Supplemental Nutrition Assistance Program
The Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp program, provides food-purchasing assistance for low- and no-income people living in the U.S. It is a federal aid program, administered by the U.S. Department of Agriculture, under the Food and Nutrition Service (FNS) Administration, though benefits are distributed by eachU.S. state's Division of Social Services or Children and Family Services. Benefits can be used to purchase any prepackaged edible foods, regardless of nutritional value (e.g. soft drinks and confections). Hot foods (such as those found in a supermarket deli) are ineligible, as well as items in fast food restaurants and similar retail settings.
For most of its history, the program used paper-denominated "stamps" or coupons – worth US$1 (brown), $5 (blue), and $10 (green) – bound into booklets of various denominations, to be torn out individually and used in single-use exchange. Because of their intrinsic value of 1:1 with actual money, the coupons were printed by the US Bureau of Engraving and Printing. Their rectangular shape resembled a US dollar bill (although about 1/2 the size), including intaglio printing on high-quality paper with watermarks.
In the late 1990s, the Food Stamp program was revamped, with some states phasing out actual stamps in favor of a specialized debit card system known as Electronic Benefit Transfer (EBT), provided by private contractors. Many states merged the use of the EBT card for public welfare programs as well, such as cash assistance. The move was designed to save the government money by not printing the coupons, make benefits available immediately instead of forcing the recipient to wait for mailing or picking up the booklets in person, and reduce theft and diversion. The 2008 farm bill renamed the Food Stamp Program as the Supplemental Nutrition Assistance Program (beginning October 2008) and replaced all references to "stamp" or "coupon" in federal law to "card" or "EBT."
In the 2012 fiscal year, $74.6 billion in food assistance was distributed. As of September 2012[update], 47.7 million Americans were receiving on average $134.29 per month in food assistance. More than 15% of the U.S. population receive food assistance.
- 1 History
- 1.1 First Food Stamp Program (FSP) (May 16, 1939 – Spring 1943)
- 1.2 Pilot Food Stamp Program (1961–1964)
- 1.3 Food Stamp Act of 1964
- 1.4 Program expansion: participation milestones in the 1960s and early 1970s
- 1.5 Major legislative changes (early 1970s)
- 1.6 1974 nationwide program
- 1.7 Eligible access to Supplemental Security Income beneficiaries
- 1.8 Food Stamp Act of 1977
- 1.9 Cutbacks of the early 1980s
- 1.10 Mid-to-late 1980s
- 1.11 1993 Mickey Leland Childhood Hunger Relief Act
- 1.12 Later participation milestones
- 1.13 1996 Welfare Reform and subsequent amendments
- 1.14 American Recovery and Reinvestment Act of 2009 (ARRA)
- 2 Impact
- 3 Healthy Incentives Pilot
- 4 State implementations
- 5 See also
- 6 References
- 7 External links
First Food Stamp Program (FSP) (May 16, 1939 – Spring 1943)
The idea for the first FSP has been credited to various people, most notably U.S. Secretary of Agriculture Henry Wallace and the program's first administrator, Milo Perkins. Of the program, Perkins said, "We got a picture of a gorge, with farm surpluses on one cliff and under-nourished city folks with outstretched hands on the other. We set out to find a practical way to build a bridge across that chasm." The program operated by permitting people on relief to buy orange stamps equal to their normal food expenditures; for every US$1 worth of orange stamps purchased, fifty cents' worth of blue stamps were received. Orange stamps could be used to buy any food; blue stamps could be used only to buy food determined by the Department to be surplus.
Over the course of nearly four years, the first FSP reached approximately 20 million people at one time or another in nearly half of the counties in the U.S. at a total cost of $262 million. At its peak, the program assisted 4 million people simultaneously. The first recipient was Mabel McFiggin of Rochester, New York; the first retailer to redeem the stamps was Joseph Mutolo; and the first retailer caught violating program rules was Nick Salzano in October 1939. The program ended when the conditions that brought the program into being (unmarketable food surpluses and widespread unemployment) no longer existed.
Pilot Food Stamp Program (1961–1964)
The eighteen years between the end of the first FSP and the inception of the next were filled with studies, reports, and legislative proposals. Prominent U.S. Senators actively associated with attempts to enact a food stamp program during this period are George Aiken, Robert M. La Follette, Jr., Hubert Humphrey, Estes Kefauver, and Stuart Symington. From 1954 on, U.S. Representative Leonor Sullivan strove to pass food-stamp-program legislation.
On September 21, 1959, P.L. 86-341 authorized the Secretary of Agriculture to operate a food-stamp system through January 31, 1962. The Eisenhower Administration never used the authority. However, in fulfillment of a campaign promise made in West Virginia, President John F. Kennedy's first Executive Order called for expanded food distribution and, on February 2, 1961, he announced that food stamp pilot programs would be initiated. The pilot programs would retain the requirement that the food stamps be purchased, but eliminated the concept of special stamps for surplus foods. A Department spokesman indicated the emphasis would be on increasing the consumption of perishables.
Mr. and Mrs. Alderson Muncy of Paynesville, West Virginia, were the first food stamp recipients on May 29, 1961. They purchased US$95 worth of food using food stamps for their 15-person household. In the first food stamp transaction, the Muncys bought a can of pork and beans at Henderson's Supermarket. By January 1964, the pilot programs had expanded from eight areas to 43 (40 counties, Detroit, Michigan, St. Louis, Missouri, and Pittsburgh, Pennsylvania) in 22 States with 380,000 participants.
Of the program, U.S. Representative Leonor K. Sullivan of Missouri asserted, "...the Department of Agriculture seemed bent on outlining a possible food stamp plan of such scope and magnitude, involving some 25 million persons, as to make the whole idea seem ridiculous and tear food stamp plans to smithereens."
Food Stamp Act of 1964
The Food Stamp Act of 1964 appropriated $75 million to 350,000 individuals in 40 counties and three cities. The measure drew overwhelming support from House Democrats, 90 percent from urban areas, 96 percent from the suburbs, and 87 percent from rural areas. Republican lawmakers opposed the initial measure: only 12 percent of urban Republicans, 11 percent from the suburbs, and 5 percent from rural areas voted affirmatively. President Lyndon B. Johnson hailed food stamps as "a realistic and responsible step toward the fuller and wiser use of an agricultural abundance."
Rooted in congressional logrolling, the act was part of a larger appropriation that raised price supports for cotton and wheat. Rural lawmakers supported the program so that their urban colleagues would not dismantle farm subsidies. Food stamps, along with Medicaid, Head Start, and the Job Corps were foremost among the growing anti-poverty programs.
President Johnson called for a permanent food-stamp program on January 31, 1964. Agriculture Secretary Orville Freeman submitted the legislation on April 17, 1964. The bill eventually passed by Congress was H.R. 10222, introduced by Congresswoman Sullivan. One of the members on the House Committee on Agriculture who voted against the FSP in Committee was then Representative Bob Dole.
As a Senator, Dole became a staunch supporter of the program, after he worked with George McGovern to produce a bipartisan solution to two of the main problems associated with food stamps: cumbersome purchase requirements and lax eligibility standards. Dole told Congress regarding the new provisions, “I am confident that this bill eliminates the greedy and feeds the needy.” The law was intended to strengthen the agricultural economy and provide improved levels of nutrition among low-income households; however, the practical purpose was to bring the pilot FSP under congressional control and to enact the regulations into law.
The major provisions were:
- The State Plan of Operation requirement and development of eligibility standards by States;
- They required that the recipients should purchase their food stamps, while paying the average money spent on food then receiving an amount of food stamps representing an opportunity more nearly to obtain a low-cost nutritionally adequate diet;
- The eligibility for purchase with food stamps of all items intended for human consumption except alcoholic beverages and imported foods (the House version would have prohibited the purchase of soft drinks, luxury foods, and luxury frozen foods);
- Prohibitions against discrimination on basis of race, religious creed, national origin, or political beliefs;
- The division of responsibilities between States (certification and issuance) and the Federal Government (funding of benefits and authorization of retailers and wholesalers), with shared responsibility for funding costs of administration; and
- Appropriations for the first year limited to $75 million; for the second year, to $100 million; and, for the third year, to $200 million.
The Agriculture Department estimated that participation in a national FSP would eventually reach 4 million, at a cost of $360 million annually, far below the actual numbers.
Program expansion: participation milestones in the 1960s and early 1970s
In April 1965, participation topped half a million. (Actual participation was 561,261 people.) Participation topped 1 million in March 1966, 2 million in October 1967, 3 million in February 1969, 4 million in February 1970, 5 million one month later in March 1970, 6 million two months later in May 1970, 10 million in February 1971, and 15 million in October 1974. Rapid increases in participation during this period were primarily due to geographic expansion.
Major legislative changes (early 1970s)
The early 1970s were a period of growth in participation, concern about the cost of providing food stamp benefits, and questions about administration, primarily timely certification. During this time, the issue was framed that would dominate food stamp legislation ever after: How to balance program access with program accountability. Three major pieces of legislation shaped this period, leading up to massive reform to follow:
P.L. 91-671 (January 11, 1971) established uniform national standards of eligibility and work requirements; required that allotments be equivalent to the cost of a nutritionally adequate diet; limited households' purchase requirements to 30 percent of their income; instituted an outreach requirement; authorized the Agriculture Department to pay 62.5 percent of specific administrative costs incurred by States; expanded the FSP to Guam, Puerto Rico, and the Virgin Islands of the United States; and provided $1.75 billion appropriations for Fiscal Year 1971.
Agriculture and Consumer Protection Act of 1973 (P.L. 93-86, August 10, 1973) required States to expand the program to every political jurisdiction before July 1, 1974; expanded the program to drug addicts and alcoholics in treatment and rehabilitation centers; established semi-annual allotment adjustments, SSI cash-out, and bi-monthly issuance; introduced statutory complexity in the income definition (by including in-kind payments and providing an accompanying exception); and required the Department to establish temporary eligibility standards for disasters.
P.L. 93-347 (July 12, 1974) authorized the Department to pay 50 percent of all states' costs for administering the program and established the requirement for efficient and effective administration by the States.
1974 nationwide program
In accordance with P.L. 93-86, the FSP began operating nationwide on July 1, 1974. (The program was not fully implemented in Puerto Rico until November 1, 1974.) Participation for July 1974 was almost 14 million.
Eligible access to Supplemental Security Income beneficiaries
Once a person is a beneficiary of the Supplemental Security Income Program he (or she) may be automatically eligible for Food Stamps depending on his (or her) state’s laws. How much money in food stamps they receive also varies by state. Supplemental Security Income was created in 1974.
Food Stamp Act of 1977
Both the outgoing Republican Administration and the new Democratic Administration offered Congress proposed legislation to reform the FSP in 1977. The Republican bill stressed targeting benefits to the neediest, simplifying administration, and tightening controls on the program; the Democratic bill focused on increasing access to those most in need and simplifying and streamlining a complicated and cumbersome process that delayed benefit delivery as well as reducing errors, and curbing abuse. The chief force for the Democratic Administration was Robert Greenstein, Administrator of the Food and Nutrition Service (FNS).
In Congress, major players were Senators George McGovern, Jacob Javits, Humphrey, and Dole and Congressmen Foley and Richmond. Amid all the themes, the one that became the rallying cry for FSP reform was "EPR"—eliminate the purchase requirement—because of the barrier to participation the purchase requirement represented. The bill that became the law (S. 275) did eliminate the purchase requirement. It also:
- eliminated categorical eligibility;
- established statutory income eligibility guidelines at the poverty line;
- established 10 categories of excluded income;
- reduced the number of deductions used to calculate net income and established a standard deduction to take the place of eliminated deductions;
- raised the general resource limit to $1,750;
- established the fair market value (FMV) test for evaluating vehicles as resources;
- penalized households whose heads voluntarily quit jobs;
- restricted eligibility for students and aliens;
- eliminated the requirement that households must have cooking facilities;
- replaced store due bills with cash change up to 99 cents;
- established the principle that stores must sell a substantial amount of staple foods if they are to be authorized;
- established the ground rules for Indian Tribal Organization administration of the FSP on reservations; and
- introduced demonstration project authority.
In addition to EPR, the Food Stamp Act of 1977 included several access provisions:
- using mail, telephone, or home visits for certification;
- requirements for outreach, bilingual personnel and materials, and nutrition education materials;
- recipients' right to submit applications the first day they attempt to do so;
- 30-day processing standard and inception of the concept of expedited service;
- SSI joint processing and coordination with AFDC;
- notice, recertification, and retroactive benefit protections; and
- a requirement for States to develop a disaster plan.
The integrity provisions of the new program included fraud disqualifications, enhanced Federal funding for States' anti-fraud activities, and financial incentives for low error rates.
The House Report for the 1977 legislation points out that the changes in the Food Stamp Program are needed without reference to upcoming welfare reform since "the path to welfare reform is, indeed, rocky...."
EPR was implemented January 1, 1979. Participation that month increased 1.5 million over the preceding month.
Cutbacks of the early 1980s
The large and expensive FSP proved to be a favorite subject of close scrutiny from both the Executive Branch and Congress in the early 1980s. Major legislation in 1981 and 1982 enacted cutbacks including:
- addition of a gross income eligibility test in addition to the net income test for most households;
- temporary freeze on adjustments of the shelter deduction cap and the standard deduction and constraints on future adjustments;
- annual adjustments in food stamp allotments rather than semi-annual;
- consideration of non-elderly parents who live with their children and non-elderly siblings who live together as one household;
- required periodic reporting and retrospective budgeting;
- prohibition against using Federal funds for outreach;
- replacing the FSP in Puerto Rico with a block grant for nutrition assistance;
- counting retirement accounts as resources;
- State option to require job search of applicants as well as participants; and
- increased disqualification periods for voluntary quitters.
Recognition of the severe domestic hunger problem in the latter half of the 1980s led to incremental expansions of the FSP in 1985 and 1987, such as elimination of sales tax on food stamp purchases, reinstitution of categorical eligibility, increased resource limit for most households ($2,000), eligibility for the homeless, and expanded nutrition education. The Hunger Prevention Act of 1988 and the Mickey Leland Memorial Domestic Hunger Relief Act in 1990 foretold the improvements that would be coming. The 1988 and 1990 legislation accomplished the following:
- increasing benefits by applying a multiplication factor to Thrifty Food Plan costs;
- making outreach an optional activity for States;
- excluding advance earned income tax credits as income;
- simplifying procedures for calculating medical deductions;
- instituting periodic adjustments of the minimum benefit;
- authorizing nutrition education grants;
- establishing severe penalties for violations by individuals or participating firms; and
- establishing EBT as an issuance alternative.
1993 Mickey Leland Childhood Hunger Relief Act
By 1993, major changes in food stamp benefits had arrived. The final legislation provided for $2.8 billion in benefit increases over Fiscal Years 1984-1988. Leon Panetta, in his new role as OMB Director, played a major role as did Senator Leahy. Substantive changes included:
- eliminating the shelter deduction cap beginning January 1, 1997;
- providing a deduction for legally binding child support payments made to nonhousehold members;
- raising the cap on the dependent care deduction from $160 to $200 for children under 2 years old and $175 for all other dependents;
- improving employment and training (E&T) dependent care reimbursements;
- increasing the FMV test for vehicles to $4,550 on September 1, 1994 and $4,600 on October 1, 1995, then annually adjusting the value from $5,000 on October 1, 1996;
- mandating asset accumulation demonstration projects; and
- simplifying the household definition.
Later participation milestones
In December 1979, participation finally surpassed 20 million. In March 1994, participation hit a new high of 28 million.
1996 Welfare Reform and subsequent amendments
The mid-1990s was a period of welfare reform. Prior to 1996, the rules for the cash welfare program, Aid to Families with Dependent Children (AFDC), were waived for many states. With the enactment of the 1996 welfare reform act, called the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), AFDC, an entitlement program, was replaced that with a new block grant to states called Temporary Assistance to Needy Families (TANF).
Although the Food Stamp Program was reauthorized in the 1996 Farm Bill, the 1996 welfare reform made several changes to the program, including:
- eliminating eligibility to food stamps of most legal immigrants who had been in the country less than five years;
- placing a time limit on food stamp receipt of three out of 36 months for Able-bodied Adults Without Dependents (ABAWDs), who are not working at least 20 hours a week or participating in a work program;
- reducing the maximum allotments to 100 percent of the change in the Thrifty Food Plan (TFP) from 103 percent of the change in the TFP;
- freezing the standard deduction, the vehicle limit, and the minimum benefit;
- setting the shelter cap at graduated specified levels up to $300 by fiscal year 2001, and allowing states to mandate the use of the standard utility allowance;
- revising provisions for disqualification, including comparable disqualification with other means-tested programs; and
- requiring states to implement EBT before October 1, 2002.
The Balanced Budget Act of 1997 (BBA) and the Agricultural Research, Education and Extension Act of 1998 (AREERA) made some changes to these provisions, most significantly:
- using additional Employment and Training (E&T) funds to providing work program opportunities for able-bodied adults without dependents;
- allowing states to exempt up to 15 percent of the able-bodied adults without dependents who would otherwise be ineligible;
- restoring eligibility for certain elderly, disabled, and minor immigrants who resided in the United States when the 1996 welfare reform act was enacted; and
- cutting administrative funding for states to account for certain administrative costs that previously had been allocated to the AFDC program and now were required to be allocated to the Food Stamp Program.
The fiscal year 2001 agriculture appropriations bill included two significant changes. The legislation increased the excess shelter cap to $340 in fiscal year 2001 and then indexed the cap to changes in the Consumer Price Index for All Consumers each year beginning in fiscal year 2002. The legislation also allowed states to use the vehicle limit they use in a TANF assistance program, if it would be result in a lower attribution of resources for the household.
American Recovery and Reinvestment Act of 2009 (ARRA)
During the recession of 2008, SNAP participation hit an all-time high. Arguing in support for SNAP, the Food Research and Action Center claims that “putting more resources quickly into the hands of the people most likely to turn around and spend it can both boost the economy and cushion the hardships on vulnerable people who face a constant struggle against hunger.” Researchers have found that every $1 that is spent from SNAP, the economy benefits by $1.73  The Congressional Budget Office also rated an increase in SNAP benefits as one of the two most cost-effective of all spending and tax options it examined for boosting growth and jobs in a weak economy.
As of 2013[update], more than 15% of the U.S. population receive food assistance, and more than 20% in Georgia, Kentucky, Louisiana, New Mexico, Oregon and Tennessee. Washington D.C. was the highest share of the population to receive food assistance at over 23%.
- 49% of all participant households have children (17 or younger), and 55% of those are single-parent households.
- 15% of all participant households have elderly (age 60 or over) members.
- 20% of all participant households have non-elderly disabled members.
- The average gross monthly income per food stamp household is $731; The average net income is $336.
- 37% of participants are White, 22% are African-American, 10% are Hispanic, 2% are Asian, 4% are Native American, and 19% are of unknown race or ethnicity.
An annual report released by the Department of Agriculture about the composition of households participating in the Food Stamp Program is identified as the Characteristics Report.
A summary statistical report indicated that an average of 46.6 million people used the program in 2012, up from 26.3 million in 2007, a 77% increase. The subprime mortgage crisis of 2008 and resulting unemployment have driven much greater program participation.
Aside from nutritional assistance, SNAP Employment and Training (E&T) funds can also be used to provide recipients with education and training and career pathways programs. SNAP outreach funds can also be integrated with screening tools for other public benefit programs.
Reasons for needing food stamps: most poor people seek SNAP funds either due to a loss of income (death of spouse, disability, divorce, loss of job, etc.) or an increase in expenses such as medical bills, auto insurance, etc.
Amounts paid to program beneficiaries rose from $28.6 billion in 2005 to $74.6 billion in 2012. From 2007 to 2012, benefits paid to program recipients increased by approximately 20% annually. In addition to benefits paid, there were other costs of approximately $3.8 billion in 2012.
The subprime mortgage crisis of 2008 and resulting unemployment have driven much higher program participation and costs per beneficiary. In addition, changes in eligibility rules have increased the number of program participants and the amount paid per participant. SNAP program costs have grown much more rapidly than several other safety net programs, due to these eligibility changes. For example, Veteran's benefits grew 49% above inflation and population growth between 2007 and 2012, while SNAP grew 110%.
Fraud and abuse
In March 2012, the USDA published its fifth report in a series of periodic analyses to estimate the extent of trafficking in the SNAP program. Trafficking and selling SNAP benefits to food retailers for cash undermines the mission and ultimately compromises the integrity of SNAP. Trafficking diverts benefits from their intended purpose of helping low-income families access a nutritious diet. The FNS aggressively acts to control trafficking by using SNAP purchase data to identify suspicious transaction patterns, conducting undercover investigations, and collaborating with other investigative agencies.
Trafficking diverted an estimated $330 million annually from SNAP benefits – or about one cent of each SNAP dollar – between 2006 and 2008. Trafficking has declined over time from nearly 4 percent in the 1990s. About 8.2 percent of all stores trafficked from 2006 to 2008 compared to the 10.5 percent of SNAP authorized stores involved in trafficking in 2011. A variety of store characteristics and settings were related to the level of trafficking. Although large stores accounted for 87.3 percent of all SNAP redemptions, they only accounted for about 5.4 percent of trafficking redemptions. Trafficking was much less likely to occur among publicly owned than privately owned stores and was much less likely among stores in areas with less poverty rather than more. The total annual value of trafficked benefits increased at about the same rate as overall program growth. The current estimate of total SNAP dollars trafficked is higher than observed in the previous 2002–2005 time period. This increase is consistent, however, with the almost 37 percent growths in average annual SNAP benefits from the 2002–2005 study periods to the most recent one. The methodology used to generate these estimates has known limitations. However, given variable data and resources, it is the most practical approach available to FNS. Further improvements to SNAP trafficking estimates would require new resources to assess the prevalence of trafficking among a random sample of stores.
The USDA report released in August 2013 says the dollar value of trafficking increased to 1.3 percent, up from 1 percent in the USDA's 2006-2008 survey, and "About 18 percent of those stores classified as convenience stores or small groceries were estimated to have trafficked. For larger stores (supermarkets and large groceries), only 0.32 percent were estimated to have trafficked. In terms of redemptions, about 17 percent of small groceries redemptions and 14 percent of convenience store redemptions were estimated to have been trafficked. This compares with a rate of 0.2 percent for large stores."
The USDA, in December 2011, announced new policies to attempt to curb waste, fraud, and abuse. These changes will include stiffer penalties for retailers who are caught participating in illegal or fraudulent activities. “The department is proposing increasing penalties for retailers and providing states with access to large federal databases they would be required to use to verify information from applicants. Food-stamp fraud, generally in the form of store employees buying food stamps from recipients is widespread in urban areas, with one in seven corner stores engaging in such behavior, according to a recent government estimate. There are in excess of 200,000 stores, and we have 100 agents spread across the country. Some do undercover work, but the principal way we track fraud is through analyzing electronic transactions” for suspicious patterns, USDA Under Secretary Kevin Concannon told The Washington Times. Also, states will be given additional guidance that will help develop a tighter policy for those seeking to effectively investigate fraud and clarifying the definition of trafficking.
According to the Government Accountability Office, at a 2009 count, there was a payment error rate of 4.36% of food stamps benefits down from 9.86% in 1999. A 2003 analysis found that two-thirds of all improper payments were the fault of the caseworker, not the participant. There are also instances of fraud involving exchange of food stamp benefits for cash and/or for items not eligible for purchase with food stamps. In 2011, the Michigan program raised eligibility requirements for full-time college students, to save taxpayer money and to end student use of monthly food stamp benefits.
In Maine, incidents of recycling fraud have occurred in the past where individuals once committed fraud by using their EBT to buy canned or bottled beverages (requiring a deposit to be paid at the point of purchase for each beverage container), dump the contents out so the empty beverage container could be returned for deposit redemption, and thereby, allowed these individuals to eventually purchase non-EBT authorized products with cash from the beverage container deposits.
The State of Utah developed a system called "eFind" to monitor, evaluate and cross-examine qualifying and reporting data of recipients assets. Utah’s eFind system is a “back end,” web-based system that gathers, filters, and organizes information from various federal, state, and local databases. The data in eFind is used to help state eligibility workers determine applicants’ eligibility for public assistance programs, including Medicaid, CHIP, the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and child care assistance. When information is changed in one database, the reported changes become available to other departments utilizing the system. This system was developed with federal funds and it is available to other states free of charge.
The USDA only reports direct fraud and trafficking in benefits, which was officially estimated at $858 million in 2012. The Cato Institute reports that there was another $2.2 billion in erroneous payouts in 2009. The organization claims that figure makes it one of the "most frequently abused non–health care social welfare programs," but Cato's report does not specify whether those errors were due to intentional abuse or unintentional mistakes in processing. Cato also reported that the erroneous payout rate dropped significantly from 5.6 percent in 2007 to 3.8 percent in 2011.
The lack of affordable housing in urban areas means that money that could have been spent on food is spent on housing expenses. Housing is generally considered affordable when it costs 30% or less of total household income; rising housing costs have made this ideal difficult to attain.
This is especially true in New York City, where 28% of rent stabilized tenants spend more than half their income on rent. Among lower income families the percentage is much higher. According to an estimate by the Community Service Society, 65% of New York City families living below the federal poverty line are paying more than half of their income toward rent.
The current eligibility criteria attempt to address this, by including a deduction for "excess shelter costs." This applies only to households that spend more than half of their net income on rent. For the purpose of this calculation, a household's net income is obtained by subtracting certain deductions from their gross (before deductions) income. If the household's total expenditures on rent exceed 50% of that net income, then the net income is further reduced by the amount of rent that exceeds 50% of net income. For 2007, this deduction can be no more than $417, except in households that include an elderly or disabled person. Deductions include:
- a standard deduction that is subtracted from income for all recipients,
- an earned income deduction reflecting taxes and work expenses,
- a deduction for dependent care expenses related to work or training (up to certain limits),
- a deduction for child support payments,
- a deduction for medical expenses above a set amount per month (only available to elderly and disabled recipients), and
- a deduction for excessively high shelter expenses.
The adjusted net income, including the deduction for excess shelter costs, is used to determine whether a household is eligible for food stamps.
The purpose of the Food Stamp Program as laid out in its implementation was to assist low-income households in obtaining adequate and nutritious diets. According to Peter H. Rossi, a sociologist whose work involved evaluation of social programs, "the program rests on the assumption that households with restricted incomes may skimp on food purchases and live on diets that are inadequate in quantity and quality, or, alternatively skimp on other necessities to maintain an adequate diet". Food stamps, as many like Rossi, MacDonald, and Eisinger contend, are used not only for increasing food but also as income maintenance. Income maintenance is money that households are able to spend on other things because they no longer have to spend it on food. According to various studies shown by Rossi, because of income maintenance only about $0.17–$0.47 more is being spent on food for every food stamp dollar than was spent prior to individuals receiving food stamps.
Studies are inconclusive as to whether SNAP has a direct effect on the nutritional quality of food choices made by participants. Unlike other federal programs that provide food subsidies, SNAP does not have nutritional standards for purchases. Critics have argued that this represents a missed opportunity for the program. However, some studies have concluded that only those most in need of nutritional supplement take advantage of the program, and therefore simply bringing their nutrition up to a national average baseline represents a significant improvement. In October 2010, New York City proposed excluding sweetened beverages from the program, but federal officials rejected the pilot program. SNAP benefits have been criticized as being too low, so that participants often have to compromise food choices for options higher in sugar, fat, and preservatives because healthy alternatives are not always affordable. SNAP participants consume less produce and healthy options and purchase at least 40% more sugar-sweetened beverages than any other consumer group. Many studies have found no significant correlation between SNAP participation and obesity. A study published in Economics and Human Biology found that an American woman, 5 feet 4 inches tall, will be 5.8 pounds (2.6 kg) heavier if she is on SNAP than someone who is SNAP eligible, but not receiving food assistance.
Another contributing factor to overweight and obesity issues in SNAP participants may be the lack of access participants have to healthy options because low-income areas are often underserved by supermarkets, and have only mini-markets with limited selections of food and, in particular, limited selections of healthier foods. A review of the evidence from a variety of disciplines reports that only for women using SNAP long-term is there a consistent correlation between excess weight and food assistance. This same study reports evidence that causality may run the other direction as well; obesity can lead to poverty and thus eligibility for SNAP. Furthermore, other factors, such as disability or abuse, can lead to both obesity and low income. This is viewed as a significant improvement over the status quo, given that food-stamp households generally have incomes
According to Keynesian economic theory, like other forms of government spending, SNAP, by putting money into people's hands, increases aggregate demand and stimulates the economy. In congressional testimony given in July 2008, Mark Zandi, chief economist for Moody's Economy.com, provided estimates of the one-year fiscal multiplier effect for several fiscal policy options, and found that a temporary increase in SNAP was the most effective, with an estimated multiplier of 1.73.
In 2011, Secretary of Agriculture Tom Vilsack gave a slightly higher estimate: "Every dollar of SNAP benefits generates $1.84 in the economy in terms of economic activity." Vilsack's estimate was based on a 2002 George W. Bush-era USDA study which found that "ultimately, the additional $5 billion of FSP (Food Stamp Program) expenditures triggered an increase in total economic activity (production, sales, and value of shipments) of $9.2 billion and an increase in jobs of 82,100," or $1.84 stimulus for every dollar spent.
A 2013 report by the USDA gave another estimate in the middle of Zandi's and Vilsack's estimates, finding that "an increase of $1 billion in SNAP expenditures is estimated to increase economic activity (GDP) by $1.79 billion." The same report also estimated that the "preferred jobs impact … are the 8,900 full-time equivalent jobs plus self-employed or the 9,800 full-time and part-time jobs plus self-employed from $1 billion of SNAP benefits.
Local economic effects
In March 2013, the Washington Post reported that one-third of Woonsocket, Rhode Island's population used food stamps, putting local merchants on a "boom or bust" cycle each month when EBT payments were deposited. The Post stated that "a federal program that began as a last resort for a few million hungry people has grown into an economic lifeline for entire towns." And this growth "has been especially swift in once-prosperous places hit by the housing bust."
In addition to local town merchants, national retailers are starting to take in an increasing large percentage of SNAP benefits. For example, "Walmart estimates it takes in about 18% of total U.S. outlays on food stamps."
Healthy Incentives Pilot
The 2008 Farm Bill authorized $20 million to be spent on pilot projects to determine whether incentives provided to SNAP recipients at the point-of-sale would increase the purchase of fruits, vegetables, or other healthful foods. Fifteen states expressed interest in having the pilot program and, ultimately, five states submitted applications to be considered for HIP. Hampden County, Massachusetts was selected as the Healthy Incentives Pilot (HIP) site. HIP is designed to take place from August 2010 to April 2013 with the actual operation phase of the pilot program scheduled to last 15 months, from November 2011 to January 2013.
HIP offers select SNAP recipients a 30% subsidy on produce, which is credited to the participant’s EBT card, for 15 months. 7,500 households will participate HIP and an equal number will not; the differences between the two groups will be analyzed to see the effects of the program. Produce, under the HIP, is defined as fresh, frozen, canned, or dried fruits and vegetables that do not have any added sugar, salt, fat, or oil.
Impact on SNAP participants
Fruits and vegetables are higher in both nutritional value and price, making it difficult for SNAP recipients to purchase regularly, limiting their access to healthy options. The subsidy would give participants more purchasing power while not restricting “bad” unhealthy foods. Such subsidies encourage sellers to offer more fresh produce at locations that previously did not carry them. This increases access for the SNAP recipients and is intended to encourage healthy eating habits if practiced properly by the public.
The Massachusetts Department of Transitional Assistance (DTA) is the state agency responsible for SNAP. DTA has recruited retailers to take part in HIP and sell more produce, planned for the EBT system change with the state EBT vendor, and hired six new staff members dedicated to HIP. DTA has agreed to provide FNS with monthly reports, data collection and evaluation.
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