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United States General Accounting Office: 
GAO: 

Report to the Ranking Minority Member, Committee on Agriculture, 
Nutrition, and Forestry, U.S. Senate: 

February 2002: 

Food Stamp Program: 

States' Use of Options and Waivers to Improve Program Administration 
and Promote Access: 

GAO-02-409: 

Contents: 

Letter: 

Results in Brief: 

Background: 

States Used Eligibility Options and Waivers Primarily to Increase 
Access to Food Stamps: 

States Used Reporting Options and Waivers Primarily to Reduce Payment 
Errors and Simplify Paperwork: 

Many States Planning to Use the Transitional Benefit Option: 

No State Is Using All Aspects of the Simplified Food Stamp Program 
Option: 

Agency Comments: 

Related GAO Products: 

Table: 

Table 1: Reporting Options and Waivers: 

Figures: 

Figure 1: Reasons States Confer Categorical Eligibility to Households: 

Figure 2: Reasons States Replaced Vehicle Asset Rules with TANF-Funded 
Program Rules: 

Figure 3: Reasons States Used Categorical Eligibility to Exempt 
Vehicles: 

Figure 4: Thirty-Five States Use Change Reporting Waivers: 

Figure 5: Reasons States Would Use the 3- and 6-Month Transitional 
Benefit Alternative: 

Figure 6: Reasons States Are Not Planning to Use the 3 and 6-Month 
Transitional Benefit Alternative: 

Figure 7: Reasons States Are Not Using the Simplified Food Stamp 
Program Option: 

Abbreviations: 

FNS: Food and Nutrition Service: 

GAO: General Accounting Office: 

TANF: Temporary Assistance for Needy Families: 

USDA: U.S. Department of Agriculture: 

[End of section] 

United States General Accounting Office: 
Washington, DC 20548: 

February 22, 2002: 

The Honorable Richard Lugar: 
Ranking Minority Member: 
Committee on Agriculture, Nutrition, and Forestry: 
United States Senate: 

Dear Senator Lugar: 

The U.S. Department of Agriculture’s (USDA) Food Stamp Program is a
federal entitlement that provided about $15.5 billion in benefits to a
monthly average of 17.3 million low-income individuals during fiscal 
year 2001. Despite the large number of people served, participation in 
the Food Stamp Program by eligible individuals has declined 
significantly since 1994. USDA’s Food and Nutrition Service (FNS) 
estimates that at least 60 percent of the overall decline in food 
stamp participation involved recipients receiving welfare benefits. 

Data showing that former welfare families leave the Food Stamp Program
at rates higher than their nonwelfare counterparts has raised concerns 
that the federal rules and regulations under which states administer 
their Food Stamp Programs do not facilitate participation by low-
income working families who were affected by welfare reform. While 
states continue to administer their Food Stamp Programs under these 
federal rules and regulations, welfare reform enacted in 1996 gave 
states flexibility to administer their welfare programs through 
Temporary Assistance for Needy Families (TANF) block grants. 

To help states address barriers to participation, and to help them
administer their Food Stamp Programs, FNS offers some flexibility by
providing options and waivers to program rules and regulations. In 
light of the reauthorization of the Food Stamp Program in 2002, you 
asked us to examine states’ use of certain federal food stamp options 
and waivers. Most of the options and waivers we looked at were offered 
to states since welfare reform. We assessed the extent to which states 
used specific program options and waivers related to: (1) determining 
food stamp eligibility, (2) reporting changes in household 
circumstances that may affect eligibility and benefit amounts, (3) 
providing food stamps to households leaving TANF, and (4) aligning 
food stamp and TANF program rules for families receiving both types of 
assistance. 

Results in Brief: 

Our review is based on telephone interviews that we conducted during 
September and October 2001 with officials in 50 states, including food 
stamp directors, and policy and quality control officials. We also 
analyzed federal legislation and regulations as well as FNS data on 
waivers. In addition, we reviewed literature and research that had 
been conducted on the Food Stamp Program. Our work took place between 
July and November 2001 in accordance with generally accepted government 
auditing standards. 

Almost all states used one or more options or waivers to change their 
food stamp eligibility determination process. More than half of the 
states chose to make households receiving TANF-funded services 
automatically eligible for food stamps, thereby eliminating food stamp 
eligibility requirements for these families. Thirty-three states used 
available options to exempt some or all vehicles from counting as 
assets in the determination of food stamp eligibility. Most states 
implementing these options did so to allow more households to access 
the Food Stamp Program, simplify the administrative process for 
eligibility workers, and support working families. While most states 
used these options and waivers, they considered them a cumbersome way 
to increase access to the program for families owning a vehicle. 

Almost all states used at least one option or waiver to change the 
reporting methods required of food stamp households with earnings. The 
most frequently used reporting waivers were those that replaced the 
requirement that recipients report changes in earned income of $25 or 
more per month with requirements to report larger income changes, 
increased work hours, or changes in employment status. Other states 
chose an option that allowed households with earned income to report 
less frequently, either once every 3 months or once every 6 months. 
States used these reporting options and waivers in order to reduce 
their state’s payment error rate and to simplify paperwork 
requirements for both the food stamp recipient and eligibility worker. 
Because some reporting options applied only to specific households, 
many states considered them somewhat restrictive. Officials in most 
states told us that the effect on their payment error rate was a 
factor in their decision to use particular options and waivers. 

While only a few states were using the new option to provide food stamp 
benefits to families leaving TANF, 20 other states are considering the 
option. States using the Transitional Benefit Alternative told us that 
they had selected the option to support working families. Congress is 
considering legislation that would allow states to offer transitional 
benefits for 6 months. Twenty-seven states said they would consider 
using this option. 

No state was implementing or planning to implement all aspects of the 
simplified program option, which allows states to merge their TANF and 
Food Stamp Program rules into a single set of requirements for families 
receiving both types of assistance. States told us that the simplified 
program option would make administering the programs more difficult 
because it creates a separate program, covering only a subset of food 
stamp recipients – those who receive TANF. However, nine states were 
using a portion of the simplified program to align their food stamp and 
TANF work or reporting requirements. 

Background: 

The Food Stamp Program provides eligible low-income households with 
paper coupons or electronic benefits that can be redeemed for food in 
stores nationwide. FNS funds food stamp benefits and about half of the 
states’ administrative costs and establishes regulations for 
implementing the Food Stamp Program. FNS regulations require that 
states certify household eligibility at least annually and establish 
requirements for households to report changes that occur after they 
are certified. Recently, FNS introduced several options and waivers 
[Footnote 1] to food stamp rules and regulations in order to increase 
program access and reduce the reporting burden on working families 
while minimizing the potential for payment errors.[Footnote 2] These 
include options and waivers related to program eligibility, reporting 
requirements, extending food stamp benefits to households leaving 
TANF, and options related to TANF recipients. To monitor program 
accountability, FNS’s quality control system measures states’ 
performance in accurately determining food stamp eligibility and 
calculating benefits. 

Determination of Eligibility and Benefits: 

States implement the Food Stamp Program by determining whether 
households meet established limits on gross income and assets, 
calculating monthly benefits for eligible households, and issuing 
benefits to households. The actual amount of the food stamp benefit is 
based on household income after certain deductions-—including shelter, 
dependent care, and child support. To be eligible for benefits, a 
household’s gross income may not exceed 130 percent of the federal 
poverty level and the value of its assets may not exceed $2,000. 
[Footnote 3] If the household owns a vehicle worth more than $4,650, 
the excess value is included in calculating the household’s assets. 
[Footnote 4] 

Recipients of TANF cash assistance are automatically eligible for food 
stamps-—a provision referred to as “categorical eligibility”—-and do 
not have to go through a separate food stamp eligibility determination 
process. In the wake of welfare reform, many needy families that are 
no longer receiving TANF cash assistance may receive other TANF-funded 
services or benefits. FNS gave states the option to extend categorical 
eligibility to families receiving TANF-funded benefits or services. 
[Footnote 5] States can determine which TANF-funded services or 
benefits confer categorical eligibility to food stamps. 

FNS offers two options that states can use to allow households to own a 
vehicle worth more than the amount allowed in current regulations and 
remain eligible for food stamp benefits. One option allows states to 
replace the federal food stamp vehicle asset rule with the vehicle 
asset rule from any TANF assistance program, as long as the rule is 
more liberal than the federal rule.[Footnote 6] States adopting the 
rule of a TANF-funded program must apply it to all applicants for food 
stamp benefits. States can also use the categorical eligibility option 
as a way to exclude all vehicles, as well as other assets the family 
may have, from the determination of eligibility for food stamps. This 
option affects the food stamp eligibility only of families authorized 
to receive a TANF-funded service or benefit. 

Certification and Reporting Requirements: 

After eligibility is established, households are certified to be 
eligible for food stamps for periods ranging from 1 to 24 months, with 
3-, 6-, and 12-month periods the most common. The length of the 
certification period depends on household circumstances, but only 
households in which all members are elderly or disabled can be 
certified for more than 12 months. Once the certification period ends, 
households must reapply for benefits, at which time eligibility and 
benefit levels are re-determined. Households with stable income are 
generally given longer certification periods than households with 
fluctuating income. Prior to welfare reform, federal regulations 
required households to have a face-to-face interview with an agency 
worker at each re-certification. Current regulations give states the 
option to require only one face-to-face interview a year regardless of 
the length of the certification period. 

Between certification periods, households must report changes in their 
circumstances—-such as household composition, income, and expenses— 
that may affect their eligibility or benefit amounts. States determine 
how frequently households must file reports. A state may require a 
household to submit a monthly report on their financial circumstances 
along with required verification even if nothing changed. If a 
household is not required to file a monthly report, it is required to 
report changes in income and other circumstances as they occur—-called “
change reporting.” States can require different types of reporting for 
different household types and generally require households with 
earnings to report more frequently than households with no earned 
income. 

FNS offers alternatives to monthly and change reporting: quarterly and 
semiannual reporting. Both of these reporting methods decrease the 
frequency with which households with earnings are required to report. 
FNS also offers three waivers to change reporting that reduce the 
reporting burden on households with earnings. (See table 1.) 

Table 1: Reporting Options and Waivers: 

Current policy: Monthly reporting: Households submit monthly reports 
on their circumstances along with required verification even if 
nothing has changed. 

Option or waiver: Quarterly reporting waiver: Households with earnings 
are required to report their circumstances and provide verification 
every 3 months. Changes occurring between the reports do not have to 
be reported. 

Option or waiver: Semiannual reporting option: Households with earned 
income have their benefit set for 6 months and are required to report 
only if total monthly income rises above 130 percent of the poverty 
line. To use this option, states must certify the family for a minimum 
of 6 months. 

Current policy: Change reporting 
Households must report changes in their circumstances to the food 
stamp office within 10 days, including changes in the total amount of 
income greater than $25 per month. 

Option or waiver: Change reporting waivers: 
* Status reporting. Households report the following changes: 1) 
gaining or losing a job, 2) moving from part-time to full-time 
employment or vice-versa, and 3) experiencing a change in wage rate or 
salary. 
* 5-hour reporting. Households report changes in hours worked if more 
than 5 hours a week. 
* $100 reporting. Households report changes in monthly earnings if more 
than $100.[A] 

[A] In July 1999, FNS increased the required reporting amount from $80 
to $100. Only one state continues to use the $80 waiver. 

[End of table] 

Options Related to TANF Recipients: 

USDA now provides a transitional benefit option to states to help 
families leaving TANF retain their food stamp benefits. Because 
families leaving TANF are no longer automatically eligible for food 
stamps based on their receipt of TANF cash assistance, they cannot 
receive food stamps without a re-determination of eligibility. The 
Transitional Benefit Alternative, introduced in November 2000, gives 
states the option to continue to provide families with their same food 
stamp benefit amount for 3 months after they leave welfare. As part of 
its deliberations on food stamp reauthorization, the Congress is 
considering extending the transitional benefit to 6 months. 

Finally, recognizing that TANF and the Food Stamp Program generally are 
administered by the same agency at the local level, the 1996 welfare 
reform legislation provided an option for states to merge their TANF 
and Food Stamp Program rules into a single set of eligibility and 
benefit requirements for households receiving both TANF and food 
stamps. This option, called the Simplified Food Stamp Program, allows 
states to align all of their TANF and Food Stamp Program rules. The 
option also allows states to implement a portion of the simplified 
program in which only the food stamp work requirement is replaced by 
TANF’s work requirement.[Footnote 7] 

FNS’s Quality Control System: 

FNS monitors states’ performance by assessing how accurately they 
determine food stamp eligibility and calculate benefits. Under FNS’s 
quality control system, the states calculate their payment errors by 
drawing a statistical sample to determine whether participating 
households received the correct benefit amount. The states review case 
information and make home visits to determine whether households were 
eligible for benefits and received the correct benefit payment. FNS 
regional offices validate the results by reviewing a subset of each 
state’s sample to determine its accuracy and make adjustments to the 
state’s overpayment and underpayment errors as necessary.[Footnote 8] 
States are penalized if their payment error rate is higher than the 
national average, which was 8.9 percent in fiscal year 2000. 

Food Stamp Program payment errors occur for a variety of reasons. 
Overpayments can be caused by inadvertent or intentional errors made by 
recipients and caseworkers. According to FNS’ quality control system, 
the states overpaid food stamp recipients about $976 million in fiscal 
year 2000 and underpaid recipients about $360 million. A little over 
half of these errors occurred when state food stamp workers made 
mistakes, such as misapplying complex food stamp rules in calculating 
benefits. The remaining errors occurred because participants, either 
inadvertently or deliberately, did not provide accurate information to 
state food stamp offices. 

According to USDA, about half of all payment errors are due to an 
incorrect determination of the household’s income. In 1999, every state 
except one had a higher payment error rate among households with 
earnings as compared with households without earnings. Because their 
hours of work per week vary and they change jobs frequently, low-wage 
workers often have fluctuating incomes. Recipients are required to 
report these income changes, and eligibility workers must adjust their 
food stamp benefits correctly to avoid payment errors. In order to 
minimize payment errors, states usually certify households with 
earnings for shorter periods and require them to report more 
frequently than households with no earned income. 

States Used Eligibility Options and Waivers Primarily to Increase 
Access to Food Stamps: 

Almost all states used one or more options or waivers to change their 
food stamp eligibility determination process. More than half of the 
states chose to confer categorical eligibility for food stamps to 
households receiving certain TANF-funded services or benefits. Thirty-
three states used available options to exempt some or all vehicles 
from counting as assets. States used these options to increase the 
number of households to be eligible for food stamps, to simplify the 
administrative process for eligibility workers, and to support working 
families; however, most of these states considered them a cumbersome 
way to increase access to food stamps. 

Many States Confer Categorical Eligibility to Increase Access: 

Thirty-four states extended eligibility for food stamps to households 
that are eligible to receive TANF-funded services or benefits. Many 
states conferred categorical eligibility only to households receiving 
TANF-funded benefits such as emergency assistance and childcare; while 
some states conferred categorical eligibility to food stamp applicants 
simply by providing them with information and referral services paid 
for with TANF funds. For example, during the food stamp application 
process, clients who may be financially ineligible for food stamps 
could become categorically eligible for benefits by virtue of having 
received a referral to a specific TANF-funded program.[Footnote 9] 

Although the primary reason states gave for conferring categorical 
eligibility was to increase access to food stamps by making households 
who are eligible for a TANF-funded service automatically eligible for 
food stamps, states cited other benefits of this option. For example, 
by eliminating the need to calculate the value of a food stamp 
applicant’s assets, the eligibility worker’s administrative burden is 
reduced. Furthermore, five states noted that conferring categorical 
eligibility for food stamps makes children eligible for the school 
lunch program, even if the household does not actually qualify for a 
food stamp benefit.[Footnote 10] (See figure 1.) 

Figure 1: Reasons States Confer Categorical Eligibility to Households: 

[Refer to PDF for image: vertical bar graph] 

Reason: Increase access to program; 
Number of states: 22. 

Reason: Eliminate asset limits; 
Number of states: 10. 

Reason: Simplify rules for eligibility workers; 
Number of states: 10. 

Reason: Support working families; 
Number of states: 7. 

Reason: Make children eligible for school lunch program; 
Number of states: 5. 

Note: States could provide more than one reason. 

Source: GAO’s analysis. 

[End of figure] 

While about two-thirds of the states used the categorical eligibility 
option, some states pointed out difficulties that the option created. 
For example, many individuals made categorically eligible for food 
stamps through receipt of a pamphlet or referral to a service may in 
fact not actually qualify for a food stamp benefit, possibly 
increasing the administrative burden on food stamp workers. In 
addition, several officials said they would like the food stamp rules 
pertaining to categorical eligibility simplified. They noted that 
categorical eligibility is determined in part by the source of the 
funding for the program under which the household receives noncash 
benefits or services. Because many programs have multiple funding 
sources, it can be difficult to determine whether a particular program 
meets the TANF funding requirements. Another official said that 
categorical eligibility is difficult to explain to staff. Other 
officials noted problems tied to the variation from state to state 
that the option creates. One official commented that allowing states 
to determine which of their welfare-funded services to use in granting 
categorical eligibility for food stamps could create a great deal of 
national variation in who can access this federal entitlement program. 
Using TANF-funded services as a basis for categorical eligibility, a 
state official explained, is a complicated way of excluding vehicles 
when determining food stamp eligibility. 

States Used Several Options to Exempt Vehicles: 

Thirty-three states used available options to exempt some or all 
vehicles from counting as assets in determining food stamp eligibility 
in order to increase access, support clients’ work efforts, or 
simplify eligibility determination for food stamp workers. (See figure 
2.) Twenty-nine of these states chose to replace their food stamp 
vehicle rules with their TANF program rules.[Footnote 11] While most 
of these states replaced their food stamp vehicle asset rules with 
their TANF cash assistance rules, a few states used rules from their 
TANF noncash assistance childcare programs. 

Figure 2: Reasons States Replaced Vehicle Asset Rules with TANF-Funded 
Program Rules: 

[Refer to PDF for image: vertical bar graph] 

Reason: Increase access; 
Number of states: 21. 

Reason: Support client work efforts; 
Number of states: 13. 

Reason: Simplify rules for eligibility workers; 
Number of states: 13. 

Reason: Align with TANF program; 
Number of states: 5. 

Reason: Simplify rules for recipient; 
Number of states: 4. 

Source: GAO’s analysis. 

[End of figure] 

Seven states told us that they used the option to confer categorical 
eligibility to recipients of TANF-funded services as a way to exclude 
all vehicles and other assets from eligibility determination.[Footnote 
12] Specifically, six of the seven states told us that they used 
categorical eligibility to increase access to food stamps and three 
said that they used it to support client work efforts. (See figure 3.) 

Figure 3: Reasons States Used Categorical Eligibility to Exempt 
Vehicles: 

[Refer to PDF for image: vertical bar graph] 

Reason: Increase access; 
Number of states: 6. 

Reason: Support client work efforts; 
Number of states: 3. 

Reason: Simplify rules for eligibility workers; 
Number of states: 1. 

Source: GAO’s analysis. 

[End of figure] 

While most states used available options to liberalize the way 
vehicles are considered in the food stamp eligibility determination 
process, 17 states used existing Food Stamp Program rules regarding 
vehicles. Seven of these states said that they could not replace their 
food stamp vehicle rules with TANF vehicle rules because their TANF 
rules were more restrictive than their food stamp rules. In at least 
one of these states, changes to TANF rules required approval by the 
state’s legislative body. State officials in almost half of the states 
told us that the Food Stamp Program’s vehicle asset rules should be 
changed to exempt at least one vehicle per household. Other state 
officials wanted the exemption value of a vehicle increased to reflect 
the current cost of vehicles. 

States Used Reporting Options and Waivers Primarily to Reduce Payment 
Errors and Simplify Paperwork: 

Almost all states used a reporting option or waiver to change the way 
households with earnings are required to report changes in their 
circumstances that could affect their eligibility for food stamps as 
well as their benefit amount. These options and waivers allowed states 
to alter the standard reporting methods of monthly and change 
reporting. Many states told us that they used reporting options and 
waivers to reduce their payment errors, to ease program 
administration, and to simplify paperwork requirements for households. 
Because some reporting options applied to specific households only, 
many states considered them somewhat restrictive. 

The most frequently used reporting alternatives were those that 
eliminated the requirement to report changes in earned income of $25 
or more per month. Eighteen states chose a waiver allowing households 
to report changes in employment status, which includes changes in wage 
rates, number of hours worked in a week, and a move from part-time to 
full-time employment or vice-versa. Seventeen states chose the waiver 
to require recipients to report only changes in income that exceeded 
$80 or $100. (See figure 4.) 

Figure 4: Thirty-Five States Use Change Reporting Waivers: 

[Refer to PDF for image: vertical bar graph] 

Earned income waivers: 

Reporting waivers (some states use more than one wavier): Changes in 
employment status; 
Number of states: 18. 

Reporting waivers (some states use more than one wavier): Changes in 
income of $80 or $100; 
Number of states: 17. 

Reporting waivers (some states use more than one wavier): Changes in 
hours worked per week; 
Number of states: 2. 

Unearned income waivers: 

Reporting waivers (some states use more than one wavier): Unearned 
income from private sources; 
Number of states: 5. 

Source: GAO’s analysis. 

[End of figure] 

States are allowed to use more than one reporting option or waiver. 
Thirteen states used two or more alternatives. However, some states 
chose not to use any reporting options or waivers, citing concerns 
over payment errors and the cost and burden of implementation, such as 
the cost of reprogramming computer systems to implement a new 
reporting system. 

Ten states used the semiannual reporting option, and 5 states used the 
waiver allowing quarterly reporting. In these states, households with 
earned income are allowed to report semiannually or quarterly without 
reporting changes in between. Households subject to semiannual 
reporting are required to report if their gross income exceeds 130 
percent of poverty. Should a household report a change that would 
increase the household’s food stamp benefit, the state must make the 
change; however, the state is generally not allowed to make changes 
that would reduce the food stamp benefit amount. States are held 
responsible only for errors resulting from miscalculating benefits at 
certification, or if income exceeds 130 percent of poverty and the 
change is not reported. State agencies are not held responsible for 
errors if the household experienced a change in its circumstances that 
the household did not report if the state’s policies do not require 
the household to report the change. States selecting the semiannual 
reporting requirement must certify households for at least a 6-month 
period, and they have the option to eliminate every other face-to-face 
interview because of the new rule requiring only one face-to-face 
interview a year. 

Although the semiannual reporting option provides states with an 
opportunity to reduce the reporting burden on working families with 
some impunity from payment errors, some states want to adjust the food 
stamp benefit in response to all reported changes in household income. 
Half of the states using the semiannual option requested and received 
a waiver allowing them to adjust benefits based on all changes 
reported by families. State officials gave various reasons for 
requesting this waiver to semiannual reporting. In some states, the 
Food Stamp Program shared the same computer system and database used 
for determining eligibility for other programs, such as TANF and 
Medicaid. Since these states link their programs, changes that 
families report to one program often automatically change the food 
stamp data, and states wanted the ability to adjust benefits according 
to this new information. Other states said that the waiver was useful 
because their food stamp workers have always adjusted food stamps 
based on reported changes; not to do so for all food stamp recipients 
would be confusing. 

Officials in 28 states said they are considering the semiannual 
reporting option. Nine states would implement the option only with the 
waiver allowing them to act on all reported changes in part because of 
computer integration issues. Others would consider the option with a 
waiver allowing them to apply it to all food stamp households, not just 
households with earnings. Twelve states are not using or considering 
the semiannual reporting option. Officials in these states told us the 
option is either too burdensome to implement, the rules are too 
complicated, or that it might increase payment errors.[Footnote 13] 

Officials from 38 states said that additional changes to the reporting 
requirements were needed. Some noted that states should be allowed to 
use the same reporting requirements for all households, not just 
households with earnings. 

Although states told us that a primary reason they used reporting 
options and waivers was to minimize the payment error associated with 
earnings, concern over payment accuracy affected states’ decisions 
regarding other options and waivers as well. For example, although FNS 
gave states the option to limit face-to-face interviews to once a 
year, some states continue to require households with earnings to come 
in more frequently because of concerns over payment accuracy. 
Officials in 45 states told us that the effect on their payment error 
rate was either the most important factor or a contributing factor in 
their decision to use particular options and waivers. As a result, 
officials in many states said that USDA’s quality control program 
should not focus solely on payment accuracy. State officials also 
suggested changes in the way that payment errors are calculated. For 
example, they noted that client and agency error should be counted 
separately from client error, because the agency had no control over 
whether the client reported required information correctly. 

Many States Planning to Use the Transitional Benefit Option: 

Although only three states reported using the Transitional Benefit 
Alternative, many states told us they plan on using it. At the time of 
our interviews, the 3-month Transitional Benefit Alternative was not 
yet fully implemented, but states could request this option. Twenty 
states said that they were considering it. Twenty-seven states said 
they would implement the proposed 6-month Transitional Benefit 
Alternative if it became available. 

The primary reason that states would provide a transitional benefit is 
to support working families. Many states said that the option helped 
with the transition from welfare to work by stabilizing the families 
after they leave welfare by guaranteeing a fixed food stamp benefit 
regardless of how their income fluctuates during the transitional 
benefit period. (See figure 5.) Some states that would use the 6-month 
option but not the 3-month option said that the additional 3 months of 
support to families making the transition from welfare to work would 
make the implementation costs worthwhile. 

Figure 5: Reasons States Would Use the 3- and 6-Month Transitional 
Benefit Alternative: 

[Refer to PDF for image: vertical bar graph] 

Reason: Supports working families; 
Number of states: 19. 

Reason: Benefits client; 
Number of states: 8. 

Reason: Aligns with Medicaid transitional benefits; 
Number of states: 5. 

Reason: Reduces payment error; 
Number of states: 2. 

Source: GAO’s analysis. 

[End of figure] 

The 12 states that had decided not to use transitional benefits said 
they were concerned about the implementation costs. At least eight of 
these states indicated that the computer changes required to implement 
the transitional benefit would be extensive. (See figure 6.) Eighteen 
states said they were undecided about the 3-month option, and 14 
states had not yet decided about the 6-month option. Several of the 
undecided states indicated that they were concerned about potential 
costs associated with reprogramming their computers. 

Figure 6: Reasons States Are Not Planning to Use the 3 and 6-Month 
Transitional Benefit Alternative: 

[Refer to PDF for image: vertical bar graph] 

Reason: Cost of implementation; 
Number of states: 8. 

Reason: Need to make all reported changes; 
Number of states: 6. 

Reason: Administrative burden; 
Number of states: 4. 

Reason: Increased errors; 
Number of states: 3. 

Source: GAO’s analysis. 

[End of figure] 

No state is implementing or plans to implement all aspects of the 
Simplified Food Stamp Program option. The main reason states gave for 
not choosing this option was that it was too complex and difficult to 
implement. The simplified program option was to be a vehicle for 
creating conformity between TANF and the Food Stamp Program by merging 
the programs’ rules into a single set of requirements for individuals 
receiving both types of assistance. However, as we reported earlier, 
[Footnote 14] since not all needy households receive both TANF and 
food stamps, the states selecting the simplified program option would, 
in effect, be operating three programs: one program for TANF 
recipients following state TANF rules; one program for food stamp 
recipients following federal food stamp regulations; and the 
simplified program for recipients of both food stamps and TANF. 
Furthermore, to whatever extent the states use the simplified program, 
they must also have demonstrated that total federal costs would not be 
more than the costs incurred under the regular Food Stamp 
Program—-that is, the program has to be “cost neutral.” Figure 8 shows 
the reasons states gave for not choosing the option. In addition, 
while states are not planning to use the simplified program, some 
state officials indicated that it might be worthwhile to develop such 
a program if it could apply to all food stamp households, not just 
households receiving both TANF and food stamps. 

Figure 7: Reasons States Are Not Using the Simplified Food Stamp 
Program Option: 

[Refer to PDF for image: vertical bar graph] 

Reason: Complex and difficult to implement; 
Number of states: 23. 

Reason: Creates separate program; 
Number of states: 20. 

Reason: Restricted to TANF recipients; 
Number of states: 11. 

Reason: Cost neutrality requirement; 
Number of states: 10. 

Reason: Program offers no benefit to client; 
Number of states: 5. 

Reason: Like state's program better; 
Number of states: 2. 

Reason: Error prone; 
Number of states: 2. 

Source: GAO’s analysis. 

[End of figure] 

While no state is implementing all aspects of the simplified program 
option, nine states reported using some of the flexibility offered 
under the program. Eight states are aligning their food stamp and TANF 
work requirements. One state is aligning its TANF and food stamp 
reporting requirements to reduce the reporting burden on households 
participating in both programs. 

Agency Comments: 

We provided USDA with the opportunity to comment on a draft of this 
report. While USDA did not provide formal comments, it did provide 
technical comments, which we incorporated where appropriate. 

We are sending copies of this report to the Secretary of Agriculture, 
appropriate congressional committees, and other interested parties. We 
will also make copies available to others upon request. 

If you or your staff have questions about this report, please contact 
me on (202) 512-7215 or Dianne Blank on (202) 512-5654. Individuals 
making key contributions to this report include Margaret Boeckmann, 
Elizabeth Morrison, and Lara Carreon. 

Sincerely yours, 

Signed by: 

Sigurd R. Nilsen, Director: 
Education, Workforce and Income Security Issues: 

[End of section] 

Related GAO Products: 

U.S. General Accounting Office. Food Stamp Program: Implementation of 
Electronic Benefit Transfer System. [hyperlink, 
http://www.gao.gov/products/GAO-02-332]. Washington, D.C.: 2002. 

U.S. General Accounting Office. Food Stamp Program: Program Integrity 
and Participation Challenges. [hyperlink, 
http://www.gao.gov/products/GAO-01-881T]. Washington, D.C.: 2001. 

U.S. General Accounting Office. Food Stamp Program: States Seek to 
Reduce Payment Error and Program Complexity. [hyperlink, 
http://www.gao.gov/products/GAO-01-272]. Washington, D.C.: 2001. 

U.S. General Accounting Office. Welfare Reform: Few States are Likely 
to 
Use the Simplified Food Stamp Program. [hyperlink, 
http://www.gao.gov/products/GAO/RCED-99-43'. Washington, D.C.: 2001. 

U.S. General Accounting Office. Food Stamp Program: Various Factors 
Have Led to Declining Participation. [hyperlink, 
http://www.gao.gov/products/GAO/RCED-99-185'. Washington, D.C.: 2002). 

[End of section] 

Footnotes: 

1. Waivers allow states to deviate from a specific program regulation. 
States must submit a written request to and obtain approval from FNS 
before making a change. “Options” are provided through FNS 
regulations. States, at their own discretion, may implement an option; 
they do not have to request permission from FNS. 

2. FNS estimates that in fiscal year 2000, 43 percent of all food 
stamp households with children had earned income. 

3. Households with disabled or elderly members are exempt from the 
gross income limit. In addition, households with elderly members may 
have assets valued at $3,000. 

4. If a household has no other assets, its vehicle can be worth $6,650. 

5. TANF funding includes both TANF block grant and state maintenance 
of effort funds – nonfederal funds that states are required to spend 
in order to receive the entire federal TANF block grant. FNS 
regulations state that households in which all members are receiving 
benefits or services from a program designed to meet the program goals 
of TANF and which are funded with more than 50 percent of federal TANF 
or state maintenance of effort funds would be categorically eligible 
for food stamps. A state may, at its discretion, confer categorical 
eligibility to households in which all members are receiving similar 
benefits or services from a program funded with less than 50 percent 
federal TANF or state maintenance of effort funds. 

6. Since welfare reform, many states have used the flexibility 
provided by TANF to liberalize their vehicle asset policy for cash 
assistance. In addition, other TANF-funded, noncash assistance 
programs, such as childcare, have no vehicle asset limits. 

7. Welfare reform places restrictions on the amount of time a 
recipient can receive benefits and requires states to impose work 
requirements for most adults. States are required to meet steadily 
rising requirements for the percentage of adults that must participate 
in work activities-—25 percent in fiscal year 1997, rising to 50 
percent in fiscal year 2002. States decide which activities constitute 
“work” for the purposes of obtaining assistance, but states are 
limited to what they can count as work to meet their participation 
rate. Allowable work activities for adult recipients include 
subsidized or unsubsidized employment, on-the-job training, unpaid 
work experience, community service, vocational educational training, 
and providing child care services to certain other participants. 

8. To determine each state’s combined payment error rate, FNS adds 
overpayments and underpayments, and then divides that sum by the total 
food stamp benefits paid by the state. 

9. This authority to more broadly confer categorical eligibility to 
TANF clients has been reduced by changes in Food Stamp regulations 
effective September 30, 2001, which restrict states to conferring 
categorical eligibility to clients receiving TANF-funded services with 
incomes at 200 percent of the federal poverty level or below. 

10. Children in households receiving TANF or food stamps are 
categorically eligible to receive free school meals. 

11. Twelve of these states changed their TANF vehicle asset rules 
prior to using them in their Food Stamp Program. 

12. Officials from three of these states told us that they also used 
TANF vehicle asset rules for those households that were not eligible 
for a TANF-funded program that would automatically make them eligible 
for food stamps. 

13. For example, officials from two states were concerned about being 
held responsible for large payment errors at the end of six months. 
One state was concerned about a mistake at certification that would 
not be realized until six months later, and the other was concerned 
about a household not reporting if its income goes over 130 percent of 
poverty. 

14. U.S. General Accounting Office, Welfare Reform: Few States Are 
Likely to Use the Simplified Food Stamp Program, [hyperlink, 
http://www.gao.gov/products/GAO/RCED-99-43] (Washington, D.C.: 
January, 1999). 

[End of section] 

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