WASHINGTON -- The Bush administration on Friday scolded California for operating the most error-plagued food stamp program in the nation and disclosed that the state faces a likely penalty of tens of millions of dollars, the largest such sanction imposed in the history of the program.

The California problems, centered in Los Angeles County, stood out even among big urban states with large populations of immigrants and the poor. The state's rate of incorrect food stamp allocations was twice the U.S. average and contrasted with a trend of improvement in states including New York, Texas and Illinois.

"It's something I'm very, very, very concerned about," Eric Bost, the U.S. Agriculture Department's undersecretary for nutrition programs, said in an interview. He added that he has made five visits to California to help fix the problem. "At some point in time, I've got to say, 'OK guys, I've met you more than halfway--it's time for you to start to produce.' I believe I'm at that point."

According to federal data released Friday, California awarded the wrong amount of food stamps in 17.4% of its cases last year. An estimated 124,520 households received overpayments for food stamps, with 68,486 getting less than they were eligible for.

The errors were blamed mostly on a new computer system that has proved troublesome in Los Angeles County and the state's demanding paperwork requirements.

The Department of Agriculture, relying on a formula, assessed the state a $115.8-million "liability" for the problems and soon will begin negotiating repayment from California for a substantial part of that money as a sanction.

In the interview, Bost said the state will end up paying "more than 40%" of its liability to Washington. That would come to more than $46 million, an unprecedented sanction in the food stamp program, which dates to the 1960s. State officials will be required to spend much of the remainder on improving management of the food aid.

California officials were chagrined Friday at the size of the sanction, urging the federal government to give them more time to work out the difficulties.

"Just looking at the gross figure, the magnitude of these sanctions [is] much too large by any standard," said Glen Rosselli, undersecretary of the California Health and Human Services Agency.

"California simply has to hope--L.A. County has to hope--that the feds do the right thing now and do not pull money out of the program in lean times when there's almost a nationwide consensus that the system doesn't work."

To qualify for food stamps, the gross monthly income for most families must be 130% or less of the federal poverty guideline, or about $1,533 per month for a family of three.

California, which provides more than 1.7 million residents with food stamp benefits averaging $75 every month, has long struggled to improve the quality of its program.

Critics contend that the state's filing system is too strict, requiring recipients to submit monthly income reports that flood county offices with paperwork and increase the chances of mistakes. Most states require recipients to fill out applications quarterly, or even less often.

Still, error rates have declined in such counties as San Francisco, Santa Clara, Alameda and Riverside, noted Bruce Wagstaff, deputy director of the California Department of Social Services' welfare-to-work division. By all accounts, the problems are centered in Los Angeles County, where a new computer system that was supposed to improve matters has instead created bureaucratic headaches.

Critics also say the system is bug-ridden and overly complex. The county and the state say workers had not been sufficiently trained to use the system, which helps determine food stamp allocations for 40% of California recipients. In 1998, the county's error rate was 15%. As late as December 2001, Wagstaff said, it was 21%.

In the past, the federal government has typically allowed states to plow money into their own programs rather than sending fines to Washington. But a high-level budget official in the Bush administration sent a strong signal Friday that the White House approves of a hefty fine for California.

Mark Everson, controller of the Office of Management and Budget, described California's continuing problems as "unconscionable," considering that other large states with diverse populations have been improving their food stamp efforts.

"We applaud the enforcement of the statutory sanctions by the Agriculture Department and believe that over time this will lead to better management of the food stamp program in California and elsewhere," Everson said.

"We've been struggling with our error rate for some time," said Eileen Kelly, an official of the Los Angeles Department of Public and Social Services. She said that, after last year's dismal performance, the county beefed up its audit staff to examine 3,500 cases each month rather than the federally required 50. Kelly said the county also began a review of all 300,000 cases and that unofficial results are showing some progress.

It is frustrating for the department, she said, "to be talking about what our error rate was in September when we've made substantial improvement" since then.

Los Angeles also hopes that the federal government will acknowledge local efforts and agree to a reinvestment program rather than a fine. The state passes fines on to counties consistent with their contribution to the state's overall error rate.

With a $100-million shortfall projected next year for CALWorks, California's welfare-to-work plan, the Los Angeles welfare department is in no condition to redirect tens of millions of county dollars to patch the holes in the food stamp program that such fines would create. "If we have to pay a food stamp fine," Kelly said, "we would have to have cuts across the board in all programs."

Food stamp advocates expressed concern that a focus on California's stubborn error rates could divert attention from the goal of ensuring that qualified, needy individuals receive food stamps. By some surveys, the state's food stamp program reaches only about half or even less of those qualified.

"We are hoping that the county can make it easier to get food stamps and reduce the error rate at the same time," said Matthew Sharp, director of the Los Angeles office of the nonprofit California Food Policy Advocates. "The focus on reducing the error rate should not be a singular focus."

Advocates for the poor also fear that California officials may reduce the number of food stamp recipients as one way to reduce the number of errors in serving them.

Nationally, the 8.66% error rate for the 2001 fiscal year was the lowest ever recorded, Agriculture officials said Friday. Among large states, Texas had an error rate of 3.7%, New York had 8.6%, Illinois had 8.2% and Florida had 9.8%.

In addition to California, Michigan stood out as a troubled program, with an error rate of 13.9%. Agriculture officials assessed a liability of $13.9 million, some of which will come in the form of a fine.

California last year had the nation's second-worst performance, with an error rate of 14%, leading to a potential $47.4-million fine, which officials later reduced to $11.8 million and have not yet collected, pending improvements in the program. But on Friday, they suggested that the state would soon be treated less patiently.

"We're talking about hungry people getting food on the table--that's the issue for me very clearly," said Bost, who formerly ran Texas' program. But he added that as California ultimately straightens out its program, part of that correction will also involve cutting back benefits for those who have been awarded above the legal amount.

LA Times

-- Anonymous, April 27, 2002