The Department of Economic Security has reduced its error rate in administering food stamps, but staffing cutbacks at the agency could lead to more mistakes in paying out federal and state assistance, the Auditor General’s Office states.

More than 15 per cent of the food stamps administered in 1994 were erroneous, either in the amount of benefits given to recipients or in giving benefits to people who didn’t qualify for them, an audit report released April 21 states. But by 2002, the latest period for which data were available, the error rate dropped to 5.27 per cent.

That improvement in reducing errors helped Arizona avoid federal penalties, the report states. California was fined $62 million for its high error rate reported for 2002.

The improved numbers for Arizona could be threatened by a number of factors, though, Auditor General Debbie Davenport stated in the report.

As of December 2003, DES had a backlog in verifying more than 7,700 payments for food stamps or other welfare programs to aid low-income people, chiefly in Temporary Assistance to Needy Families [TANF]. Food stamp program funding comes from the U.S. Department of Agriculture, while TANF is a combination of state and federal funding sources.

Assuming those 7,700 payments were made in error and are supposed to be paid back to DES, the state faces a potential loss of almost $2 million, the report states.

One significant factor is that supervisors of caseworkers at DES are not reviewing at least 35 cases a month, which is a federal standard, although the auditor general’s report does not state how many cases supervisors actually reviewed during the audit period.

Error Rates

Nonetheless, having supervisors review cases is “one of the most effective ways to reduce error rates,” the report states.

Keeping error rates down not only avoids penalties to the state, it can result in a bonus. If the state discovers a beneficiary has received an overpayment because of incorrect information submitted by the beneficiary, the state gets to keep 20 per cent of the overpayment. If the information supplied was fraudulent, the state gets to keep 35 per cent of the amount of any payments it recovers.

The 2002 “bonus” to the state was $3.8 million, the auditor general’s report states.

In the official agency response, Director David A. Berns agreed to the audit report’s finding that DES “should continue its efforts to ensure that supervisors review the required number of case files by monitoring the monthly case review reports, identifying local offices that are unable to meet the monthly quotas, and taking steps to improve these offices’ performance.”

Mr. Berns stated that DES implemented a new automated case-tracking system on Jan. 1, which will allow the agency to more effectively track every case in every office, including whether supervisors have reviewed case files. “Steps can then be taken to improve those sites that fail to meet expectations,” Mr. Berns stated. “The reports will also make it possible for agency management to identify sites that consistently meet expectations so that effective procedures can be shared with other sites as recommended.” —