How it works: simplified reporting vs. change reporting
Under federal law, states have discretion in determining how households receiving food stamps must report changes in income.[i] More specifically, states can decide which households are subject to simplified reporting and which are subject to change reporting.
When states assign households to simplified reporting, they are only required to report changes which make the household ineligible. In other words, households are only required to report changes in income that put the household’s income at higher than 130 percent of the federal poverty level.[ii]
Even if every household on food stamps had a perfectly clear understanding of what exactly is 130 percent of the federal poverty level in any given year, this approach is essentially an honor system. It relies on individuals voluntarily disenrolling themselves from public assistance. The disincentives and ripeness for waste and fraud under this system should be obvious.
On the other hand, when states assign households to change reporting, households are required to report all changes in income greater than $100 within ten days so that the department can reassess eligibility.[iii] The eligible will continue to receive benefits and the ineligible will be removed.
States may subject some types of households to simplified reporting and others to change reporting or use one reporting system across all households. Mississippi is among over twenty states that assign at least some households to change reporting.[iv]
Behind the scenes
In terms of practical effect, change reporting is much more effective in identifying waste and fraud. That means it has major benefits for the taxpayers who fund the program and for those who want to see people move from welfare to work. But that increased identification can lead to superficial increases in reported payment errors. With proper anti-fraud measures, these increases should be temporary.
Simplified reporting, on the other hand, has two major benefits for bureaucracies. First, waste that is never discovered cannot be reported or punished. If simplified reporting does result in fewer “errors,” it does so only because it waives the requirement that the state try to eliminate errors by requiring accurate reporting---not because it operates more efficiently. Second, because simplified reporting identifies fewer ineligible enrollees to be removed, the reporting system increases enrollment while decreasing effort on the agency’s part.
These are bureaucratic benefits—not the priorities of the taxpayers or the truly needy who are actually eligible for benefits and rely on the integrity of these programs.
Mississippi’s forward progress
In 2017, Mississippi took a big step forward in protecting the integrity of its welfare programs. The legislature passed the Medicaid and Human Services Transparency and Fraud Prevention Act.[v] One of that bill’s most significant accomplishments was the requirement that the state’s Department of Human Services implement change reporting across food stamps.[vi]
Mississippi is certainly not alone. In switching to change reporting, Mississippi is among over twenty other states which use change reporting in their eligibility systems, including Arkansas and Tennessee.[vii]
The Department of Human Services has voiced concern. To its credit, the department has not hidden its motivations. In the two years since implementation of change reporting, improper payment rates have increased. The department worries that these higher rates will lead to administrative penalties from the Biden administration. But an increase in the discovery of improper payments is not a flaw of change reporting. It is one of its principal aims.
Understandably, the department does not want to be punished for the failure of its enrollees to report changes. But, put simply, the department has identified more enrollees breaking the rules and receiving benefits for which they are not eligible. Its response—asking to change the rules—is not the solution.
Switching back to simplified reporting to reduce the improper payment rate will do nothing to actually reduce improper payments.
This is a bureaucratic shell game where hiding waste and fraud takes a higher priority than catching it. It is akin to closing down a 9-1-1 call center and reporting a decrease in reported crimes.
Nor is it clear that the department has considered how much of the recent uptick is tied to recent fluidity in the labor market. Changes in income were far more common in 2020 due to the COVID-19 pandemic than in typical years.
Conclusion
The solution is not to end the requirement so fewer improper payments are discovered. The solution is to increase enrollee reporting.
As Mississippi recovers from the pandemic and explores tools to increase enrollee reporting, the state’s improper payment rate should decline. Simplified reporting will, instead, hide the problem from effective oversight and increase spending and dependency in Mississippi’s welfare programs.
[i] 7 CFR 273.12
[ii] Ibid.
[iii] Ibid.
[iv] Food and Nutrition Service,“Supplemental Nutrition Assistance Program: State options report, 12th ed,” U.S. Department of Agriculture (2016), https://fns-prod.azureedge.net/sites/default/files/snap/14-State-Options.pdf
[v] 2017 Miss. H.B. 1090
[vi] Miss. Code Ann. § 43-12-33
[vii] Food and Nutrition Service,“Supplemental Nutrition Assistance Program: State options report, 12th ed,” U.S. Department of Agriculture (2016), https://fns-prod.azureedge.net/sites/default/files/snap/14-State-Options.pdf