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The State of Wisconsin was fined $7 million for the misuse of SNAP benefits.

The State of Wisconsin was fined $7 million for the misuse of SNAP benefits.

The Supplemental Nutrition Assistance Program (SNAP) is the U.S. based program that replaced traditional food stamps. While it is a federal program, the government relies on states to screen applicants for and administer the benefits as well. A large part of that process is performing quality control to make sure the systems they use are working. This seems to make sense until one realizes that those same organizations trying to access as many federal funds as possible are the ones then measuring quality control. They are essentially leaving the kids to watch the candy store, and that does not end well.

According to Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division:

“USDA requires that the states’ quality control processes ensure that benefits are correctly awarded, are free from bias, and accurately report states’ error rates in making eligibility decisions. The USDA reimburses states for a portion of their administrative expenses in administering SNAP, including expenses for providing quality control. The USDA also pays performance bonuses to states that report the lowest and the most improved error rates each year, and can impose monetary sanctions on states with high error rates that do not show improvement.”

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In a recent audit by the Department of Justice, the State of Wisconsin was found to be fraudulent in its quality control measures. The policies that were supposed to maintain strict guidelines as to who was able to use the SNAP benefits were being circumvented by employee cheats to bring in the highest level of financial benefits into the state. These employees’ hacks into the rigid federal system ended in fines of $6,991,905 for the state.

The quality control measures should have helped to weed out any members in the Wisconsin system that were not, in fact, eligible for benefits. On the files that were not eligible, an error posted. Instead of taking the error to mean the members were not eligible like they should have, state employees were instructed to take one of the several measures to avoid the mistakes altogether. This type of manipulation can explain the steady rise in those eligible for benefits regardless of the current economic cycle.

Even as economic cycles change, there has been a steady increase in benefit need. This points to fraud in many cases.

Even as economic cycles change, there has been a steady increase in benefit need. This points to fraud in many cases.

The reason the state worked so hard to avoid these errors was tied to the bonuses offered by the USDA as incentives. An outside consultant was brought in to make policy change recommendations that would help to avoid the higher error rate. Among the changes made by Julie Osnes Consulting:

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1. “Finding a basis for dropping error cases from the review by discouraging beneficiaries from cooperating with information requests and pursuing unnecessary information.
2. Selectively applying requirements and policies to overturn and reduce errors.
3. Asking beneficiaries leading questions to obtain desired answers to eliminate error potential.
4. Arbitrating any and all differences with USDA.
5. Subjecting error cases to additional scrutiny and quality control casework with the goal of overturning an error or dropping a case; and
6. Omitting verifying information in documents made available to USDA.”

State employees should have been using quality control measures to apply the standards of the USDA without bias. Instead,  the state of Wisconsin manipulated case files to not only avoid errors but also bring a higher amount of federal funds into the state. By artificially decreasing their error rate, the state received bonuses for 2009, 2010, and 2011 that they were not eligible to receive. The result was many members getting benefits they were not entitled to take advantage of in the first place. This worked directly against the federal program and resulted in immediate action. The report from the Department of Justice explained:

“The Wisconsin Department of Health Services (WDHS) has agreed to pay the United States $6,991,905 to resolve allegations that it violated the False Claims Act in its administration of the Supplemental Nutrition Assistance Program (SNAP). This settlement reflects the Justice Department’s commitment to ensuring that taxpayer funds are spent appropriately so that the public can have confidence in the integrity of programs like SNAP.”

This award for the Department of Justice is a small step forward in a system that is crippled at times by fraud like this at the state level. When members receive benefits they are not entitled to, it can lead to another type of benefit fraud via the end users or retailers.

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SNAP benefits are meant to provide food assistance to low-income families. When someone gets a benefit they may not need, the benefits are often sold for part of the cash value. This may not seem like that big of a deal, but some store owners have cashed in on this neighborhood trade to fund illegal activities including terrorism.

An example of this occurred in Michigan at a local corner store. Word got around that the store owners would pay 50% of the face value of benefits. The store owners then used the food stamp benefits to stock their shelves and sold items at a huge profit. These profits were sent overseas to fund jihad activities.

The overall program has seen its fair share of criticism even when it is working the way it was set out to. Many point to a lack of oversight of the end user regarding the ability to waste the benefits on junk food and soda. A recent study, for example, found the most purchased item was not a staple like milk, but instead soda pop. SNAP users spend roughly $360 million yearly on soda versus $260 million spent program-wide on milk.

Manipulating an already taxed system is not merely giving a few members extra food, it can be going to much more sinister outlets. Whether fraud comes from the state, end users, or retailers, the big loser is the taxpayer. It all comes down to wasting an already over-stretched resource.