Public Comment on proposed revision of categorical eligibility in the Supplemental Nutrition Assistance Program, Hope Lane testimony

Public Comment to the U.S. Department of Agriculture
Regarding Proposed Revision of Categorical Eligibility in the Supplemental Nutrition Assistance Program [RIN 0584-AE62]

Hope A. Lane, Associate Public Policy & External Affairs

August 21, 2019

As a nonpartisan, nonprofit think tank focused on health, social and economic issues throughout Ohio, The Center for Community Solutions welcomes this opportunity to submit public comment on the United States Department of Agriculture’s (USDA) proposed rule, Revision of Categorical Eligibility in the Supplemental Nutrition Assistance Program (SNAP) (RIN 0584-AE62). This revision to categorical eligibility (CE) would eliminate the ability for states to participate in broad-based categorical eligibility something that Ohio and 41 other jurisdictions currently do, which has allowed more than 3 million low-income Americans, to receive nutrition benefits. The rule would also severely weaken CE for SNAP, making it more difficult for low-income Americans to become automatically eligible for the program. For the reasons listed below, Community Solutions opposes the proposed rule.

The proposed rule would worsen food insecurity for American families. Not only is SNAP effective to fight food insecurity, SNAP has proven to be one of the most successful anti-poverty programs in modern American history. Unfortunately, SNAP eligibility criteria has not kept pace with the cost of living in this country when factors like housing, childcare and basic necessities are taken into account. By revising categorical eligibility to eliminate SNAP eligibility for low-income Americans with earnings right above the poverty line, families will be forced to choose between food and other needs such as utilities and clothing.
Poor evidence to support rule’s assumptions. The USDA argues that automatic eligibility has allowed many people to receive SNAP benefits when they don’t need them, however, that is simply not the case. Automatic eligibility has been utilized by states to cover the gap between income and need, and allows states to tailor their SNAP programs to best fit their economies.
The proposed rule would increase administrative costs. Automatic eligibility simplifies the benefits process for beneficiaries as well as for Job and Family Services (JFS) employees. Asset verification and determination, interviews and recertification require time and employees that most state and county JFS agencies don’t have resources for.
Definition of ongoing and substantial. The amended criteria for categorical eligibility conflicts with the goals and nature of public assistance.

Community Solutions asks that the USDA considers each of these points and withdraw the proposed rule.

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Background on categorical eligibility

The Food and Nutrition Act of 2008 allowed for states to use CE for SNAP, meaning if a household meets eligibility requirements and participates in other government benefits, most notably Social Security Income (SSI) and Temporary Assistance for Needy Families (TANF), they are automatically granted SNAP eligibility without undergoing income or asset tests. Following the law’s enactment, 43 jurisdictions expanded this categorical eligibility to “broad-based categorical eligibility” (BBCE) so that low-income households may become automatically eligible for SNAP if they qualify for a non-cash TANF or state maintenance of effort (MOE) funded benefit.

States choose to participate in BBCE because it allows them flexibility for SNAP eligibility so that low-income families whose gross household income is over the income threshold but have costs that consume a large share of their income, such as housing and childcare, could receive nutrition benefits. Additionally, this allows for a less prohibitive asset test so that families who own their cars or homes or maintain a modest savings account can remain eligible for food benefits. According to a 2017-2018 report by the Federal Reserve Board, 4 in 10 American adults, if faced with an unexpected expense of $400 or more, would either not be able to cover it, or would cover it by selling something or borrowing money.[1] Considering often times low-income families are forced to take out predatory payday or title loans that trap them in debt for these unplanned expenses, families should not be punished for thinking ahead or being proactive. Asset tests encourage families to spend down their savings before getting help and discourage families from applying in the first place.

In order to qualify for SNAP categorical eligibility, a family must first qualify for TANF or SSI. While states have broad discretion to determine eligibility for TANF assistance, it’s strictly limited to households containing a minor child. Figure 1 below highlights which states participate in BBCE for SNAP and how they have done so.

Figure 1

It’s important to keep in mind that CE and BBCE households are still bound to other SNAP eligibility and benefit rules and must complete a SNAP application. States must still fully review each household’s circumstance to determine its SNAP benefit.

Background on qualifying for TANF

As mentioned above, states have broad discretion over how they implement their TANF programs, including who receives TANF benefits, how much they receive, under what conditions and for how long. Unlike SNAP, the federal government has imposed no requirements for TANF asset tests so states have the ability to impose or not impose one. Figure 1 on the previous page highlights this autonomy using color: the 33 states shaded in dark blue have raised their gross income limit on participation in any TANF/MOE program from 130 percent of the federal poverty level (FPL) to between 130 to 200 percent of the FPL in addition to raising or eliminating the asset test needed to qualify for SNAP. The nine states shaded in light blue have mirrored their gross income limit for TANF on SNAP levels at or below 130 percent of the FPL, however they have raised or eliminated the asset limit for TANF. In a majority of states, it can be less burdensome for low-income families to qualify for TANF benefits, as opposed to the SNAP benefits they likely also need, given that more than a third of households earning between 130 percent and 185 percent of the FPL report being food insecure.[2]

Due to the lack of independent oversight and transparency of states’ programs, and the conversion to a block grant from an entitlement program, TANF has fewer participants than its predecessor, Aid to Families with Dependent Children (AFDC) did.[3] Figure 2 below demonstrates how the cash benefit levels of those who are on TANF are not sufficient to move a family out of poverty in any state as TANF benefits are below two-thirds of the federal poverty line in all 50 states and Washington D.C.[4]

Figure 2

Families in Ohio, for example, have to be deemed to live in “deep poverty” or have an income of less than 50 percent of the FPL to qualify for cash assistance. The average benefit, per person, is $203.58. Given that only 9 percent of Ohio families who receive cash assistance in an average month have income beyond cash assistance [5] and the two bedroom fair market rent cost in Ohio is $818/month[6] it’s easy to see how TANF beneficiaries can have trouble putting food on the table.

Ohio is among many states struggling to implement an effective TANF program and continuously underspends both the federally allocated and the state MOE funds, despite not reaching everyone who may be in need of services. Although TANF is not meant to be a poverty reduction program, it’s meant to be an accessible one. According to the Center on Budget and Policy Priorities, the TANF-to-poverty-ratio in Ohio was 24 in 2016-2017.[7] This indicates that for every 100 poor families with children in Ohio, only 24 of them received any TANF benefit during that year. Ohio Works First (OWF), Ohio’s cash assistance TANF program, is intended to encourage work and self-sufficiency by requiring adults to work a certain number of hours to receive their benefits.

While child care in Ohio is the most popular form of non-cash assistance used by TANF beneficiaries, it currently consumes more than 30 percent of Ohio’s entire TANF block grant. Ohio spends a larger portion of its TANF budget on child care than 46 other states. This is worrisome as TANF has several core components to help families achieve success that don’t receive quite the same attention as child care.

In 2016, an estimated 24.9 percent of eligible families nationwide received cash benefits compared to in 1995, the last year of AFDC, when the participation rate was 84.3 percent.[8] Participation rates are based on the program’s actual caseload compared to the number of families estimated to be eligible for aid based on income.

While there are numerous reasons why eligible families would not participate in TANF such as being unaware of eligibility and feeling that the potential benefit isn’t worth the rules beneficiaries have to follow, a huge burden is the inconsistency of time limits across states. As earlier mentioned, states can set their own time limit policies. Although child-only TANF benefits (which arise when no adult is included in the cash benefit calculation) have no limit in most states, the lifetime limit for an entire household to receive cash assistance using federal TANF dollars is 60 months. While a majority of states (30 including Washington D.C.) maintain a periodic enrollment limit and a lifetime limit of 60 months, 21 states have enacted stricter rules.[9] Here in Ohio, a household can continuously receive cash benefits for 36 months, following a 24 month waiting period, a family may receive an additional 24 months of eligibility through an extension, where policies can differ by county.[10]

Background on qualifying for SNAP without being CE or BBCE

SNAP benefits themselves are fully funded by the federal government and because of this, SNAP eligibility guidelines are set by the federal government, largely based on gross monthly income as it relates to the FPL:

A household’s gross monthly income generally must be at or below 130 percent of the FPL
A household’s net monthly income must be less or equal to the FPL
A household’s assets must generally fall below certain limits. In fiscal year (FY) 2019 the limit is $2,250 in countable resources which includes a bank account.

While Ohio mirrors the nationwide SNAP participation rate of 85 percent in 2016,[11] the rate varies from state to state. It’s important to note here that states have the ability to tailor aspects of the program, such as whether or not the value of a household’s vehicle(s) are included in an evaluation of a household’s assets. In some states, like Iowa and Idaho, vehicle ownership can exclude people from qualifying for SNAP. This flexibility in asset testing can increase or decrease the number of people who are eligible for SNAP in a given state, making it difficult to accurately compare participation rates across states.

In Ohio and many other states, an individual is able to apply for benefits including SNAP and TANF online or by phone, however may be required to complete a face-to-face interview to complete the application. Additionally, you must be able to provide verification documents such as income, residency and expenses in person or via fax. Each beneficiary receives a different recertification period at the time of enrollment depending on your caseworker’s determination of your circumstances.

Beneficiaries are also required to report changes that occur in-between benefit recertification such as changes in income, address, rent, savings etc. to periodically adjust their SNAP benefits. In some states, a family paying off a vehicle loan can make the difference between receiving food benefits and being cut off, even if that vehicle is essential to maintain employment, access healthcare and secure food.

SNAP without CE or BBCE can deter work and self-sufficiency because more often than not, workers who receive SNAP benefits are better off financially if they don’t receive a raise or a promotion if one of those things means they will surpass SNAP’s gross income limit of 130 percent of the FPL. Earning even 131 percent of the FPL will deem a family completely ineligible for food benefits.

The strict guidelines, extensive paperwork requirements, the need to recertify multiple times a year and the creation of a benefit cliff make SNAP have some of the most rigorous program integrity standards and requirements of any federal program.

The Ohio Benefits System was created in 2014 for Ohioans to verify eligibility, streamline and manage their benefits online and in one place. When SNAP was added to the list of participating benefits in early 2019, eligible people were denied food assistance because notices for interviews were sent to the wrong addresses or their case workers never picked up for scheduled phone interviews.

In October 2013, Just Harvest, a nonprofit group in Pittsburgh collaborated with the University of Pittsburgh to conduct a “Barriers to Benefits” survey of SNAP recipients in Pennsylvania who highlighted the obstacles to obtain and maintain SNAP benefits. Many respondents reported difficulties with contacting caseworkers, lost or unprocessed paperwork which affected benefits and overall general communication and customer service problems.[12]

A survey of SNAP recipients by the Urban Institute in Colorado, Illinois and South Carolina revealed similar frustrations. Of those working in Illinois and Colorado, 15 percent report having to take an unpaid day off of work to visit a social service office during regular business hours to apply for food benefits.[13] Additionally, clients in these three states reported that staff interactions can use improvement as can the clarity of information.

Impact on food insecurity

By helping families purchase food, SNAP frees up resources for other needs, thus participation in SNAP is critical to reduce food insecurity and poverty in the United States. In 2016 alone, SNAP benefits kept 7.3 million Americans out of poverty, more than any other program.[14] Households that are considered food insecure are those that, due to insufficient funds or other resources for food, were uncertain of having or being able to acquire enough food to meet their needs. The country as a whole has a food insecurity problem, with 40 million people, or 12.5 percent of the population reporting having lived in food-insecure households in 2017.[15] Of the 40 million food insecure people living in the United States, 12.5 million are children.[16] The SNAP program has long been the first line of defense for food-related hardships and poverty in general. Figure 3 below shows food insecurity averages by state compared to national averages from 2015 to 2017. Note that every state that is below the U.S. average of food insecure households participates in BBCE.

Figure 3

Participation in SNAP can make individuals automatically eligible for other nutrition programs, most notably the National School Lunch Program and the School Breakfast Program. These two programs allow children from low-income families to receive free breakfast and lunch throughout the school year without having to apply for the programs. As previously mentioned, paperwork to prove poverty can be burdensome and stressful, especially for families enrolled in multiple benefit programs or who have multiple children. By the USDA’s own estimate, more than 500,000 children would lose automatic eligibility for free school meals should the proposed rule take effect.[17] According to the USDA, 93 percent of the children affected by the change would remain eligible for reduced-priced meals through these specific programs, but families would need to apply individually. The three programs are currently linked because of the shared goal to reduce food insecurity and to ensure that children specifically receive all of the food assistance they qualify for with minimal paperwork. Requiring families to now pay for meals, even at a reduced rate of up to 30 cents for each breakfast and up to 40 cents for each lunch, can result in hardship, especially for families with multiple children, and high amounts of school lunch debt for high poverty districts. Some qualified children may continue to receive free meals through other programs but others will inevitably fall through the cracks due to lack of awareness. Research shows that food insecurity and poor nutrition in children is a threat to their overall wellbeing as it is detrimental to their development, health, concentration and behavior in the short and long terms.[18]

The enactment of the proposed rule would eliminate food benefits for many seniors and individuals with disabilities if they are considered to have “excessive assets” of $3,500 or more. These are vulnerable populations that typically rely solely on SSI which is a fixed income, and as previously mentioned this “asset” can be something as simple as a vehicle.

Seniors, a population that tends to be at high risk for food insecurity, already struggle with a low SNAP participation rate. In 2017, an estimated 264,000 seniors in Ohio were SNAP eligible but did not receive benefits, in part because of barriers to accessing them.[19]

Poor evidence supporting rule’s assumptions

The USDA refers to CE and BBCE as an abused loophole that allows states to expand the amount of people eligible for SNAP, resulting in large numbers of households receiving benefits who wouldn’t (and shouldn’t) otherwise qualify for the program because their gross monthly income exceeds SNAP income rules, but that’s not supported by data.

In 2010, the U.S. Government Accountability Office conducted a report that estimated only about 2.6 percent or 473,000 U.S. households in fiscal year 2010 received SNAP benefits that would not have been eligible without BBCE. These households, on average, were similar to other SNAP households, however were much more likely to be employed or be receiving unemployment benefits. While reliable data on participant assets doesn’t exist, other data suggests few had assets over the standard SNAP limit.[20]

In 2016, the Congressional Research Service produced a similar report that concluded a monthly average of 4.2 percent or 530,000 SNAP households without an elderly or disabled member had incomes above 130 percent of the FPL.[21]

Of the 36 million people who currently receive monthly SNAP benefits, only 3 million or eight percent of them do so because of CE or BBCE.

Relatively few households ultimately qualify for CE and BBCE because they still must demonstrate that their disposable incomes, after deductions, fall below the poverty line. The proposed changes, however, are designed to remove benefits from people who may appear to have a modest income, however, SNAP does not consider their child care, housing and other basic expense costs.

It’s worth keeping in mind that food insecurity reaches far beyond the 130 percent threshold imposed by SNAP and no state may provide a household with an income more than 200 percent of the FPL with TANF benefits.

Would increase administrative costs

Only 10 states including Ohio have county-administered benefit programs where counties and local governments are responsible for the administrative and supplemental costs of running the programs. Due to the programs being decentralized, there can be inconsistencies with the ease of access to benefits depending on which county a person may reside in.

Data shows that families who participate in SNAP through CE or BBCE reflect important populations that need support, and CE and BBCE help to simplify the outreach and eligibility process for doing so. BBCE allows for the programs to be integrated, and streamlines the application and eligibility process which reduces the time devoted to verifying resources for benefits. Additionally, CE and BBCE help to reduce churn, defined as when a household exits SNAP and then re-enters the program within a short amount of time. Since individuals applying for SNAP have to be deemed eligible and have their circumstances verified every time, many people cycling on and off the program proves expensive for counties. Churning is also concerning because while it can be due to a household’s change in circumstances, it can also likely be attributed to administrative practices as previously discussed. Changes in asset and income determination and categorical eligibility will likely post a significant increase in administrative costs for county Department of Job and Family Services who are already running on tight budgets. Customer service, program efficiency and program integrity suffer when local governments are forced to do more with less.

Additionally, the enactment of the rule would cause a huge administrative burden for agencies trying to keep track of SNAP beneficiaries’ bank accounts and other assets.

Definition of “ongoing” and “substantial”

The proposed rule would modify CE so that automatic SNAP eligibility will only be conferred to those receiving “ongoing” and “substantial” cash and non-cash TANF benefits. This would require a household receive or be approved to receive at least six months of benefits worth at least $50 per month to be considered CE for SNAP. Further, the non-cash TANF benefits that could deem a household CE would be limited to only include subsidized employment, work supports and child care should the proposed rule take effect.

The proposed definitions of ‘ongoing’ and ‘substantial’ however are inconsistent with TANF’s purpose. Although the average cash benefit in all states is well above $50 per month, according to data from the United States Census Bureau, 62.9 percent of respondents who participate in TANF only receive assistance between one and 12 months.[22] Although TANF time limits vary by state, Arizona has the lowest time limit of 12 months, thus it is unlikely that a majority of respondents replied this way because they reached their lifetime limit.

The time limit penalizes individuals who work untraditional jobs or face short-term financial crisis by no longer allowing them to participate in categorical eligibility upon being deemed eligible for TANF. If a person works retail, but receives more hours during the holiday season and thus become TANF ineligible temporarily after participating for five months it creates the same benefits cliff discussed earlier. Working more hours can make the individual ineligible for TANF, and interrupt the consecutive months streak, thus making the individual also ineligible for categorical eligibility because they did not participate in TANF long enough.

Conclusion

The enactment of the proposed rule would reduce access to basic nutrition assistance for low- income families with children and people with fixed incomes who receive SSI benefits, predominately elderly and individuals with disabilities. States across the country have chosen to embrace both CE and BBCE to assure their most vulnerable populations have access to a safety-net program designed for them. Although the SNAP income and resource limits are updated annually by the federal government, the federal poverty line is getting further from the median family income and thus isn’t a good measure of poverty in most states. The USDA should instead consider codifying current categorical eligibility to help lower-income American families.

[1] https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf

[2] https://www.ers.usda.gov/webdocs/publications/84973/err-237.pdf?v=42979

[3] https://www.cbpp.org/research/family-income-support/policy-basics-an-introduction-to-tanf

[4] https://www.cbpp.org/research/family-income-support/chart-book-temporary-assistance-for-needy-families

[5] https://www.communitysolutions.com/research/temporary-assistance-needy-families-ohio-balancing-program-integrity-entitlement-reducing-poverty-not-goal/

[6] https://reports.nlihc.org/oor/ohio

[7] https://www.cbpp.org/sites/default/files/atoms/files/tanf_trends_oh.pdf

[8]https://www.urban.org/sites/default/files/publication/100521/what_was_the_tanf_participation_rate_in_2016_0.pdf

[9] https://knowledgecenter.csg.org/kc/content/state-welfare-reforms-tanf-time-limits-numbers

[10] https://www.benefits.gov/benefit/1674

[11] https://fns-prod.azureedge.net/sites/default/files/resource-files/Reaching2016.pdf

[12] https://www.justharvest.org/wp-content/uploads/2013/11/Barriers-to-Benefits-2013.pdf