Finance

Georgia Wastes Almost $140 Million a Year in Overpayments to Food Stamp Recipients

by | March 31, 2014

By Craig Schneider

Georgia is wasting millions of dollars each year -- about $138 million in 2013 -- in overpayments to people who receive food stamps, The Atlanta Journal-Constitution has learned.

The problem has worsened dramatically in recent years, putting the state at risk of a federal crackdown that could include millions of dollars in penalties.

The overpayments are partly offset by mistakes that result in underpayments to other recipients, but the overpayments involve much more money, according to figures the AJC obtained from the state.

Although food stamp benefits are funded completely through federal dollars, the program is administered by the state Division of Family and Children Services. Last year DFCS distributed $3.1 billion to 1.7 million Georgians, or nearly one of every five state residents.

The thought of the program throwing away millions of taxpayer dollars angers those who view it as a bloated entitlement. "It's wasteful," said state Rep. Greg Morris (R-Vidalia). "It's inexcusable."

Morris, who authored a law this year to drug test food stamp recipients, suspects overpayments have some recipients living high on the hog.

"Hardworking taxpayers are incensed when they are on line, buying an inexpensive cut of meat due to their budget, and they see someone with a (food stamps) card eating better than they are," he said.

Even those who doubt that recipients profit greatly through overpayments worry that the issue reflects a breakdown in Georgia's food stamp program.

"This is a very dramatic wrong turn," said David Super, a Georgetown University professor who has studied Georgia's food stamp system for a decade. "It's unusual to see a state deteriorate this far this fast."

Overpayments can arise from several causes: misinformation submitted by applicants, either by accident or deliberately; or agency mistakes in verifying the information and calculating benefits. If applicants knowingly supply false information, it's fraud, and the agency has a unit that investigates such cases.

Exactly how much fraud contributes to the overpayments is unclear. Even when clients give wrong information, it's difficult to discern whether the mistake was intentional or a misunderstanding about reporting obligations.

Nationally, states collected $74 million in fraud claims from households in 2012, according to the U.S. Agriculture Department, which oversees the food stamp program. In Georgia, a separate collection program by the Treasury Department has recouped $58 million in overpayments since 1992.

Across the country, about 60 percent of overpayments are caused by agency errors, according to the Food and Nutrition Service, the arm of the U.S. Department of Agriculture that handles the program.

Advocates worry, too, about the people affected by underpayments. "We're talking about people in desperate situations trying to put food on the table," said Nancy Rhinehart, an attorney for Atlanta Legal AID. "And because of an agency's error," they're getting less than the rules say they should.

DFCS officials acknowledge that Georgia's error rate has climbed in recent years. In 2012, it was 3.18 percent; in 2013, it was 4.99 percent; this year, based on just one month worth of data, it stands at 5.5 percent.

The rate is an estimate, based on a review of about 1,200 cases a year. The amount of dollars issued in error is compared to the overall amount issued.

If the rate exceeds 6 percent, federal officials will trigger a quality control process that could result in millions of dollars in fines.

DFCS spokeswoman Ashley Fielding said the agency simply doesn't have enough staff to handle what has been more than a doubling of food stamp cases since the recession began. The state actually has fewer workers now than before the downturn, she said.

"(Workers are) giving each case less attention than in years before," she said. But she added that workers still do their best to assign the correct allotment of benefits to each person. The error rate is not the only problem plaguing Georgia's food stamp system.

Under intense pressure from the federal government, DFCS is scrambling to fix a badly broken call-in system and eliminate a backlog of thousands of cases. The phone system, in which thousands of calls are never completed, may contribute to the error rate by preventing clients from furnishing timely information on their finances.

Now, advocates worry that the rush to clear the backlog of applications will lead to more mistakes.

"Haste makes waste, or in this case, errors," said Super, the Georgetown professor.

Agency officials said that would be an unfair conclusion.

"Don't assume that because we are concentrating on getting all the work caught up, that we are not doing the correct eligibility work," said DFCS food and nutrition unit manager Lucy Smith.

However, Georgia has a long history of making mistakes calculating food stamps. From 1986 to 1999, the state drew several million dollars in federal penalties as a result of high error rates. By 2010, reforms had brought the error rate down to under 2 percent -- until it began to spike again.

Morris, the state representative, believes there simply are too many people on the rolls. He suggests tightening eligibility rules and implementing work requirements for those receiving benefits. "That would make a lot less people eligible and a lot less people apply," he said.

Super, though, believes adopting tougher rules only opens the door to more errors.

Other ideas abound. Some call for more state and federal dollars to provide more staff and better technology.

"The mistakes ... are a side effect of not having enough workers," said Melissa Johnson, a policy analyst for the left-leaning Georgia Budget and Policy Institute.

Kelly McCutchen, president of the fiscally conservative Georgia Public Policy Foundation, suggested using one standard of eligibility for several social service programs, rather than each one having its own. That would simplify the process and cut down errors, he said.

Rachel Sheffield, a policy analyst for the conservative Heritage Foundation, suggested gradually changing the funding formula for food stamps to include more state dollars. With state dollars on the line, Georgia officials might push harder to bring down the number of errors, she said.

"It's not their own dollar," Sheffield said. "There's less incentive to use the dollars wisely."

Whatever solution the state hits on, it needs to turn the tide before federal penalties kick in, Super said.

"If Georgia keeps going the way it's going, it's going to be paying the federal government a lot of money, " he said.

(c)2014 The Atlanta Journal-Constitution

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from Finance