Of Food Stamps and Fraud

One reason food stamps are an appealing anti-poverty measure for municipal governments is that they are funded federally. In the Bloomberg years, the Human Resources Administration has made a big push to increase food stamp usage. According to HRA, more than 1.3 million New Yorkers receive food stamps, an increase of 65 percent since Bloomberg took office. Many of the new enrollees are working families who are not on welfare. HRA has said these gains are partly the result of a proactive outreach approach and partly stemming from a simplified application process. Partnering with City Council, the administration recently announced it would contact 600,000 households who may be eligible (as identified from Medicaid rosters), but aren’t receiving food stamps, to increase food stamp usage even further.

In spite of this, critics of the administration have argued that the state’s finger imaging requirement counteracts much of the progress made in food stamps outreach. New York is one of four states that require food stamps applicants, and adults in their households, to have their fingerprints scanned to prevent against fraudulent duplicate applications. The state’s Office of Temporary and Disability Assistance (OTDA) has tried to limit the requirements for certain groups, but HRA has consistently resisted these efforts.

HRA argues that finger imaging saves the city and state significant amounts of money while not depressing food stamp application rates. Since the introduction of finger imaging in 1995, HRA estimates the requirement has saved the city more than $23 million by avoiding duplicate payments—including $2.3 million in 2008 alone. The agency spent $307,000 on the program in fiscal year 2007.

According to HRA records, the estimated payment error rate—the percentage of food stamp payments above the amount for which households are eligible, according to the Center on Budget and Policy Priorities—dropped from 13.8 percent in 2001 to 5.18 percent in 2007. “Prior to the implementation of finger imaging in New York City, multiple investigations revealed that fraud was prevalent in the benefit programs, particularly involving multiple case openings and multiple identities,” Commissioner Robert Doar said in testimony to Council's General Welfare Committee on Nov. 25. “That problem has been virtually eliminated while public support and confidence that our benefit programs are being used appropriately has grown.”

Not everyone agrees the requirement achieves its goals. The program has a loud chorus of critics who argue that HRA overestimates the amount of fraud and underestimates the unintended consequence of the requirement—namely discouraging food stamp applications. Joel Berg, executive director of the New York City Coalition Against Hunger, has led this chorus. In a recent opinion piece, Berg noted that the city spent $800,000 in 2006 on the finger imaging program, but detected just 31 cases of fraud. He also cited a USDA/Urban Institute report finding that one in 23 eligible applicants doesn't apply because of the requirement.

Although Doar, who headed OTDA until his appointment to lead HRA in Feb. 2007, used to support efforts to scale back the finger imaging program in New York City, he now appears to fully support continuation of the requirement for all food stamp applicants.