SNAP Costs Starting to Fall, Almost Certain to Fall Further
Trends Reflect Flat Caseloads and Recent Benefit Cut
Revised March 6, 2014
SNAP spending, which doubled as a share of the economy (gross domestic product or GDP) in the wake of the Great Recession, has begun to decline, as the Congressional Budget Office (CBO) and other experts expected.
- SNAP spending in fiscal year 2013 was down slightly. Government data show that spending on SNAP (formerly food stamps) fell slightly as a share of GDP in fiscal year 2013, which ended September 30. (See Figure 1.)
- The number of SNAP participants has started to fall. Growth in the number of SNAP participants slowed in 2011 and 2012, and now has begun to decline. Fewer people have participated in SNAP in each of the last three months for which data are available (September through November 2013), compared with the same months of 2012, and in November 2013 more than 750,000 fewer people participated in SNAP than at the height
of participation in December 2012. This flattening of participation follows the pattern of previous recessions and is largely accountable for the decline in spending in fiscal year 2013 as a share of GDP.
- The end of the Recovery Act’s benefit increase will result in a large drop in SNAP spending in 2014. U.S. Department of Agriculture (USDA) data show that due to the November 2013 expiration of the 2009 Recovery Act’s benefit increase, SNAP average benefits declined by about 7 to 8 percent, or over $400 million, in the first month without the benefit increase. Table 2 shows the average benefit and dollar amounts of the decline in each state. Over the first four months of fiscal year 2014 (October 2013 through January 2014), SNAP outlays were 7 percent lower than the same period of fiscal year 2013.
CBPP projects that, in fiscal year 2014, SNAP spending will not only continue to decline as a share of GDP but will fall by at least 5 percent in nominal (non-inflation-adjusted) terms, largely because of the expiration of the temporary benefit increase. As the economic recovery continues and fewer low-income people qualify for SNAP, CBO expects SNAP spending to fall further in future years, returning to its 1995 levels as a share of GDP by 2019. The effects of the 2014 farm bill, which CBO estimated would cut SNAP by $8 billion over 10 years, would be in addition to the trends that already are emerging.
Background: SNAP Grew Significantly in Response to Recession
SNAP’s caseload growth in recent years resulted primarily from more households qualifying because of the recession and more eligible households applying for help. CBO has confirmed that “the primary reason for the increase in the number of participants was the deep recession . . . and subsequent slow recovery; there were no significant legislative expansions of eligibility.”
SNAP caseloads grew in part because more households qualified for the program due to the recession and lagging recovery. The number of people in households with incomes below 130 percent of the poverty line (the SNAP income limit) rose from 54 million in 2007, before the recession, to 60 million in 2009 and 65 million in 2012, allowing more households to qualify for help from the program.
Participation among eligible individuals also increased, from 69 percent in 2007 to 79 percent in 2011 (the most recent year available). Several factors likely contributed to rising participation rates. The widespread and prolonged effects of the recession may have made it more difficult for family members and communities to help people who are struggling to make ends meet. Households that already were poor became poorer during the recession and may have been in greater need of help. In addition, states continued efforts begun before the recession to reach more eligible households, particularly working families and senior citizens, by simplifying SNAP policies and procedures.
The number of SNAP recipients increased in every state, and some of the states that were hit hardest by the recession saw the largest caseload increases. For example, Nevada, Florida, Idaho, and Utah, the four states with the greatest growth in the number of unemployed workers between 2007 and 2011, also had the greatest growth in the number of SNAP recipients.
Adding to SNAP costs, the 2009 Recovery Act temporarily boosted SNAP benefits as a fast and effective economic stimulus measure to help push against the rising tide of hardship for low-income Americans. Economists consider SNAP one of the most effective forms of economic stimulus. Moody’s Analytics estimates that in a weak economy, every dollar increase in SNAP benefits generates about $1.70 in economic activity. Similarly, CBO has found that SNAP has one of the largest “bangs-for-the buck” (i.e. increase in economic activity and employment per budgetary dollar spent) among a broad range of policies for stimulating economic growth and creating jobs in a weak economy. The Recovery Act’s additional SNAP benefits raised SNAP spending by almost 20 percent in fiscal years 2010 and 2011 and between 8 and 11 percent in each of fiscal years 2009, 2012, and 2013.
Caseloads Have Started to Fall, Projected to Shrink Further in Coming Years
As the economy started to recover, SNAP caseload and spending growth slowed substantially. Caseloads leveled off in 2011 and 2012 and have remained essentially flat for the past year. (See Figure 2.) Fewer people have participated in SNAP in each of the last three months for which data are available (September through November 2013), compared to the same months of 2012.
This is true across the nation: state data for recent months show small participation declines month-to-month in about half the states and small increases in the other half. The trend appears to be picking up: in November 2013, all but a handful of states had fewer SNAP participants than in October 2013, and 38 states had fewer SNAP participants than a year earlier. In November 2013, more than 750,000 fewer people participated in the program than in December 2012, when the program reached its highest level of participation. The states with the largest declines from a year earlier include Utah (-10 percent), North Carolina (-9 percent), Georgia (-9 percent), Louisiana (-7 percent), North Dakota (-7 percent), Missouri (-6 percent), and Arizona (-5 percent). CBO expects that as the economy improves, the number of participants will fall by 2 to 5 percent each year over the next decade: from 47.7 million in fiscal year 2013 to 47.6 million in 2014, 46.5 million in 2015, and 34.3 million by 2023.
Due to these flat caseloads, government data show that SNAP spending fell as a share of GDP in fiscal year 2013. (While nominal spending increased slightly in fiscal year 2013, the economy grew faster than SNAP spending.) Because caseloads are expected to decline as the economy recovers, and because of the cut in benefits resulting from the expiration of the Recovery Act (discussed below), total SNAP spending is expected to decline both as a share of GDP and in nominal terms over the next decade.
Recovery Act Expiration Also a Major Factor in Falling SNAP Costs
In addition, the expiration of the Recovery Act’s temporary benefit increase cut SNAP benefits for all households by about 7 percent in the first month, a cut that will amount to about $5 billion in the remaining months of fiscal year 2014. The maximum SNAP benefit decreased by about 5.5 percent on November 1, 2013. (See Figure 3.) While households of the same size experienced the same cut in dollar amount in almost every state, the percentage decrease for households that receive less than the maximum benefit was larger. SNAP benefits are calculated based on the expected contribution that a household can make toward buying food; households with no disposable income receive the maximum SNAP allotment.
In November 2013, SNAP households in almost every state experienced a decrease in average benefits from October 2013. (See Table 2). The average decrease in benefits per SNAP household was $19 per household per month, or a cut of about 7 percent, Table 1 shows. This is equivalent to an average family having to find means to provide for 10 meals a month that SNAP benefits no longer provide. The average SNAP benefit per person per meal fell to just $1.39 per person per month, from about $1.49 per person previously.
|Table 1 |
Difference in SNAP Benefits Resulting From the Expiration
of the Recovery Act Boost
|October 2013||November 2013||Decrease in benefits||% Decrease|
|Maximum benefit (Household of 3)||$526||$497||-$29||-5.5%|
|Average Benefit per Household||$276||$257||-$19||-7.0%|
|Average Benefit per Person||$134||$125||-$9||-7.0%|
|Source: CBPP Calculations Based on USDA Program Data. |
Note: Data differs slightly from published numbers due to two adjustments to data for New York and Alaska. See footnote 3 for an explanation.
In future years, SNAP maximum benefit levels — following the program’s standard benefit adjustments — will simply keep pace with food price inflation.
SNAP spending is almost certain to continue to decline in 2014 because of the expiration of the Recovery Act’s benefit increase, barring a significant reversal of the economic recovery or another unanticipated factor that would cause SNAP caseloads to rise again. Once the economy has fully recovered, SNAP costs are expected to rise only in response to growth in the size of the low-income population and increases in food prices. Unlike health care programs and Social Security, no demographic or programmatic pressures will cause SNAP costs to grow faster than the overall economy. Thus, SNAP is not contributing to the nation’s long-term fiscal problems.
One key question will be whether states are able to maintain the progress they have made in reaching eligible households. During the recession the growth in the number of SNAP participants was caused by both more people qualifying because of the weak economy and a higher share of those who qualify applying and receiving benefits. Just as it has been difficult to disentangle how much each factor contributed to the increase in participation, it will be difficult to assess, assuming caseloads decline we and others expect, whether all of the decline is due to economic factors leading to improved circumstances for low-income households, or whether changes in the participation rate among those eligible also are contributing.
Though SNAP benefits are modest — averaging less than $1.40 per person per meal in fiscal year 2014 — SNAP is one of the most powerful anti-hunger tools available, helping millions of low-income working families, children, seniors, and people struggling to find work (and many veterans and their families) to get enough to eat. SNAP helped to keep nearly 4.9 million Americans out of poverty in 2012, including 2.2 million children, and has been a stepping stone for millions of Americans while they look for work and get back on their feet. The program rose to meet the demand created by the recession, but participation is beginning to decline now that the economy is recovering.
|Table 2 |
Decrease in Average Benefits Resulting From the Expiration of the Recovery Act’s Temporary Benefit Increase, October to November 2013
|Average Benefits per Household, October 2013||Average Benefits per Household, November 2013||Approximate Cut Per Household, October to November 2013||Total Monthly Loss in Benefits to State (millions) 3||Approximate Total Loss in Benefits to State, FY 2014 (millions)4|
|District of Columbia||$245||$229||-$16||-$1||-$15|
|Sources: CBPP calculations based on USDA SNAP Program Data and New York State Office of Temporary and Disability Assistance Monthly Caseload Statistics. |
1Alaska experienced an increase in participation and benefits in October 2013 (as every October), due to residents’ receipt of the annual oil dividends. Data shown here is for September 2013 instead of October 2013. New York residents experienced an increase in benefits due to a one-time settlement payment, and thus data is displayed for December 2013 instead of September 2013.
2 The U.S. Agriculture Department sets SNAP benefits for Alaska, Hawaii, Guam, and the Virgin Islands differently from the rest of the United States because the cost of food is different in these areas. Hawaii’s Thrifty Food Plan exceeded the Recovery Act levels beginning in fiscal year 2013, and therefore its SNAP benefits were already set higher than Recovery Act levels, and participants did not experience a decrease in maximum benefits in November 2013.
3 This column estimates the benefit loss from October to November 2013 by multiplying the average cut per household by the number of participating households in November 2013. The total decrease in benefits that a state experienced may be larger as a result of declining participation in addition to an average loss of benefits.
4This column multiplies the November loss in benefits by 11 months, to simulate the 11 months of Fiscal Year 2014 that the ARRA cut was in effect (November 2013-September 2014). Because this assumes that participation will remain flat, if the number of households participating in SNAP is higher or lower, then the total cut in the state over the 11 months will be correspondingly higher or lower.
|Table 3 |
The Number of SNAP Participants Is Declining in Most States
|SNAP Participants, November 2012 (thousands)||SNAP Participants, October 2013 (thousands)||SNAP Participants, November 2013 (thousands)||% Decrease in Participants, November 2012 to November 2013||% Decrease in Participants, October 2013 to November 2013|
|District of Columbia||145||146||145||0.0%||-0.6%|
|Sources: USDA SNAP Program Data. |
1Alaska experienced an increase in participation and benefits in October 2013 (as every October), due to residents’ receipt of the annual oil dividends. Data shown here is for September 2013 instead of October 2013.
 In early February CBO issued a preliminary revised baseline, which does not include the effects of the SNAP cuts from the 2014 Farm Bill. (It was enacted a few days later.) Total SNAP outlays under the February 2014 CBO baseline are only, at most, about 1 percent different from the May 2013 baseline for any given year. CBO did not provide detailed information about assumptions regarding the number of participants or food price inflation. We will update this chart when CBO issues its revised baseline, likely in April.
 In fiscal year 2013, SNAP outlays were $82.5 billion, a 2.7 percent increase in nominal terms from 2012; but because the economy (GDP) grew at a faster rate (3.3 percent, according to CBO projections), SNAP costs as a share of GDP declined slightly.
 These numbers differ slightly from the published USDA numbers because CBPP made two adjustments to account for one-month anomalies in state data and better reflect the likely annual trend. Specifically, because New York made a one-time legal settlement payment to some SNAP recipients in November 2013, we used data for December 2013 from New York State’s Office of Temporary and Disability Assistance (ODTA) Monthly Caseload Statistics instead of November 2013. For Alaska we used participation and benefit levels for September 2013 instead of October 2013, as Alaska experiences an annual one-month decline in participation and benefits due to payment of oil dividends to residents.
 These CBPP projections are based on the May 2013 CBO baseline, adjusted to reflect actual SNAP outlays for fiscal year 2013 (which differed from the CBO projection by only 0.4 percent) and the actual June 2013 Thrifty Food Plan, upon which SNAP benefits for 11 months of fiscal year 2014 are based — and which grew by 0.7 percent over the previous year, compared to CBO’s projection of 2.5 percent annual growth. The CBPP projections assume that in 2015 and later years, food price inflation and SNAP participation will return to the projections in CBO’s May 2013 baseline.
 Congressional Budget Office, “The Supplemental Nutrition Assistance Program,” April 2012.
 CBPP analysis of the Current Population Survey (CPS).
 Esa Eslami and Karen Cunnyngham, “Supplemental Nutrition Assistance Program Participation Rates: Fiscal Years 2010 and 2011,” U.S. Department of Agriculture, February 2014, http://www.fns.usda.gov/sites/default/files/trends2010-2011.pdf. The estimated participation rates are not directly comparable between 2007 and 2011 because of revisions to the methodology. More recent available data suggest that the rise in SNAP participation rates among those eligible has continued since 2011.
 Both Mark Zandi of Moody’s Analytics and CBO have listed SNAP as one of the most effective policies to increase economic growth and employment in a weak economy. CBO has generally ranked transfer payments to individuals, including SNAP, as one of the top stimulus multipliers as well. See, for example, “Estimated Impact of the American Recovery and Reinvestment Act on Employment and Economic Output in 2013,” February 2014, http://www.cbo.gov/sites/default/files/cbofiles/attachments/45122-ARRA.pdf. Zandi has consistently ranked SNAP as one of the top fiscal stimulus multipliers (see, for example, here: https://www.economy.com/mark-zandi/documents/2012-02-07-JEC-Payroll-Tax.pdf).
 For more information see Stacy Dean and Dorothy Rosenbaum, “SNAP Benefits Will Be Cut for Nearly All Participants In November 2013,” Center on Budget and Policy Priorities, Revised August 2, 2013, http://www.cbpp.org/cms/?fa=view&id=3899.
 SNAP enrollment has not declined in tandem with the unemployment rate in recent years because the job market remains weak. The recent reductions in the unemployment rate overstate the improvements in the labor market. Most tellingly, the share of the adult population with a job (the employment rate) has barely improved since the depth of the recession. And, even as the overall number of unemployed workers has declined, the number of unemployed workers not receiving unemployment insurance — and likely qualifying for SNAP based on their low incomes — has increased. Moreover, the historical record shows that declines in poverty and SNAP enrollment typically lag behind declines in the unemployment rate following recessions. See Chad Stone, Jared Bernstein, Arloc Sherman and Dottie Rosenbaum, “SNAP Enrollment Remains High Because the Job Market Remains Weak,” Center on Budget and Policy Priorities, revised July 30, 2013, http://www.cbpp.org/cms/index.cfm?fa=view&id=3996.
 Congressional Budget Office, “CBO’s May 2013 Baseline for the Supplemental Nutrition Assistance Program,” May 14, 2013, http://www.cbo.gov/publication/44211. CBO has issued a preliminary baseline for 2014, but has not made detailed participation projections available yet.
 The U.S. Agriculture Department sets SNAP benefits for Alaska, Hawaii, Guam, and the Virgin Islands differently from the rest of the United States because the cost of food is different in these areas. Hawaii’s Thrifty Food Plan exceeded the Recovery Act levels beginning in fiscal year 2013, which resulted in its SNAP benefits already being set higher than Recovery Act levels, and therefore its residents did not experience a cut in November 2013 as the result of the Recovery Act’s expiration. SNAP households in Alaska, Guam, and the Virgin Islands experienced a benefit cut in November 2013 that was the same in proportional terms, but slightly different in dollar terms, from the cut in the 48 other states and the District of Columbia.
 Every state except Hawaii experienced a decrease benefits from October to November 2013 because of the expiration of the Recovery Act provision, but we used December 2013 participant and benefits data for New York, because a one-month settlement payment in November 2013 clouds the picture; and we used September participants and benefits data for Alaska instead of October data, because certain dividend payments to households in October result in a pattern that is not representative.