Demonstration Projects Could Identify Ways to Simplify Policies & Facilitate Technology Enhancements to Reduce Administrative Costs

The Government Accountability Office (GAO) sought to determine how federal social service programs allocate administrative costs. GAO determined that in 2004 that seven social service programs combined spent $21 billion on administration, which was about 18% of total program spending. However, GAO discovered that the percentage of administrative costs varied between programs and states. Administrative spending varied from two percent in the Child Care and Development Fund to 58% in Foster Care, with the exception of Child Support Enforcement in which all program spending is considered administrative. Between fiscal years 2000 and 2004, administrative spending increased in five of the seven programs, generally at a lower rate than total program spending. The programs investigated and their 2004 administrative cost percentages were:

• Adoption Assistance: 20.1%
   
• Child Care and Development Fund: 2.3%
   
• Food Stamps: 17.3%
   
• Foster Care: 58.1%
   
• Temporary Assistance for Needy Families: 7.7%
   
• Unemployment insurance: 6.8%

The GAO found that the primary difference between programs was the definition of what constituted an administrative costs. A further difference was noted in the laws that governed each program also included different mechanisms for state and federal participation in funding administrative costs, including matching rates, block grants, and spending caps.

The GAO recommended that the federal agencies should identify ways to standardize processes between programs to reduce administrative costs. The GAO further recommended that Congress should consider authorizing state and local demonstration projects designed to simplify eligibility determination and other processes for federal human service programs.