[Code of Federal Regulations]
[Title 7 Volume 4]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR275.23]
[Page 864-876]
TITLE 7--AGRICULTURE
CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
PART 275--PERFORMANCE REPORTING SYSTEM--Table of Contents
Subpart G--Program Performance
Sec. 275.23 Determination of State agency program performance.
(a) FNS shall determine the efficiency and effectiveness of a
State's administration of the Food Stamp Program by measuring:
(1) State compliance with the standards contained in the Food Stamp
Act, regulations, and the State Plan of Operation; and
(2) State efforts to improve program operations through corrective
action.
(b) This determination shall be made based on:
(1) Reports submitted to FNS by the State;
(2) FNS reviews of State agency operations;
(3) State performance reporting systems and corrective action
efforts; and
(4) Other available information such as Federal audits and
investigations, civil rights reviews, administrative cost data,
complaints, and any pending litigation.
(c) State agency error rates. FNS shall estimate each State agency's
error rates based on the results of quality control review reports
submitted in accordance with the requirements outlined in Sec. 275.21.
The State agency's active case error, payment error, underissuance
error, and negative case error rates shall be estimated as follows:
(1) Active case error rate. The active case error rate shall include
the proportion of active sample cases which were reported as ineligible
or as receiving an incorrect allotment (as described in Sec. 275.12(e))
based upon certification policy as set forth in part 273.
(2) Payment error rate. (i) For fiscal years prior to Fiscal Year
1986, the payment error rate shall include the value of the allotments
overissued, including overissuances to ineligible
[[Page 865]]
cases, for those cases included in the active error rate.
(ii) For Fiscal Year 1986 and subsequent fiscal years, the payment
error rate shall include the value of the allotments overissued,
including those to ineligible cases, and the value of allotments
underissued for those cases included in the active error rate.
(3) Underissuance error rate. Prior to Fiscal Year 1986, the
underissuance error rate shall include the value of the allotments
reported as underissued for those cases included in the active case
error rate.
(4) Negative case error rate. The negative case error rate shall be
the proportion of negative sample cases which were reported as having
been eligible at the time of denial, suspension or termination (as
described in Sec. 275.13(c)) based upon certification policy as set
forth in part 273.
(5) Demonstration projects/SSA processing. The reported results of
reviews of active and negative demonstration project/SSA processed
cases, as described in Sec. 275.11(g), shall be excluded from the
estimate of the active case error rate, payment error rate,
underissuance error rate, and negative case error rate.
(d) Federal enhanced funding. (1) Before making enhanced funding
available to a State agency, as described in Sec. 277.4(b), FNS will:
(i) Validate the State agency's estimated payment error rate,
underissuance error rate, and negative case error rate, as provided for
in Sec. 275.3(c);
(ii) Ensure that the sampling techniques used by the State agency
are FNS-approved procedures, as established in Sec. 275.11; and
(iii) Validate the State agency's quality control completion rate to
ensure that all of the minimum required sample cases, of both active and
negative quality control samples, have been completed. This completion
standard is applied separately to the active and negative case samples,
and the State agency's estimated payment and underissuance error rates
will be adjusted separately, if necessary, to account for those required
cases not completed, in accordance with the procedures described in
paragraph (e)(8)(iii) of this section for adjustment of the payment
error rate.
(2) After validation and any necessary adjustment of estimated error
rates:
(i) A State agency with a combined payment error rate and
underissuance error rate of less than five percent for an annual review
period for Fiscal Year 1983 through Fiscal Year 1985, or a payment error
rate of less than five percent for an annual review period for Fiscal
Year 1986 through Fiscal Year 1988, shall be eligible for a 60 percent
Federally funded share of administrative costs, provided that the State
agency's negative case error rate for that period is less than the
national weighted mean negative case error rate for the prior fiscal
year;
(ii) Beginning with Fiscal Year 1989, a State agency with a payment
error rate less than or equal to 5.90 percent and with a negative case
error rate less than the national weighted mean negative case rate for
the prior fiscal year will have its Federally funded share of
administrative costs increased by one percentage point to a maximum of
60 percent for each full one-tenth of a percentage point by which the
payment error rate is less than six percent.
(3) State agencies entitled to enhanced funding shall receive the
additional funding on a retroactive basis only for the review period in
which their error rates are less than the levels described in paragraph
(d)(2) of this section.
(e) State agencies' liabilities for payment error rates. (1) At the
end of each fiscal year, each State agency's payment error rate over the
entire fiscal year will be computed, as described in paragraph (e)(8) of
this section, and evaluated to determine whether the payment error rate
goals established in the following paragraphs have been met.
(2) Establishment of payment error rate goals--Fiscal Year 1983
through Fiscal Year 1985. (i) Each State agency's payment error rate
goal for Fiscal Year 1983 shall be nine percent. Each State agency's
payment error rate goal for Fiscal Year 1984 shall be seven percent.
Each State agency's payment error rate goal for Fiscal Year 1985 shall
be five percent. State agencies' payment
[[Page 866]]
error rates for any fiscal year shall be derived from the review period
corresponding to the fiscal year.
(ii) If a State agency fails to achieve a nine percent payment error
rate in Fiscal Year 1983 but reduces its payment error rate for Fiscal
Year 1983 by 33.3 percent (or more) of the difference between its
payment error rate during the period of October 1980 through March 1981
and a five percent payment error rate, the State agency shall bear no
fiscal liability for its payment error rate. If a State agency fails to
achieve a seven percent payment error rate in Fiscal Year 1984, but
reduces its payment error rate for Fiscal Year 1984 by 66.7 percent (or
more) of the difference between its payment error rate during the period
of October 1980 through March 1981 and a five percent payment error
rate, the State agency shall bear no fiscal liability for its payment
error rate.
(iii) State agencies' payment error rates shall be rounded to the
nearest one hundredth of a percent with .005 and above being rounded up
to the next highest one-hundredth and .004 and below being rounded to
the next lowest one-hundredth.
(3) State agencies failing to achieve payment error rate goals--
Fiscal Year 1983 through Fiscal Year 1985. Each State agency which fails
to achieve its payment error rate goal during a fiscal year shall be
liable as specified in the following paragraphs.
(i) For every percentage point, or fraction thereof, by which a
State agency's payment error rate exceeds the goal for a fiscal year,
FNS shall reduce the money it pays for the State agency's Food Stamp
Program administrative costs by five percent for that fiscal year;
provided that for every percentage point, or fraction thereof, by which
a State agency's payment error rate exceeds its goal by more than three
percentage points, FNS shall reduce the Federally funded share of Food
Stamp Program administrative costs by ten percent for the applicable
fiscal year. Thus, if a State agency's reported error rate in Fiscal
Year 1983 is 10.5 percent, its Federal administrative funding could be
reduced by ten percent. A 13.1 percent error rate, or 4.1 percentage
points above the goal, would result in a reduction of 5 percent for each
of the three first points, 10 percent for the fourth point and another
10 percent for the fraction above 4 percentage points. This would amount
to a 35 percent reduction in Federal administrative funds unless the
provisions of paragraph (e)(3)(ii) are applicable to the State agency's
circumstances.
(ii) If a State agency fails to reach its payment error rate goal
but reduces its error rate as explained in paragraph (e)(2)(ii) for a
given fiscal year it will bear no liability for its error rates. If,
however, a State agency fails to reach the established goal and fails to
meet the reduction percentage for Fiscal Year 1983 and/or 1984, its
Federally funded share of program administrative costs shall be reduced
by five percent for every percentage point, or fraction thereof, (with a
10 percent reduction applied for every percentage point or fraction
above 3 percentage points) by which its error rate exceeds the payment
error rate it would have achieved had it met the 33.3 or 66.7 percent
reduction percentage for the applicable fiscal year. Thus, if a State
agency's payment error rate during the October through March 1981 period
was 13 percent and its error rate for Fiscal Year 1983 is 11 percent, it
will have failed to achieve a 33.3 percent reduction
(13-(13-5)(33.3)=10.34 percent), i.e., the rate the State agency would
have achieved had it met the reduction percentage) and incurred a
liability equal to five percent of its Federal administrative funding.
If the State agency's payment error rate increased to 13 percent in
Fiscal Year 1984, it will have missed a 66.7 percent reduction by 5.34
percentage points (13-(13-5)(66.7)=7.66 percent) and incurred a
liability equal to 45 percent of its Federal administrative funding. In
the latter example, the 45 percent funding reduction results from a 15
percent reduction for the first three percentage points and 30 percent
for the additional 2.34 percentage points by which the State agency
exceeded a 7.66 percent error rate.
(iii) If a State agency is found liable for an excessive payment
error rate, the amount of liability will be calculated by: (A)
Multiplying the percent the Federal share is to be reduced by
[[Page 867]]
the base Federal reimbursement rate of 50 percent; (B) subtracting the
product of (A) from 50 percent; and (C) multiplying the result of (B) by
the State agency's costs covered under the base Federal reimbursement
rate for the fiscal year in which the State agency incurred the
liability. For example, if the total administrative costs (State and
Federal) in a State agency are $4,000,000 for the fiscal year, and the
State agency's Federal funding is to be reduced by 25 percent, the State
agency would be reimbursed at a rate of 37.5 percent (i.e., 50 percent
minus 25 percent times 50 percent) or $1,500,000. The State agency's
liability would be $500,000 or 12.5 percent of its administative costs.
(iv) A State's federally funded share of administrative costs shall
not be reduced by an amount that exceeds the difference between its
payment error rate goal (or what its error rate would have been had it
met the reduction criteria of paragraph (ii) above) and its actual error
rates expressed as a percentage of its total issuance during the fiscal
year. Therefore, if the State agency in the above example issued
$10,000,000 in food stamps in the fiscal year and exceeded its goal by
four percentage points (as demonstrated by a 25 percent reduction in
Federal funding), the State agency's liability would be capped at
$400,000 ((.04)(10,000,000)), even though the calculation based upon
administrative funds would result in a liability of $500,000.
(4) State agencies' liabilities for payment error--Fiscal Year 1986
through Fiscal Year 1991. Each State agency that fails to achieve its
payment error rate goal during a fiscal year shall be liable as
specified in the following paragraphs.
(i) For Fiscal Year 1986 through Fiscal Year 1991, FNS shall
announce a national performance measure within nine months following the
end of each fiscal year that is the sum of the products of each State
agency's payment error rate times that State agency's proportion of the
total value of national allotments issued for the fiscal year using the
most recent issuance data available at the time the State agency is
initially notified of its payment error rate. Once announced, the
national performance measure for a given fiscal year will not be subject
to change. This national performance measure is used to establish a
payment-error tolerance level. The payment-error tolerance level for any
fiscal year shall be one percentage point added to the lowest national
performance measure ever announced up to and including such fiscal year.
(ii) For any fiscal year in which a State agency's payment error
rate exceeds the payment-error tolerance level, the State agency shall
pay or have its share of administrative costs reduced by an amount equal
to the difference between its payment error rate less such tolerance
level as a quantity, multiplied by the total value of the allotments
issued in the fiscal year by that State agency.
(5) State agencies' liabilities for payment error--Fiscal Year 1992
and beyond. Each State agency that fails to achieve its payment error
rate goal during a fiscal year shall be liable as specified in the
following paragraphs.
(i) For Fiscal Year 1992 and subsequent years, FNS shall announce a
national performance measure within 30 days following the completion of
the case review and the arbitration processes for the fiscal year. The
national performance measure is the sum of the products of each State
agency's payment error rates times that State agency's proportion of the
total value of national allotments issued for the fiscal year using the
most recent issuance data available at the time the State agency is
notified of its payment error rate. Once announced, the national
performance measure for a given fiscal year will not be subject to
change.
(ii) For any fiscal year in which a State agency's payment error
rate exceeds the national performance measure for the fiscal year, the
State agency shall pay or have its share of administrative funding
reduced by an amount equal to the product of:
(A) The value of all allotments issued by the State agency in the
fiscal year; multiplied by
(B) The lesser of--
(1) The ratio of the amount by which the payment error rate of the
State agency for the fiscal year exceeds the
[[Page 868]]
national performance measure for the fiscal year, to the national
performance measure for the fiscal year, or
(2) One; multiplied by
(C) The amount by which the payment error rate of the State agency
for the fiscal year exceeds the national performance measure for the
fiscal year.
(6) Relationship to warning process and negligence. (i) States'
liability for payment error rates as determined above are not subject to
the warning process of Sec. 276.4(d).
(ii) FNS shall not determine negligence (as described in Sec. 276.3)
based on the overall payment error rate for issuances to ineligible
households and overissuances to eligible households in a State or
political subdivision thereof. FNS may only establish a claim under
Sec. 276.3 for dollar losses from failure to comply, due to negligence
on the part of the State agency (as defined under Sec. 276.3), with
specific certification requirements. Thus, FNS will not use the results
of States' QC reviews to determine negligence.
(iii) Whenever a State is assessed for an excessive payment error
rate, the State shall have the right to request an appeal in accordance
with procedures set forth in part 283 of this chapter. While FNS may
determine a State to be liable for dollar loss under the provisions of
this section and the negligence provisions of Sec. 276.3 of this chapter
for the same period of time, FNS shall not bill a State for the same
dollar loss under both provisions. If FNS finds a State liable for
dollar loss under both the QC liability system and the negligence
provisions, FNS shall adjust the billings to ensure that two claims are
not made against the State for the same dollar loss.
(7) Good cause--(i) Events. When a State agency with otherwise
effective administration exceeds the tolerance level for payment errors
as described in this section, the State agency may seek relief from
liability claims that would otherwise be levied under this section on
the basis that the State agency had good cause for not achieving the
payment error rate tolerance. State agencies desiring such relief must
file an appeal with the Department's Administrative Law Judge (ALJ) in
accordance with the procedures established under part 283 of this
chapter. The five unusual events described below are considered to have
a potential for disputing program operations and increasing error rates
to an extent that relief from a resulting liability or increased
liability is appropriate. The occurrence of an event(s) does not
automatically result in a determination of good cause for an error rate
in excess of the national performance measure. The State agency must
demonstrate that the event had an adverse and uncontrollable impact on
program operations during the relevant period, and the event caused an
uncontrollable increase in the error rate. Good cause relief will only
be considered for that portion of the error rate/liability attributable
to the unusual event. The following are unusual events which State
agencies may use as a basis for requesting good cause relief and
specific information that must be submitted to justify such requests for
relief:
(A) Natural disasters such as those under the authority of the
Stafford Act of 1988 (Pub. L. 100-707), which amended the Disaster
Relief Act of 1974 (Pub. L. 93-288) or civil disorders that adversely
affect program operations.
(1) When submitting a request for good cause relief based on this
example, the State agency shall provide the following information:
(i) The nature of the disaster(s) (e.g. a tornado, hurricane,
earthquake, flood, etc.) or civil disorder(s)) and evidence that the
President has declared a disaster;
(ii) The date(s) of the occurrence;
(iii) The date(s) after the occurrence when program operations were
affected;
(iv) The geographic extent of the occurrence (i.e. the county or
counties where the disaster occurred);
(v) The proportion of the food stamp caseload whose management was
affected;
(vi) The reason(s) why the State agency was unable to control the
effects of the disaster on program administration and errors;
(vii) The identification and explanation of the uncontrollable
nature of
[[Page 869]]
errors caused by the event (types of errors, geographic location of the
errors, time period during which the errors occurred, etc.).
(viii) The percentage of the payment error rate that resulted from
the occurrence and how this figure was derived; and
(ix) The degree to which the payment error rate exceeded the
national performance measure in the subject fiscal year.
(2) The following criteria and methodology will be used to assess
and evaluate good cause in conjunction with the appeals process, and to
determine that portion of the error rate/liability attributable to the
uncontrollable effects of a disaster or civil disorder: Geographical
impact of the disaster; State efforts to control impact on program
operations; the proportion of food stamp caseload affected; and/or the
duration of the disaster and its impact on program operations.
Adjustments for these factors may result in a waiver of all, part, or
none of the error rate liabilities for the applicable period. As
appropriate, the waiver amount will be adjusted to reflect States'
otherwise effective administration of the program based upon the degree
to which the error rate exceeds the national performance measure. For
example, a reduction in the amount may be made when a State agency's
recent error rate history indicates that even absent the events
described, the State agency would have exceeded the national performance
measure in the review period.
(3) If a State agency has provided insufficient information to
determine a waiver amount for the uncontrollable effects of a natural
disaster or civil disorder using factual analysis, the waiver amount
shall be evaluated using the following formula and methodology which
measures both the duration and intensity of the event: Duration will be
measured by the number of months the event had an adverse impact on
program operations. Intensity will be a proportional measurement of the
issuances for the counties affected to the State's total issuance. This
ratio will be determined using issuance figures for the first full month
immediately preceding the disaster. This figure will not include
issuances made to households participating under disaster certification
authorized by FNS and already excluded from the error rate calculations
under Sec. 275.12(g)(2)(vi). ``Counties affected'' will include counties
where the disaster/civil disorder occurred, and any other county that
the State agency can demonstrate had program operations adversely
impacted due to the event (such as a county that diverted significant
numbers of food stamp certification or administrative staff). The amount
of the waiver of liability will be determined using the following linear
equation: Ia/Ib x [M/12 or Mp/18] x L, where Ia is the issuance for
the first full month immediately preceding the unusual event for the
county affected; Ib is the State's total issuance for the first full
month immediately preceding the unusual event; M/12 is the number of
months in the subject fiscal year that the unusual event had an adverse
impact on program operations; Mp/18 is the number of months in the last
half (April through September) of the prior fiscal year that the unusual
event had an adverse impact on program operations; L is the total amount
of the liability for the fiscal year. Mathematically this formula could
result in a waiver of more than 100% of the liability, however, no more
than 100% of a State's liability will be waived for any one fiscal year.
Under this approach, unless the State agency can demonstrate a direct
uncontrollable impact on the error rate, the effects of disasters or
civil disorders that ended prior to the second half of the prior fiscal
year will not be considered.
(B) Strikes by State agency staff necessary to determine Food Stamp
Program eligibility and process case changes.
(1) When submitting a request for good cause relief based on this
example, the State agency shall provide the following information:
(i) Which workers (i.e. eligibility workers, clerks, data input
staff, etc.) and how many (number and percentage of total staff) were on
strike or refused to cross picket lines;
(ii) The date(s) and nature of the strike (i.e., the issues
surrounding the strike);
[[Page 870]]
(iii) The date(s) after the occurrence when program operations were
affected;
(iv) The geographic extent of the strike (i.e. the county or
counties where the strike occurred);
(v) The proportion of the food stamp caseload whose management was
affected;
(vi) The reason(s) why the State agency was unable to control the
effects of the strike on program administration and errors;
(vii) Identification and explanation of the uncontrollable nature of
errors caused by the event (types of errors, geographic location of the
errors, time period during which the errors occurred, etc.);
(viii) The percentage of the payment error rate that resulted from
the strike and how this figure was derived; and
(ix) The degree to which the payment error rate exceeded the
national performance measure in the subject fiscal year.
(2) The following criteria shall be used to assess, evaluate and
respond to claims by the State agency for a good cause waiver of
liability in conjunction with the appeals process, and to determine that
portion of the error rate/liability attributable to the uncontrollable
effects of the strike: Geographical impact of the strike; State efforts
to control impact on program operations; the proportion of food stamp
caseload affected; and/or the duration of the strike and its impact on
program operations. Adjustments for these factors may result in a waiver
of all, part, or none of the error rate liabilities for the applicable
period. For example, the amount of the waiver might be reduced for a
strike that was limited to a small area of the State. As appropriate,
the waiver amount will be adjusted to reflect States' otherwise
effective administration of the program upon the degree to which the
error rate exceeded the national performance measure.
(3) If a State agency has provided insufficient information to
determine a waiver amount for the uncontrollable effects of a strike
using factual analysis, a waiver amount shall be evaluated by using the
formula described in paragraph (e)(7)(i)(A) of this section. Under this
approach, unless the State agency can demonstrate a direct
uncontrollable impact on the error rate, the effects of strikes that
ended prior to the second half of the prior fiscal year will not be
considered.
(C) A significant growth in food stamp caseload in a State prior to
or during a fiscal year, such as a 15 percent growth in caseload.
Caseload growth which historically increases during certain periods of
the year will not be considered unusual or beyond the State agency's
control.
(1) When submitting a request for good cause relief based on this
example, the State agency shall provide the following information:
(i) The amount of growth (both actual and percentage);
(ii) The time the growth occurred (what month(s)/year);
(iii) The date(s) after the occurrence when program operations were
affected;
(iv) The geographic extent of the caseload growth (i.e. Statewide or
in which particular counties);
(v) The impact of caseload growth;
(vi) The reason(s) why the State agency was unable to control the
effects of caseload growth on program administration and errors;
(vii) The percentage of the payment error rate that resulted from
the caseload growth and how this figure was derived; and
(viii) The degree to which the error rate exceeded the national
performance measure in the subject fiscal year.
(2) The following criteria and methodology shall be used to assess
and evaluate good cause in conjunction with the appeals process, and to
determine that portion of the error rate/liability attributable to the
uncontrollable effects of unusual caseload growth: Geographical impact
of the caseload growth; State efforts to control impact on program
operations; the proportion of food stamp caseload affected; and/or the
duration of the caseload growth and its impact on program operations.
Adjustments for these factors may result in a waiver of all, part, or
none of the error rate liabilities for the applicable period. As
appropriate, the waiver amount will be adjusted to reflect States'
otherwise effective administration of the program based
[[Page 871]]
upon the degree to which the error rate exceeded the national
performance measure. For example, a reduction in the amount may be made
when a State agency's recent error rate history indicates that even
absent the events described, the State agency would have exceeded the
national performance measure in the review period. Under this approach,
unless the State agency can demonstrate a direct uncontrollable impact
on the error rate, the effects of caseload growth that ended prior to
the second half of the prior fiscal year will not be considered.
(3) If the State agency has provided insufficient information to
determine a waiver amount for the uncontrollable effects of caseload
growth using factual analysis, the waiver amount shall be evaluated
using the following five-step calculation:
(i) Step 1, determine the average number of households certified to
participate statewide in the Food Stamp Program for the base period
consisting of the twelve consecutive months ending with March of the
prior fiscal year;
(ii) Step 2, determine the percentage of increase in caseload growth
from the base period (Step 1) using the average number of households
certified to participate statewide in the Food Stamp Program for any
twelve consecutive months in the period beginning with April of the
prior fiscal year and ending with June of the current fiscal year;
(iii) Step 3, determine the percentage the error rate for the
subject fiscal year, as calculated under paragraph (e)(5)(i) of this
section, exceeds the national performance measure determined in
accordance with paragraph (e)(5)(i) of this section;
(iv) Step 4, divide the percentage of caseload growth increase
arrived at in step 2 by the percentage the error rate for the subject
fiscal year exceeds the national performance measure as determined in
step 3; and
(v) Step 5, multiply the quotient arrived at in step 4 by the
liability amount for the current fiscal year to determine the amount of
waiver of liability.
(4) Under this methodology, caseload growth of less than 15% and/or
occurring in the last three months of the subject fiscal year will not
be considered. Mathematically this formula could result in a waiver of
more than 100% of the liability however, no more than 100% of a State's
liability will be waived for any one fiscal year.
(D) A change in the Food Stamp Program or other Federal or State
program that has a substantial adverse impact on the management of the
Food Stamp Program of a State. Requests for relief from errors caused by
the uncontrollable effects of unusual program changes other than those
variances already excluded by Sec. 275.12(d)(2)(vii) will be considered
to the extent the program change is not common to all States.
(1) When submitting a request for good cause relief based on unusual
changes in the Food Stamp or other Federal or State programs, the State
agency shall provide the following information:
(i) The type of change(s) that occurred;
(ii) When the change(s) occurred;
(iii) The nature of the adverse effect of the changes on program
operations and the State agency's efforts to mitigate these effects;
(iv) Reason(s) the State agency was unable to adequately handle the
change(s);
(v) Identification and explanation of the uncontrollable errors
caused by the changes (types of errors, geographic location of the
errors, time period during which the errors occurred, etc.);
(vi) The percentage of the payment error rate that resulted from the
adverse impact of the change(s) and how this figure was derived; and
(vii) The degree to which the payment error rate exceeded the
national performance measure in the subject fiscal year.
(2) The following criteria will be used to assess and evaluate good
cause in conjunction with the appeals process, and to determine that
portion of the error rate/liability attributable to the uncontrollable
effects of unusual changes in the Food Stamp Program or other Federal
and State programs; State efforts to control impact on program
operations; the proportion of food stamp caseload affected; and/or the
duration of the unusual changes in the
[[Page 872]]
Food Stamp Program or other Federal and State programs and the impact on
program operations. Adjustments for these factors may result in a waiver
of all, part, or none of the error rate liabilities for the applicable
period. As appropriate, the waiver amount will be adjusted to reflect
States' otherwise effective administrative of the program based upon the
degree to which the error rate exceeded the national performance
measure.
(E) A significant circumstance beyond the control of the State
agency. Requests for relief from errors caused by the uncontrollable
effect of the significant circumstance other than those specifically set
forth in paragraphs (e)(7)(i)(A) through (e)(7)(i)(D) of this section
will be considered to the extent that the circumstance is not common to
all States, such as a fire in a certification office.
(1) When submitting a request for good cause relief based on
significant circumstances, the State agency shall provide the following
information:
(i) The significant circumstances that the State agency believes
uncontrollably and adversely affected the payment error rate for the
fiscal year in question;
(ii) Why the State agency had no control over the significant
circumstances;
(iii) How the significant circumstances had an uncontrollable and
adverse impact on the State agency's error rate;
(iv) Where the significant circumstances existed (i.e. Statewide or
in particular counties);
(v) When the significant circumstances existed (provide specific
dates whenever possible);
(vi) The proportion of the food stamp caseload whose management was
affected;
(vii) Identification and explanation of the uncontrollable errors
caused by the event (types of errors, geographic location of the errors,
time period during which the errors occurred, etc.);
(viii) The percentage of the payment error rate that was caused by
the significant circumstances and how this figure was derived; and
(ix) The degree to which the payment error rate exceeded the
national performance measure in the subject fiscal year.
(2) The following criteria shall be used to assess and evaluate good
cause in conjunction with the appeals process, and to determine that
portion of the error rate/liability attributable to the uncontrollable
effects of a significant circumstance beyond the control of the State
agency, other than those set forth in paragraph (e)(7)(i)(E) of this
section: Geographical impact of the significant circumstances; State
efforts to control impact on program operations; the proportion of food
stamp caseload affected; and/or the duration of the significant
circumstances and the impact on program operations. Adjustments for
these factors may result in a waiver of all, part, or none of the error
rate liabilities for the applicable period. As appropriate, the waiver
amount will be adjusted to reflect States' otherwise effective
administration of the program based upon the degree to which the error
rate exceeded the national performance measure.
(ii) Adjustments. When good cause is found under the criteria in
paragraphs (e)(7)(i)(A) through (e)(7)(i)(E) of this section, the waiver
amount may be adjusted to reflect States' otherwise effective
administration of the program based upon the degree to which the error
rate exceeds the national performance measure.
(iii) Evidence. When submitting a request to the ALJ for good cause
relief, the State agency shall include such data and documentation as is
necessary to support and verify the information submitted in accordance
with the requirements of paragraph (e)(7) of this section so as to fully
explain how a particular significant circumstance(s) uncontrollable
affected its payment error rate.
(iv) Finality. The initial decision of the ALJ concerning good cause
shall constitute the final determination for purposes of judicial review
without further proceedings as established under the provisions of
Sec. 283.17 and Sec. 283.20 of this chapter.
(8) Determination of payment error rates. As specified in
Sec. 275.3(c), FNS will validate each State agency's estimated payment
error rate through rereviewing the State agency's active
[[Page 873]]
case sample and ensuring that its sampling, estimation, and data
management procedures are correct.
(i) Once the Federal case reviews have been completed and all
differences with the State agency have been identified, FNS shall
calculate regressed error rates using the following linear regression
equations.
(A)
y1'=y1+b1(X1-x1),
where y1' is the average value of allotments overissued to
eligible and ineligible households; y1 is the average value
of allotments overissued to eligible and ineligible households in the
rereview sample according to the Federal finding, b1 is the
estimate of the regression coefficient regressing the Federal findings
of allotments overissued to eligible and ineligible households on the
corresponding State agency findings, x1 is the average value
of allotments overissued to eligible and ineligible households in the
rereview sample according to State agency findings, and X1 is
the average value of allotments overissued to eligible and ineligible
households in the full quality control sample according to State
agency's findings. In stratified sample designs Y1,
X1, and x1 are weighted averages and b1
is a combined regression coefficient in which stratum weights sum to 1.0
and are proportional to the estimated stratum caseloads subject to
review.
(B)
y2'=y2+b2(X2-x2),
where y2' is the average value of allotments underissued to
households included in the active error rate, y2 is the
average value of allotments underissued to participating households in
the rereview sample according to the Federal finding, b2 is
the estimate of the regression coefficient regressing the Federal
findings of allotments underissued to participating households on the
corresponding State agency findings, x2 is the average value
of allotments underissued to participating households in the rereview
sample according to State agency findings, and X2 is the
average value of allotments underissued to participating households in
the full quality control sample according to the State agency's
findings. In stratified sample designs y2, X2, and
x2 are weighted averages and b1 is a combined
regression coefficient in which stratum weights sum to 1.0 and are
proportional to the estimated stratum caseloads subject to review.
(C) The regressed error rates are given by
r1'=y1'/u, yielding the regressed overpayment
error rate, and r2'=y2'/u, yielding the regressed
underpayment error rate, where u is the average value of allotments
issued to participating households in the State agency sample.
(D) After application of the adjustment provisions of paragraph
(e)(8)(iii) of this section, the adjusted regressed payment error rate
shall be calculated to yield the State agency's payment error rate for
use in the reduced and enhanced funding determinations described in
paragraphs (d) and (e) of this section. Prior to Fiscal Year 1986, the
adjusted regressed payment error rate is given by r1". For
Fiscal Year 1986 and after, the adjusted regressed payment error rate is
given by r1"+r2".
(ii) If FNS determines that a State agency has sampled incorrectly,
estimated improperly, or has deficiencies in its QC data management
system, FNS will correct the State agency's payment error rate based
upon a correction to that aspect of the State agency's QC system which
is deficient. If FNS cannot accurately correct the State agency's
deficiency, FNS will assign the State agency a payment error rate based
upon the best information available. After consultation with the State
agency, this assigned payment error rate will then be used in the above
described liability determination and in determinations for enhanced
funding under paragraph (d) of this section. State agencies shall have
the right to appeal assignment of an error rate in this situation in
accordance with the procedures of part 283.
(iii) Should a State agency fail to complete 98 percent of its
required sample size, FNS shall adjust the State agency's regressed
error rates using the following equations:
(A) r1"=r1'+2(1-C)S1, where
r1" is the adjusted regressed overpayment error rate,
r1' is the regressed overpayment error rate computed from the
formula in paragraph (e)(8)(i)(C) of this section, C is the State
agency's rate of completion of its required sample size expressed as a
decimal value, and S1 is
[[Page 874]]
the standard error of the State agency sample overpayment error rate. If
a State agency completes all of its required sample size, then
r1"=r1'.
(B) r2"=r2'+2(1-C)S2, where
r2" is the adjusted regressed underpayment error rate,
r2' is the regressed underpayment error rate computed from
the formula in paragraph (e)(8)(i)(C) of this section, C is the State
agency's rate of completion of its required sample size expressed as a
decimal value, and S2 is the standard error of the State
agency sample underpayment error rate. If a State agency completes all
of its required sample size, then r2"=r2'.
(9) FNS Timeframes. FNS shall determine and announce the national
average payment error rate for the fiscal year within 30 days following
the completion of the case review process and all arbitrations of State
agency-Federal difference cases for that fiscal year, and at the same
time FNS shall notify all State agencies of their individual payment
error rates and payment error rate liabilities, if any. The case review
process and the arbitration of all difference cases shall be completed
not later than 180 days after the end of the fiscal year. FNS shall
initiate collection action on each claim for such liabilities before the
end of the fiscal year following the reporting period in which the claim
arose unless an administrative appeal relating to the claim is pending.
Such appeals include requests for good cause waivers and administrative
and judicial appeals pursuant to Section 14 of the Food Stamp Act. While
the amount of a State's liability may be recovered through offsets to
their letter of credit as identified in Sec. 277.16(c) of this chapter,
FNS shall also have the option of billing a State directly or using
other claims collection mechanisms authorized under the Federal Claims
Collection Act, depending upon the amount of the State's liability. FNS
is not bound by the timeframes referenced in this subparagraph in cases
where a State fails to submit QC data expeditiously to FNS and FNS
determines that, as a result, it is unable to calculate a State's
payment error rate and payment error rate liability within the
prescribed timeframe.
(10) Interest charges. (i) To the extent that a State agency does
not pay a claim established under Sec. 275.23(e)(5) within 30 days from
the date on which the bill for collection (after a determination on any
request for a waiver for good cause) is received by the State agency,
the State agency shall be liable for interest on any unpaid portion of
such claim accruing from the date on which the bill for collection was
received by the State agency. This situation applies unless the State
agency appeals the claim under part 283 of the regulations. If the State
agency agrees to pay the claim through reduction in Federal financial
participation for administrative costs, this agreement shall be
considered to be paying the claim. If the State agency appeals such
claim (in whole or in part), the interest on any unpaid portion of the
claim shall accrue from the date of the decision on the administrative
appeal, or from a date that is one year after the date the bill is
received, whichever is earlier, until the date the unpaid portion of the
payment is received.
(ii) If the State agency pays such claim (in whole or in part) and
the claim is subsequently overturned through administrative or judicial
appeal, any amounts paid by the State agency above what is actually due
shall be promptly returned with interest, accruing from the date the
payment was received until the date the payment is returned.
(iii) Any interest assessed under this paragraph shall be computed
at a rate determined by the Secretary based on the average of the bond
equivalent of the weekly 90-day Treasury bill auction rates during the
period such interest accrues. The bond equivalent is the discount rate
(i.e., the price the bond is actually sold for as opposed to its face
value) determined by the weekly auction (i.e., the difference between
the discount rate and face value) converted to an annualized figure. The
Secretary shall use the investment rate (i.e., the rate for 365 days)
compounded in simple interest for the period for which the claim is not
paid. Interest billings shall be made quarterly with the initial billing
accruing from the date the interest is first due. Because the discount
rate for Treasury bills is issued weekly, the
[[Page 875]]
interest rate for State agency claims shall be averaged for the
appropriate weeks.
(11) Suspension and waiver of liabilities for investments in program
management activities. In connection with the settlement of all or a
portion of a QC liability for FY 1986 and subsequent QC review periods,
the Department may suspend and subsequently waive all or part of a State
agency's payment error rate liability claim based on the State agency's
offsetting investment in program management activities intended to
reduce errors measured by the QC system. A State agency may submit a
request to the Department for review of planned investments in program
management activities intended to reduce error rates as part of a
proposed settlement of all or a portion of a QC liability at any time
during the QC liability claim process.
(i) The State agency's investment plan activity or activities must
meet the following conditions to be accepted by the Department:
(A) The activity or activities must be directly related to error
reduction in the ongoing program, with specific objectives regarding the
amount of error reduction, and type of errors that will be reduced. The
costs of demonstration, research, or evaluation projects under sections
17 (a) through (c) of the Act will not be accepted. The State agency may
direct the investment plan to a specific project area or implement the
plan on a statewide basis. In addition, the Department will allow an
investment plan to be tested in a limited area, as a pilot project, if
the Department determines it to be appropriate. A request by the State
agency for a waiver of existing rules will not be acceptable as a
component of the investment plan. The State agency must submit any
waiver request through the normal channels for approval and receive
approval of the request prior to including the waiver in the investment
plan. Waivers that have been approved for the State agency's use in the
ongoing operation of the program may continue to be used.
(B) The program management activity must represent a new or
increased expenditure. The proposed activity must also represent an
addition to the minimum program administration required by law for State
agency administration including corrective action. Therefore, basic
training of eligibility workers or a continuing corrective action from a
Corrective Action Plan shall not be acceptable. The State agency may
include a previous initiative in its plan; however, the State agency
would have to demonstrate that the initiative is entirely funded by
State money, represents an increase in spending and there are no
remaining Federal funds earmarked for the activity.
(C) Investment activities must be funded in full by the State
agency, without any matching Federal funds until the entire investment
amount agreed to is spent. Amounts spent in excess of the settlement
amount included in the plan may be subject to Federal matching funds.
(ii) The request shall include:
(A) A statement of the amount of money that is a quality control
liability claim that is to be offset by investment in program
improvements;
(B) A detailed description of the planned program management
activity;
(C) Planned expenditures, including time schedule and anticipated
cost breakdown;
(D) Anticipated impact of the activity, identifying the types of
errors expected to be affected;
(E) Documentation that the funds would not replace expenditures
already earmarked for an ongoing effort; and
(F) A statement that the expenditures are not simply a reallocation
of resources.
(iii) The State's and the Department's agreement to settle all,
part, or none of the QC liability claim under this paragraph is final
and not subject to further appeal within the Department. An agreement to
settle all or part of a State agency's QC liability claim will result in
suspension of the claim for the specified amount, pending the State's
satisfactory completion of the initiative or action taken by the
Department under the provisions of paragraph (e)(11)(vi) of this
section.
[[Page 876]]
(iv) The State agency shall submit modifications to the plan to the
Department for approval, prior to implementation. Expenditures made
prior to approval by the Department may not be used in offsetting the
liability.
(v) Each State agency which has all or part of a claim suspended
under this provision shall submit periodic documented reports according
to a schedule in its approved investment plan. At a minimum, these
reports shall contain:
(A) A detailed description of the expenditure of funds, including
the source of funds and the actual goods and services purchased or
rented with the funds;
(B) A detailed description of the actual activity; and
(C) An explanation of the activity's effect on errors, including an
explanation of any discrepancy between the planned effect and the actual
effect.
(vi) Any funds that the State agency's reports do not document as
spent as specified in the investment plan may be withdrawn by the
Department from the reduction in QC liability. Before the reduction is
withdrawn, the State agency will be provided an opportunity to provide
the missing documentation.
(vii) If the reduction in QC liability is withdrawn, the Department
shall charge interest on the funds not spent according to the plan, in
accordance with section 602 of the Hunger Prevention Act of 1988, which
amended section 13(a)(1) of the Food Stamp Act of 1977.
(viii) The Department's determination to withdraw a reduction in QC
liability is not appealable within the Department.
[Amdt. 160, 45 FR 15912, Mar. 11, 1980, as amended by Amdt. 260, 49 FR
6311, Feb. 17, 1984; Amdt. 262, 49 FR 50598, Dec. 31, 1984. Redesignated
and amended at 52 FR 3410, Feb. 4, 1987; Amdt. 295, 52 FR 29659, Aug.
11, 1987; Amdt. 328, 56 FR 60052, Nov. 27, 1991; Amdt. 325, 57 FR 2828,
Jan. 24, 1992; Amdt. 327, 57 FR 44486, Sept. 28, 1992; 57 FR 47163, Oct.
14, 1992; Amdt. 348, 59 FR 34561, July 6, 1994; ; Amdt. 366, 62 FR
29659, June 2, 1997; Amdt. 373, 64 FR 38297, July 16, 1999]