ASSIGNED FOR INVESTIGATION IN MAR, 1981

STATEMENT OF V. LANELLE EAKES, ELIGIBILITY SUPERVISOR I, DURHAM COUNTY DEPARTMENT OF SOCIAL SERVICES, DURHAM, N.C.

The Food Stamp Program in its current state, allows a vast amount of manipulation and abuse. While time permits for only three major areas of concern to be addressed, there are a number of other areas that also should be considered. Three major areas of concern are:

1. the Household Concept provision-(7 CFR p 273.1a-d; Manual Section 6030), 2. the Voluntary Quit provision-(7 CFR p 273.7c; Manual Section 6122), and 3. the Adverse Action provision—(7 CFR p 273.13; Manual Section 6390).

Household concept

For Food Stamp purposes, a household consists of those persons who cook and eat together. Claiming "separate household" status (i.e. that one cooks and eats separately from others living under the same roof) allows the applicant to obtain increased benefits or to make part of a group eligible by excluding those with income and assets.

For example: In one house there lives a husband, wife, their three daughters, and 3 grandchildren. The husband and wife both work and together earn $800.00 gross per month.

Daughter 1 applies for food stamps. She is 18 years old with no income of any kind. She claims that she cooks and eats separately from all the others. She is certified and receives $70.00 per month in food stamp benefits. (Maximum allotment for one person)

Daughter 2 applies for food stamps. She is 20 years old, has one child, and receives a monthly AFDC (Aid to Families with Dependent Children) check of $167.00 per month (maximum AFDC amount for two in N.C.). She claims that she and her child cook separately from all the others and pays her parents $100.00 per month in rent. She is certified and receives $121.00 per month in food stamp benefits.

Daughter 3 applies for food stamps. She is 25 years old, has two children and works part-time earning $200.00 per month gross. She receives $50.00 per month in child support and maintains that she and her children cook and eat separately from all the others. She pays her parents $100.00 per month in rent. She is certified and receives $157.00 per month in food stamp benefits.

In the present system three separate food stamp allotments may be received by this household. The combined benefit amount of the above mentioned case is $348.00 per month. Were the entire household required to be certified together and all income included a substantial savings could be realized. To illustrate this point: Wife applies for food stamps for herself, her husband, three daughters, and three grandchildren. Included as income to this household are her and her husband's gross income of $800.00 per month, her daughter's gross income of $200.00 per month from the part-time job, an AFDC check in the amount of $167.00 per month and a child support check of $50.00 per month. They must pay all utilities and their rent is $200.00 per month. They are certified and receive $139.00 per month in food stamp benefits. A savings of $209.00.

The problems with this regulation are obvious. Beyond inviting manipulation of a household's true circumstances, it is costly in terms of manpower, paper and postage. Because the household's eating arrangements are virtually impossible to verify, the Eligibility Worker is forced to accept a verbal statement regarding separate household status even though the circumstances are highly questionable. In the above stated case-assuming that the three daughters and their children actually cooked each meal-the stove must be used three separate times at breakfast, lunch and dinner for a total of nine heatings per day just for the three daughters involved! Because of its manipulative nature, this regulation has served to reduce morale of Eligibility Workers perhaps more than any other. The Eligibility Workers' and Eligibility Supervisors must apply and adhere to a regulation that they don't support, respect or believe in.

I am proposing a simple solution: All persons living in the same house or apartment must be certified together with all members' income and assets included. Voluntary quit

Under this regulation a household will be found to be ineligible and disqualified for two months when the primary wage earner of that household quits his or her most recent job without good cause.

On the surface this appears to be a good solid step in the right direction . . . until you read the first exception to the regulation. Manual Section 6122.2 (Part 273.7c of the CFR) contains a loophole that allows households with primary wage earners certified at the time of the quit to continue to be eligible simply because they were

certified at the time of the quit! As long as the household is certified a person may enter and leave employment situations at will-with no adverse effect on their food stamp eligibility. On the other hand an uncertified household containing a primary wage earner who quit his/her job without good cause is disqualified for two months. The regulation is not equally applied-and it should be.

The regulation should be changed making all households ineligible to participate for six months when any primary wage earner quits a job without good causeregardless of whether the household was certified at the time of the quit or not. I am in favor of extending the disqualification period from two months to six months because the extension would encourage the primary wage earner to seek other employment.

The current disqualification period (two months) begins with the month of the quit which many times, in effect, allows only for what amounts to a one month disqualification period, (depending on when the household applies). In these cases, the eligibility must then be determined for the subsequent month.

For example: A person may quit his/her job without good cause in February and apply for food stamps in March. Current regulations disqualify the household in February and March but eligibility must be determined for April.

As the regulation stands, it is possible for the household to simply "wait-out" the disqualification period. Were a six month disqualification period imposed, it would encourage the primary wage earner to actively seek other gainful employment. Currently, this regulation is ineffective in its attempt to apply some punitive measure to the household. The above suggestions would provide adequate sanctions to the household and make this regulation a more meaningful one.

Adverse action

Before any action may be taken to reduce or terminate a household's benefits, the county is required to provide a minimum of 10 days advance notice before that action can be taken. Manual Section 6393 (p 273.13 CFR) identifies circumstances in which notices of adverse action are not required.

This requirement wastes a vast amount of federal dollars. Because of this requirement many wages go unaccounted for an additional month, and many households continue to receive food stamps for persons not in the home for an additional month.

For example: Ms. Smith's household is certified for food stamps from February 1981 until May 1981. She reports on March 23rd that she is now employed. Because of 10-day adverse action requirement; she will receive the April allotment based on February's original eligibility circumstances. Her income may not be included in the food stamp budget until May 1981.

Another example: Mr. Jones is certified for food stamps from February 1981 until May 1981 as a six person household. On March 23rd he reports that two of the six persons have moved out. Because of the 10-day adverse action requirement, he will receive the April allotment based on a household of six when only four are present. The two persons may not be deleted from the food stamp budget until May 1981. This regulation should be changed to allow counties to act on changes of these kinds immediately! Untold sums of federal dollars are lost by requiring a 10-day advance notice prior to reducing allotments. Not only do households continue to receive a higher allotment than they should based on income and household size information available to the County, but inconvenience to clients occur. The 10-day adverse action requirement entangles the eligibility determination whenever these household members who have moved attempt to apply in their own right. In many cases, their eligibility cannot be determined until a subsequent month because they are already certified in a household.

For example: The two persons who moved from Mr. Jones' home on 3-23-81 apply for food stamps on April 1, 1981 in their own right. Because Mr. Jones was afforded the 10-day advance notice, the two persons applying in this case may not receive stamps in their own right until May 1981. For the time being they must do the best they can and hope to talk Mr. Jones into giving them a portion of the stamps he received. This is clearly an inconvenience to the client. I am suggesting the addition of two more instances in which 10-day notices of adverse action are not necessary: (1) when an increase in income is sufficient to result in an allotment decrease, and (2) when there is a reduction in household size. The reasoning behind allowing the 10-day notice is to afford the household time to request a hearing. At present, should a hearing be requested, the household can continue to receive benefits at the original level. If it is determined that the county was correct in their determinations, the household must repay an overissuance.

Certainly a household should have the right to appeal any action they feel is unfair or erroneous, however, the county should be able to take immediate action in cases of income increases and household member decreases. An appeal could then

be heard and the county could restore benefits to the household should any error be found to be the fault of the county. Altering the appeal procedure in this manner and adding the above mentioned instances to the list of items not requiring an adverse action could save the American taxpayer countless dollars.

In conclusion, I would like to say that the Food Stamp Program was founded on ideals of which no reasonable person can take exception. However, because of such lenient regulations the program has lost the respect of the American taxpayers and has fallen from grace with persons who must administer it on a day-to-day basis. There is no reason why this Program cannot be one in which the taxpayers of this country are proud. Before such pride can be achieved, however, the regulations must be written with a combination of sensitivity and common sense.

Only those associated with the Program on a day-to-day basis know the complexities and potential areas of abuse in the program. This is why I strongly urge you to get past State and County Administrators and establish contact with Eligibility Workers, Eligibility Supervisors, and Fraud Analysts for comment on proposed regulations prior to any action which would make those regulations permanent

ones.

STATEMENT OF JEFF PETERSON, ELIGIBILITY WORKER, ALEXandria Department of SOCIAL SERVICES, ALEXANDRia, Va.

Although I do not represent the Agency in an official capacity, it is the consensus of my co-workers that the budget reductions proposed by President Reagan can be achieved without reducing benefits for the truly needy.

(1) Fraud is a major source of unnecessary expenditures: In our locality alone, fraud accounts for 10 percent, or $200,000 per year, of expenditures. Individuals who have frauded in the past continue to participate on the program because, by law, these individuals cannot be removed from participation. Even when clients know that we know they have frauded, they continue to lie and deceive because they do not fear the law. Of all frauds which exist, less than 1 percent are ever brought to trial, and less than that are convicted. Of all monies lost to the program through fraud and overissuance, less than one tenth of 1 percent ever repay those amounts. In addition, convicted fraud cases of one locality can move to another locality within the same state and continue to be eligible for food stamps. A person removed from the rolls for fraud in one locality is eligible in another, even though the food stamp program is a federal program, because the original jurisdiction has no authority in the next. Fraud is encouraged by this loophole which allows the guilty to remain essentially unpunished.

We also have no way of knowing how many people participate in more than one locality at the same time. Although it is illegal, we catch this type of fraud through client error on occasion, and it is known on the streets as a fairly safe way of "ripping-off" the government.

Even in the rare instances that someone is convicted and punished, the rest of the client's family continue to get food stamps, while only that member convicted is removed from participation.

Recommendations: Since most localities have neither the resources nor the will to pursue and convict all the obvious fraud cases which exist, I recommend that the states be required to establish a 'state hearing-appeals' system which would make preliminary determinations of intent to fraud. If found guilty, clients should be made ineligible to participate throughout the state and nation, either permanently or until the debt is repaid. Criminal prosecution would still be left to the courts. In order to prevent participation in more than one locality at the same time, and to ensure that those removed from the program will stay removed, Social Security Numbers of all food stamp participants should be fed into a central, federal computer, much in the same way as the Social Security Administration now operates. If frauds and duplicate participants were removed, food stamp participation would be reduced from 10 to 30 percent, which should reduce expenditures by far more than the initial outlay.

As most frauds are now discovered by income reported to the state by SSN, we would like to extend this method of discovering unreported income throughout the tri-state area. As of now, only those individuals who work in Virginia and collect food stamps in Virginia will be found out, while those who work in Maryland or D.C. will not be. We would like to be able to request verification of income reported to the federal government by SSAN. At present, this system, on the state level, is our single most effective tool for discovering fraud.

(2) Overissuances: Overissuances probably exceed fraud in the amount of money wasted and needlessly spent. Overissuances include failure of clients to report changes on their cases, where the intent not to do so is questionable. Combined with

fraudulent participation, overissuances and fraud account for probably 30 percent of the budget. At present, we have no method of recouping benefits from those cases where a minor fraud or overissuance occurs, even if the client would desire us to do

So.

Recommendation: Agencies be allowed to recoup minor overissuances through a partial reduction of current benefits.

Many overissuances occur every year because the elderly fail to report raises in Social Security and Civil Service Annuity. Although these percentage increases are known well in advance by the local agencies, last year we were not allowed to make proper adjustments in these cases.

Recommendation: That agencies be allowed to make mass changes in cases affected by a yearly cost-of-living increase.

(3) Because of present law, immediate/nuclear families may apply as separate food stamp households, and receive 9 percent additional benefits, as long as they state they are willing to buy and eat separately from other household members. These households are allowed to be divided even if all other household expenses are shared. Because of the loopholes of this law, 16-year-old children may sometimes apply separately from their parents.

Recommendation: That immediate families (children, parents, brothers, sisters, grandparents) must apply together as one household. I do not believe that it is the responsibility of the state to take on the role of traditional, familial responsibility. (4) Outreach: Last June, as the program was running out of funds, Congress mandated further outreach to publicize the program. So, while Congress was contemplating ending direct benefits to all recipients by not refunding the program, it was mandating increased expenditures in indirect projects that benefited no one. In view of President Reagan's desire to reduce the budget, it seems senseless to spend money advertising the availability of the program, which we want reduced anyway.

[The following material was submitted by John Charles Houston. See p. 161 for the oral testimony of Mr. Houston.]

[Reprint from The Herald-Dispatch, Huntington, W. Va., Feb. 16, 1981]

FOOD STAMPS PROLONG STRIKE, OPERATOR SAYS

A Logan County coal operator complained yesterday that the Department of Welfare encouraged miners to continue a wildcat strike by issuing them food stamps and said he might demand a federal investigation.

At the same time, it was uncertain if more than 4,000 wildcatting miners would return to work-despite union orders to do so.

"We told the people they should return to work," Jack Perry, president of the United Mine Workers union's District 17, reported after an intense meeting in Logan County.

"But it was an emotional type meeting, and at this point, no one is sure what's going to happen."

Mel Triola, an official of the Logan Coal Operators Association, said miners won't resume work as long as the state is passing out food stamps.

"We're thinking about wiring the Secretary of Agriculture for an investigation of the Department of Welfare for issuing them, when we've got work for these people," he said. "We're kicking it around."

Triola said about 20 mines have been idled by the strike, which began Jan. 29 at Powellton Coal Co. in Rock House, over a dispute involving a sub-contracting firm brought in to work a Powell mine.

Perry explained that miners stand to lose their seniority in the sub-contracting, meaning it "would be like starting over.'

The UMW official said the miners' only recourse was to submit the matter to arbitration, but "they didn't seem to be satisfied with that at all."

Triola accused the welfare agency of promoting unauthorized work stoppages. "Hell, we've got work for these people," he said. "They make about $75 a day on the average. When school's out, teachers don't get a damn thing. If anybody should get them, they should. They qualify because they don't have a job for those three

months.

"It's a damn crime."

The mine closings have been concentrated along Buffalo and Rum creeks in Logan County.

A large crowd of miners poured into the meeting hall, and Perry said he couldn't predict what action would follow when the new work week begins.