Summary: GAO was asked to evaluate the Aid to Families With Dependent Children (AFDC) program management in California, Illinois, Massachusetts, and New York in terms of differences in management practices, agency organization, and employee accountability as they related to administrative costs and the level of erroneous payments.
Each State is required to have an AFDC operational plan which is deemed to be proper and efficient by the Department of Health and Human Services (HHS). However, HHS officials have defined their management role as an advisor to the States and have not asked State and local managers to develop any cost performance data by which they and the States can measure the cost effectiveness of program operations. This approach has been ineffective. HHS cannot evaluate the cost effectiveness of State operations, and State and local managers have only limited data to establish budgetary and performance goals, maximize their use of resources, and measure the cost effectiveness of day-to-day operations. California implemented a comprehensive management system that generated administrative cost savings of $18.8 million in its first year of operation. AFDC management has been improving; however, in one or more States, further attention needs to be paid to administrative problems which contribute to high error rates and erroneous payments. HHS and the States are currently working to implement AFDC program changes mandated by the Omnibus Budget Reconciliation Act. In addition, the President has announced his intention to turn the AFDC program over to the States, a transfer which would demand a high degree of HHS-State cooperation. Under the circumstances, altering the Federal-State relationship might not be appropriate at this time.
