week.

* $100 reporting. Households report changes in monthly earnings if more

a

                                 than $100.

aIn July 1999, FNS increased the required reporting amount from $80 to $100.
Only one state continues to use the $80 waiver.

Options Related to TANF Recipients

USDA now provides a transitional benefit option to states to help families
leaving TANF retain their food stamp benefits. Because families leaving TANF
are no longer automatically eligible for food stamps based on their receipt
of TANF cash assistance, they cannot receive food stamps without a
re-determination of eligibility. The Transitional Benefit Alternative,
introduced in November 2000, gives states the option to continue to provide
families with their same food stamp benefit amount for 3 months after they
leave welfare. As part of its deliberations on food stamp reauthorization,
the Congress is considering extending the transitional benefit to 6 months.

Finally, recognizing that TANF and the Food Stamp Program generally are
administered by the same agency at the local level, the 1996 welfare reform
legislation provided an option for states to merge their TANF and

Food Stamp Program rules into a single set of eligibility and benefit
requirements for households receiving both TANF and food stamps. This
option, called the Simplified Food Stamp Program, allows states to align all
of their TANF and Food Stamp Program rules. The option also allows states to
implement a portion of the simplified program in which only the food stamp
work requirement is replaced by TANF's work requirement.7

FNS's Quality Control System

FNS monitors states' performance by assessing how accurately they determine
food stamp eligibility and calculate benefits. Under FNS's quality control
system, the states calculate their payment errors by drawing a statistical
sample to determine whether participating households received the correct
benefit amount. The states review case information and make home visits to
determine whether households were eligible for benefits and received the
correct benefit payment. FNS regional offices validate the results by
reviewing a subset of each state's sample to determine its accuracy and make
adjustments to the state's overpayment and underpayment errors as
necessary.8 States are penalized if their payment error rate is higher than
the national average, which was 8.9 percent in fiscal year 2000.

Food Stamp Program payment errors occur for a variety of reasons.
Overpayments can be caused by inadvertent or intentional errors made by
recipients and caseworkers. According to FNS' quality control system, the
states overpaid food stamp recipients about $976 million in fiscal year 2000
and underpaid recipients about $360 million. A little over half of these
errors occurred when state food stamp workers made mistakes, such as
misapplying complex food stamp rules in calculating benefits. The remaining
errors occurred because participants, either inadvertently or

7 Welfare reform places restrictions on the amount of time a recipient can
receive benefits and requires states to impose work requirements for most
adults. States are required to meet steadily rising requirements for the
percentage of adults that must participate in work activities-25 percent in
fiscal year 1997, rising to 50 percent in fiscal year 2002. States decide
which activities constitute "work" for the purposes of obtaining assistance,
but states are limited to what they can count as work to meet their
participation rate. Allowable work activities for adult recipients include
subsidized or unsubsidized employment, on-the-job training, unpaid work
experience, community service, vocational educational training, and
providing child care services to certain other participants.

8 To determine each state's combined payment error rate, FNS adds
overpayments and underpayments, and then divides that sum by the total food
stamp benefits paid by the state.

deliberately, did not provide accurate information to state food stamp
offices.

According to USDA, about half of all payment errors are due to an incorrect
determination of the household's income. In 1999, every state except one had
a higher payment error rate among households with earnings as compared with
households without earnings. Because their hours of work per week vary and
they change jobs frequently, low-wage workers often have fluctuating
incomes. Recipients are required to report these income changes, and
eligibility workers must adjust their food stamp benefits correctly to avoid
payment errors. In order to minimize payment errors, states usually certify
households with earnings for shorter periods and require them to report more
frequently than households with no earned income.

Almost all states used one or more options or waivers to change their food
stamp eligibility determination process. More than half of the states chose
to confer categorical eligibility for food stamps to households receiving
certain TANF-funded services or benefits. Thirty-three states used available
options to exempt some or all vehicles from counting as assets. States used
these options to increase the number of households to be eligible for food
stamps, to simplify the administrative process for eligibility workers, and
to support working families; however, most of these states considered them a
cumbersome way to increase access to food stamps.

States Used Eligibility Options and Waivers Primarily to Increase Access to
Food Stamps

Many States Confer Categorical Eligibility to Increase Access

Thirty-four states extended eligibility for food stamps to households that
are eligible to receive TANF-funded services or benefits. Many states
conferred categorical eligibility only to households receiving TANF-funded
benefits such as emergency assistance and childcare; while some states
conferred categorical eligibility to food stamp applicants simply by
providing them with information and referral services paid for with TANF
funds. For example, during the food stamp application process, clients who
may be financially ineligible for food stamps could become

categorically eligible for benefits by virtue of having received a referral
to a specific TANF-funded program.9

Although the primary reason states gave for conferring categorical
eligibility was to increase access to food stamps by making households who
are eligible for a TANF-funded service automatically eligible for food
stamps, states cited other benefits of this option. For example, by
eliminating the need to calculate the value of a food stamp applicant's
assets, the eligibility worker's administrative burden is reduced.
Furthermore, five states noted that conferring categorical eligibility for
food stamps makes children eligible for the school lunch program, even if
the household does not actually qualify for a food stamp benefit.10 (See
fig. 1.)

9 This authority to more broadly confer categorical eligibility to TANF
clients has been reduced by changes in Food Stamp regulations effective
September 30, 2001, which restrict states to conferring categorical
eligibility to clients receiving TANF-funded services with incomes at 200
percent of the federal poverty level or below.

10 Children in households receiving TANF or food stamps are categorically
eligible to receive free school meals.

Figure 1: Reasons States Confer Categorical Eligibility to Households

25 Number of states

22

e accessto program

limitseligibility workers familieseligible for schoollunch programate asset

kea

Support working M c

                                  nrehild

sain

creIn

limE

                                    Sim

Reasons

Note: States could provide more than one reason.

Source: GAO's analysis.

While about two-thirds of the states used the categorical eligibility
option, some states pointed out difficulties that the option created. For
example, many individuals made categorically eligible for food stamps
through receipt of a pamphlet or referral to a service may in fact not
actually qualify for a food stamp benefit, possibly increasing the
administrative burden on food stamp workers. In addition, several officials
said they would like the food stamp rules pertaining to categorical
eligibility simplified. They noted that categorical eligibility is
determined in part by the source of the funding for the program under which
the household receives noncash benefits or services. Because many programs
have multiple funding sources, it can be difficult to determine whether a
particular program meets the TANF funding requirements. Another official
said that categorical eligibility is difficult to explain to staff. Other
officials noted problems tied to the variation from state to state that the
option creates. One official commented that allowing states to determine
which of their welfare-funded services to use in granting categorical
eligibility for

food stamps could create a great deal of national variation in who can
access this federal entitlement program. Using TANF-funded services as a
basis for categorical eligibility, a state official explained, is a
complicated way of excluding vehicles when determining food stamp
eligibility.

States Used Several Options to Exempt Vehicles

Thirty-three states used available options to exempt some or all vehicles
from counting as assets in determining food stamp eligibility in order to
increase access, support clients' work efforts, or simplify eligibility
determination for food stamp workers. (See fig. 2.) Twenty-nine of these
states chose to replace their food stamp vehicle rules with their TANF
program rules.11 While most of these states replaced their food stamp
vehicle asset rules with their TANF cash assistance rules, a few states used
rules from their TANF noncash assistance childcare programs.

11 Twelve of these states changed their TANF vehicle asset rules prior to
using them in their Food Stamp Program.

Figure  2: Reasons  States Replaced  Vehicle Asset  Rules with TANF-  Funded
Program Rules

25 Number of states

21

Increase access Support clientwork effortseligibility worker Program
recipient

                      Align with TANFSimplify rules for

Reasons

Source: GAO's analysis.

Seven states told us that they used the option to confer categorical
eligibility to recipients of TANF-funded services as a way to exclude all
vehicles and other assets from eligibility determination.12 Specifically,
six of the seven states told us that they used categorical eligibility to
increase access to food stamps and three said that they used it to support
client work efforts. (See fig. 3.)

12 Officials from three of these states told us that they also used TANF
vehicle asset rules for those households that were not eligible for a
TANF-funded program that would automatically make them eligible for food
stamps.

Figure 3: Reasons States Used Categorical Eligibility to Exempt Vehicles

7 Number of states

6

access

Increase Support clientwork effortseligibility workerReasons

Source: GAO's analysis.

While most states used available options to liberalize the way vehicles are
considered in the food stamp eligibility determination process, 17 states
used existing Food Stamp Program rules regarding vehicles. Seven of these
states said that they could not replace their food stamp vehicle rules with
TANF vehicle rules because their TANF rules were more restrictive than their
food stamp rules. In at least one of these states, changes to TANF rules
required approval by the state's legislative body. State officials in almost
half of the states told us that the Food Stamp Program's vehicle asset rules
should be changed to exempt at least one vehicle per household. Other state
officials wanted the exemption value of a vehicle increased to reflect the
current cost of vehicles.

States Used Reporting Options and Waivers Primarily to Reduce Payment Errors
and Simplify Paperwork

Almost all states used a reporting option or waiver to change the way
households with earnings are required to report changes in their
circumstances that could affect their eligibility for food stamps as well as
their benefit amount. These options and waivers allowed states to alter the
standard reporting methods of monthly and change reporting. Many states told
us that they used reporting options and waivers to reduce their payment
errors, to ease program administration, and to simplify paperwork
requirements for households. Because some reporting options applied to
specific households only, many states considered them somewhat restrictive.

The most frequently used reporting alternatives were those that eliminated
the requirement to report changes in earned income of $25 or more per month.
Eighteen states chose a waiver allowing households to report changes in
employment status, which includes changes in wage rates, number of hours
worked in a week, and a move from part-time to full-time employment or
vice-versa. Seventeen states chose the waiver to require recipients to
report only changes in income that exceeded $80 or $100. (See fig. 4.)

         Figure 4: Thirty-Five States Use Change Reporting Waivers

Earned income waivers

Unearned income waivers

                              Number of states

18

                                     5

Changes inployment statusChanges in incom

e

                       of $80 or $100worked per week

private sourcesUnearned income fromem Reporting waivers (some states use
more than one wavier)

Source: GAO's analysis.

States are allowed to use more than one reporting option or waiver. Thirteen
states used two or more alternatives. However, some states chose not to use
any reporting options or waivers, citing concerns over payment errors and
the cost and burden of implementation, such as the cost of reprogramming
computer systems to implement a new reporting system.

Ten states used the semiannual reporting option, and 5 states used the
waiver allowing quarterly reporting. In these states, households with earned
income are allowed to report semiannually or quarterly without reporting
changes in between. Households subject to semiannual reporting are required
to report if their gross income exceeds 130 percent of poverty. Should a
household report a change that would increase the household's food stamp
benefit, the state must make the change; however, the state is generally not
allowed to make changes that would reduce the food stamp benefit amount.
States are held responsible only for errors

resulting from miscalculating benefits at certification, or if income
exceeds 130 percent of poverty and the change is not reported. State
agencies are not held responsible for errors if the household experienced a
change in its circumstances that the household did not report if the state's
policies do not require the household to report the change. States selecting
the semiannual reporting requirement must certify households for at least a
6-month period, and they have the option to eliminate every other
face-to-face interview because of the new rule requiring only one
face-to-face interview a year.

Although the semiannual reporting option provides states with an opportunity
to reduce the reporting burden on working families with some impunity from
payment errors, some states want to adjust the food stamp benefit in
response to all reported changes in household income. Half of the states
using the semiannual option requested and received a waiver allowing them to
adjust benefits based on all changes reported by families. State officials
gave various reasons for requesting this waiver to semiannual reporting. In
some states, the Food Stamp Program shared the same computer system and
database used for determining eligibility for other programs, such as TANF
and Medicaid. Since these states link their programs, changes that families
report to one program often automatically change the food stamp data, and
states wanted the ability to adjust benefits according to this new
information. Other states said that the waiver was useful because their food
stamp workers have always adjusted food stamps based on reported changes;
not to do so for all food stamp recipients would be confusing.

Officials in 28 states said they are considering the semiannual reporting
option. Nine states would implement the option only with the waiver allowing
them to act on all reported changes in part because of computer integration
issues. Others would consider the option with a waiver allowing them to
apply it to all food stamp households, not just households with earnings.
Twelve states are not using or considering the semiannual reporting option.
Officials in these states told us the option is either too burdensome to
implement, the rules are too complicated, or that it might increase payment
errors.13

13 For example, officials from two states were concerned about being held
responsible for large payment errors at the end of six months. One state was
concerned about a mistake at certification that would not be realized until
six months later, and the other was concerned about a household not
reporting if its income goes over 130 percent of poverty.

Officials from 38 states said that additional changes to the reporting
requirements were needed. Some noted that states should be allowed to use
the same reporting requirements for all households, not just households with
earnings.

Although states told us that a primary reason they used reporting options
and waivers was to minimize the payment error associated with earnings,
concern over payment accuracy affected states' decisions regarding other
options and waivers as well. For example, although FNS gave states the
option to limit face-to-face interviews to once a year, some states continue
to require households with earnings to come in more frequently because of
concerns over payment accuracy. Officials in 45 states told us that the
effect on their payment error rate was either the most important factor or a
contributing factor in their decision to use particular options and waivers.
As a result, officials in many states said that USDA's quality control
program should not focus solely on payment accuracy. State officials also
suggested changes in the way that payment errors are calculated. For
example, they noted that client and agency error should be counted
separately from client error, because the agency had no control over whether
the client reported required information correctly.

Although only three states reported using the Transitional Benefit
Alternative, many states told us they plan on using it. At the time of our
interviews, the 3-month Transitional Benefit Alternative was not yet fully
implemented, but states could request this option. Twenty states said that
they were considering it. Twenty-seven states said they would implement the
proposed 6-month Transitional Benefit Alternative if it became available.

The primary reason that states would provide a transitional benefit is to
support working families. Many states said that the option helped with the
transition from welfare to work by stabilizing the families after they leave
welfare by guaranteeing a fixed food stamp benefit regardless of how their
income fluctuates during the transitional benefit period. (See fig. 5.) Some
states that would use the 6-month option but not the 3-month option said
that the additional 3 months of support to families making the transition
from welfare to work would make the implementation costs worthwhile.

Many States Planning to Use the Transitional Benefit Option

Figure 5:  Reasons States Would Use the 3-  and 6-Month Transitional Benefit
Alternative

Number of states

19

Supports Benefits

working families clienttransitional benefits payment error

                                  Reduces

Reasons Source: GAO's analysis.

The 12 states that had decided not to use transitional benefits said they
were concerned about the implementation costs. At least eight of these
states indicated that the computer changes required to implement the
transitional benefit would be extensive. (See fig. 6.) Eighteen states said
they were undecided about the 3-month option, and 14 states had not yet
decided about the 6-month option. Several of the undecided states indicated
that they were concerned about potential costs associated with reprogramming
their computers.

Figure  6:  Reasons  States  Are Not  Planning  to  Use  the  3 and  6-Month
Transitional Benefit Alternative

10 Number of states

                                     9

                                     8

                                     7

                                     6

                                     5

                                     4

                                     3

                                     2

                                     1

                                     0

                                     8

Cost of

implementationreported changes burden

errorsAdministrative Increased

No State Is Using All Aspects of the Simplified Food Stamp Program Option

Reasons Source: GAO's analysis.

No state is implementing or plans to implement all aspects of the Simplified
Food Stamp Program option. The main reason states gave for not choosing this
option was that it was too complex and difficult to implement. The
simplified program option was to be a vehicle for creating conformity
between TANF and the Food Stamp Program by merging the programs' rules into
a single set of requirements for individuals receiving both types of
assistance. However, as we reported earlier,14 since not all needy
households receive both TANF and food stamps, the states selecting the
simplified program option would, in effect, be operating three programs: one
program for TANF recipients following state TANF rules; one program for food
stamp recipients following federal food stamp regulations; and the
simplified program for recipients of both food stamps and TANF. Furthermore,
to whatever extent the states use the simplified program, they must also
have demonstrated that total federal costs would

14 U.S. General Accounting Office, Welfare Reform: Few States Are Likely to
Use the Simplified Food Stamp Program, GAO/RCED-99-43 (Washington, D.C.:
January, 1999).

not be more than the costs incurred under the regular Food Stamp
Program-that is, the program has to be "cost neutral." Figure 8 shows the
reasons states gave for not choosing the option. In addition, while states
are not planning to use the simplified program, some state officials
indicated that it might be worthwhile to develop such a program if it could
apply to all food stamp households, not just households receiving both TANF
and food stamps.

  Figure 7: Reasons States Are Not Using the Simplified Food Stamp Program
                                   Option

                            25 Number of states

23

Complex andCreates separatedifficult to implement programTANF recipients
requirementbenefit to client program better

                        Cost neutrality Error prone

Reasons

Source: GAO's analysis.

While no state is implementing all aspects of the simplified program option,
nine states reported using some of the flexibility offered under the
program. Eight states are aligning their food stamp and TANF work
requirements. One state is aligning its TANF and food stamp reporting
requirements to reduce the reporting burden on households participating in
both programs.

Agency Comments We provided USDA with the opportunity to comment on a draft
of this report. While USDA did not provide formal comments, it did provide
technical comments, which we incorporated where appropriate.

We are sending copies of this report to the Secretary of Agriculture,
appropriate congressional committees, and other interested parties. We will
also make copies available to others upon request.

If you or your staff have questions about this report, please contact me on
(202) 512-7215 or Dianne Blank on (202) 512-5654. Individuals making key
contributions to this report include Margaret Boeckmann, Elizabeth Morrison,
and Lara Carreon.

Sincerely yours,

 Sigurd R. Nilsen, Director Education, Workforce and Income Security Issues

Related GAO Products

U.S. General Accounting Office. Food Stamp Program: Implementation of
Electronic Benefit Transfer System. GAO-02-332. Washington, D.C.: 2002.

U.S. General Accounting Office. Food Stamp Program: Program Integrity and
Participation Challenges. GAO-01-881T. Washington, D.C.: 2001.

U.S. General Accounting Office. Food Stamp Program: States Seek to Reduce
Payment Error and Program Complexity. GAO-01-272. Washington, D.C.: 2001.

U.S. General Accounting Office. Welfare Reform: Few States are Likely to Use
the Simplified Food Stamp Program. GAO/RCED-99-43. Washington, D.C.: 2001.

U.S. General Accounting Office. Food Stamp Program: Various Factors Have Led
to Declining Participation. GAO/RCED-99-185. Washington, D.C.: 2002).

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