Feds sanction state’s food stamps program

Workers at the Eligibility Benefits Center in Waterbury sort through applications.

Editor’s note: This story was updated at 4:24 on Oct. 1 to include some of the core documents used for this story. Those documents are listed below the text.

In fiscal year 2011, Vermont had the second highest error rate in the country for doling out food assistance benefits. And federal regulators at the USDA took notice, imposing a roughly $341,000 sanction on the state this summer.

Now, as federal fiscal year 2012 closes, state officials at the Department of Children and Families (DCF) Economic Services Division are hoping that they’ve lowered those error rates. Otherwise, the USDA could require the state to pay half of that amount in fines and could slap the state with another sanction next year.

The USDA administers food assistance benefits via the Supplemental Nutrition Assistance Program, or SNAP, and the Vermont branch of SNAP is called 3SquaresVT.

Vermont’s 2011 payment error rate of 8.53 percent was above the 6 percent federal threshold for the second straight year. As a result, the USDA is forcing DCF to reinvest half of that sanction, about $170,500, in the program. If the department doesn’t lower its error rate below that 6 percent marker this fiscal year, the other $170,500 would go to the USDA as a fine.

James Arena-DeRosa, northeast regional administrator for the USDA’s Food and Nutrition Service, explained the arrangement.

“The state comes up with a plan for how they’re going to invest half of that sanction, and then if they can get below 6 percent for an error rate, they’re out of sanction,” he said.

If the state doesn’t get below the threshold, the federally imposed fine would add to the state’s projected budget gap of $50 million to $70 million in FY 2014.

According to documents obtained through a federal records request, the state’s 8.53 percent payment error rate for 3SquaresVT is only exceeded by the state of Wyoming, which had a rate of 9.63 percent. The national average is 3.8 percent.

Rick Smith, chief of quality control for DCF’s economic service’s division, said that regulators calculate the payment error rate by sampling random cases and looking at which participants were given too many or too few benefits. Smith and his colleagues oversee that process and report the results to the federal government.

As federal records for FY 2011 show, the majority of Vermont’s payment errors are not for paying beneficiaries too little, but rather, paying them too much. Of the payment errors identified, about 82 percent stemmed from overpayments and 18 percent were due to underpaying.
That means that of the 92,558 average monthly cases that the department dealt with in 2011, 1,398 beneficiaries — or 1.51 percent of those caseloads — received less than their fair share of food assistance. Meanwhile, 6,498 beneficiaries received more than the federally stipulated amount.

After the first quarter of FY 2012, state numbers show that Vermont had a payment error rate of 7.34 percent. The annual error rate won’t be fully calculated until January 2013, said Smith.

Vermont also has the third highest negative error rate in the country at 19.33 percent — an improvement over the state’s FY 2010 rate of 20.33 percent. This number pertains to the level of service a beneficiary receives, and it reflects the state’s ability to follow federal procedures when denying, suspending or terminating benefits. The national average for negative error rates is 8.3 percent.

Why is this happening?

As an investigation by the Addison County Independent in May of this year found, the demand for Vermont food assistance, known as 3SquaresVT, has more than doubled in the past decade.

At the same time, state officials say the number of DCF workers who handle those increased caseloads has dropped due to budget cuts. With lower staff levels, the department has struggled in recent years to keep up with the skyrocketing demand for 3SquaresVT benefits.

“The caseloads continue to grow, and when you reduce your infrastructure you eventually get problems, and that’s what we’ve got,” said Smith. “People are working faster, they’re working harder and they’re working above their sustainable potential, and people make mistakes. In the midst of all that, we have to reestablish our training protocols and reestablish our infrastructure and put whatever efficiencies we can in place to make limited staff resources more effective while still providing good customer service.”

Arena-DeRosa, who meets with DCF officials almost every month, is worried about the Economic Services Division’s ability to meet rising demand across a range of programs. In addition to administering SNAP benefits, the division also oversees low-income health insurance programs and other need-based assistance programs.

“I do have some concerns as to whether or not the state has the capacity to handle the case load, and that’s a larger question not just for the SNAP program,” said Arena DeRosa.

Smith said the economy’s instability over the past four years has also exacerbated the state’s problem of pinpointing the exact amount that a 3SquaresVT beneficiary should receive.

“Somebody is part-time and then they go to full-time and then they get overtime and then they’re back to part-time and then they lose their job,” he said about the labor market many beneficiaries are coping with. “The more fluctuations you have coming in, the easier it is to make mistakes. There’s too much data and not enough workers to process it.”

Despite the department’s high error rates, Arena-DeRosa said that Vermonters who need these benefits appear to be getting them.

“I think (the state has) done a great job making sure people who need these benefits are getting them,” he said. “But there are some challenges, and they’re in the middle of them still. We’re watching them closely.”

What can be done?

Earlier this year, Reneé Richardson, who ran Vermont’s 3SquaresVT program for more than a decade, left for a new job. Now, after only five months, the new director of the program, Ames Robb, is also moving on, and state officials haven’t found a replacement for her yet.

Despite the shifts in the program’s leadership, Smith and SNAP Chief Bonnie Brathwaite are confident that by 2013 Vermont’s error rates will be back up to federal standards.

The roughly $170,500 the program is required to invest in itself will go toward much-needed training, Smith says. In order to slim down budgets, the department offered retirement incentives to many of its seasoned workers, which left DCF with a dearth of institutional memory. At the same time, the department discontinued training programs to reel in expenses.

“Quite frankly, the training should have been ongoing for the years it was postponed in order to save money, and you eventually have to pay for these things,” he said. “It’s like not keeping up with road maintenance. If you don’t fill the pot holes for three years then you’ve eventually got to replace the whole roadbed.”

Roughly a decade ago, Smith said DCF had payment error rates teetering around 10 percent. The department implemented a similar training regimen and quickly dropped those error rates.

Brathwaite is confident that the training will help. In Maine, the state’s SNAP error rates were around 10 percent and 8 percent in FY 2007 and FY 2008. Since it carried out a similar training program and implemented new management systems, its error rates have plummeted to between 2.5 percent and 3.5 percent in recent years.

Vermont’s DCF has also been in the midst of a transition, as it began implementing new management systems and new ways of servicing beneficiaries several years ago. It revamped its call system, set up a web application system and, recently, began shifting its workflow so as not to turn away applicants who come to a division office in person.

Brathwaite said that states generally have high error rates during such periods of technological and personnel transition. Moreover, Vermont’s DCF had to deal with Tropical Storm Irene inundating its headquarters in the middle of this adversity.

“You have to look at the great things Vermont has done: improved technology, centralized calls, (implemented) an interactive voice response line (and) online self-service tools,” she said. “As a small state, Vermont has done so much in the sense of automating their systems and streamlining procedures.

“Yes, they’re taking a hit with the error rate, but that will improve.”