FoodShare Wisconsin is the State's program implementing the federal Food Stamp Act of 1964, which assists low-income individuals and families in purchasing food. The program is administered at the federal level by the United States Department of Agriculture (USDA) and in Wisconsin by the Department of Health Services (DHS), counties, and other local agencies. Currently, program benefits are federally funded, while most administrative expenditures are shared equally by the State and the federal government. In 2011, 1.1 million individuals received $1.1 billion in FoodShare benefits. In January 2012, 58.7 percent of recipients were children, disabled, or older than age 59. Eligibility is based on the composition of an “assistance group,” which generally includes all members of a household. The average assistance group included two individuals and received a benefit of $246 in January 2012.

To address concerns about the growth in program costs and participation, the accuracy and timeliness of benefit determination, and the extent of fraud in the program, we reviewed:

The number of FoodShare recipients increased from 462,204 in 2003 to 1.1 million in 2011. In January 2012, more than one-half of recipients were white, and more than one-half were female. In that same month, approximately two-thirds of all recipients lived in households that received Medical Assistance, and approximately two-thirds lived in households that had no earned income. The total value of FoodShare benefits increased from $360.2 million in fiscal year (FY) 2006-07 to $1.1 billion in FY 2010-11, or by 206.9 percent. During the same period, administrative expenditures increased by 20.1 percent, from $85.5 million to $102.7 million.

The national economic recession that occurred from December 2007 to June 2009 and an increase in poverty, especially among children, contributed to the increase in participation. Policy changes also reduced barriers to participation and increased the number eligible for benefits. For example, DHS expanded eligibility for FoodShare benefits to those with gross incomes up to 200 percent of the federal poverty level and eliminated net income and asset limits for most recipients. DHS also implemented changes to make it easier to apply for benefits and complete recertification requirements, such as allowing online applications for benefits and allowing application and recertification requirements to be completed via telephone interviews.

Although program participation has increased, it is difficult to determine the extent to which eligible individuals receive FoodShare benefits. Estimates of participation for 2009 ranged from a low of 42.1 percent, which likely understates the participation rate, to a high of 76.5 percent, which likely overstates the participation rate.

Federal law requires states to approve or deny applications within 30 days of submission or within 7 days for those who are determined eligible for expedited benefits. The percentage of FoodShare applications processed within the required time limits decreased each year from 90.3 percent in federal fiscal year (FFY) 2005-06 to 74.9 percent in FFY 2009-10. USDA has required Wisconsin to develop timeliness improvement plans since FFY 2007-08.

USDA assesses the extent to which assistance groups were incorrectly denied benefits, which is referred to as the "negative error rate." In FFY 2007-08, Wisconsin's negative error rate was above the national average at 12.9 percent, but declined to 4.6 percent in FFY 2008-09. As a result, Wisconsin received a bonus payment of approximately $967,000 from USDA.

USDA requires states to calculate a "benefit payment error rate," which is a measure of both the extent to which ineligible individuals received benefits and the extent to which the value of benefits provided was calculated incorrectly. Historically, Wisconsin has had one of the highest benefit payment error rates in the nation. To address the problem, DHS hired a contractor to analyze FoodShare policies and review cases. Subsequently, Wisconsin's benefit payment error rate declined from 7.4 percent in FFY 2007-08 to 2.0 percent in FFY 2009-10. As a result, Wisconsin received bonus payments of approximately $3.4 million from USDA.

In FY 2010-11, 107,288 assistance groups were issued permanent replacement cards, including 22 groups that received ten or more cards. We found that 21 of these 22 assistance groups had been issued a total of 86 replacement cards at the time their accounts had balances of less than one dollar. This may be an indication that these recipients were selling their cards for cash.

Although federal law prohibits incarcerated individuals from receiving FoodShare benefits, we identified 447 state prison inmates who received FoodShare benefits while incarcerated. We limited our analysis to single-person assistance groups. From the time of incarceration through March 2012, we estimate 293 of these inmates received $413,000 in FoodShare benefits, or an average of $1,410 per inmate.

Similarly, we identified 1,192 recipients who are ineligible because they are fleeing to avoid prosecution for a felony, fleeing to avoid incarceration after conviction of a felony, or violating a condition of probation or parole. Of these, 847 were single-person assistance groups and we estimate they received $1.4 million in benefits, or an average of $1,690 per person, from the time they became ineligible through March 2012.

We provided information on these cases to DHS and law enforcement for appropriate action.

Recipients who are found to have intentionally violated program rules are to repay the benefits they received and be disqualified from receiving future benefits for a period of time. However, we found that recipients who appear to have intentionally violated program rules are often not disqualified, which allows individuals who repeatedly violate program rules to reapply for FoodShare benefits and immediately begin receiving them.

County fraud consortia were recently created in an attempt to enhance local fraud prevention and investigation efforts. However, most have not functioned as intended because the extent of collaboration in providing these services has been limited.

To ensure an effective and efficient approach to fraud prevention and investigation statewide, DHS will need to determine how best to facilitate the coordination of these efforts among counties, as well as the role of DHS's newly created Office of Inspector General in coordinating local efforts and providing fraud prevention and investigation services directly.

We recommend the Department of Health Services report to the Joint Legislative Audit Committee by December 3, 2012, on: