Hunger Pangs

hen the Food and Nutrition Service (FNS) found out last fall that low-income New Yorkers were having trouble signing up for food stamps, it launched an investigation. Agency officials suspected that city bureaucrats might be violating a federal law requiring that potential beneficiaries be offered food stamp and Medicaid applications on their first visits to welfare offices. But policies pursued by FNS itself have contributed to the problem. In recent years, FNS has put as much emphasis on preventing fraud as it has on delivering food to needy people.

Between 1995 and 1998, the number of food stamp recipients dropped from 26 million to 18.7 million, according to the FNS Data Base Monitoring Branch. Agency officials say the decline is steeper than can be explained by the good economy and tougher eligibility requirements under the 1996 welfare reform law.

"We just haven't been able to pinpoint why the caseload is declining at such a rapid level," says Ruthie Jackson, who runs the Southwest regional office--which includes Texas, where the caseload has dropped 40 percent in three years. The economy has helped, she says, but some of the decline may have come because "we're running all the crooks out of the program."

Since 1980, the number of FNS employees has fallen nearly 40 percent, from 2,762 to 1,669. But throughout the decline, the authorized number of food stamp investigators has remained stable at about 48. Non-investigative staffers have been told that quality control, primarily fraud prevention, remains a high priority, says Bonny O'Neil, the FNS associate deputy administrator who directs the food stamp program. As a result, the percentage of staff and time devoted to fighting fraud is rising in comparison with other functions. Christopher J. Martin, regional administrator of FNS' Mid-Atlantic regional office in New Jersey, confirms that while his staff has been "cut continually, I don't cut the number in quality control."

Legislators' priorities for FNS have changed over the past 30 years from extending benefits to controlling fraud. In the 1970s and 1980s, special congressional hunger committees urged FNS to search for Americans without adequate diets and inform them of food stamp benefits and other programs providing free or reduced-cost food. FNS administers 15 domestic food assistance programs. Those programs provide, depending on income, free or reduced-cost school lunches and breakfasts; infant formula and other foods under a special supplemental nutrition program for women, infants and children (WIC); and basic commodities to food banks, soup kitchens, other institutions and Indian reservations.

But in the 1990s, politicians and taxpayers have been less concerned with extending benefits than limiting fraud and abuse. Welfare reform ended food stamp eligibility for most unmarried, able-bodied people between the ages of 18 and 50 and for most legal immigrants, although benefits were restored in 1998 to the elderly, disabled people and child immigrants. Under a law that took effect in November, FNS is developing a national database of all beneficiaries of means-tested welfare programs to prevent people from fraudulently receiving food stamp benefits in two or more states at once.

Fraud is no small matter in the food stamp program, which, at nearly $20 billion and approximately 23 million recipients in fiscal 1997 is USDA's largest. Food, nutrition and consumer services provided by FNS and the Center for Nutrition Policy and Promotion account for about two-thirds of USDA's budget. In 1997, food stamp overpayments totaled $1.4 billion, Robert E. Robertson, General Accounting Office associate director for food and agriculture issues, told a House Agriculture subcommittee last August. In 1993, the latest year for which figures are available, about $815 million in food stamps issued were illegally traded for cash at stores.

FNS has responded to Congress' concerns by making reductions in fraud and overpayments its top strategic and annual performance goals. According to USDA and GAO data, the overpayment rate decreased from 8.27 percent in 1993 to 6.92 percent in 1996. Shirley Watkins, undersecretary of Agriculture for food, nutrition and consumer services, says improving the integrity of the nutrition programs is a close second to her primary goal of providing food to the poor.

In 1984, FNS began an electronic benefits transfer (EBT) pilot program in Pennsylvania to allow food stamp beneficiaries to get their benefits using cards similar to those used in automated teller machines. FNS officials say EBT will give recipients greater dignity and privacy, since they will no longer have to use coupons when shopping for groceries, but the primary motivation for the move to EBT was to reduce fraud and abuse. EBT, which is being expanded to other states, eliminates paper coupons that can be lost, stolen or sold. In addition, EBT systems create an electronic record of each food stamp transaction showing who made it, when, where, for how much money and at which cash register.

Last year, FNS deployed an anti-fraud system that records EBT transactions and analyzes the data to quickly identify suspicious patterns in food stamp use. In 1992, just one 1 percent of food stamp households received benefits electronically; in 1998, 47 percent did. Martin hopes the number of FNS employees assigned to quality control and investigations can be reduced once EBT is fully in place.

Coping With Downsizing

FNS' success depends heavily on its partners. The agency does not directly provide services. State and county social workers certify the 19 million people currently in the food stamp program, schools serve lunch to 26.7 million children, state health departments certify the 7 million poor women, infants and children in the WIC program, and local governments, churches, civic organizations and Indian reservations run food banks and soup kitchens that serve millions.

Officials in state and local government and private organizations say cooperation between political appointees at FNS and the agency's partners is a key factor in getting food to the needy. Many criticized Reagan and Bush administration political appointees for being unsympathetic to the agency's basic goals. Ellen Haas, the first Clinton administration undersecretary in charge of the nutrition programs, was considered autocratic. But Watkins has won praise for adopting a more cooperative style and working well with both the FNS career staff and the agency's non-federal partners.

FNS also benefits from stability and expertise among career executives and managers. Career civil servants such as O'Neil and Stanley Garnett, director of the Child Nutrition Division, each have more than 20 years of FNS experience. Their independent and authoritative reputations transcend political shifts. A Republican Senate Agriculture Committee staffer calls FNS one of the two best-managed divisions of the Agriculture Department.

But both food delivery and management are suffering at FNS today, according to Watkins. "In recent years, food program administration funding has not been sufficient to keep up with the rising demands made on the agency," she told a House Appropriations subcommittee in March. Reductions in administrative funding have led FNS to cut its staff by nearly 18 percent since the beginning of the Clinton administration. FNS made the cuts without using reductions in force or downgrades. The agency doesn't have a formal workforce plan, but reports devoting much attention during the past several years to setting work priorities, seeking opportunities to consolidate and finding ways to increase efficiency and reduce duplication. For example, in 1997, FNS began hiring contract investigators to visit stores that apply for authorization to participate in the food stamp program.

FNS managers and supervisors have considerable hiring discretion, but the agency lacks key staff in critical areas such as program analysis, financial management and compliance investigation.

Two-thirds of FNS employees are covered by collective bargaining agreements. The agency portrays labor-management relations as cooperative. Grievances are relatively few, just 22 in 1997 (up from 11 in 1995), though they can take up to six months to resolve.

Varied States of Technology

FNS uses computers to receive reports from the states on food stamp and WIC participation and distribution of benefits, to communicate with schools about fulfilling USDA dietary requirements and to manage its commodities inventory. FNS staffers use the Store Tracking and Redemption System to monitor food stamp redemptions. This system is being integrated with the Anti-Fraud Locator Using EBT Retailer Transactions system, now available online in all FNS regions. The agency also maintains a national database of information about people disqualified from the food stamp program. All program managers and employees have access to these systems, which can produce standard and specialized reports. FNS says its automated systems permit significant measurement of program results, including data on program participation and benefit issuance and comparison of these data with overall expenditures.

FNS' technology problems lie with its partners at the state level, Martin says. Even though FNS pays half the cost of administering the food stamp program and must approve the computer systems states use, states' computer systems vary in quality.

FNS program managers determine their systems requirements, describe needed enhancements and log problems and complaints. IT systems are a major portion of each program's operating budget. The agency is small enough that when IT systems develop problems, program managers often appear in person at IT division offices.

FNS' information resources management plan for fiscal 1998 through 2000 notes that funds for training in new computer applications are "extremely limited." A 1997 FNS employee survey showed generally high satisfaction with agency computer systems. Major programs have different systems, but within programs, managers appear to be able to easily get the information they need.

Fixable Finances

FNS' financial management system interacts with USDA's National Finance Center in New Orleans, providing all information required for processing payments, receivables, grants and the agency's payroll, as well as tracking capital management. The agency's chief capital investments are in IT, for which it assesses return on investments by tracking maintenance, enhancement, and transmission costs.

If food stamps were a discretionary program, FNS could be in financial management trouble for not knowing why the number of recipients has fallen so fast. But food stamps are an entitlement, so funds are provided based on population and economic data. FNS projects funding needs for all its mandatory programs using statistical models of indicators such as food stamp participation, school meals service levels and data on unemployment, inflation and school enrollments.

FNS uses similar models to project the costs of its discretionary programs, such as WIC, the Commodity Supplemental Food Program, food distribution on Indian reservations and the elderly nutrition program. But participation rates and performance for these programs are limited by the amount of appropriated funding. The agency reports that for fiscal 1997 its mid-session projections for food stamps came within 2 percent of actual funding needed and within 0.7 percent for Child Nutrition Programs.

The accuracy of spending projections notwithstanding, FNS does have several financial management problems. In its 1997 Federal Managers Financial Integrity Act report, the agency acknowledged that it must do more to fulfill its promise of intensive on-site reviews of administrative costs claimed for reimbursement by state agencies administering the Food Stamp and WIC programs. FNS also pledged to provide more detailed guidance and stronger oversight of state agencies' management of food delivery systems.

FNS also identified a need for more scrutiny of authorized food stamp retailers; stronger state and federal procedures for establishing, recording, adjusting, collecting and reporting on food stamp claims; better management and monitoring of the Child and Adult Care Food Program; and more oversight of states' automated systems. In May 1998, the Agriculture Department inspector general found that FNS has not corrected its accounting weaknesses related to food stamp overpayments it is trying to recover from states.

Partnership Problems

Susan Carr Goffman, deputy administrator for food stamps, says a key challenge in managing the food stamp program is that it depends so much on state-county relationships. FNS sends food stamps to state governments, but county agencies determine eligibility and distribute benefits. Relations between the states and counties vary dramatically, she says.

In addition, many people who manage FNS-funded programs or receive benefits don't even realize where they originate, says FNS Administrator Samuel Chambers, a former Wayne County, Mich., social services executive. Chambers estimates that 85 percent of social services caseworkers "don't have the foggiest notion of who FNS is and what its role is," nor do they understand that mistakenly certifying people translates into a "percentage of cases in error and federal dollars that have to be recouped." But the reduction in the food stamp error rate is an indication that the agency is overcoming management problems.

Neither Watkins nor Chambers has been on the job long enough to establish strong reputations in Washington, but anti-hunger groups credit Watkins with Congress' 1998 decisions to restore food stamp benefits to some legal immigrants and to reauthorize child nutrition programs.

Watkins has said that her goal is to create a "seamless" food safety net so that no American goes hungry. Chambers wants FNS' partners to work more closely together so, for example, a child receiving free school breakfast and lunch would be asked if there's a younger child at home who should be getting WIC benefits. Given the separate distribution channels for each of FNS' major programs, coordinating such efforts would be a massive job. Watkins' successes last year with child nutrition programs and restoring food stamps for legal immigrants have provided both FNS employees and anti-hunger advocates with a burst of enthusiasm that should encourage further cooperation with Watkins and Chambers.

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