Farm Bill Contains Significant Domestic Nutrition Improvements

PDF of this report (8pp.)

By Dottie Rosenbaum [1]

Revised July 1, 2008

Related Areas of Research

The 2008 Farm Bill makes numerous improvements in domestic food assistance programs to help low-income Americans put food on the table in the face of rising food and fuel prices.  The nutrition title includes more than $10 billion over ten years in increases in these programs — including $7.8 billion for the Food Stamp Program, $1.26 billion for the Emergency Food Assistance Program (TEFAP), and $1 billion for the free fresh fruit and vegetable snack program, which is targeted to schools with high shares of low- income families.[2] The major provisions will be effective October 1, 2008.

The nutrition title of the Farm Bill will:

  • End years of erosion in the purchasing power of food stamps by raising and indexing for inflation the program’s standard deduction and minimum benefit.  These changes will help about 11 million low income people, including families with children, seniors, and people with disabilities.  With these changes, Food Stamp Program rules now fully account for annual inflation for the first time since the program’s creation over 40 years ago, and food stamp households will stop losing food purchasing power each year.
  • Support working-poor families by eliminating the cap on the dependent care deduction, reducing the chances that families will have to forego food to pay for decent and safe child care.
  • Promote savings by improving the program’s resource limits and no longer counting tax-preferred retirement accounts and education accounts toward the resource limit.
  • Simplify administration of the Food Stamp Program for participants and states by building on successful initiatives from the last farm bill.
  • Rename and update the Food Stamp Program.  The program name is changed to the “Supplemental Nutrition Assistance Program,” or SNAP, effective October 1, 2008.  The new law also includes numerous provisions to strengthen program operations, integrity, and oversight.
  • Help emergency feeding organizations such as food banks, food pantries, and soup kitchens meet increasing demand and rising food prices by increasing annual funding for commodity purchases for TEFAP from $140 million to $250 million and subsequently adjusting this amount for food inflation.
  • Dramatically increase the availability of fruits and vegetables in low-income schools by expanding the Fresh Fruit and Vegetable Program under the Richard B. Russell National School Lunch Act, which provides free fresh fruits and vegetables, typically as snacks, to children in schools. 

Major Nutrition Provisions

Below are short descriptions of the major nutrition provisions in the nutrition title.  The Center on Budget and Policy Priorities has conducted a preliminary analysis of the state-by-state impacts of some of the key provisions:  those affecting the food stamp standard deduction, child care deduction, and minimum benefit, as well as the increased funding for the Fresh Fruit and Vegetable Program and TEFAP.  Tables at the end of this report present estimates of the number of people affected in each state and the size of the benefit increases under the law, based on information that the Congress has made available, Congressional Budget Office cost estimates, and CBPP analysis.

Ends the erosion in the Standard Deduction.  As a result of benefit cuts enacted in 1996, the purchasing power of most households’ food stamp benefits has eroded each year.  Similar to income tax rules, food stamp rules allow households to subtract a standard deduction from their income to reflect the cost of non-food essentials such as housing, transportation, and medical care.  For more than a decade this amount has been frozen at $134 a month for households with three or fewer members, a group that makes up 75 percent of food stamp households.[3]  As a result of the 1996 cuts, a typical working parent with two children receives about $37 less in food stamps each month in 2008 than she would have without the 1996 cuts.  Under prior law, because of the frozen level of the standard deduction, the cut grew larger each year because of inflation.

Under the new law, the minimum standard deduction will increase from $134 to $144 in 2009 and will be indexed in subsequent years for inflation.  In 2009, the change will provide a typical working family of three with an additional $4 to $5 a month in food stamp benefits.   In nominal terms, this amount will rise to $17 a month by 2017 according to CBO’s inflation projections.  As a result, the food stamp benefit’s purchasing power will no longer shrink each year, and some of the lost ground will be made up.  (See Figure 1.)

The provision will help about 10 million recipients in an average month and will increase food stamp benefits by $5.4 billion over the 2009 to 2017 period. 

Increases the $10 minimum benefit and ends erosion in its value.  Under food stamp rules, one- and two-person households that qualify for a monthly benefit amount of less than $10 receive a $10 “minimum benefit.” The minimum benefit goes overwhelmingly to people who are elderly or have a disability, and has not been adjusted for inflation in more than 30 years.  As a result, households that receive the minimum benefit can purchase only about one-third as much food with their food stamp benefits as they could have purchased in 1979, when the minimum benefit went into effect.  Under the farm bill, the minimum benefit will be set at 8 percent of the maximum benefit (or Thrifty Food Plan) for a household of 1, rounded to the nearest whole dollar — or about $14 a month in fiscal year 2009[4] — and will be adjusted for inflation in subsequent years.

Approximately 650,000 households with 780,000 individuals will receive higher benefits under this provision, nearly all of them containing seniors or people with disabilities.  Food stamp benefits will increase by about $280 million over the 2009 to 2017 period.

Eliminates the cap on the dependent care deduction.  For low-income working families who have preschool or young school-age children, high quality, affordable child care is often essential for finding and keeping employment.  The food stamp benefit formula allows families to deduct some of their child care expenses from their income to reflect the fact that they have less money available to purchase food.  Yet under prior law, this deduction was capped at $175 per month per child ($200 for infants), well below the amounts that some low-income families must pay for child care. 

This provision allows households to deduct the full amount of dependent care costs that they incur in order to work (or to participate in approved education and training programs), and thereby targets more food assistance to working families that are less able to afford food because of this expense. 

This change will increase food stamp benefits by $500 million over the 2009 to 2017 period.  It will provide an average of almost $500 more per year (about $40 per month) to approximately 100,000 households that pay high child care costs.  A mother of three who works 35 hours a week at $9 an hour and pays $350 a month for child care for a pre-school-aged child (the average out-of-pocket costs for employed mothers with income below the poverty level, according to the Census Bureau) will receive an additional $79 in food stamps each month ($334 rather than $255), or almost $1,000 more over the course of a year. 

Encourages savings.  The food stamp asset limits have been frozen since 1986, at $2,000 for most households and $3,000 for households with members who are elderly or disabled.  The steady shrinkage in the inflation-adjusted value of the asset limits discourages saving and undermines a key path to self-sufficiency.  The new law will address this problem by indexing the asset limits to inflation. 

In addition, consistent with an Administration proposal, tax-preferred retirement accounts and education accounts will no longer be counted toward the asset limit.  This removes the current disincentive for working households to save for retirement and education. 

The Food Stamp Program’s prior rules excluded amounts in 401(k) retirement plans from the asset test but counted amounts in Individual Retirement Accounts (IRAs).  As a result, working families who managed to save more than $2,000 for retirement in an IRA had to partially liquidate that account to qualify for food stamps during periods of unemployment.  This forced families to choose between hardship when they lose their job and a higher risk of poverty in old age. 

CBO estimates that these changes will, by 2017, make about 125,000 people newly eligible for food stamps.  Individuals in these households will receive an average of about $90 to $125 a month in food stamps.  CBO estimates the provision will increase food stamp benefits by about $1.2 billion over the 2009 to 2017 period.

Builds on the successes of the 2002 Farm Bill.  The farm bill builds upon several state options to simplify benefit delivery that were enacted in the 2002 Farm Bill.  It streamlines paperwork burdens on seniors and people with disabilities and expands the “transitional benefit” option to cover more families leaving welfare for work.  It also supports state efforts to modernize service delivery, based on recent state innovations.  For example, the Farm Bill establishes a new state option to allow states to take food stamp applications over the telephone.  The new law also enhances program integrity by increasing penalties for retailers who abuse the program and requiring adequate testing of large new automated systems before they can be implemented.   

Increases support for emergency feeding organizations.   Mandatory funding under the Food Stamp Act for The Emergency Food Assistance Program (TEFAP), which supports food purchases by food banks and other emergency feeding organizations, was set at $140 million per year.  This amount had been flat since 2002, even as food prices climbed more than 15 percent.  Had the amount kept pace with inflation, it would be $163 million in fiscal year 2008. 

In addition, the TEFAP program receives “bonus commodities” that USDA purchases and provides under other authority.  “Bonus commodities” from USDA have declined by more than 70 percent in the past three years.

Under the farm bill, annual funding for commodity purchases for TEFAP will increase from $140 million to $250 million in 2009 and be increased in accordance with changes in the cost of the Thrifty Food Plan in years after that, so the funding level keeps pace with food prices.  TEFAP also will receive $50 million in additional funding for the remainder of fiscal year 2008.

Expands free fresh fruits and vegetables in low-income schools.  The law expands and improves the Fresh Fruit and Vegetable Program under the Richard B. Russell National School Lunch Act.  This program has been receiving $9 million a year in mandatory funds and currently operates in 14 states.  (Three Indian tribes also operate the program.)  In fiscal year 2008, an additional $9.9 million in discretionary funds was provided to expand the program into all states and the District of Columbia.  

Under the farm bill, mandatory funding will increase to $40 million for the 2008-2009 school year and grow in each subsequent year through 2012.  By 2012, the program will be funded at nearly eight times its current size: $150 million each year, with annual adjustments for inflation in years after that.  A significant portion of the new program was financed by restricting the Secretary’s “Section 32” spending authority, which provides the Secretary with broad authority to use a share of annual customs receipts to support the agricultural sector. 

In addition to providing increased funding, the farm bill targets program funds to elementary schools with a significant share of low-income children.  Free fresh fruits and vegetables should be provided to all elementary schools in the country where more than half of the children are eligible for free or reduced price school meals.  Each such school will receive $50 to $75 per child per year for fruit and vegetable purchases.  CBO estimates the ten-year cost of the expansion at a little over $1 billion.

IMPACT OF SELECTED NUTRITION
PROVISIONS OF THE FARM BILL
Additional Benefits, FY 2009
(Budget Authority in millions of dollars)

State
Standard
Deduction
Dependent
Care
Deduction
Minimum
Benefit
TEFAP
Fresh Fruit
& Veg.
Program*
Total
these
provisions**
Alabama
$5
$1.6
$0.3
$1.7
$1.8
$10
Alaska
1
0.1
0.2
1.1
2
Arizona
4
1.0
0.3
2.1
1.9
10
Arkansas
3
0.8
0.3
1.2
1.5
7
California
19
0.7
0.5
13.2
7.1
40
Colorado
2
0.2
0.2
1.5
1.8
6
Connecticut
3
0.5
0.3
1.0
1.6
6
Delaware
1
0.2
0.1
0.2
1.2
2
District of Columbia
1
0.1
0.3
1.1
2
Florida
15
2.5
1.1
5.6
4.1
28
Georgia
8
2.3
0.5
3.5
2.6
17
Hawaii
2
0.3
1.2
4
Idaho
1
0.6
0.1
0.4
1.3
3
Illinois
11
2.3
0.7
4.4
3.1
22
Indiana
5
0.8
0.4
2.2
1.3
10
Iowa
2
0.1
0.2
0.9
1.2
4
Kansas
2
0.1
0.2
0.9
1.5
5
Kentucky
6
0.6
0.4
1.8
1.7
11
Louisiana
7
3.1
0.2
1.8
1.8
14
Maine
2
0.3
0.2
0.5
1.2
4
Maryland
3
1.4
0.3
1.4
2.0
8
Massachusetts
5
0.3
0.5
2.1
2.1
10
Michigan
9
2.2
1.4
4.4
1.7
19
Minnesota
4
0.1
1.1
1.6
1.9
9
Mississippi
3
0.3
0.2
1.5
1.3
6
Missouri
7
3.1
0.7
2.2
2.0
15
Montana
1
0.1
0.3
1.2
2
Nebraska
1
0.2
0.5
1.3
3
Nevada
1
0.2
0.1
0.8
1.4
4
New Hampshire
1
0.1
0.1
0.3
1.2
2
New Jersey
5
0.9
0.4
2.4
2.5
11
New Mexico
2
0.2
0.1
0.8
1.4
5
New York
19
3.4
1.3
6.9
4.2
35
North Carolina
8
2.1
0.9
3.4
1.6
16
North Dakota
1
0.3
0.2
1.1
2
Ohio
10
0.7
0.7
4.5
1.9
18
Oklahoma
3
0.8
1.4
1.6
7
Oregon
5
1.1
0.7
1.4
1.6
10
Pennsylvania
11
1.6
1.3
4.1
2.1
20
Rhode Island
1
0.1
0.2
0.4
1.2
3
South Carolina
4
0.9
0.4
1.9
1.7
9
South Dakota
0.4
0.1
0.3
1.0
2
Tennessee
8
2.2
1.1
2.4
2.0
16
Texas
19
7.8
0.8
9.5
4.9
42
Utah
1
0.3
0.1
0.6
1.5
4
Vermont
1
0.1
0.1
0.2
1.1
2
Virginia
5
0.8
0.7
1.9
2.3
11
Washington
5
0.2
0.3
2.2
1.3
9
West Virginia
3
0.1
0.3
0.7
1.3
5
Wisconsin
3
0.5
0.8
1.9
2.0
8
Wyoming
0.3
0.1
1.1
1
Guam
0.2
***
0.2
Puerto Rico
0
0
0
3.8
***
4
Virgin Islands
0.1
***
0.1
Total
$250
$49
$22
$110
$96
$527
—  Estimated effect is less than $100,000.

This table presents information for five of the major provisions in the nutrition title: the standard deduction, dependent care deduction,
and minimum benefit in food stamps, commodity purchases for The Emergency Food Assistance Program (TEFAP), and new spending
 for the Fresh Fruit and Vegetable Program under the School Lunch Act.  National estimates are from CBO.  For state estimates the national
number is allocated based on CBPP analysis of food stamp and other USDA administrative data.

* This represents additional mandatory funds made available under this bill, above the baseline amounts.

** Total does not reflect the interaction of the three food stamp provisions.  The actual impact may be slightly lower.

*** Guam, Puerto Rico, and Virgin Islands will receive amounts under this program, but we are unable to estimate the amounts.

IMPACT OF SELECTED NUTRITION PROVISIONS OF THE FARM BILL
Additional Benefits, FY 2008-2017
(Budget Authority in millions of dollars)
State
Standard
Deduction
Dependent
Care
Deduction
Minimum
Benefit
TEFAP
Fresh Fruit
& Veg.
Program*
Total
these
provisions**
Alabama
$107
$17
$3
$19
$23
$169
Alaska
17
1
3
15
35
Arizona
93
10
3
24
26
156
Arkansas
72
8
4
14
19
117
California
406
8
6
151
93
664
Colorado
46
2
3
18
23
92
Connecticut
56
5
4
11
21
95
Delaware
12
2
1
3
15
33
District of Columbia
19
1
3
14
38
Florida
333
26
14
64
55
491
Georgia
178
23
6
40
33
281
Hawaii
50
0.5
0.2
3
16
70
Idaho
18
6
1
5
16
47
Illinois
249
23
8
50
40
370
Indiana
112
8
5
26
17
166
Iowa
44
1
3
10
10
67
Kansas
43
1
3
11
19
77
Kentucky
138
6
5
21
22
192
Louisiana
147
32
3
21
23
225
Maine
45
3
3
5
16
72
Maryland
71
15
4
16
26
132
Massachusetts
103
3
6
24
27
164
Michigan
205
23
18
50
26
321
Minnesota
97
2
14
18
25
155
Mississippi
61
4
3
17
10
95
Missouri
140
32
9
25
25
231
Montana
18
1
3
15
37
Nebraska
24
3
6
17
49
Nevada
29
2
2
9
19
61
New Hampshire
14
1
1
4
16
37
New Jersey
111
9
6
28
32
185
New Mexico
47
2
2
9
16
76
New York
412
34
17
79
53
595
North Carolina
169
21
12
39
23
264
North Dakota
10
3
1
2
14
30
Ohio
218
7
8
51
28
312
Oklahoma
72
10
16
21
119
Oregon
102
12
9
16
21
160
Pennsylvania
244
17
17
46
30
354
Rhode Island
17
1
2
4
16
40
South Carolina
93
9
5
22
22
151
South Dakota
9
1
3
12
25
Tennessee
172
22
14
28
26
262
Texas
411
80
10
108
66
674
Utah
22
3
1
7
19
53
Vermont
13
1
1
2
15
32
Virginia
114
9
9
22
30
183
Washington
111
2
4
25
20
162
West Virginia
61
1
3
8
17
91
Wisconsin
56
5
10
22
25
119
Wyoming
5
0.2
1
2
14
22
Guam
4
0.4
***
4
Puerto Rico
0
0
0
43
***
43
Virgin Islands
1
0.2
***
1
Total
$5,420
$500
$278
$1,256
$1,240
$8,694
—  Estimated effect is less than $100,000.

This table presents information for five of the major provisions in the nutrition title: the standard deduction, dependent care deduction, and minimum benefit
in food stamps, commodity purchases for The Emergency Food Assistance Program (TEFAP), and new spending for the Fresh Fruit and Vegetable Program
under the School Lunch Act.

National estimates are from CBO.  For state estimates the national number is allocated based on CBPP analysis of food stamp and other USDA administrative data.

* This represents additional mandatory funds made available under this bill, above the baseline amounts.

** Total does not reflect the interaction of the three food stamp provisions.  The actual impact may be slightly lower.

*** Guam, Puerto Rico, and Virgin Islands will receive amounts under this program, but we are unable to estimate the amounts.

NUMBER OF PEOPLE BENEFITING FROM
SELECTED NUTRITION PROVISIONS OF THE FARM BILL

(People Receiving Additional Benefits in 2012)

State
Standard Deduction*
Dependent Care Deduction**
Minimum Benefit**
Total these provisions*  ***
Alabama
201,000
10,000
10,000
209,000
Alaska
31,000
3,000
34,000
Arizona
174,000
4,000
9,000
184,000
Arkansas
129,000
6,000
11,000
140,000
California
850,000
4,000
18,000
866,000
Colorado
80,000
2,000
8,000
88,000
Connecticut
89,000
3,000
11,000
98,000
Delaware
25,000
1,000
3,000
28,000
District of Columbia
38,000
3,000
41,000
Florida
536,000
20,000
44,000
575,000
Georgia
324,000
16,000
19,000
340,000
Hawaii
71,000
1,000
72,000
Idaho
33,000
4,000
3,000
36,000
Illinois
415,000
14,000
27,000
438,000
Indiana
194,000
4,000
14,000
204,000
Iowa
76,000
7,000
82,000
Kansas
71,000
1,000
8,000
77,000
Kentucky
234,000
4,000
15,000
247,000
Louisiana
266,000
21,000
9,000
272,000
Maine
69,000
2,000
7,000
75,000
Maryland
120,000
9,000
13,000
131,000
Massachusetts
178,000
2,000
20,000
197,000
Michigan
395,000
14,000
53,000
446,000
Minnesota
176,000
2,000
18,000
192,000
Mississippi
136,000
2,000
9,000
142,000
Missouri
243,000
20,000
26,000
266,000
Montana
31,000
2,000
33,000
Nebraska
43,000
7,000
49,000
Nevada
46,000
1,000
5,000
51,000
New Hampshire
24,000
1,000
4,000
28,000
New Jersey
196,000
7,000
15,000
211,000
New Mexico
96,000
2,000
5,000
100,000
New York
877,000
19,000
40,000
912,000
North Carolina
311,000
15,000
35,000
340,000
North Dakota
17,000
2,000
2,000
18,000
Ohio
369,000
4,000
31,000
389,000
Oklahoma
135,000
25,000
157,000
Oregon
160,000
9,000
25,000
185,000
Pennsylvania
408,000
12,000
41,000
449,000
Rhode Island
34,000
1,000
4,000
38,000
South Carolina
201,000
5,000
14,000
213,000
South Dakota
16,000
2,000
17,000
Tennessee
309,000
15,000
38,000
345,000
Texas
857,000
46,000
32,000
890,000
Utah
41,000
2,000
5,000
44,000
Vermont
20,000
1,000
3,000
23,000
Virginia
198,000
7,000
23,000
220,000
Washington
229,000
2,000
12,000
239,000
West Virginia
104,000
1,000
11,000
112,000
Wisconsin
110,000
3,000
30,000
140,000
Wyoming
10,000
1,000
11,000
Guam
4,000
4,000
Virgin Islands
4,000
4,000
Total
10,003,000
320,000
780,000
10,703,000
— Estimated effect is less than 1,000 people.

This table presents information for three of the major food stamp provisions in the nutrition title:
the standard deduction, dependent care deduction, and minimum benefit.

* CBPP estimate based on food stamp administrative data.

** National estimates are from CBO.  For state estimates the national number is allocated based on CBPP
analysis of food stamp administrative data.

***Total is less than the sum of the three preceding columns because of
overlap in the participants who will benefit from the three provisions.

 

End Notes:

[1] The author received significant assistance in the data analysis for the paper from Danilo Trisi and Katie Van Loo.

[2] P.L. 110-246 was enacted on June 18, 2008 after the House and Senate voted to override the President’s veto of the legislation.  The same bill (except with the Trade title missing) cleared the Congress on May 22nd.  The new law can be found at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h6124enr.txt.pdf.

[3] In the 2002 Farm Bill, Congress addressed benefit erosion for larger households.

[4] This estimate is based on the Congressional Budget Office’s March 2008 projection for the TFP for a household of 1 in FY09.  The minimum benefit will be higher in Alaska, Hawaii, Guam, and the Virgin Islands because these areas have higher Thrifty Food Plans.

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