USDA 2007 Farm Bill Proposals - US Department of Agriculture

improves program payment accuracy in accordance with a written agreement between theState and USDA by the third year. These funds can also be changed from "at risk" andinvested in new state improvements in program administration (the so-called investmentoption). These new investments are State-only dollars and are not eligible for federalmatching funds. This proposal would strengthen the penalties associated with improperpayments by requiring the States pay their liabilities without the option of newinvestment of year two at risk dollars when their improper payments rates are above theformula prescribed in law for errors three years in a row.BackgroundAuthorized by the Food Stamp Act of 1977 (the Act), the Food Stamp Program (FSP) is thecornerstone of the Nation’s nutrition assistance programs which serve 1 in 5 Americans. Duringfiscal year (FY) 2005, the Program served approximately 26 million people in an average monthwith a total annual benefit cost of approximately $29 billion. The FSP increases the purchasingpower of low-income families and individuals by providing electronic benefits redeemed forfood in authorized stores.The program operates in partnership with the States. The Federal Government sets nationalprogram standards for eligibility and benefits, funds all benefit costs and approximately half ofState administrative expenses, and has responsibility for monitoring and oversight of programimplementation, including authorization and enforcement measures associated with theredemption of benefits at authorized retail stores. State agencies interact directly with programparticipants, are responsible for eligibility certification.Outreach to underserved populations and program integrity have been a primary focus for theAdministration. At the same time that there has been an increase in participation, programintegrity has also improved. In FY 2005, the FSP reached the highest level of payment accuracyin its history of 94.16 percent. The Food Stamp Program has a Quality Control System that usesa statistically valid sample of State cases to determine the accuracy of food stamp benefits andestablish a national error rate. The Program has also seen progress in the area of trafficking(exchanging benefits intended for food purchases for cash), with a recent GAO report stating thattrafficking has been reduced to 1 cent of every benefit dollar, down from almost 4 cents.The purpose of the FSP is to increase the nutritional levels of low-income households whoqualify based on criteria associated with income, assets, and household composition. To qualifyfor benefits the applicant’s gross income must be less than 130 percent of poverty (e.g., $2043per month for a family of four in 2005), and 100 percent after allowable deductions. Themaximum monthly food stamp allotment ($499 for a family of four in 2005) is based on the costof the Thrifty Food Plan, a low-cost nutritious model food plan. The Program also providesnutrition education designed to help low-income individuals choose healthy foods and activelifestyles.USDA 2007 Farm Bill Proposals Page 94 of 183