Revised December 2, 2003
IMPLEMENTING NEW CHANGES TO THE FOOD STAMP PROGRAM:
A Provision by Provision Analysis of the Farm Bill
by Stacy Dean and Dorothy Rosenbaum
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States, non-profit groups, and low-income families from around the country have spent the last few years working together to promote a new vision for the Food Stamp Program one that allows eligible families, especially working families, to participate in the program for longer periods of time with less paperwork and fewer office visits. The recently enacted Farm Bill should allow states to make significant progress toward this goal.
On May 13, 2002, President Bush signed into law the Farm Security and Rural Investment Act of 2002 (P.L. 107-171), more commonly known as the Farm Bill. The nutrition title of the Farm Bill reauthorizes the Food Stamp Program for five years, adds almost $7 billion in resources to the program, and significantly strengthens the program in a variety of ways.
The food stamp provisions fall into four categories:
- Restoring Benefits to Ineligible Groups. Significant process was made in restoring benefits to legal immigrants made ineligible for food stamps under the 1996 welfare law. Benefits will be restored to legal immigrants who have lived in the country for at least five years, and to both legal immigrant children and individuals receiving disability benefits, regardless of the number of years they have been in the country. In addition, the asset limit for households with a disabled member will be raised to $3,000.
- Improving Benefit Adequacy The standard deduction will be raised for larger households and adjusted annually to reflect inflation. The Congressional Budget Office estimated that this provision would provide almost $2 billion over 10 years to low-income families with children.
- Simplifying the Program and Streamlining Benefit Delivery States will receive ten new options to deliver benefits more effectively to eligible households, particularly working households. Using these options, states can replace complex benefit computations that must be adjusted each month to accommodate even the slightest changes in a household's circumstances with a benefit that is easier to calculate and remains constant longer. Adopting the new options should make the Food Stamp Program easier for states to administer and much less burdensome and stressful for families to use.
- Reforming the Quality Control System The Quality Control system will no longer set up one-half of the states for failure. Instead, it will be revised to focus on states with persistently high error rates and will include new performance awards for states with superior performance.
These changes can help create a stronger Food Stamp Program and thereby make a critical difference in the well-being of millions of low-income individuals. The Food Stamp Program is the nation's most important food assistance program, especially for children. It provides more substantial nutrition assistance to low‑income children than all of the nation's child nutrition programs combined. More than half of all food stamp participants are children, and over 80 percent of food stamp benefits go to families with children. Furthermore, the Food Stamp Program is the only social program that creates a national benefit floor under nearly all categories of poor households, assisting low‑income children and their families as well as low‑income elderly, disabled and unemployed individuals.
Moreover, food stamps serve as an important work support by helping low‑wage workers make ends meet. Leaders from across the political spectrum have agreed that a family supported by a full‑time, year‑round, minimum-wage worker should not have to live in poverty. Such a family, however, will fall short of the poverty line by 25 percent, even after counting the Earned Income Tax Credit, if the family does not receive food stamps. And because food stamps (unlike the EITC) come to families throughout the year, they can help these families meet monthly expense
Unfortunately, however, food stamp participation among eligible households has plummeted in recent years:
- According to the U.S. Department of Agriculture (USDA), the share of eligible individuals participating in food stamps dropped from 73 percent to 60 percent between 1994 and 1998 and then remained essentially level through 2000. (The share of eligible households participating dropped from 70 percent to 53 percent between 1994 and 2000.) These participation rates vary dramatically across states. In 1999, they ranged from over 75 percent in Maine, West Virginia, and Hawaii to below 45 percent in Massachusetts, Kansas, and Nevada.
- While participation rates for the elderly and disabled have held fairly stable, participation rates among households with children have declined markedly. In 1994, some 86 percent of eligible households with children participated in the program; in 2000, some 71 percent did.
- The share of individuals in working households with children that participate in food stamps has also fallen, from 63 percent in 1994 to 55 percent in 2000.
The decline in food stamp participation means that poor families are foregoing billions of dollars in federal food assistance each year. In any given month of 2000, more than two million eligible working poor households did not participate in the Food Stamp Program. These families gave up an average (in 2001) of about $200 per month in food stamp benefits, which can make the difference in enabling a low‑income family to put adequate food on the table each day.
While all of the reasons for the decline in food stamp participation among working families are not known with certainty, policy experts and state officials agree that barriers to participation in the program have become more significant in recent years, especially for working families:
- The Food Stamp Program has historically demanded that states be aware of changes in a household's circumstances on a monthly basis. This requirement poses particular difficulties for working families, whose circumstances are more likely to fluctuate than those of non-working families; working families typically have a lower food stamp participation rate than non‑working families. As large numbers of food stamp households have moved from welfare to work in recent years, many have dropped out of the Food Stamp Program, finding it too burdensome to keep up with the program's demands for detailed information on a monthly basis.
- In an effort to limit food stamp errors, many states imposed more onerous paperwork and office‑visit requirements on working food stamp households during the mid‑1990s. USDA's Quality Control system evaluates states according to how accurately they issue food stamp benefits and imposes fiscal sanctions on states with error rates above the national average. Because states are especially likely to make errors in benefit levels for households with fluctuating incomes (like most low‑income working households), states felt pressured to target the growing number of working food stamp households for extra verification of their circumstances and more frequent face‑to‑face eligibility reviews. These changes appear to have driven many working households from the program. In particular, states that required working families to reapply for food stamps every three months experienced much greater caseload declines among working families with children than did other states.
- Most families that leave TANF cash assistance programs have low incomes and remain eligible for food stamps when they go to work. Many of these eligible families, however, do not stay connected to the Food Stamp Program when they leave TANF. Research by both the Department of Health and Human Services and the Urban Institute has shown that fewer than half of the individuals who leave TANF cash assistance continue to participate in the Food Stamp Program despite earning low wages and, in most cases, remaining eligible for food stamp benefits. Additional research by the Manpower Demonstration Research Corporation indicates that many families that leave TANF cash assistance are not aware they remain eligible for food stamps. Frequently these families are asked to complete paperwork detailing their circumstances once they leave TANF. Many, failing to understand that they continue to qualify for significant food stamp benefits, never respond to the welfare offices' queries
In addition to these procedural barriers, research indicates that many low-income families that do not participate in the Food Stamp Program do not believe they are eligible. Others mistakenly believe they are eligible for only a very small food stamp benefit. Procedural barriers can compound these misperceptions: even if outreach efforts educate households about their potential eligibility, many households may not be willing to find out if they are eligible if the application process is too difficult or interferes with their work schedules.
Ironically, this deterioration in food stamp service to working families has been occurring at the same time that states have been easing the barriers that low-income working families face in obtaining health insurance. States have taken significant new steps to reduce paperwork and to allow families to apply for health insurance outside of the welfare office.
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 Trends in Food Stamp Program Participation: 1994 to 2000, Karen Cunningham, Mathematica Policy Research, June 2002, available at: http://www.fns.usda.gov/oane/MENU/Published/FSP/Participation.htm#Trends.
 Reaching Those in Need: State Food Participation Rates in 1999, Allen Schrim and Laura Castner, Mathematica Policy Research, June 2002, available at: http://www.fns.usda.gov/oane/MENU/Published/FSP/FILES/Participation/1999rates.pdf.