Report: Food stamp fraud, misuse small, but costs 'relatively large'
SALEM — State auditors touted their work investigating food stamp fraud on Tuesday.
They say their efforts resulted in convictions for five merchants committing food stamp fraud; $1.7 million in avoided future costs; and $525,000 in court-ordered restitution.
Forty recipients received a yearlong ban, and 59 people were banned from the program permanently as a result of auditors' efforts, they say.
Since 2013, auditors have been using new data analytics techniques and mapping software to identify merchants with a high risk of fraud.
Recipients get their monthly benefits in the form of an Oregon Trail Card, which is similar to a debit card and can be used at participating food merchants.
Auditors focused on collusion between recipients and merchants, and a type of collusion in which a merchant rings up a purchase, but instead of selling food, gives the customer cash in exchange for food stamps, typically for about 50 cents on the dollar value of the purchase.
In the 2017 fiscal year, about 689,000 Oregonians were on food stamps. The number of recipients has been steadily decreasing since 2013.
Food stamp benefits — also known as the Supplemental Nutrition Assistance Program, or SNAP — are paid for by the federal government and help low-income people buy food. States pay 50 percent of the costs of administering the program. The average annual cost of administering the program to the state has been about $78 million in recent years, according to the secretary of state's office. As of 2008, the USDA estimated that about 1 cent of every dollar was lost to fraud trafficking.
But state auditors' advisory report says that those fraud incidence numbers might be "understated," saying the USDA figure is based solely on fraud convictions and doesn't include fraudulent applications for benefits and fraud between cardholders.
"While the vast majority of benefit recipients are not committing fraud, a 1 percent fraud rate in this substantial program still translates to relatively large misuse of public monies," the advisory report states.
Oregon's Department of Human Services was recently awarded a $300,000 grant by the U.S. Department of Agriculture to "apply analytic methods in their SNAP investigation work," according to the report.
Janet Bauer, a policy analyst for the Oregon Center for Public Policy, noted Tuesday that auditors' advisory report is not an analysis of the program's overall integrity, or how many recipients out of all 689,000 may be committing fraud. "The goal of their inquiry wasn't to do an assessment of the integrity rate in Oregon," Bauer said. "They were basically looking for instances of abuse."
The report is not an audit and doesn't adhere to government auditing standards, but to a "rigorous quality assurance process used for every audit report" from the Secretary of State's audits division, the report says.
In 2013, state auditors found that among a sample of recipients, the state paid public assistance benefits to hundreds of people whose social security numbers were associated with a dead person, or to people who had won the lottery, had a state public pension, or were in jail or prison. That prompted the state legislature to convene a work group to find ways to reduce the rate of fraud.
East Oregonian / Pamplin Media