Chronic errors in payments to beneficiaries of its food-buying assistance program have landed the state in hot water with the U.S. Department of Agriculture, which has handed down hundreds of thousands of dollars in penalties.
Top anti-hunger advocates say the federal sanctions are doing little to correct accounting problems that in some cases have led to the wrongful denial of benefits to hungry Vermont families. And action continues to be slow in coming, according to anti-hunger officials, despite persistent pleas from caseworkers decrying the effects on their low-income clients.
The errors come most often in the form of overpayments to recipients of the program, extra money they’re forced to repay once uncovered by state audits or other reviews. A smaller percentage of beneficiaries are getting less than they are eligible to receive, and others are cut off from the program altogether, even though their incomes qualify them for assistance.
“This is a great program, and we know the state is working on these problems,” said John Sayles, chief executive officer at the Vermont Foodbank. “But we need a bigger sense of urgency in the governor’s office and in the Legislature to make the changes that need to happen so that our neighbors are eating.”
The Supplemental Nutrition Assistance Program, formerly called food stamps and now named 3SquaresVT, supplies cash benefits to more than 100,000 lower-income Vermonters. While the program is administered by the state Department for Children and Families, the benefits are funded by the federal government, and state operations are monitored by the USDA.
In June, the state got word that it had exceeded the federal government’s maximum allowable “payment error rate” for the second year running. Failure to meet the benchmarks has now cost DCF more than $400,000 in penalties over the past two federal fiscal years. And hunger advocates say the state is on pace to suffer its highest payment error rate in history for the federal fiscal year set to conclude at the end of this month.
“There really doesn’t seem to be a short-term strategy on the part of the state to address this,” Sayles said. “So we’re really concerned about not only there being errors in the payments made … but the difficulties people are having just getting access to the system.”
Vermont’s payment error rate in federal fiscal year 2011 was 8.53 percent, second-highest in the nation behind Wyoming, a distinction for which it paid $341,000 in sanctions.
The federal fiscal year 2012 error rate of 6.96 percent is still more than double the national average, and was exceeded only by four states and Guam. The penalty assessed on Vermont for that year was $135,000, though half that amount can be held back for investments aimed at improving the situation.
But the problem looks to be getting worse. According to Hunger Free Vermont, an anti-hunger advocacy organization that has led the charge for reform, Vermont was on pace through March for an error rate of 9.6 percent for federal fiscal year 2013.
DCF Commissioner David Yacovone said he sought and received authority from lawmakers in July to create and fill three new positions at the department. The new jobs, which together will cost about $180,000 annually, will be responsible for training the 190 people now processing 3SquaresVT applications.
Yacovone traces the errors to the elimination under former Gov. James Douglas of what was once a five-person training team.
“If ever there were an example of what happens when you cut budgets indiscriminately, this is a good one,” Yacovone said. “I’m not pointing fingers, but when people cut positions … well, those people are working hard, and there are consequences when that happens.”
Those consequences, Sayles said, extend far beyond the half-million-dollar hit to the DCF budget. The majority of Vermont’s error rate is tied to overpayments to beneficiaries, many of whom end up receiving surprise bills from the state for money they weren’t aware they shouldn’t have been getting.
Sayles said the overpayment in a given month wouldn’t be noticeable to the recipient, who, as is encouraged, generally expends the entirety of the 3SquaresVT benefit on eligible purchases. Benefits are wired monthly to recipients’ accounts, and people redeem them with a state-issued debit card.
“But when you add up all those small overpayments over months or years, it can accumulate into a significant amount of money, especially for families experiencing hardship,” Sayles said.
In state fiscal year 2012, Vermont issued overpayment bills totaling $206,000 to 212 households. While Yacovone said “we feel terrible when we make any mistakes,” he said it’s also important to note that those numbers constitute only a fraction of a percent of the $148 million 3SquaresVT budget.
For affected recipients, however, Sayles said the impacts are far-reaching and long-lasting.
“We’re talking oftentimes about working Vermonters or children or people with disabilities who are doing everything right, who are playing by all the rules and barely scraping by,” Sayles said. “And then to find out the state has made an error and you have to pay back hundreds or thousands of dollars is devastating, and frankly shouldn’t happen.”
Sayles said underpayment errors can be even more problematic, especially when the state mistakenly denies an eligible Vermonter access to federal benefits. He said he knows of people who spent months challenging their denials, racking up credit card bills for basic grocery purchases all the while.
Hunger Free Vermont said the state’s application process is rife with shortcomings and that its advocates have received numerous contacts from Vermonters reporting erroneous information on their benefits statements, lost paperwork, a failure to contact them for follow-up interviews, or wrongful termination of their benefits.
According to Yacovone, errors by the state resulted in the wrongful denial of benefits to 34 applicants in federal fiscal year 2012.
“We are concerned that error rates persist which lead to inaccurate benefits and financial hardships for needy families and seniors,” said Marissa Parisi, executive director of Hunger Free Vermont. “We think it is essential the Department for Children and Families make as many interventions as immediately as possible to lessen errors.”
Hunger Free Vermont and the Vermont Foodbank are urging the state to assume financial liability for overpayments caused by department error. Yacovone says that isn’t going to happen. The federal government mandates that the state return the cash, according to Yacovone. And he said that “no other state gives people a free pass on that and uses state funds to pay it back.”
Yacovone said the state often makes attempts to reduce the amount owed and puts families on a payment plan that might include deductions from their monthly 3SquaresVT benefit.
Yacovone said the troubles stem from growing pains associated with the rise in 3SquaresVT participation in recent years. Enrollment in the program has jumped from 61,000 in 2009 to more than 100,000 today, an increase attributable in part to an expansion in eligibility thresholds.
The cuts in training staff under Douglas — part of the $30 million in government savings called for in 2010 legislation called Challenges for Change — coincided almost precisely with the rise in applications, according to Yacovone.
“The state was forced to rely on a buddy system for training,” Yacavone said. “And a buddy system in some places works just fine. But if your buddy doesn’t know his job, he passes on his mistakes.”
He added, “And if you eliminate the training unit for what are rather technical transactions, your error rates are going to go up, and that’s what happened.”
Yacovone said federal “bonus” payments associated with Vermont’s push to sign up more 3SquaresVT recipients has been sufficient so far to offset whatever budget impacts might have been wrought by the payment-error penalties.
But the most recent federal sanction, issued June 21, warns that from now on, states that exceed the allowable error rate will no longer be eligible for bonus funds. If Vermont suffers additional penalties for federal fiscal year 2013, then either the budget will have to increase accordingly or officials will have to cut from programs elsewhere.
The state has encountered, and solved, this problem before. In federal fiscal year 2003, Vermont was hit with sanctions for an error rate of 8.52 percent. The state invested in intensive staff training and by federal fiscal year 2004 had brought the error rate down to 5.13 percent.
Anti-hunger advocates say there’s plenty of incentive to invest in similar efforts now. By simplifying the application process, and reducing the number of errors committed, advocates say, the state could maximize participation and boost the flow of federal dollars into the local economy.
According to numbers from Hunger Free Vermont, only about 30 percent of eligible seniors are receiving benefits. Enrolling all seniors who qualify, according to the organization, would ship an additional $13.5 million in federal money to the state annually.
“Ninety percent of every dollar in SNAP benefits is spent within 30 days at local corner stores, grocery stores and farmers markets,” Sayles said. “We’re leaving huge amounts of federal dollars on the table by not getting people qualified and into the program as soon as possible.”