Means-Tested Programs: Determining Financial Eligibility Is
Cumbersome and Can Be Simplified (02-NOV-01, GAO-02-58).
About 80 means-tested federal programs assisted low-income people
in 1998. GAO reviewed 11 programs that assisted families and
individuals with income, food, medical assistance, and housing.
Despite substantial overlap in the populations they serve, the 11
programs varied significantly in their financial eligibility
rules. At the most basic level, the dollar levels of the income
limits--the maximum amounts of income an applicant can have and
still be eligible for a program--vary across programs. Beyond
this, there are differences related to detailed aspects of the
income rules, such as whose income is counted and what types of
income are counted or disregarded. The variations and complexity
of the federal financial eligibility rules, along with other
factors, have contributed to processes that are often duplicative
and cumbersome for both caseworkers and applicants. Overall,
federal, state, and local entities have made little progress in
simplifying or coordinating eligibility determination processes.
States realigned some of the financial rules, but only to a
limited extent. Another approach uses computer systems to
establish joint eligibility determination processes that a single
caseworker can administer. Efforts to simplify or better
coordinate eligibility determination processes confront many
obstacles, including restrictive federal program statutes and
regulations. In addition, program costs may rise if financial
eligibility rules are changed.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-02-58
ACCNO: A02410
TITLE: Means-Tested Programs: Determining Financial Eligibility
Is Cumbersome and Can Be Simplified
DATE: 11/02/2001
SUBJECT: Eligibility criteria
Eligibility determinations
Federal aid programs
Food programs for children
Health care programs
Housing programs
Interagency relations
Public assistance programs
Food Stamp Program
HHS Child Care and Development Fund
HUD Housing Choice Voucher Program
HUD Low Rent Public Housing Program
Low-Income Home Energy Assistance
Program
Medicaid Program
Special Supplemental Nutrition Program
for Women, Infants and Children
State Children's Health Insurance
Program
Supplemental Security Income Program
HHS Temporary Assistance for Needy
Families Program
National School Breakfast Program
National School Lunch Program
******************************************************************
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GAO-02-58
Report to the Honorable Ernest J. Istook, Jr., House of Representatives
United States General Accounting Office
GAO
November 2001 MEANS- TESTED PROGRAMS
Determining Financial Eligibility Is Cumbersome and Can Be Simplified
GAO- 02- 58
Page i GAO- 02- 58 Eligibility Simplification Letter 1
Results in Brief 2 Background 4 Variations in Programs? Financial
Eligibility Rules Stem Primarily
From Federal Statutes and Regulations 13 Variations in Financial Rules and
Other Factors Contribute to
Administrative Duplication and Client Burden 21 Some Progress Has Been Made
to Streamline or Coordinate
Eligibility Determination Processes 27 Conclusions 35 Matter for
Congressional Consideration 36 Agency and Other Comments 36
Appendix I Scope and Methodology 41
Appendix II Comments From the Office of Management and Budget 44
Appendix III Comments From the Department of Agriculture 46
Appendix IV Comments From the Department of Health and Human Services 48
Appendix V Comments From the Department of Housing and Urban Development 51
Appendix VI GAO Contacts and Staff Acknowledgments 54
Related GAO Products 55 Contents
Page ii GAO- 02- 58 Eligibility Simplification Tables
Table 1: Means- Tested Programs With Expenditures of More Than a Billion
Dollars, Fiscal Year 1998 6 Table 2: Program Expenditures by Type of
Assistance, Fiscal Year
1998 7 Table 3: Overview of the 11 Programs Examined in This Report 8 Table
4: Income Limits for Program Eligibility - Fiscal Year 2001 14 Table 5:
Whose Income Is Counted in Determining Eligibility for
Assistance - Fiscal Year 2001 16 Table 6: Amounts of Earned Income
Disregarded in Determining
Initial Program Eligibility or Benefit Levels - Fiscal Year 200117 Table 7:
Deductions for Child Care Expenses in Calculating the
Income of Applicants - Fiscal Year 2001 18 Table 8: General Asset Limits and
Vehicle Asset Rules 20 Table 9: Programs For Which Eligibility Is Determined
Jointly 21 Table 10: Diverse Agencies Determine Eligibility for Means-
Tested
Programs 24 Table 11: Estimate of Federal Costs for Program Administration,
Fiscal Year 1998 26
Figure
Figure 1: Percentages of Families Receiving TANF Who Also Participate in
Selected Other Programs 10
Page iii GAO- 02- 58 Eligibility Simplification Abbreviations
AFDC Aid to Families With Dependent Children CPS Current Population Survey
CRS Congressional Research Service DCIS II Delaware Client Information
System II FAMIS Family Assistance Management Information System FMV fair
market value HHS U. S. Department of Health and Human Services HUD U. S.
Department of Housing and Urban Development LIHEAP Low- Income Home Energy
Assistance Program N- FOCUS Nebraska- Family On- Line Client User System OMB
Office of Management and Budget PRWORA Personal Responsibility and Work
Opportunity
Reconciliation Act of 1996 SCHIP State Children?s Health Insurance Program
SIPP Survey of Income and Program Participation SSA Social Security
Administration SSI Supplemental Security Income TANF Temporary Assistance
for Needy Families WIC Special Supplemental Nutrition Program for Women,
Infants, and Children USDA U. S. Department of Agriculture
Page 1 GAO- 02- 58 Eligibility Simplification
November 2, 2001 The Honorable Ernest J. Istook, Jr. House of
Representatives
Dear Mr. Istook: About 80 means- tested federal programs assisted low-
income people at a cost of nearly $400 billion in federal, state, and local
funds in fiscal year 1998. These programs provide cash and noncash benefits
and are restricted to families or individuals whose income falls below
defined levels and who meet certain other eligibility criteria established
for each program. Numerous federal departments and agencies, state and local
offices, community- based organizations, and other entities are responsible
for administering these programs. Authorized by different congressional
committees at different points in time, these programs were created to meet
the various needs of different groups of low- income people. However, when
viewed as a whole, they have given rise to longstanding concerns that the
nation?s assistance programs for low- income families are too difficult and
costly to administer and too complicated for families to navigate.
As you requested, we determined (1) the extent and sources of variation in
financial eligibility rules among selected means- tested programs, (2) how
the variation in these rules and other factors affect the administrative
processes for determining eligibility, and (3) how federal, state, and local
agencies have sought to simplify or coordinate eligibility determination
processes. Our review focused on 11 programs that help meet families? and
individuals? basic needs such as income, food, medical assistance, and
housing. Low- income families and individuals often participate in several
of these programs at the same time. Specifically, the 11 programs covered in
our review are Temporary Assistance for Needy Families (TANF); Food Stamps;
Medicaid; Child Care and Development Fund (Child Care); State Children?s
Health Insurance Program (SCHIP); Low- Income Home Energy Assistance Program
(LIHEAP); Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC); School Meals; 1 Housing Choice Voucher; Low Rent Public
Housing; and Supplemental Security Income (SSI). These 11 programs
represented over 70 percent of the $400 billion
1 Throughout this report, we refer to the School Meals program to include
both free and/ or reduced- price school breakfast and lunch.
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 02- 58 Eligibility Simplification
total expenditures for means- tested federal programs in fiscal year 1998.
To address the first objective, we analyzed the statutory and regulatory
rules related to financial eligibility in each of the 11 programs. To
address the second and third objectives, we interviewed federal agency
officials and conducted site visits in five states: California, Delaware,
Kentucky, Nebraska, and Utah. In selecting states, we sought to include
those with a range of experiences related to welfare simplification or
service integration initiatives and also include states with both state-
supervised and county- administered welfare systems. Appendix I contains a
detailed discussion of our scope and methodology.
Despite substantial overlap in the populations they serve, the 11 programs
we reviewed vary significantly in their financial eligibility rules. In some
cases, these variations reflect differences in program goals and purposes.
At the most basic level, the dollar levels of the income limits- the maximum
amounts of income an applicant can have and still be eligible for a program-
vary across programs. Beyond this, there are differences related to detailed
aspects of the income rules, such as whose income is counted and what types
of income are counted or disregarded in either whole or part. For example,
the Food Stamp program considers the income of the entire household,
including children aged 18 and over who are not students, in calculating
income; whereas several other programs either do not include children?s
income or disregard a certain amount of their income. Moreover, the
financial eligibility rules in these programs also vary in other aspects,
such as limits on the amount of assets that applicants can possess and
provisions about which assets are counted or excluded. The primary sources
of these variations are generally federal statutes and regulations, although
for several programs such as TANF, Medicaid, and SCHIP states and localities
have some flexibility in setting financial eligibility rules.
The variations and complexity of the federal financial eligibility rules,
along with other factors, have contributed to processes that are often
duplicative and cumbersome for both caseworkers and applicants. In spite of
the variations in financial eligibility rules, the states we reviewed have
established joint eligibility determination processes for some programs,
ranging from three programs in Kentucky to six in Nebraska. Applicants can
complete a single application form for these programs, and a single
caseworker determines eligibility and benefit levels. Nonetheless, state and
local officials reported that the varying rules in these programs
complicated the work required of caseworkers to determine eligibility and
also contributed to errors. Among the areas of financial rules they cited as
particularly cumbersome were those associated with household Results in
Brief
Page 3 GAO- 02- 58 Eligibility Simplification
composition, income limits, and countable and excludable income- especially
in the Food Stamp program. With regard to the other programs in these
states, eligibility is generally determined separately for each program,
which reflects the multiplicity of agencies that administer programs at the
local level. For example, public housing agencies generally separately
administer the housing programs; the Social Security Administration
administers SSI; public health agencies administer WIC; and school districts
administer the School Meals programs. A family in the states we visited that
wanted to apply for all 11 programs would need to complete anywhere from 6
to 8 applications and visit up to six offices. These separate eligibility
processes also result in considerable duplication of administrative
activities because caseworkers in different offices collect and document
much of the same personal and financial information about applicants. While
national data generally are not available on the specific costs of
determining eligibility and calculating benefit levels for the 11 programs
we reviewed, evidence suggests that these costs are substantial- for
example, over $1 billion annually for the Food Stamp program alone.
Overall, federal, state, and local entities have made limited progress in
simplifying or coordinating eligibility determination processes. States
realigned some of the financial rules, yet this approach has been used to
only a limited extent. For example, Nebraska and Delaware used their
flexibility under TANF to change aspects of their TANF financial eligibility
rules to align them with those in other programs such as Medicaid or Food
Stamps. Another approach makes use of computer systems as a tool to
establish joint eligibility determination processes that a single caseworker
can administer. While all of the states we reviewed have used this approach
to varying extents, in some cases they reported limitations, such as the
burden placed on a caseworker of having to master complex eligibility rules
in too many programs even with computer assistance. Multiple obstacles
confront efforts to make further progress in simplifying or better
coordinating eligibility determination processes, such as restrictive
federal program statutes and regulations, and the potential for increased
program costs as a result of changing the financial eligibility rules.
To better understand how to reduce the obstacles to simplification and
coordination, we suggest that the Congress consider authorizing
demonstration projects to simplify and coordinate eligibility determination
processes for means- tested programs. The Office of Management and Budget
and the Departments of Agriculture, Health and Human Services, and Housing
and Urban Development provided written comments on a draft of this report
and generally agreed with the report?s findings. The
Page 4 GAO- 02- 58 Eligibility Simplification
draft version of the report contained a recommendation to the Director of
OMB to develop legislative proposals that would authorize state and local
demonstration projects designed to simplify and coordinate eligibility
processes for means- tested federal programs. In its comments, OMB indicated
its support for program simplification but did not indicate that it would
implement the recommendation. OMB acknowledged that demonstration projects
could be helpful in achieving sweeping standardization across programs. OMB
also expressed concern about the implications of program simplification on
program costs and said that demonstration projects may not be necessary for
states to pursue many simplification strategies, such as in programs in
which many states have not fully utilized the flexibility that they have. We
believe that authorizing demonstration projects could facilitate progress in
this area by providing much- needed information about the effects of various
changes in financial eligibility rules and processes on administrative and
program costs, and access to programs by individuals and families. The
agencies? comments are reprinted in appendix II through appendix V.
Over time, the Congress has established about 80 separate programs to
provide cash and noncash assistance to low- income individuals and families.
Means- tested programs are restricted to families or individuals who meet
specified financial requirements and certain other eligibility criteria
established for each program. The financial requirements restrict
eligibility to families and individuals whose income falls below defined
levels, and in some cases, whose assets- such as bank accounts and the value
of automobiles- also fall below defined levels. Nonfinancial requirements
restrict eligibility to specified categories of beneficiaries, such as
pregnant women, children, or individuals with disabilities.
Federal, state, and local governments expended a combined total of nearly
$400 billion on the approximately 80 means- tested programs in fiscal year
1998. 2 Medicaid accounted for 45 percent of the expenditures. 3 Twentyseven
of the 80 programs, representing 97 percent of the total
2 The 1998 data, compiled by the Congressional Research Service (CRS), are
the most current available on expenditures by all levels of government for
the full range of meanstested programs. CRS periodically updates its report
on means- tested programs and is currently preparing a report on
expenditures for fiscal years 1999- 2000.
3 In fiscal year 1998, 71 percent of Medicaid expenditures were for aged,
blind, and disabled recipients. The remaining expenditures were for
dependent children under 21, adults in families with dependent children, and
others. Background
Means- Tested Programs Provide Varied Forms of Assistance
Page 5 GAO- 02- 58 Eligibility Simplification
expenditures, had expenditures of over a billion dollars each (see table 1).
Means- tested programs provide assistance in eight areas of need: (1) cash
assistance; (2) medical benefits; (3) food and nutrition; (4) housing; (5)
education; (6) other services, such as child care; (7) jobs and training;
and (8) energy aid.
Page 6 GAO- 02- 58 Eligibility Simplification
Table 1: Means- Tested Programs With Expenditures of More Than a Billion
Dollars, Fiscal Year 1998
Dollars in billions
Program Federal State/ local Total
Medicaid $100.2 $77.2 $177.4 SSI 29.7 3. 0 32.7 Earned Income Tax Credit
(refund) 25.3 0 25.3 Food Stamp 18.9 2. 0 20.9 TANF 11.3 10.2 21.5 Housing
Choice Voucher 16.1 0 16.1 Medical Care for Veterans (no service- connected
disability) 9.6 0 9.6 Federal Pell Grants 6. 3 0 6. 3 Foster Care 3.7 3. 3
7.0 School Meals Program 6. 5 0.4 6. 9 Title XX Social Services 2.3 3. 6 5.9
Head Start 4. 3 1.1 5. 4 General Assistance (medical component) 0 5. 0 5.0
Child Care and Development Fund 3.1 1. 6 4.7 HOME (Home investment
partnerships) 1.5 2. 6 4.1 Low- rent Public Housing 3. 9 0 3. 9 WIC 3. 9 0
3. 9 Rural Housing Loans (Section 502) 3.8 0 3.8 Subsidized Federal Stafford
and Stafford/ Ford loans 3. 8 0 3. 8 Veterans Pensions 3.1 0 3.1 General
Assistance (cash and nonmedical) 0 2. 6 2.6 Indian Health Services 2.1 0 2.1
Child and Adult Care Food Program 1.4 0 1.4 Adoption Assistance 0.7 0. 6 1.3
Job Corps 1. 2 0 1. 2 LIHEAP (home energy assistance) 1. 1 0 1. 1 Maternal
and Child Health Services Block Grant 0. 7 0.4 1. 1 27- program total $264.5
$113.6 $378.1
Sources: Congressional Research Service, Cash and Noncash Benefits for
Persons With Limited Income: Eligibility Rules, Recipient and Expenditure
Data, FY 1996- FY 1998 (Washington, D. C.: CRS, Dec. 1999). The Social
Security Administration (SSA) provided the figure for state/ local SSI
expenditures and the Department of Agriculture (USDA) provided the figures
for federal Food Stamp and state/ local School Meals program expenditures.
Ten of the 11 programs on which our review focuses accounted for 74 percent
of the total expenditures for means- tested federal programs in
Page 7 GAO- 02- 58 Eligibility Simplification
fiscal year 1998 (see table 2). 4 Table 3 provides an overview of the
populations targeted by these programs and the types of assistance that they
provide.
Table 2: Program Expenditures by Type of Assistance, Fiscal Year 1998
Dollars in billions
Type of assistance/ program Federal State/ local Total Income Support
SSI $29.7 $3.0 $32.7 TANF 11.3 10.2 21.5
Medical Care
Medicaid 100.2 77.2 177.4 State Children?s Health Insurance Program a bbb
Food and Nutrition
Food Stamps 18.9 2. 0 20.9 School Meals 6. 5 0.4 6. 9 WIC 3. 9 0 3. 9
Housing
Housing Choice Voucher 16.1 0 16.1 Low- rent Public Housing 3. 9 0 3. 9
Other services
Child Care and Development Fund 3.1 1. 6 4.7 LIHEAP (home energy assistance)
1. 1 0 1. 1
10- program total $194.7 $94.4 $289.1
a Federal, state, and local expenditure information were not contained in
the 1999 CRS report. b Not applicable.
4 SCHIP is the 11th program we reviewed. However, fiscal year 1998 was the
first year that the SCHIP program was funded, and expenditure information
was not included in CRS? 1999 report. In fiscal year 1998, $4. 3 billion was
appropriated for SCHIP. See Children?s Health Insurance: SCHIP Enrollment
and Expenditure Information (GAO- 01- 993R, Jul. 25, 2001) for more
information on SCHIP expenditures.
Page 8 GAO- 02- 58 Eligibility Simplification
Table 3: Overview of the 11 Programs Examined in This Report Program
Description
TANF This block grant to states provides temporary assistance to needy
families. In general, able- bodied TANF recipients, who receive cash
assistance, must participate in work or work- related activities after
receiving assistance for a maximum of 24 months, and there is a 5- year
lifetime limit on federal assistance. Beyond work, work- related activities
include education and training; job search; and participation in community
service. States may also use a portion of TANF funds for child care
services. Food Stamps The primary federal food assistance program that
provides support to needy households and to those
making the transition from welfare to work. It helps low- income households
buy the food they need for a nutritionally adequate diet. The program
provides participants with food coupons or electronic benefit transfer cards
that can be used in authorized retail stores to purchase food items.
Medicaid The largest program providing medical- and health- related services
to America?s poor and low- income
people. Medicaid is jointly funded by the federal and state governments to
assist states in providing medical assistance to individuals and families
who fall into certain categories and have low incomes and resources. State
Medicaid programs must provide certain benefits, such as physician services,
inpatient and outpatient hospital services, and laboratory and x- ray
services. In addition to the benefits that are federally mandated, states
may offer optional services, such as dental, physical therapy, prescription
drugs, and case management services. Medicaid also provides assistance to
hospitals for the cost of uncompensated care. Child Care and Development
Fund With this block grant, states develop and pay for child care programs
for a broad population of lowincome families, including those on welfare, in
order to enable low- income parents to work. Within
certain federal guidelines, states have discretion in deciding how these
funds will support child care, who will be eligible, and what payment
mechanism will be used. SCHIP This federal- state matching program expands
health coverage to uninsured children from working
families with incomes too high to quality for Medicaid. States can use
federal funds to expand coverage either through their existing Medicaid
programs, through a separate state health insurance program, or through a
combination of both. LIHEAP An energy assistance block grant program to
assist low- income households in meeting the heating or
cooling portion of their residential energy needs, LIHEAP funds can be used
for the following types of energy assistance: heating, cooling, energy
crisis intervention, and low- cost residential weatherization and other
energy- related home repair. Program eligibility, types of assistance
available, and benefit levels vary among LIHEAP programs. WIC This federal
grant program serves low- income pregnant, postpartum, and breastfeeding
women,
infants, and children up to age 5 who are at nutritional risk because of a
nutrition- related medical or dietary condition. The program provides
nutritious foods, nutrition counseling, and referrals to health and other
social services to participants at no charge. School Meals Includes school
breakfast, lunch, and snack programs. More than 97,000 schools and
institutions
provide children with nutritionally balanced, low- cost or free breakfasts
and/ or lunches. Participating school districts and independent schools get
varying levels of cash subsidies for each meal they serve, depending on the
income category of the participating child?s household. In return, the
participating districts must offer free or reduced- price meals to children
from eligible households. School districts and independent schools are also
reimbursed for snacks served to children through age 18 in afterschool
educational or enrichment programs. Housing Choice Voucher This is the
federal government?s major program for assisting very low- income families,
the elderly, and
the disabled to afford decent and safe housing in the private market.
Prospective tenants are free to choose any housing that meets the
requirements of the program. Once a unit is located, the tenant signs a
lease and agrees to pay at least 30 percent of their adjusted household
income for rent and utilities.
Page 9 GAO- 02- 58 Eligibility Simplification
Low- rent Public Housing Public housing developments were established to
provide decent, safe, and low- rent housing primarily for low- income
families with children. Single persons who are elderly or handicapped are
eligible on the same basis as families. SSI This federal income supplement
program assists people who are age 65 or older, blind, or disabled,
and who have limited income and resources. The program provides monthly cash
payments to help those who are qualified meet basic needs for food,
clothing, and shelter.
The 11 means- tested programs that we included in our review were enacted
over time to serve various populations and achieve various objectives. For
example, in 1937, the Public Housing program was created to provide adequate
temporary shelter to families who could not afford housing; Medicaid, in
1965, to provide medical assistance for low- income families with children
and aged, blind, and disabled individuals; and SCHIP, in 1997, to provide
health insurance coverage to uninsured lowincome children from families who
do not qualify for Medicaid. In some cases, the unique financial rules that
apply to a particular program may be related to the purpose of that program
and reflect its goals or objectives. For other programs, this may not be the
case and the differences in eligibility standards across programs may stem
from decisions made at different times by different congressional committees
or federal agencies.
In addition to offering a wide variety of benefits and services, meanstested
programs vary in the extent to which they guarantee that funds for services
will be available. For some programs such as Food Stamps and SSI, federal
funds are available to provide benefits to all eligible applicants. Other
programs such as TANF and SCHIP have a fixed amount of federal funds
available. Moreover, some of the programs require state and other nonfederal
matching money (e. g., Medicaid and SCHIP), while others are fully funded
with federal dollars (e. g., LIHEAP and WIC).
An individual low- income family is likely to be eligible for and
participate in several means- tested programs. For example, as shown in
figure 1, families receiving TANF generally also receive Medicaid, food
stamps, and school meals. Smaller percentages of these families receive
assisted housing, WIC, and LIHEAP. Low- Income Families
Receive Assistance From Multiple Programs
Page 10 GAO- 02- 58 Eligibility Simplification
Figure 1: Percentages of Families Receiving TANF Who Also Participate in
Selected Other Programs
Note: The Current Population Survey (CPS) data for the School Meals program
only include the lunch component.
Sources: All data, except for WIC and assisted housing, are from the March
2000 CPS. WIC data are from the Survey of Income and Program Participation,
1996 panel, wave 11 (information collected between Aug. and Nov. 1999). HUD
provided the estimate of the percentage of TANF recipients receiving
assisted housing.
The need for welfare simplification has been voiced recurrently over a
period of many years. While this concept covers a broad range of potential
objectives, a key aspect has been the need to simplify financial eligibility
rules. Means- tested programs have been established over time to meet the
needs of various target populations. However, policy experts and researchers
have concluded that the complexity and variations in programs? financial
eligibility rules have had unanticipated but detrimental consequences for
both program administration and family access to assistance. On the
administrative side, they have argued that the financial eligibility rules
have increased substantially the staff resources needed to determine
eligibility and benefit levels, and thereby increased the costs of
administering programs. With regard to families? access to programs, they
maintained that the rules have often resulted in confusing families about
The Need to Simplify
Eligibility Rules Has Been a Longstanding Concern
Page 11 GAO- 02- 58 Eligibility Simplification
their eligibility for programs and contributed to the creation of a service
delivery system with many separate entry points that is often difficult and
burdensome for families to navigate.
Numerous studies and reports since the late 1960s have called for the
overhaul or repair of the nation?s assistance programs that serve lowincome
families and individuals. For example, a Presidential committee recommended
in 1977 that a total effort to reform welfare was needed because of the
inequities and administrative ?chaos? created by a plethora of inconsistent
and confusing programs. During the1980s, we issued several reports on
welfare simplification. One of these reports surveyed the states to identify
what they viewed as the major obstacles to their efforts to achieve service
integration. Of the 25 obstacles identified, the one cited most frequently
(42 states) was that different programs use different financial eligibility
requirements. 5 In 1991, the National Commission for Employment Policy
recommended that agencies administering public assistance programs should
develop a common framework for streamlining eligibility requirements,
formulating standard definitions, and easing administrative and
documentation requirements. 6
In 1990, the Congress authorized the creation of the Welfare Simplification
and Coordination Advisory Committee to examine four major assistance
programs: Food Stamps, Aid to Families with Dependent Children, Medicaid,
and housing assistance programs. The Congress mandated the committee to
identify barriers to participation in assistance programs and the reasons
for those barriers. In June 1993, the committee recommended that the
numerous programs that currently serve needy families be replaced with a
single family- focused, client- oriented, comprehensive program. 7
Recognizing that it would take time to implement its primary recommendation,
the Commission made 14 interim recommendations to the Congress, including
the following:
5 Welfare Simplification: States? Views on Coordinating Services for Low-
Income Families (GAO/ HRD- 87- 110FS, Jul. 29, 1987). 6 Coordinating Federal
Assistance Programs for the Economically Disadvantaged: Recommendations and
Background Materials, Special Report No. 31, National Commission for
Employment Policy, October 1991.
7 Time for A Change, Remaking the Nation?s Welfare System, Report of the
Welfare Simplification and Advisory Committee, June 1993.
Page 12 GAO- 02- 58 Eligibility Simplification
Form a work group of the chairs of the relevant congressional committees
to ensure that all legislative and oversight activities involving public
assistance programs are coordinated.
Establish uniform rules and definitions to be used by all needs- based
programs in making their eligibility determinations.
Streamline the verification process.
Permit the sharing of client information among agencies to streamline
eligibility determination processes and reduce duplication of related
activities.
In 1995, the Institute for Educational Leadership, based on its examination
of the executive and legislative structures that federal means- tested
programs are built upon, urged the administration to create a Family
Council. 8 One of the stated goals of such a council was to have been
proposing changes to eligibility requirements, definitions, financing and
administrative requirements, data collection and reporting requirements, and
performance standards that were inconsistent, incoherent, and confusing.
Moreover, in a 1995 report to the Congress, we concluded, in part, that the
inefficient welfare system is increasingly cumbersome for program
administrators to manage and difficult for eligible clients to access. 9
Just as the need for simplification of financial eligibility rules has been
acknowledged, there has also been a general recognition that achieving
substantial improvements in this area is exceptionally difficult. For
example, implementing systematic changes to the federal rules for human
service programs can be challenging because jurisdiction for these programs
is spread among numerous congressional committees and federal agencies.
8 Who Controls Major Federal Programs for Children & Families - Rube
Goldberg Revisited, The Policy Exchange, The Institute for Educational
Leadership, 1995. 9 Welfare Programs: Opportunities to Consolidate and
Increase Program Efficiencies
(GAO/ HEHS- 95- 139, May 31, 1995).
Page 13 GAO- 02- 58 Eligibility Simplification
Substantial variations exist in the financial eligibility rules across
selected means- tested federal programs. The primary sources of these
variations are generally at the federal level, although for several programs
such as TANF and Medicaid states and localities have some flexibility in
setting financial eligibility rules. Variations exist among the programs in
the financial rules regarding the types and amounts of income limits.
Differences also exist among these programs with regard to whose income is
counted, what income is counted or excluded, and whether certain expenses-
such as child care costs- are deducted in calculating income. In addition to
income tests, programs impose different limits on the assets that an
individual or family may hold in order to receive benefits. Asset tests are
further complicated because of the differences in how the equity in vehicles
is treated when determining assets.
The first and most basic difference among programs is the variation in type
of income limits used for determining program eligibility. Income limits for
most of the 11 programs reviewed used a percentage of the federal poverty
guideline or an area?s median income. For example, the School Meals program
uses a percentage of the poverty guideline to set benefit eligibility while
the housing programs use percentage of area median income to determine
eligibility. The programs not only differed in the type of income limit but
also in the actual level of income. For example, the maximum allowable gross
monthly income for food stamps for a family of three is $1,585 nationwide,
whereas, the maximum allowable gross monthly income for subsidized child
care- which is based on state median income- is $4,494 in the state of
Connecticut (the state with the highest median income). For all 11 programs
except TANF, federal laws and regulations have set some income limit. The
most common type of income limit used among these programs is some
percentage multiple of the federal poverty guideline, updated annually in
the Federal Register by the Department of Health and Human Services (HHS).
10 However, the percentage of the guideline used varies among programs. (See
table 4 for a comparison of the type of limits used among the 11 programs.)
10 The poverty guidelines are updated annually in the Federal Register by
the U. S. Department of Health and Human Services under the authority of 42
U. S. C. 9902( 2). They are an administrative version of the federal
government?s official poverty thresholds used by the Bureau of the Census to
prepare its statistical estimates on the number of persons in poverty. A
single guideline is published annually for the 48 contiguous states and the
District of Columbia, and separate guidelines are issued for Alaska and
Hawaii. These guidelines are to be used for farm and nonfarm families and
aged and nonaged units. Variations in
Programs? Financial Eligibility Rules Stem Primarily From Federal Statutes
and Regulations
Rules About Types and Amounts of Income Limits Vary Across Programs
Page 14 GAO- 02- 58 Eligibility Simplification
Table 4: Income Limits for Program Eligibility - Fiscal Year 2001 Income
limit based on
Program Federally
imposed or state option Federal poverty guideline Other
TANF State option States set their own income limits Food Stamps Federal
130% of guideline - limit on gross Income (not applicable to
households with elderly or disabled members) 100% of guideline - limit on
net income Medicaid Federal
w/ state option Federal income limits for children and pregnant women range
from 100% to 185%, depending on age
Income limits for adults, aged, and disabled vary by state Child Care and
Development Fund Federal
w/ state option No more than 85% of state median income a
SCHIP Federal w/ state option Above Medicaid eligibility and up to either
200% of federal
poverty level or 50 percentage points over Medicaid eligibility threshold at
time SCHIP was created b , whichever is greater LIHEAP Federal
w/ state option 110% of guideline as floor 150% of guideline as ceiling or
HHS state median income
60% (whichever is higher) WIC Federal
w/ state option Either 185% of guideline (reduced- price school meals limit)
or state or local free or reduced- price health care criteria if
between 100% and 185% of federal poverty guideline School Meals Federal 130%
of guideline - free meals
130% - 185% of guideline - reduced price meals Housing Choice Voucher
Federal HUD area median family income a
families with less than 80% of area median income are low income
families with less than 50% of area median income are very low income Low-
rent Public Housing Federal HUD area median family income a
families with less than 80% of area median income are low income
families with less than 50% of area median income are very low income SSI
Federal Fixed dollar amount
Note: As of September 30, 2001, 17 year olds with family incomes less than
or equal to the federal poverty level will be eligible for Medicaid. By
September 30, 2002, mandatory Medicaid eligibility will increase to cover
children through age 18 with incomes less than or equal to the federal
poverty level.
Page 15 GAO- 02- 58 Eligibility Simplification
a Housing, LIHEAP, and Child Care use a percentage of the state or area
median income as an income limit. The Department of Housing and Urban
Development (HUD) calculates metropolitan and nonmetropolitan area median
income levels as well as various other limits and distributes them to public
housing agencies. Although states are not required to use the information,
HHS calculates median income by state and provides them for the LIHEAP and
Child Care programs. SSI legislation and regulation provide a set dollar
amount that acts as the upper- income level for a program applicant. b Some
states extend the income limit beyond 200 percent of the federal poverty
level by using
income disregards. For example, in New Jersey, the income limit for
eligibility is set at 350 percent of the federal poverty level.
Programs also vary in setting the income limits that are used to determine
eligibility. While some of the programs provide states with options in
setting income limits others do not. For example, LIHEAP and WIC provide
states the option of choosing between two types of income limits. In the
case of TANF, states are given full discretion in how they establish
eligibility, including choosing both the type and level for their income
limit. For Medicaid, while the federal government requires that states
provide Medicaid to individuals who fall into certain categories and whose
income and resources fall below certain limits, states may, in some
circumstances, set more generous income limits and create different
categories so that additional individuals may receive coverage. 11 In
addition, in some instances, states are given options to set income limits
by the federal statute or regulation. For example, while the law sets the
maximum income limit for child care funds at 85 percent of a state?s median
income, several states have set their limits far below the allowable federal
limit.
Whose income is counted and whether any exclusions or deductions are made
can affect a family?s income eligibility for the different programs. In
general, the programs varied in whose income is counted in determining
eligibility. There is no single definition of ?family? or ?household? used
by means- tested federal programs. Federal rules generally govern whose
income should be used to determine eligibility. In some programs, the
definition of the household unit reflects the program?s service focus, and
in these instances the income of people with whom the applicant shares
certain expenses are included in the calculation. The LIHEAP program, for
example, defines household as members purchasing energy together. Similarly,
the Food Stamp statute identifies the household as the income
11 For Medicaid, over 25 different eligibility categories are identified in
the federal statute, which allow states to receive federal matching funds
(The Kaiser Commission on Medicaid & the Uninsured- Medicaid Eligibility for
Families and Children, September 1998, Part 2, p. 1). Whose Income Is
Counted,
What Income Is Excluded, and How Expenses Are Treated Vary by Program
Page 16 GAO- 02- 58 Eligibility Simplification
unit and defines a household as people who purchase food and prepare meals
together. 12 Certain programs provide states with some discretion in
defining a family. For example, the SCHIP regulation identifies the family
as the income unit but allows the states to decide how that should be
defined. Regulations for the Low- rent Public Housing and Housing Choice
Voucher programs set forth some examples of families but allow public
housing agencies to determine if any other group of persons qualify as an
eligible family. Table 5 summarizes household unit definitions for each of
the 11 programs.
Table 5: Whose Income Is Counted in Determining Eligibility for Assistance -
Fiscal Year 2001 Program Definition of household unit whose income is
counted
TANF ?Family?- which generally includes only dependent children, their
siblings, and their parents or other caretaker relatives as the eligibility
unit. Food Stamps Persons living together who purchase food and prepare
meals together for home consumption (including
children up to 21). Medicaid Based on AFDC a definitions. States have
flexibility to define what constitutes a family or household and
to link income among family members. Child Care and Development Fund
Family (with a child under age 13) whose income does not exceed 85% of state
median and in which the parent or parents is/ are working or attending a job
training or educational program. States may also serve children in need of
protective services. SCHIP States have flexibility to define what
constitutes a family (and some use the same definitions as set forth
in their Medicaid state plan). LIHEAP Individual or group of individuals who
are living together as one economic unit for whom residential
energy is commonly purchased. WIC A group of related or unrelated
individuals who live together, although not necessarily, as an economic
unit and share income and resources. This includes, but is not limited to
pregnant women, children under 5, mothers up to 6 months after childbirth,
and nursing mothers up to 1 year after childbirth at nutritional risk.
School Meals A group of related or unrelated individuals living as an
economic unit and who share housing and
significant income and/ or expenses of its members. Housing Choice Voucher
Family meaning two or more related persons, single persons at least 62 and
younger single persons who
are disabled, handicapped, or displaced by government action or natural
disaster. Low- Rent Public Housing Family meaning two or more related
persons, single persons at least 62 and younger single persons who
are disabled, handicapped or displaced by government action or natural
disaster. SSI Individual who is blind or disabled, or over 65, with other
citizenship or residency requirements possible.
If spouse living in same household and not eligible, that individual?s
income is considered. If under 18 and living in the parent( s) household,
parent( s) income considered.
a In 1996, the Congress replaced the Aid to Families with Dependent Children
(AFDC) entitlement program with TANF. However, Medicaid eligibility for
children and families is still based upon AFDC standards and methodologies.
12 The statute further provides that parents and their children 21 years of
age or under, as well as foster parents with children under 18 who live
together (whether or not they prepare meals together), be considered
households.
Page 17 GAO- 02- 58 Eligibility Simplification
Programs also differ in how they treat earned income for the purposes of
eligibility determination. Those programs that emphasize a transition to
economic self- sufficiency sometimes treat earned income favorably for
program eligibility purposes to provide an incentive for clients to continue
to work. In TANF, for example, almost all states disregard some income; that
is, they allow TANF recipients to earn a given amount of their earned income
either as a percentage of earnings (between 20 and 50 percent), or a set
dollar amount (between $90 and $250) or both, without any reduction in their
benefits. In Medicaid, while some states have the same disregards used in
TANF, other states have more generous disregards. See table 6 for the earned
income disregards used by various programs.
Table 6: Amounts of Earned Income Disregarded in Determining Initial Program
Eligibility or Benefit Levels - Fiscal Year 2001
Program Federally
imposed provision or state option Amount disregarded
TANF State option Varies by state. Food Stamps Federal $134 per household
per month plus 20% of
earned income and up to five additional deductions depending on individual
circumstances. Medicaid State option a Varies by state. Child Care and
Development Fund State option SCHIP State option LIHEAP State option WIC
None None School Meals None None Housing Choice Voucher Federal $480 per
dependent, $400 for elderly
annually; income of minors, certain unreimbursed expenses over 3% of annual
income. Low- rent Public Housing Federal $480 per dependent, $400 for
elderly
annually; income of minors, certain unreimbursed expenses over 3% of annual
income. Other optional deductions. SSI Federal $20 per month of income and
$65 per month
of earnings for recipients plus one- half of remaining earnings. a The
income and resource methodologies should be no more restrictive, and may be
less restrictive,
than those in the AFDC state plan.
In calculating applicants? income levels to determine eligibility, some
programs also have provisions to deduct certain types of expenses. These
deductions include allowances for certain medical, shelter, or child care
Page 18 GAO- 02- 58 Eligibility Simplification
expenses of applicants. In other programs, no deductions or exclusions may
apply. Some states have the same child care deductions in their TANF and
Medicaid programs. Housing Choice Voucher and Low- rent Public Housing
programs share many but not all of the same rules and regulations. Both
programs have a child care deduction for children under 13 and an adult
dependent care deduction for expenses over 3 percent of a family?s income.
Table 7 illustrates programs? different handling of payments for child care
as a deduction from income.
Table 7: Deductions for Child Care Expenses in Calculating the Income of
Applicants - Fiscal Year 2001
Program Child care deductions
TANF Some states do not deduct any. Some treat deductions the same as
Medicaid. Food Stamps Up to $200 a month for children under 2 years of age,
up to
$175 a month for other dependents. Medicaid Uses those in AFDC state plan
(up to $200 a month for children
under 2 years of age, $175 a month for other dependents), unless a less
restrictive methodology has been developed. Child Care and Development Fund
State option. States could choose to deduct out- of- pocket child
care expenses SCHIP State option LIHEAP Some states may have some
deductions. WIC None School Meals None Housing Choice Voucher Reasonable
child care assistance costs deducted for children
under age 13. Low- rent Public Housing Reasonable child care assistance
costs deducted for children
under age 13. SSI None
While several programs have specific rules regarding assets and set limits
on the amount of certain assets that clients can hold, most programs have no
restrictions on assets at all. Assets are generally defined to include cash
held in checking and savings accounts, individual retirement accounts,
401Ks, and other accounts that can be readily transferred into cash. Federal
rules and regulations set assets limits for several programs, but states do
have discretion in certain cases. Vehicle asset rules exist in some of the
11 programs and these rules vary, not only across programs, but across
states as well. In some programs, a vehicle used to access work may be
disregarded; in other programs, a certain portion of the value of the
vehicle may be disregarded. For example, in the SSI program, the first
$4,500 in current market value is excluded. If it is used for employment or
Programs Also Vary in
Rules About Limits on Assets
Page 19 GAO- 02- 58 Eligibility Simplification
daily activities, used to obtain medical treatment, or has been modified for
use by or for transportation of a handicapped person, the vehicle?s value is
completely excluded. The vehicle asset test for food stamps is set at
$4,650. However, a recent change allows states to apply their TANF vehicle
asset test for food stamp eligibility and benefit determination, as long it
is at least as generous as the Food Stamp rule. For TANF, many states
exclude the entire value of one vehicle; one state excludes the value of all
vehicles, and one state has no asset test at all. In states that impose a
vehicle asset test for TANF, three states (Louisiana, Oregon, and Wisconsin)
allow up to $10,000 in equity value and one state (Wyoming) disregards up to
$12,000 in trade- in value. Table 8 displays the general assets limits as
well as the vehicle asset rules, if any.
Page 20 GAO- 02- 58 Eligibility Simplification
Table 8: General Asset Limits and Vehicle Asset Rules Program Federal limits
on assets State- established
limits on assets Treatment of vehicles
TANF State option (Range is from $1,000- 10,000)
State option - Most states disregard value up to $4,650 or more up to value
of one vehicle
Food Stamps After exclusions: $2,000 non- elderly $3,000 elderly
Federal - Certain vehicles are excluded in their entirety. If not excluded,
all but $4, 650 of the fair market value (FMV) of one licensed vehicle for
each adult is counted toward the asset limit and additional vehicles are
counted at the higher of their equity or their excess FMV over $4, 650.
States may substitute TANF rules as of 7/ 01/ 01. Medicaid For families and
children, can
be no more restrictive than former AFDC rules.
Varies for some categories. States have the option to raise the limit or
eliminate the asset test entirely.
State option - Many states disregard value of one vehicle up to $4, 650 or
one vehicle.
Child Care and Development Fund State option None SCHIP None State option
State option LIHEAP State option None WIC None None None School Meals None
None None Housing Choice Voucher No explicit limit but value of
net family assets over $5, 000 computed and multiplied by passbook rate and
counted as income
None Low- rent Public Housing No explicit limit but value of
net family assets over $5, 000 computed and multiplied by passbook rate and
counted as income
None SSI $2,000 individual
$3,000 couple - after up to 23 various exclusions
Federal: The first $4,500 in market value or full value if needed for
employment or for use by handicapped person.
Page 21 GAO- 02- 58 Eligibility Simplification
Variations in financial eligibility rules and the multiplicity of agencies
that administer programs at the state and local level have contributed to
the formation of administrative processes that involve substantial
complexity and duplication of staff efforts. In spite of the variations in
financial eligibility rules, the states we reviewed have established joint
eligibility determination processes for certain programs. While the
processes for determining eligibility were coordinated for selected
programs, state and local staff reported that the variations and
complexities of certain financial rules in these programs created
considerable difficulties in determining eligibility and calculating benefit
levels. With regard to the other programs in these states, eligibility is
determined separately for each program. As a result, applicants must visit
multiple offices and repeatedly provide much of the same information to
apply for assistance from these other programs. While data generally are not
available on the specific costs of determining eligibility and calculating
benefit levels for the 11 programs we reviewed, evidence suggests that these
costs are substantial.
In all five states we visited, joint application processes have been
established for some programs, ranging from three programs in Kentucky to
six programs in Nebraska. These processes enable an applicant to complete a
single application for multiple programs. A single caseworker can determine
for which programs the client is eligible and then calculate benefit
amounts. The caseworker uses one or more automated systems to perform these
tasks and generally needs to input application information only once into
the automated systems. As shown in table 9, all five states have joint
eligibility determination processes for TANF, Food Stamps, and Medicaid. In
Nebraska, applicants can complete a joint application for these three
programs and Child Care, SCHIP, and LIHEAP. (How these states have used
computer systems to establish joint application processes is discussed later
in the report.)
Table 9: Programs For Which Eligibility Is Determined Jointly Program/
counties and states
Contra Costa, Placer, and San Mateo Counties, California Kentucky Utah
Delaware Nebraska
TANF X X X X X Food Stamps X X X X X Medicaid X X X X X Child Care X X X
SCHIP X X LIHEAP X
Variations in Financial Rules and Other Factors Contribute to Administrative
Duplication and Client Burden
Eligibility Is Determined Jointly for Some Programs, But Variations and
Complexities of Financial Rules Complicate Caseworkers? Efforts
Page 22 GAO- 02- 58 Eligibility Simplification
Even though the determination of eligibility in these programs has been
coordinated, state and local officials told us that variations in these
programs? financial eligibility rules, as well as the sheer complexity of
the rules in certain programs, create substantial difficulties or added work
for caseworkers in determining eligibility and benefit levels. With regard
to variations in rules, the aspects most commonly cited as troublesome for
caseworkers include differences in rules about household units, income
limits, countable and excludable income, and asset limits. For example,
differences in the definition of a household unit affect eligibility
decisions because family members are treated differently across programs. In
the Food Stamp program, a household generally consists of all the persons
who purchase food and prepare meals together. In TANF, the family is the
household unit (which states define) but generally includes only dependent
children, their siblings, and the parents or other caretaker relatives.
Consequently, a family member may be a part of a household in one program,
treated as a separate family in another program, and ineligible for benefits
in another program. If caseworkers do not establish the correct household
for a program, errors in eligibility or benefit levels can result. State and
local officials believed that establishing a uniform definition of household
unit would reduce both the work required of caseworkers and the possibility
of errors.
The problems encountered by caseworkers were attributed primarily to the
complexity of the financial eligibility rules for certain programs,
especially Food Stamps and Medicaid. State and local officials identified
the following areas as especially difficult and error- prone in the Food
Stamp program: (1) determining household composition, (2) determining
whether the value of a household?s assets is less than the maximum
allowable, and (3) calculating the amount of a household?s earned and
unearned income and deductible expenses. For example, with regard to the
last of these areas, Food Stamp rules require that net monthly income be
calculated by allowing up to six possible deductions from gross monthly
income. The six allowable deductions are a standard deduction, an earned
income deduction, a dependent care deduction, a medical deduction, a child
support deduction, and an excess shelter cost deduction. 13 Errors in
calculating any one of these complicated deductions has resulted in
inaccurate eligibility determinations or food stamp benefit levels. Such
errors can lead to overpayments or underpayments to clients,
13 A shelter deduction is allowed when monthly shelter costs exceed 50
percent of income after the other deductions have been allowed (unless the
household has been allowed a homeless shelter deduction). The shelter
deduction may not exceed a certain limit unless there is an elderly or
disabled member in the household.
Page 23 GAO- 02- 58 Eligibility Simplification
and delays in processing of applications and disbursement of benefits.
Moreover, states with high error rates can receive federal sanctions or be
required to take steps to improve program administration. Our prior work
identified the complexity of Food Stamp eligibility rules as a problem and
recommended that USDA develop and analyze options for simplifying the rules
for determining eligibility and benefit levels. 14
State officials also pointed to various complexities associated with
determining eligibility for Medicaid. Unlike the TANF and Food Stamp
programs, Medicaid eligibility encompasses many categories of individuals.
Among the states we visited, the number of eligibility categories varied
from approximately 30 in Nebraska to about 100 in California. The rules and
methodologies used to determine eligibility vary for many of these
categories. Medicaid eligibility rules often include different income
thresholds for children of different ages in the same family, and different
rules for determining the eligibility of parents. Consequently, multiple
tests may be used in determining eligibility for each member of a family,
resulting in different outcomes for members of the same family. State and
local officials told us that because of the complex financial rules in
Medicaid, caseworkers are often frustrated; it is also more difficult for
caseworkers to learn their jobs and perform them well.
While joint eligibility processes have been established for some programs in
the states we reviewed, eligibility for other programs is generally
determined separately. For example, as shown in table 10, public housing
agencies administer housing programs and SSA administers SSI in each state.
In addition, in general, health departments determine eligibility for WIC
and SCHIP; school districts administer School Meals; and communitybased
organizations administer LIHEAP.
14 Food Stamp Program: States Seek to Reduce Payment Errors and Program
Complexity
(GAO- 01- 272, Jan. 19, 2001). Separate Processes for
Determining Eligibility in Other Programs Result in Duplicative Activities
by Caseworkers and Clients
Page 24 GAO- 02- 58 Eligibility Simplification
Table 10: Diverse Agencies Determine Eligibility for Means- Tested Programs
Program
Contra Costa, Placer, and San Mateo Counties, California Kentucky Utah
Delaware Nebraska
TANF Food Stamps Medicaid
County human services State department for
community based services
State workforce services b State health & social
services State health & human services
Child Care and Development Fund Various county
offices Community- based organization State workforce
services State health & social services State health &
human services SCHIP State insurance
board State health department State health
department State health & social services State health &
human services LIHEAP Community- based
organization Community- based organization Community- based
organization Community- based organization State health &
human services WIC County health
department Local health department County health
department State health & social services Local public and
private agencies School Meals School district School district School
district School district School district
Housing Choice Voucher/ Low- rent Public Housing
Public housing agency a Public housing
agency Public housing agency Public housing
agency Public housing agency
SSI Social Security Administration Social Security
Administration Social Security Administration Social Security
Administration Social Security Administration
a In San Mateo County, the public housing agency, like the Human Services
Agency, was under the jurisdiction of the San Mateo County board of
supervisors; however, eligibility determinations were performed separately.
b In Utah, the department of health also processes Medicaid applications.
In some instances, caseworkers from different programs have been colocated
at one location such as a one- stop center, but eligibility for these
programs continues to be determined separately. For example, in San Mateo
County, California, caseworkers for the Human Services Agency determine
eligibility for the Food Stamp, Medicaid, TANF, Child Care, Low- rent Public
Housing, and the Housing Choice Voucher programs. While one caseworker can
assist clients in applying for TANF, Medicaid, and Food Stamps, these
clients must meet separately with different caseworkers to apply for any of
the other programs.
The separate eligibility processes in the states we reviewed involve a
substantial duplication of administrative functions and impose demands on
the time and resources of applicants. For example, a family in these states
that wanted to apply for all 11 programs would need to complete anywhere
from 6 to 8 applications and visit up to six offices. These applications
require applicants to repeatedly provide much of the same information. Our
analysis of the application forms in Utah showed that at least 90 percent of
the information collected by the applications for each of the following
programs- SCHIP, LIHEAP, WIC, and School Meals- was
Page 25 GAO- 02- 58 Eligibility Simplification
collected on the joint application for TANF, Food Stamps, Medicaid, and
Child Care. In fact, no new information was obtained on the SCHIP and LIHEAP
applications. These separate applications generally ask for similar
information collected on the joint application, such as household
composition, employment status, and earned and unearned income. 15
The annual costs to the federal government for administering meanstested
programs are significant and eligibility determination activities make up a
substantial portion of these costs. The federal government provides funds to
states and localities for administering most of the means- tested programs
and the percentage of the administrative costs borne by the federal
government varies by program. 16 The programs vary in the types of
activities included in the administrative cost category. For example, in
some cases these activities include outreach to potential program
participants and service providers, preparation of program plans and
budgets, travel, and quality assurance. As shown in table 11, in fiscal year
1998, the estimated federal costs for program administration in the 11
programs totaled over $12.4 billion. This constitutes about 4 percent of
total expenditures for benefits in these programs. 17
15 Only the SSI application requires substantially different information,
such as much more detailed information regarding living arrangements,
financial resources, and assets. 16 For example, the federal government pays
100 percent of the administrative costs for the WIC program and about 50
percent of the administrative costs for the Food Stamp program.
17 1998 was the most recent year for which we were able to obtain
administrative cost figures for all 11 programs. Administrative Costs for
Determining Eligibility Are Substantial, But Magnitude Is Unknown
Page 26 GAO- 02- 58 Eligibility Simplification
Table 11: Estimate of Federal Costs for Program Administration, Fiscal Year
1998
(in millions)
Program Federal
agency Administrative cost estimate
TANF HHS $1, 043 Food Stamps USDA 1,931 Medicaid HHS 3,800 Child Care and
Development Fund HHS 264 SCHIP HHS 422 LIHEAP HHS 100 WIC USDA 350 School
Meals USDA 523 Housing Choice Voucher HUD 842 Low- rent Public Housing HUD
877 SSI SSA 2,300
Estimated total $12,452
Sources: The figures for Child Care, SCHIP, LIHEAP, and WIC are GAO?s
estimates, and appendix I includes a description of the methodologies we
used. The source of the estimates for the other programs is administrative
cost data maintained by the cognizant federal agency. For the Food Stamp
program, the figure represents actual administrative costs and was provided
by USDA. Administrative cost figures for the housing programs were provided
by HUD and based on actual expenditures for the four quarters ending March
31, 1999.
Federal agencies generally do not require states to report the costs for
specific activities related to eligibility determinations. While data are
not generally available on the specific costs of determining eligibility and
calculating benefit levels for all of the 11 programs we reviewed, evidence
suggests that these costs are substantial. In the Food Stamp program, for
example, federal costs for eligibility determinations are in excess of $1
billion annually and account for over half of overall administrative costs.
Moreover, while the states we visited did not routinely collect data on the
costs associated with determining eligibility, we obtained some information
on these costs for certain programs in California. For one calendar quarter-
the fourth- quarter of 2000- California was able to provide data on
expenditures for eligibility determination activities: $183 million in staff
costs for Medicaid eligibility determinations, $106 million for food stamps,
and $71 million for TANF, according to state officials. These figures
include both federal and state costs.
Page 27 GAO- 02- 58 Eligibility Simplification
Overall, federal, state, and local entities have made limited progress in
simplifying or coordinating eligibility determination processes. Several of
the states we visited realigned some of the financial rules, yet this
approach has been used to a limited extent. Another approach is to take
advantage of the capabilities of computer systems. The state and localities
we reviewed used computer systems both to establish joint eligibility
determination processes for some programs and in a few cases to share data
across agencies to coordinate eligibility determination processes. However,
state and local officials in all five states said that much more should be
done to simplify the financial eligibility rules and eligibility
determination processes across programs but cited various obstacles to
achieving further progress.
In some cases, states have used the flexibility allowed under federal law to
simplify or realign their financial eligibility rules. This has occurred in
at least three ways. First, some states have used options established in
federal law to extend eligibility automatically for one program based on an
applicant?s participation in another means- tested program- a provision
referred to as ?categorical eligibility.? Second, at least one state has
attempted to use a federally established option to create a Simplified Food
Stamp program that aligns the financial eligibility rules for Food Stamps
and TANF. Third, the states we visited have used the flexibility allowed
under TANF to change provisions of their TANF financial eligibility rules to
realign them with those of other programs.
Provisions allowing categorical eligibility have been implemented by states
in several programs. For example, the 1972 amendments to the Social Security
Act gave states the authority to make SSI recipients automatically eligible
for Medicaid. 18 States that use this authority pay SSA to incorporate
Medicaid- required questions in the SSI application process and establish an
automated linkage between the SSI and Medicaid programs. As a result,
clients who are approved for SSI are automatically enrolled in Medicaid and
are not required to apply for Medicaid benefits. As of February 2001, 32
states- including three states we visited (California, Delaware, and
Kentucky)- and the District of Columbia have linked their Medicaid programs
with SSI.
Federal law also gives states the option of establishing categorical
eligibility to LIHEAP applicants who are receiving SSI, TANF, or Food
18 P. L. 92- 603, Sec. 1634. Some Progress Has
Been Made to Streamline or Coordinate Eligibility Determination Processes
States Have Used Federal Flexibility in Some Instances to Realign Financial
Eligibility Rules Across Programs
Establishing Categorical Eligibility
Page 28 GAO- 02- 58 Eligibility Simplification
Stamps. However, according to one agency official, while one of the states
we visited (Nebraska) uses this option, most states do not. Many of the
potential beneficiaries of the LIHEAP program are elderly or others who are
not using public assistance programs. To avoid the perception that LIHEAP is
a public assistance program, states are required to offer LIHEAP services
through an alternative approach; most of the states we visited used
community- based organizations to administer the program. 19
School districts may also use direct certification to enroll school- aged
children into the School Meals program. Direct certification is a method of
eligibility determination that does not require families to complete school
meals applications. Instead, school officials use documentation obtained
directly from the local or state human services agency that indicates that a
household participates in TANF or Food Stamps as the basis for certifying
students for free school meals. 20 While all of the states we visited used
direct certification as a means to identify and enroll children in the
School Meals program, not all school districts or schools within the states
used the process. According to a recent USDA study, approximately 35 percent
of students approved for free meals are certified through direct
certification. 21
The Simplified Food Stamp Program, an option created by the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), was
another effort to streamline program administration. 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.
Specifically, the program allows states to establish eligibility and benefit
levels on the basis of household size and income, work
19 States are required to establish automatic or adjunctive income
eligibility for the WIC program to clients who are receiving TANF, Medicaid,
or food stamps. However, such individuals who are adjunctively income-
eligible for WIC because of participation in one of the other means- tested
programs must also meet nutritional and targeting requirements. WIC state
agencies may also consider program applicants to be automatically income
eligible if proof of participation (or eligibility to participate) in other
targeted, stateadministered programs is provided.
20 Households may also establish categorical eligibility by providing their
TANF or Food Stamp case number on the School Meals application instead of
household size and income information in order to be approved for free
meals.
21 The Gallup Organization, et. al., The School Meals Initiative
Implementation Study Second Year Report, prepared under contract to the Food
and Nutrition Service, Office of Analysis, Nutrition and Evaluation. U. S.
Department of Agriculture (Washington, D. C.: U. S. Department of
Agriculture, July 2001). Implementing the Simplified
Food Stamp Program
Page 29 GAO- 02- 58 Eligibility Simplification
requirements, and other criteria established under TANF, food stamps, or a
combination of both programs- as long as federal costs are not increased in
doing so. As of February 2001, while several states had used some features
of the Simplified Food Stamp program, only one state had attempted to
implement a more extensive version of the program. In our January 1999
report, we found that the two most frequent reasons given by states for not
implementing the simplified program were as follows: (1) it would result in
increased caseworker burden and (2) the cost neutrality provision restricted
the states? options for simplifying the program. 22
States have also sought to realign their financial eligibility rules by
taking advantage of their flexibility under TANF. For example, Nebraska
changed its TANF (1) assets limits to mirror those for Medicaid, (2) earned
income disregards to mirror those for Food Stamps, and (3) client reporting
requirements to mirror those for Food Stamps. A Nebraska state official told
us that these changes resulted in simplifying the financial rules to ease
eligibility determination processes for caseworkers and reduce complexities
for clients being served. Delaware broadened eligibility for food stamps by
creating categorical eligibility for food stamps through the TANF program.
During the application process, clients are asked if they are interested in
two specific TANF program components, pregnancy prevention and family
planning services. Some clients who may have been determined financially
ineligible for food stamps, but indicated an interest in either TANF
service, received categorical eligibility for food stamps. However, in the
near future, states will not have the authority to more broadly confer
categorical eligibility to TANF clients. With recent changes in Food Stamp
regulations, effective September 30, 2001, states will be restricted to
conferring categorical eligibility to TANF clients with incomes at 200
percent of the federal poverty level or below.
States have considerable flexibility to streamline eligibility processes in
their Medicaid for children and SCHIP programs. According to a recent survey
23 , many states have taken steps to streamline and simplify their child
health coverage programs. These activities have been driven, to a
22 This provision requires states to operate simplified programs so that
costs are no higher than they would have been under the regular Food Stamp
program in any fiscal year. See
Welfare Reform: Few States Are Likely to Use the Simplified Food Stamp
Program
(GAO/ RCED- 99- 43, Jan. 29, 1999). 23 Donna Cohen Ross and Laura Cox,
Center on Budget and Policy Priorities, Making it Simple: Medicaid for
Children and CHIP Income Eligibility Guidelines and Enrollment Procedures,
Findings From a 50- State Survey, (Washington, D. C.: The Kaiser Commission
on Medicaid and the Uninsured, October 2000). Using Flexibility Provided by
TANF Using Flexibility Provided by Medicaid and SCHIP
Page 30 GAO- 02- 58 Eligibility Simplification
large extent, by the emphasis on designing easy, family- friendly
application systems for new SCHIP programs, coupled with the federal
requirement to coordinate these new programs with Medicaid. The survey found
that most states have taken steps to simplify the application process for
child health coverage. For example, of the 32 states that implemented
separate SCHIP programs, 28 states use joint applications for Medicaid and
SCHIP. Moreover, 39 states and the District of Columbia have eliminated
face- to- face interviews and 10 states allow self- declaration of income in
both their Medicaid for children and SCHIP programs. In addition, most
states have made efforts to expand income- eligibility for children and
simplify eligibility rules. For example, between November 1998 and July
2000, the number of states that covered children under age 19 in families
with income at or below 200 percent of FPL increased from 22 to 36. Finally,
41 states and the District of Columbia have dropped the asset test in both
their Medicaid for children and SCHIP programs.
States are increasingly relying on computer systems to establish joint
processes for determining eligibility or to share data across agencies to
facilitate the verification of data needed to determine client eligibility.
However, in some cases states have encountered difficulties in expanding
joint eligibility processes due to factors such as limitations in the
abilities of caseworkers to master the eligibility rules for so many
programs.
The federal government has played a key role in facilitating the automation
of means- tested programs. Three of the federal government?s major programs
for needy families- TANF, Food Stamps, and Medicaid- have historically
relied on state- run automated systems to help determine applicants?
eligibility and the amount of assistance each client should receive. In the
past, the Congress authorized several agencies to reimburse states for a
significant proportion of their total costs to develop and operate automated
eligibility determination systems for these programs. For example, in 1980,
the Congress authorized USDA?s Food and Nutrition Service, which oversees
the Food Stamp program, to reimburse states for 75 percent of their costs
for planning, designing, developing, and installing automated eligibility
systems and 50 percent of the costs to operate these systems. 24 To obtain
enhanced funding for AFDC automated systems, states had to meet the
requirements for a Family Assistance Management Information System (FAMIS),
a general system design developed by HHS to improve state administration of
the AFDC program. Because eligibility
24 Legislation in 1993 reduced the food stamp funding rate to 50 percent of
states? development costs, effective April 1, 1994. States Are Using
Computer
Systems as a Tool to Streamline the Determination of Eligibility
Page 31 GAO- 02- 58 Eligibility Simplification
for Medicaid and Food Stamps was linked to eligibility for AFDC, most of the
AFDC systems also covered Medicaid and Food Stamps. 25 While the federal
government generally no longer provides for enhanced levels of matching
funds for systems development, the federal government continues to be a
major funder of new computer systems for human services. 26 For example,
Texas has budgeted more than $289 million over a 6- year period to develop a
new automated system for its human services department that would support
the determination of eligibility for approximately 50 programs. The federal
share (obtained from HHS and USDA) is projected to be about 51 percent of
the total amount.
Some of the states we reviewed have developed computer systems that have
enabled them to expand the number of programs for which eligibility can be
jointly determined. For example, Nebraska developed the Nebraska- Family On-
Line Client User System (N- FOCUS), which contains the eligibility rules for
TANF, Food Stamps, Medicaid, SCHIP, and Child Care. A separate computer
system is used to determine eligibility for LIHEAP. These computer systems
enable a single worker to jointly determine eligibility and calculate
benefit levels for all of these programs. However, since these computer
systems are not completely interfaced, caseworkers must sometimes enter
client information more than once.
In Delaware, caseworkers use the Delaware Client Information System II (DCIS
II) to determine eligibility and benefit levels for TANF, Food Stamps,
Medicaid, and SCHIP. Caseworkers use a separate computer system to determine
eligibility and benefit levels for Child Care. These computer systems enable
a single caseworker to determine eligibility jointly for five programs. In
contrast to Nebraska, the different computer systems in Delaware are
interfaced, which allows caseworkers to switch between systems and transfer
data from one system to another, thereby eliminating the need to re- enter
the same information in multiple systems. 27 While their computer systems
have resulted in streamlining the
25 At the time PRWORA was enacted in August 1996, 38 states operated state
systems that complied with the FAMIS requirements. 26 As part of PRWORA,
$500 million in federal funds were made available to states for both
outreach and redesign of their Medicaid enrollment systems, with an enhanced
matching rate ranging from 75 percent to 90 percent. Additionally, the cost
of developing Medicaid automated systems is federally matched at a 90
percent rate.
27 For a more detailed discussion of the use of computer systems in human
services, including initiatives in other states and obstacles to systems
modernization, see Welfare Reform: Improving State Automated Systems
Requires Coordinated Federal Effort
(GAO/ HEHS- 00- 48, Apr. 27, 2000).
Page 32 GAO- 02- 58 Eligibility Simplification
eligibility determination processes for clients, no data were available to
determine whether these initiatives had generated any administrative cost
savings.
In addition to supporting joint eligibility determination processes,
computer systems are being used to share client data across certain agencies
to obtain information needed for determining eligibility. For example, when
families in Delaware apply for TANF cash assistance, they are informed on
their applications that the state department of health and social services
may contact other persons or organizations to obtain the proof necessary in
determining eligibility and benefit levels. The department of health and
social services has automated links to share client information with other
state agencies, including the department of Labor, the Divisions of Public
Health and Motor Vehicles, and the child support enforcement agency. 28
While computer systems can facilitate efforts to coordinate eligibility
determination processes, states encountered limitations in system
capabilities. For example, Nebraska officials told us that because of the
variations in programs and financial rules, ?workarounds? had been developed
to help caseworkers overcome some systems- related problems. Workarounds are
instructions to staff for specific situations in which a worker has to
intervene manually in the eligibility determination process. While
Nebraska?s N- FOCUS system provided automated support for 26 programs and
the policies and rules built into the system to support all these programs,
slow processing times had resulted. In addition, caseworkers were frustrated
because the system was inflexible and did not cover all possible client
household situations, which sometimes resulted in inaccurate eligibility
determinations. Later, when the N- FOCUS automated system was modified by
reducing technical complexities, it resulted in quicker processing times of
client data, more flexibility for caseworkers in using the automated system,
and greater responsibilities for caseworkers to know their programs.
Caseworkers told us that the changes were helpful improvements. Nonetheless,
some caseworkers expressed concern that program complexities, high
caseloads, and time
28 In a review of three federal programs, we reported that the continued
reliance on selfreported information from applicants and recipients leaves
these programs at risk for improper payments. While each of the programs
uses varying degrees of computer matching and other methods to verify the
information that applicants and current recipients provide, we concluded
that the programs could benefit from access to additional data sources. See
Benefit and Loan Programs: Improved Data Sharing Could Enhance Program
Integrity (GAO/ HEHS- 00- 119, Sept. 13, 2000).
Page 33 GAO- 02- 58 Eligibility Simplification
constraints made it difficult to learn the eligibility rules with their
varying criteria and financial rules.
Through discussions with federal, state, and local officials, and a review
of literature in the area, we identified a number of obstacles that hinder
efforts to make further progress in streamlining or coordinating processes
for determining eligibility. In general, these have been longstanding
obstacles. Key obstacles to efforts to simplify or realign financial
eligibility rules include program cost implications, restrictive federal
laws and regulations, the need for collaboration of multiple executive
branch agencies and legislative committees, and differences in goals and
purposes of some federal programs.
Program cost implications is a major obstacle to efforts to simplify or
realign financial eligibility rules. Financial eligibility rules serve to
target and limit benefits to those considered in need and also to ration
federal and nonfederal dollars. Yet, modifying financial eligibility rules
for purposes of simplifying them or making them more consistent across
programs can result in changes to the number of people who are eligible for
assistance or the benefit levels they receive. For example, if such rule
changes have the effect of raising income eligibility limits, more people
will be eligible for assistance and program costs will tend to increase. On
the other hand, if such rule changes have the effect of lowering income
eligibility levels, some people will no longer be eligible for assistance
from certain programs. Among means- tested programs, pressures in recent
years have generally been to increase coverage, such as by loosening
financial eligibility standards.
As we have seen, much of the variation in financial rules derives from
federal statutes and regulations. For the 11 programs we reviewed, most
program requirements were set in statute. Agency regulations also provide
annual guidance such as income thresholds used to establish eligibility and
benefit amounts. State officials believe that because of federal statutes
and regulations they had very little flexibility in aligning financial
eligibility rules across programs. Such alignment can involve standardizing
various types of rules, including those pertaining to income limits, whose
income is counted, what income is counted, and deductions from income. While
states have aligned some financial rules to simplify their TANF, Food Stamp,
and Medicaid rules, most of these changes were modest and officials were
frustrated by federal barriers that prevented better aligning the financial
rules across programs. For example, officials in two states told us that
they believed the federally established income limits in the Food Stamp
program (130 percent of federal poverty guidelines) were set Many Obstacles
Constrain
Attempts to Streamline or Coordinate Administrative Processes
Page 34 GAO- 02- 58 Eligibility Simplification
too low. They explained that although their states had the flexibility to
lower their TANF and Medicaid income limits to match the limit for food
stamps, this option was not appealing because it would result in decreased
participation in TANF and Medicaid.
The division of legislative and executive responsibility, while allowing
multiple points of access for members of Congress, interest groups, and the
affected public, can be an obstacle to states? ability to pursue system
integration. Making systematic changes to programs? financial eligibility
rules can be very difficult, because it would generally require the
collaborative efforts of multiple congressional committees (in the case of
laws) or multiple federal agencies (in the case of regulations). Several
reviews of the legislative and executive governance mechanisms that affect
program direction at the federal level have been conducted in recent years.
One study found that primary responsibility for most of the approximately 80
major programs that assist low- income families and individuals resides in
19 congressional committees and 33 subcommittees. For the 11 programs in our
review, we identified 9 committees and 6 appropriations subcommittees with
legislative responsibility for the programs. In addition, the 11 programs
spanned 3 executive branch departments and 1 independent agency.
The different purposes of the various means- tested programs and the lack of
overarching goals also create a barrier to administrative streamlining. For
example, state and local officials frequently cited the Food Stamp program
rules as overly complex and rigid, with too much emphasis on quality
control. The officials were concerned that quality control in the program
focused, to a great extent, on detailed financial matters such as small
amounts of overpayments and underpayments, timeliness of changes in income,
and recalculation of benefit levels. The officials believe that while a
focus on financial integrity through process and payment accuracy was
important, too much attention on quality control has contributed to
increased program complexities, decreased program participation, and high
administrative costs. In comparison, the states receive block grants from
the federal government to operate TANF programs and have significant
autonomy in these programs. In the states we visited, officials told us that
the flexibility in TANF provided them the opportunity to develop more
effective cash assistance programs than existed prior to welfare reform. The
officials believed that having greater flexibility in other means- tested
programs such as Food Stamps would further their efforts to streamline
eligibility determination processes.
Page 35 GAO- 02- 58 Eligibility Simplification
Over a period of more than 60 years, a large number of means- tested
programs have been established to meet diverse goals and serve the needs of
different populations of low- income families and individuals. However, when
viewed from a service provider?s or client?s perspective, the existing
processes for determining eligibility and calculating benefit levels in the
11 means- tested programs we reviewed are often cumbersome to administer and
burdensome for families who apply for assistance.
The variations and complexity of these programs? financial eligibility
rules, as well as the fact that numerous agencies administer the programs,
have contributed to the formation of these cumbersome processes. There has
been a long history of calls for the need to simplify eligibility rules and
processes for means- tested programs. While there have been some efforts to
make such improvements, little progress has been achieved overall. This
limited progress reflects the broad scope and complex intricacy of the
obstacles that confront any efforts to make large- scale improvements in
this area, including the difficulty of grappling with the cost implications
of changing financial eligibility rules. For example, the Simplified Food
Stamp program was designed to allow states to align the TANF and Food Stamp
programs? rules but few states have implemented this option. Most states
have not used the Simplified Food Stamp program, in large part, because they
viewed the program?s requirement for cost neutrality within any fiscal year
as being too restrictive.
Many federal, state, and local officials recognize that additional efforts
to simplify or coordinate eligibility determination processes are needed.
However, a lack of information on the likely consequences of such efforts
hinders further steps to improve the administration of means- tested federal
programs. While many of these officials believe that administrative cost
savings could be achieved from improved coordination or simplification, data
are not available to evaluate the potential savings from such actions. Given
the paucity of data on the costs of determining eligibility and calculating
benefit levels in the existing system, it is difficult to quantify the costs
of the variations and complexity of financial eligibility rules. Yet these
costs appear to be substantial and even increases in efficiencies of the
processes of 10 to 20 percent could potentially save billions of dollars.
Moreover, the simplification of eligibility rules and processes offers the
prospect of reducing burdens on caseworkers and applicants. On the other
hand, simplifying financial eligibility rules could potentially result in
increased program costs. To facilitate further progress in this area,
information is needed about the effects of changes in financial eligibility
rules and procedures on program and administrative costs, and access to
programs by families and individuals. This information could be instrumental
in designing a system for administering means- tested Conclusions
Page 36 GAO- 02- 58 Eligibility Simplification
programs that is less costly to taxpayers, less onerous for workers, less
frustrating for applicants, and that potentially reduces improper payments
in federal programs.
The Congress should consider authorizing state and local demonstration
projects designed to simplify and coordinate eligibility determination
processes for means- tested federal programs. Such projects would provide
states and localities with opportunities to test changes designed to
simplify or align the financial eligibility rules for programs, increase the
number of programs for which eligibility can be determined jointly, and
expand data sharing across agencies to facilitate eligibility
determinations.
Once authorized, states and/ or localities could submit proposals for
demonstration projects and relevant federal agencies working in a
coordinated manner could review them, suggest modifications as needed, and
make final approval decisions. Demonstration projects would include waivers
of federal statutes and regulations as needed and deemed appropriate. While
our review covered 11 means- tested federal programs, we are not suggesting
that the demonstration projects must include all of these programs or
exclude others. Consistent with a focus on citizencentered government,
states should be given the opportunity to try various approaches aimed at
streamlining or simplifying eligibility determination processes that
consider all feasible programs.
Projects must be given sufficient time to be fully implemented and must
include an evaluation component. Cost neutrality would be most desirable for
federal approval of these projects. However, projects should not be rejected
solely because they are unable to guarantee cost neutrality over the short
run. It would be expected that, over a period of time, state and federal
efforts to streamline eligibility determination processes would create
administrative cost savings that could help offset any increased program
costs.
The Office of Management and Budget and the Departments of Agriculture,
Health and Human Services, and Housing and Urban Development provided
written comments on a draft of this report. These comments are presented and
evaluated below and are reprinted in appendix II through appendix V. The
agencies generally agreed with the report?s findings. The draft version of
the report contained a recommendation to the Director of OMB to develop
legislative proposals that would authorize state and local demonstration
projects designed to simplify and coordinate eligibility determination
processes for means Matter for
Congressional Consideration
Agency and Other Comments
Page 37 GAO- 02- 58 Eligibility Simplification
tested federal programs. In its comments, OMB indicated its support for
program simplification but did not indicate that it would implement the
recommendation.
OMB agreed with our assessment of the longstanding obstacles to program
simplification. However, OMB said that legislative authority for
demonstration projects may not be necessary for states to pursue many
simplification strategies because many programs, such as Food Stamps,
already have significant waiver authority, and many states have not fully
utilized the flexibility they have in programs such as TANF, Medicaid, and
SCHIP. We agree that states have substantial flexibility in some programs;
our report provides examples of how some states have used this flexibility
to coordinate financial rules or processes. Our proposal for the
authorization of demonstration projects is motivated primarily by the need
to obtain more detailed and systematic information about the effects of
various simplification strategies on key factors such as program and
administrative costs. These demonstration projects would provide states with
whatever additional waiver authority is needed and appropriate.
OMB acknowledged that demonstration projects could be helpful in achieving
sweeping standardization across programs, particularly if current waiver
authority in certain programs, such as HUD?s rental assistance programs, is
not designed to achieve such sweeping standardization. OMB added that
program reauthorization also presents an opportunity to propose changes to
program rules that may more immediately and effectively address
simplification. We agree that program reauthorization presents a good
opportunity to address simplification, especially on a program- specific
basis. However, demonstration projects would provide the ability to make
comprehensive changes in a multiplicity of programs to coordinate
eligibility rules and processes, and to obtain information about the effects
of these changes.
OMB also expressed concern about the implications of program simplification
on program costs and argued that simplification should not be a license to
expand eligibility and increase spending beyond current levels. OMB
questioned whether we potentially overestimate the administrative cost
savings that would result from program simplification, which may
underestimate the significance of program cost implications. We agree that
there is a lot of uncertainty about the cost implications of program
simplification. We believe that demonstration projects could provide useful
empirical evidence about the potential for administrative cost savings and
the ability to limit program cost increases.
Page 38 GAO- 02- 58 Eligibility Simplification
Finally, OMB maintained that if demonstration projects are authorized, the
review of state proposals for such projects would most appropriately be lead
by a federal agency such as HHS, in collaboration with other federal
agencies, rather than by OMB as we had originally recommended. We believe
that whatever federal agency or agencies were to be designated as the lead,
the critical factor would be to establish a coordinated federal review
process that facilitates efficient state and local interactions with the
federal government.
USDA commented that the report has made a noteworthy effort to compare the
key variations in financial eligibility rules among the eleven federal
programs reviewed. With regard to food stamps, USDA stated that making
legislative changes during reauthorization would be a better approach to
streamlining and simplifying Food Stamp program rules than mounting a series
of demonstration projects. We agree that reauthorization presents an
opportunity for simplifying Food Stamp rules and have recommended this in an
earlier GAO report. 29 USDA also provided additional information about the
use of direct certification in the School Meals program and categorical
eligibility for WIC, which we added to the report.
HHS said in its comments that this is a very important report that verifies
the lack of standardization and complexity of applying for means- tested
programs. However, HHS added that in recommending demonstration projects,
the report does not offer any suggestions on how to build upon or make this
new initiative more productive than past efforts. We agree that the report
does not address in a detailed and thorough manner the issues regarding how
such demonstration projects should be designed and implemented. We believe
that these issues would be best addressed with input from diverse
stakeholders, especially the various federal and state agencies that have
longstanding experience administering and overseeing these means- tested
programs.
HHS noted that while considerable progress has been made in developing joint
application processes, there has recently been a recognition that this model
has limitations. HHS explained that increasing numbers of Medicaid- eligible
persons come from working families not eligible for other programs. HHS
added that it is important to strive to effectively reach and serve both
this population and the population eligible for multiple programs, so it
continues to work on both joint and single
29 Food Stamp Program: States Seek to Reduce Payment Errors and Program
Complexity
(GAO- 01- 272, Jan. 19, 2001).
Page 39 GAO- 02- 58 Eligibility Simplification
purpose application processes. We agree with HHS that both types of
application processes have appropriate uses. HHS also said that the report
did not acknowledge sufficiently the progress in simplifying eligibility
determination that has been made in SCHIP. In response, we added a section
to provide information on state efforts to streamline and simplify
administrative processes for SCHIP and Medicaid programs for children.
In addition, HHS questioned whether our review of Medicaid, which focused on
TANF- related Medicaid groups and policies, should also have included SSI-
related groups and policies. Because the primary focus of our review was on
means- tested programs commonly used by low- income families and children,
the report does not include a discussion of SSIrelated groups and policies.
Finally, HHS commented that states have significant flexibility to expand
and simplify eligibility for Medicaid to coordinate with other programs that
serve low- income families.
In its comments, HUD agreed that simplification of the financial eligibility
and benefit rules for means- tested federal programs is needed and said that
the department is interested in exploring participation in a demonstration
program in this area. HUD also noted that it has an effort underway- the
Rental Housing Income Integrity Initiative- that has a major goal of
simplifying cumbersome income and rent policies in public and assisted
housing programs. HUD also provided estimates of administrative costs for
housing assistance programs and the percentage of TANF recipients receiving
housing assistance; we revised the report to incorporate these estimates.
We also received technical comments on a draft of this report from the
Departments of Agriculture, Health and Human Services, and Housing and Urban
Development, the Social Security Administration, and three of the five
states discussed in the report- Delaware, Nebraska, and Utah- and we
incorporated these comments where appropriate.
As agreed to with your staff, unless you publicly release its contents
earlier, we will make no further distribution of this report until 30 days
after its issue date. At that time, we will send copies of this report to
the Subcommittee on Human Resources, House Committee on Ways and Means; the
Director of the Office of Management and Budget; the Secretary of Health and
Human Services; the Secretary of Agriculture; the Secretary of Housing and
Urban Development; the Acting Commissioner of Social Security; other
interested congressional committees; and interested parties. Copies will be
made available to others upon request. The report is also available on GAO?s
home page at http:// www. gao. gov.
Page 40 GAO- 02- 58 Eligibility Simplification
Please contact me on (202) 512- 7215 if you have any questions about this
report. Other GAO contacts and staff acknowledgments are listed in appendix
VI.
Sincerely yours, Sigurd R. Nilsen Director, Education, Workforce, and
Income Security Issues
Appendix I: Scope and Methodology Page 41 GAO- 02- 58 Eligibility
Simplification
In conducting our review, we obtained and analyzed information from a
variety of federal, state, and local sources. At the federal level, we
interviewed officials at three departments (Agriculture, Health and Human
Services, and Housing and Urban Development) and two agencies (Centers for
Medicare and Medicaid Services and the Social Security Administration). We
visited five states and generally met with officials of state, local, and
community- based organizations in two cities in each state- one urban
location and one rural community. Our fieldwork was performed in three
counties (Contra Costa, San Mateo, and Placer) in California; Georgetown and
Wilmington, Delaware; Louisville and Barren County, Kentucky; Omaha and
Crete, Nebraska; and Salt Lake City and Logan, Utah. In selecting the states
for our fieldwork, we sought to include states (1) that had undertaken
welfare simplification or service integration initiatives, (2) with combined
welfare and workforce agencies, (3) that had enhanced automated systems for
eligibility determinations and benefit level calculations, (4) with state-
supervised and county- administered welfare systems, and (5) that were
geographically diverse.
To obtain data on the extent to which Temporary Assistance for Needy
Families (TANF) families participate in multiple means- tested federal
programs, we reviewed and analyzed the results of two national Bureau of the
Census surveys:
The March 2000 supplement of the Current Population Survey (CPS) -
The survey has information on TANF families? participation in multiple
federal programs, is conducted monthly of about 47,000 households, and is
designed to be a nationally representative sample of the country. The total
response rate for the March 2000 CPS supplement was about 86 percent.
The Survey of Income and Program Participation (SIPP)- A nationally
representative sample of approximately 20,000 households, SIPP consists of
information on social and demographic characteristics for each person in the
household. SIPP contains other household data in areas such as labor force
activity, income, assets and liabilities, postsecondary education, private
health insurance coverage, pension plan coverage, and participation in
selected means- tested federal programs.
To determine the extent and sources of variation in financial eligibility
rules among the 11 programs, we reviewed relevant federal statutes and
regulations, as well as the 2000 Green Book (Committee on Ways and Means, U.
S. House of Representatives) and the 2000 Catalog of Federal Domestic
Assistance (published by the Office of Management and Budget and the General
Services Administration). We also reviewed information contained in CRS?
December 1999 report, Cash and Noncash Benefits for Persons With Limited
Income: Eligibility Rules, Recipient and Expenditure Appendix I: Scope and
Methodology
Appendix I: Scope and Methodology Page 42 GAO- 02- 58 Eligibility
Simplification
Data, FY 1996- FY 1998. We discussed the financial eligibility rules with
federal program officials and reviewed relevant documents such as program
handbooks and policy guidance. In addition, during our site visits we met
with state officials, local office managers, and eligibility workers to
obtain their views on variations in financial eligibility rules.
To obtain information about how the variation in financial eligibility rules
and other factors affects the administrative processes for determining
eligibility, we discussed these issues with state and local eligibility
workers and supervisors to obtain their views. During these meetings, staff
assisted us in identifying rule differences and the extent to which these
variations affected the eligibility determination processes. We also
reviewed state- prepared documents such as memorandums, discussion papers,
and reports. We met with experts in the areas of means- tested federal
programs and eligibility simplification and with advocacy groups to obtain
their views on how the variations in financial rules impacted clients and
their efforts to access benefits and services. We also conducted a content
analysis of the multiple applications used by different programs in Utah to
determine the amount of overlap in questions.
To determine how federal, state, and local agencies have sought to
streamline or coordinate eligibility determination processes, we met with
federal program officials to discuss their efforts to simplify eligibility
and work more closely with other departments and agencies. In addition, we
reviewed statutes, program guidance, and other documents that identified
actions to streamline and coordinate at the federal level. As part of our
fieldwork, we met with state and local officials to discuss their efforts to
simplify eligibility determination processes. We discussed some of these
streamlining efforts with frontline workers, including eligibility workers
and supervisors. We also reviewed documents obtained at these meetings, such
as reorganization strategies and other state and local planning documents.
To obtain estimates of federal costs for program administration, we used
administrative cost data from federal agency sources for programs where such
data were available: TANF, Food Stamps, Medicaid, School Meals, Housing
Choice Voucher, Low- rent Public Housing, and SSI. For the other programs,
we developed estimates of federal administrative costs as follows. For the
WIC program, overall administrative cost data available from the agency
includes nutrition education and assessment costs as part of the
administrative cost category. To develop our estimate, we computed and
removed the amount (two- thirds of the costs) associated with nutrition
assessment activities and attributed the remainder to general
administration. For the Child Care program, eligibility determination data
Appendix I: Scope and Methodology Page 43 GAO- 02- 58 Eligibility
Simplification
are gathered separately from administrative cost data by the states. To make
a fiscal year 1998 estimate we developed separate estimates for eligibility
determination costs and other administrative costs and added the components
together. For the LIHEAP and SCHIP programs, the maximum allowable
administrative cost percentage (10 percent) was applied to the separate
appropriations for 1998 where administrative costs could be applied.
Our work was done between September 2000 and August 2001 in accordance with
generally accepted government auditing standards.
Appendix II: Comments From the Office of Management and Budget
Page 44 GAO- 02- 58 Eligibility Simplification
Appendix II: Comments From the Office of Management and Budget
Appendix II: Comments From the Office of Management and Budget
Page 45 GAO- 02- 58 Eligibility Simplification
Appendix III: Comments From the Department of Agriculture
Page 46 GAO- 02- 58 Eligibility Simplification
Appendix III: Comments From the Department of Agriculture
Appendix III: Comments From the Department of Agriculture
Page 47 GAO- 02- 58 Eligibility Simplification
Appendix IV: Comments From the Department of Health and Human Services
Page 48 GAO- 02- 58 Eligibility Simplification
Appendix IV: Comments From the Department of Health and Human Services
Appendix IV: Comments From the Department of Health and Human Services
Page 49 GAO- 02- 58 Eligibility Simplification
Appendix IV: Comments From the Department of Health and Human Services
Page 50 GAO- 02- 58 Eligibility Simplification
Appendix V: Comments From the Department of Housing and Urban Development
Page 51 GAO- 02- 58 Eligibility Simplification
Appendix V: Comments From the Department of Housing and Urban Development
Appendix V: Comments From the Department of Housing and Urban Development
Page 52 GAO- 02- 58 Eligibility Simplification
Appendix V: Comments From the Department of Housing and Urban Development
Page 53 GAO- 02- 58 Eligibility Simplification
Appendix VI: GAO Contacts and Staff Acknowledgments Page 54 GAO- 02- 58
Eligibility Simplification
Andrew Sherrill, (202) 512- 7252, sherrilla.@ gao. gov
Tim Hall, (202) 512- 7192, hallt@ gao. gov
The following people also made important contributions to this report:
George Erhart; Sheila Nicholson; Mikki Holmes; Daniel Schwimer; and Barbara
Alsip. Appendix VI: GAO Contacts and Staff
Acknowledgments GAO Contacts Staff Acknowledgments
Related GAO Products Page 55 GAO- 02- 58 Eligibility Simplification
Child Care: States Increased Spending on Low- Income Families (GAO01- 293,
Feb. 2, 2001).
Food Stamp Program: States Seek to Reduce Payment Errors and Program
Complexity (GAO- 01- 272, Jan. 19, 2001).
Food Assistance: Activities and Use of Nonprogram Resources at Six WIC
Agencies (GAO/ RCED- 00- 202, Sept. 29, 2000).
Benefit and Loan Programs: Improved Data Sharing Could Enhance Program
Integrity (GAO/ HEHS- 00- 119, Sept. 13, 2000).
Welfare Reform: Improving State Automated Systems Requires Coordinated
Federal Effort (GAO/ HEHS- 00- 48, Apr. 27, 2000).
Welfare Reform: States? Experiences in Providing Employment Assistance to
TANF Clients (GAO/ HEHS- 99- 22, Feb. 26, 1999).
Welfare Reform: Few States are Likely to Use the Simplified Food Stamp
Program (GAO/ RCED- 99- 43, Jan. 29, 1999).
Medicaid: Early Implications of Welfare Reform for Beneficiaries and States
(GAO/ HEHS- 98- 62, Feb. 24, 1998).
Welfare Programs: Opportunities to Consolidate and Increase Program
Efficiencies (GAO/ HEHS- 95- 139, May 31, 1995).
Means- Tested Programs: An Overview, Problems, and Issues (GAO/ THEHS- 95-
76, Feb. 7, 1995)
Welfare Simplification: States? Views on Coordinating Services for LowIncome
Families (GAO/ HRD- 87- 110FS, Jul. 29, 1987).
Welfare Simplification: Thirty- Two States? Views on Coordinating Services
for Low- Income Families (GAO/ HRD- 87- 6FS, Oct. 30, 1986).
Welfare Simplification: Projects to Coordinate Services for Low- Income
Families (GAO/ HRD- 86- 124FS, Aug. 29, 1986).
Needs- Based Programs: Eligibility and Benefit Factors (GAO/ HRD- 86107FS,
Jul. 9, 1986). Related GAO Products
(116046)
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