Alaska to pay $2.5M to settle claims about food program

ANCHORAGE — Alaska will pay $2.5 million to the federal government to settle allegations of inaccurate reporting in the administration of a federal food assistance program, the U.S. Department of Justice announced Monday.

The Alaska Department of Health and Social Services made false claims in its administration of the Supplemental Nutrition Assistance Program, formerly known as the Food Stamps Program, according to the Justice Department.

A consultant who advised Alaska and other states disputes the federal claims about the program that provides financial assistance to low-income families so they can buy nutritious food.

People in the program receive an electronic benefit transfer card, similar to an ATM card, that can be used at participating stores to buy eligible food such as fruits, vegetables, whole-grain products and other items.

The U.S. Department of Agriculture program has provided more than $71 billion annually since 2010. More than 45 million Americans per month, out of a population of 325.9 million, receive benefits.

Alaska in the last fiscal year issued $187.8 million in benefits to 129,649 needy residents.
The federal government pays for the program’s benefits but states administer them, including the determination of who is eligible. The USDA pays performance bonuses to states that report the lowest error rates and the most improved error rates each year.


States conduct quality control by randomly sampling participating households, reviewing eligibility and the amount of benefits paid and looking for errors. A federal agency reviews a subsample of those households. The results of both reviews are combined to calculate error rates.

Alaska received questionable advice from a consultant in calculating its error rate, Department of Law spokeswoman Cori Mills said in a statement.

“Alaska, like many other states, relied on a contractor, (Julie) Osnes Consulting, who advocated practices that may have led to the inaccurate reporting of food stamp error rates to USDA,” the department said in an email response to questions. “USDA awarded bonuses between 2010 and 2014 based on the reported error rates.”

Alaska in late 2009 hired Julie Osnes Consulting LLC, a South Dakota firm. The consultant injected bias into the quality control process for the program, known as SNAP, the Justice Department said.

Osnes’ attorney, Michael Sullivan, disputed that.

“Julie has done a fabulous job with working with states,” Sullivan said. “As the facts will show, in helping them to reach a balanced approach to quality control in the SNAP area, the incredible pressure from the quote-unquote feds has pushed some states into capitulating, and falling like dominoes. We look forward to defending Julie and her company.”

Alaska received performance bonuses for four fiscal years from 2010 through 2013 that should not have been awarded, the Justice Department said.

“Alaska terminated its contract with Osnes Consulting in early 2015 and has reviewed and changed its quality control practices,” Mills said.

State agencies in Virginia and Wisconsin, which also hired Osnes Consulting, reached settlements of about $7 million each in April with the Justice Department.