U.S. Hits State With a Major Fine Over Food Stamp Error Rate

The Bush administration again slapped California with a hefty penalty for its troubled food stamp program, notifying the cash-strapped state Friday that it faces a $62.5-million fine.

California’s error rate in dispensing food stamps in 2002 was nearly double the national average, according to a letter by Eric Bost, the U.S. Agriculture Department undersecretary who oversees food and nutrition services. The state issued more than $172 million in coupons to recipients who were not entitled to them and underpaid others who were entitled by about $79.5 million, Bost said.

The state, which provides more than 1.7 million people with food stamps, has struggled for years to improve its track record. Last year, the federal government imposed a $114-million penalty on California, the biggest in the history of the program. The state appealed the fine and is waiting for a decision.

California’s error rate has since dropped slightly, to 14.8% from 17.4% in 2001, but it remains higher than those for all other states. Other states scoring poorly include Michigan, Wisconsin, Kansas, Connecticut and New Hampshire.

California’s problem has been largely fueled by difficulties in Los Angeles County, said Rita Saenz, director of the state Department of Social Services. The county installed a new computer system in 1999, but workers were so poorly trained in its use that they resorted to tracking cases manually, she said. But after the state sent a consulting team to Los Angeles for a yearlong overhaul of the system, the error rate began to improve.

“It’s not going to help us out for last year, but at least we have a promising arrangement here,” Saenz said. After hitting a high of 22% two years ago, Saenz said, Los Angeles County’s error rate dropped to about 9% in recent months. In February, the rate dipped as low as 4%, she said.

To qualify for food stamps, a family must have a gross monthly income of no more than 130% of the federal poverty guideline. More than 600,000 California households receive the stamps, which can be used in lieu of cash at grocery stores.

To nudge California along, the federal government offered to settle the claim if the state agrees to invest $30 million, or half the latest penalty, over the next two years to improve the food stamp program.

If the state brings its error rate into line with the national average by September 2005, the federal government will cut the penalty by 50%, another agriculture official proposed in a letter to Saenz.

But if California winds up having to pay for its mistakes, Los Angeles will foot most of the bill. The county’s share of last year’s $114-million assessment is estimated at $87 million.