States ignored fraud in the food stamp program so they could receive bonuses rather than penalties, according to a report from the USDA’s inspector general.
The Food and Nutrition Service, which administers the food stamp program, conducts reviews to determine whether beneficiaries are eligible for the program and receiving the correct benefit amount. The results of these reviews are used to calculate a state’s error rate.
"The SNAP error rate is an important measurement used for two primary purposes," the report says. "First, it is the basis for awarding State bonuses for high payment accuracy and assessing state penalties for poor performance."
The inspector general visited eight states and found that they all weakened their quality control processes to lower error rates instead of correctly reporting them.
States may perform their own quality control reviews of state operations, making it possible for errors to go unreported. "The inherent conflict of interest in allowing states to perform [quality control] reviews of state operations, contributed to the lower error rates."
"In our view, any errors identified by the states would adversely affect them by either increasing the chances for penalties or reducing the chances for bonuses," explains the IG.
According to the report, the agency has awarded states more than $220 million in bonuses since 2004.
A SNAP director admitted that conflicting incentives make the program vulnerable to abuse.
"The bias in the [quality control] process was an inevitable consequence of states competing against each other for bonus money," stated a SNAP director in one of the states reviewed by the audit.