The US Department of Agriculture will crack down on fraud and wasteful practices in the Supplemental Nutrition Assistance Program (SNAP), also called Food Stamps. The move comes as SNAP enrollment and spending has hit record levels. More than 46.3 million people received a total of $75.3 billion in benefits in fiscal year 2011, the highest levels in US history, according to new data released on Monday. Kevin Concannon, Under Secretary for Food, Nutrition and Consumer Services (above), today announced details of the plans to reduce waste and abuse.Concannon said the Department plans to introduce “severe penalties” for the illegal “trafficking” of SNAP benefits--selling these for cash. USDA will also make an effort to reduce "improper payments" and administrative errors, which is not fraud but over- or under-paying beneficiaries by agencies.
The Department will also pursue people involved in "dumping" schemes, and make an effort to better share data with state and county governments, who administer the federal nutrition programs. The latest technology available, such as data mining, and geo-tagging purchases, will be used in an effort to combat illegal activity, Concannon said.
Social media, such as Facebook and Craigslist, has delivered new ways for fraud to be transacted, and USDA is developing plans to mitigate this, too.
About 230,000 retailers nationwide participate in the SNAP program, with about 80 percent of funds spent at larger grocery chains, and the rest spent at smaller venues, including gas stations. "A very significant percentage of all SNAP dollars are spent in Walmart stores, in some states up to fifty percent," Leslie Dach, Executive Vice President of Corporate Affairs, announced last week.
8,300 stores have been permanently disqualified from SNAP for trafficking, Concannon said.
Trafficking goes on at a rate of 1%; improper payments are at 4%...
USDA's effort is a complement to the Obama Administration's larger "Campaign to Cut Waste," launched last summer. Today's announcement of a crack down was made on a national conference call with reporters, and comes just as Congress is battling the President over extending the payroll tax cut.
USDA, Concannon said, has been "credible" in its practices, and has already reduced trafficking--the sale of SNAP benefits for cash--to a rate of just 1%, or one cent for every dollar paid. And "improper payments" and errors--giving individuals too much or too little money in benefits--has also been dramatically reduced; in 2010 USDA achieved its highest payment accuracy in its history, Concannon said, with a rate of 96.1%.
Still, a 1 cent rate for trafficking costs the Agency $753 million per year, if annual spending is $75.3 billion.
"We find great umbrage to that 1 cent that is trafficked," Concannon said. "We cannot afford to waste any of these resources."
Most of the 46.3 million SNAP recipients are "regular hardworking folks who are struggling to get by," and more than half are children, Concannon said.
"Improper payments" and errors have been trimmed to a 3% rate for overpayment and a 1% rate for underpayment, down from "10-11 % at one point," Concannon said.
But: "We will not rest until we achieve 100% accuracy."
Concannon did not give hard details on penalties for abuse or fraud, other than outlining a "three strikes and you're out" program. Instead, he said USDA is "working on developing stronger penalties." Under the three strikes rule, a first offender gets SNAP payments suspended for a short period, an individual with a second offense gets suspended for a longer period, and a third offense gets a user kicked out of the program for life. Retailers who participate in SNAP trafficking schemes could be subject to state laws for fraud, too.
As for USDA's efforts to combat "dumping": This practice goes on in states that give cash for returned bottles. The liquids in the bottles are dumped rather than consumed, so an individual can return the bottles for a cash payment. This kind of scheme, Concannon said, is not so prevalent in places where bottles are small. But in places like Maine and Iowa, he said, where gallon glass bottles for milk or juice fetch $2.50, and multi-gallon water cooler bottles fetch $7.50-$8, it is more of a problem.
"When it [dumping] occurs its so outrageous we believe something should be done about it," Concannon said, noting that the SNAP program is designed to improve access to nutritional foods, and in addition to dumping being fraud, food is not actually being consumed. USDA has previously announced its efforts to combat dumping.
A new penalty for dumping will go into effect in the beginning of the next calendar year, Concannon said.
Social Media abuse: Facebook and Craigslist have been used to advertise the sale of SNAP benefits, Concannon said. So USDA is working to create stiffer penalties for this.
"Just putting an ad out there indicating your willingness to sell benefits is an 'intentional program violation' and we take that very seriously," Concannon said.
After being informed of the practice, Craigslist worked with the Agency to inform users that advertising SNAP benefits for sale is illegal, he said. USDA is making its own efforts to inform state and county program administrators that advertising trafficking is illegal, he said.
As for the high SNAP enrollment and expenditures in FY 2011: SNAP participation increased by 6 million beneficiaries and had increased spending of $7 billion between FY 2010 and 2011, according to USDA. The Agency credits this to a combination of the struggling economy, and to Hurricane Irene, which devastated states along the Eastern Seaboard, boosting enrollment and thus benefits paid during the final months of FY 2011.
With the unemployment rate dropping--it's now at 8.6%--Concannon said he expects SNAP numbers to go down, too.