The U.S. Department of Agriculture has notified the Alaska State Health Department that it owes the federal government $11.9 million for overpayments of food stamp benefits last year.
In a letter to HHS Secretary Heidi Hedberg on Friday, Acting Secretary of Agriculture Kumar Chandran said the state's mispayment rates have been too high for too long. Chandran said the state could face additional penalties if its Supplemental Nutrition Assistance Program overpayment rates remain high.
“Alaska's proper administration of SNAP is essential to ensure the program is operated efficiently, effectively, and with integrity,” the letter said.
State officials say the problem stems from the state choosing to extend benefits to Alaskans while it processes a backlog of food stamp applications.
Federal data shows state public assistance agencies made errors and overpaid benefits in about 60% of claims in the fiscal year that ended in June 2023. The national average is a 10% error rate.
The error rate does not measure fraud, but rather indicates whether states are accurately measuring eligibility and payments. Alaska's error rate is more than five times the national average for fiscal year 2022 and beyond.
But DPA Director Deb Etheridge said these overpayments weren't a mistake. The state chose to extend benefits to Alaskans during the backlog to ensure people didn't go hungry, she said.
She said state leaders had intentionally instructed workers to skip parts of the verification process for renewing food stamp certification during the delinquent period.
But because states didn't have federal permission to extend benefits until they caught up on applications, any renewals they did so for showed up as overpayment errors.
“If you extend the certification, it's 100% an automatic error,” she said.
Etheridge said state officials made the choice to get food to Alaskans while they work to resolve the backlog.
When the backlog grew to crisis proportions last fall, state officials asked the federal government for permission to bypass the verification process and slow the process, but were turned down. Mr. Hedberg told state officials to skip the verification process anyway and notify the federal government that the state planned to break the rules.
“I think the commissioner took a really brave and bold step,” Etheridge said.
The move prompted federal regulators to write the company this winter that the practice could jeopardize federal funding if it continued.
“Everybody's priority was getting the benefits to Alaskans, and I think you remember all the harms we were trying to reduce,” Etheridge said of state officials at the time.
Etheridge said the HHS department has since followed federal guidelines: Previously, state officials had to recertify food stamp recipients' continued eligibility every six months, but federal officials approved extending the recertification period to 12 months.
According to the letter, state officials have three options regarding the roughly $12 million fine: pay it in full, challenge the federal analysis or take a rehabilitation approach in which they could use half of the compensation to upgrade the state systems that administer the program and only have to pay back the other half if the overpayments continue in fiscal year 2024. Etheridge said health department officials are in discussions with the state Department of Law to explore appeal options, but may choose to take the 50-50 approach.
The USDA letter stressed that federal officials must ensure food assistance programs are “operated effectively and efficiently, and that eligible participants receive accurate and timely benefits.”
Alaska Department of Health officials are working to process a large backlog of food aid, but Etheridge said they are still keeping a tight rein on the program.
Etheridge said the impact of the state's decision to extend benefits will likely remain on the error rate into the fall.
Etheridge took over the department at the height of the backlog and said he was prepared for it to take time to fix.
“What we do today will show up in a few years,” she said, adding that she's comfortable tackling tough problems. “I just look to the future,” she said.
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