The early months of 2014 saw the passing of the long-stalled farm bill, along with its implications for the next decade on anti-hunger organizations nationwide.
On February 7 in front of a crowd of farmers and local officials gathered at Michigan State University, President Obama signed into law the new $956 billion farm bill—the Agriculture Act of 2014—marking the end of nearly four difficult years of heated congressional negotiations over the bill’s provisions. Reauthorized every five years, the farm bill regulates policy for both federal food and nutrition assistance programs and agricultural programs. With food and nutrition programs comprising around 80% of the bill’s total spending, policy regarding the Supplemental Nutrition Assistance Program (SNAP)—previously known as the food stamp program—stood at the forefront of the farm bill debates.
SNAP is the nation’s largest nutrition assistance program, receiving 100% of its program benefit funding from the federal government, with administrative costs split between the federal and state governments. One in seven Americans participates in SNAP annually; data from the USDA reveals that more than 47.5 million low-income individuals participated in SNAP in FY2013. According to the Center on Budget and Policy Priorities, around 72% of SNAP participants live in households that include a child, and more than one-quarter live in households that include an elderly or disabled member.
Under the new farm bill, cuts to the food stamp program amount to $8.6 billion over the next decade. Changes to SNAP benefit calculations were the target of this bill as many conservatives looked to tighten program policy by closing a proclaimed loophole, known as “Heat and Eat,” among other minor policy reforms. “Heat and Eat” refers to the SNAP provision that allows states to coordinate food stamp benefits with aid received from the Low-Income Home Energy Assistance Program (LIHEAP), a federally funded program designed to assist low-income Americans with energy costs. Roughly 850,000 households receiving LIHEAP benefits—4% of food stamp recipients—are expected to face a benefit reduction of $90 a month, on average, as a result of the new bill. However, since “Heat and Eat” is not recognized nationwide, the new legislation will affect only participants living in Washington, D.C., and the fifteen states where it is practiced.
The process for determining food stamp eligibility is complex and relies on various financial and non-financial factors. Special rules apply immediately to legal immigrants, ex-criminals, college students, lottery winners and unemployed childless adults. As explained by the Center on Budget and Policy Priorities, three criteria must be met in order for a household to qualify for benefits:
- Gross monthly income must be at or below 130% of the federal poverty line. (For single-person households living in either Washington, D.C., or one of the 48 contiguous states, the federal poverty line for 2014 is set at $11,670. The level varies for Hawaii and Alaska.)
- Net monthly income must be equal to or less than the federal poverty level.
- Total assets cannot exceed $2,000. (Asset levels vary for households containing elderly (age 60 and older) or disabled members, where only the net monthly income level must be met.)
On top of the federal regulations, some states also implement their own asset tests, commonly factoring in car ownership when determining eligibility. Program administrators calculate a household’s net income by subtracting federal and state-authorized deductions—medical expenses for elderly and/or disabled members and child support payments, among others—from its gross income. More deductions mean a lower net income, and a lower net income means higher benefits. Most influential of these deductions is the Excess Shelter Deduction, encompassing such shelter costs as rent or mortgage payments, property taxes and utilities. In order to be eligible for this deduction, a household’s shelter and utility expenses must collectively amount to more than half of that household’s net monthly income after all other authorized deductions have been taken into account. (Again, levels differ here if the household includes either an elderly or disabled member.)
Initially, SNAP administrators collected and examined a household’s utility bills to determine if it qualified for the Excess Shelter Deduction. However, the process was eventually streamlined by allowing each state to set its Standard Utility Allowance (SUA), a fixed dollar amount reflecting a state’s average utility costs for that given year. The SUA is awarded only if a household pays for its utility expenses out of pocket and not by the landlord directly. So, instead of reviewing multiple utility bills for a particular household, that household is now required to provide only one bill as proof that it pays for its own utilities. Once that bill is provided, the household automatically qualifies for the SUA, which is then factored into the calculations for determining eligibility for the shelter deduction. Qualifying for the SUA increases shelter expenses and usually boosts a household’s food stamp benefits.
However, a caveat exists here: If a household receives LIHEAP benefits, it also automatically qualifies for the SUA—the rationale being that if a household receives help to pay for its energy bills, then is must pay for them out of pocket in the first place. (This is the federally authorized practice known as “Heat and Eat,” discussed in paragraph 4 of this article.) Realizing that LIHEAP and SNAP benefits frequently come up short by the month’s end, “Heat and Eat” states began identifying which SNAP beneficiaries were not currently getting the SUA; they were then provided with a very small LIHEAP benefit—as little as $1 a year—in order to automatically qualify for the SUA. This is the heart of why “Heat and Eat” is contested, since it is believed that the practice enables SNAP households to receive credit for utility costs that they do not actually pay. Considered a loophole by both the House and Senate, the new farm bill amends this practice by requiring a household to receive at least $20 of LIHEAP assistance a year in order to automatically qualify for the SUA.
These latest program cuts follow a significant benefit reduction for all participants that took effect only a few months ago when SNAP funding from the 2009 stimulus package expired. The Recovery Act that was established in April 2009 funneled an estimated $45.2 billion into the food stamp program in order to stimulate the economy by increasing the purchasing power of the growing number of food-insecure households. That kind of boost meant an increase of 15% (on average) in monthly benefits, or $80 each month to most four-person SNAP households, according to research from the USDA. When that funding expired on October 31, 2013, it put into effect an automatic $5 billion cut over FY2014, and an $11 billion cut spread over fiscal years 2014-16. Monthly benefits lost totaled $11 for a household of one and $36 for a household of four. In more tangible terms, the Center on Budget and Policy Priorities explains that cuts of this magnitude meant that SNAP households had to learn to get by on less than $1.40 per person per meal (on average) for FY 2014.
Though SNAP advocates may have difficulty seeing funding cuts to a program that already struggles to meet high demand as a positive outcome, the terms of this bipartisan compromise are far more favorable than those of earlier proposals. In a program many conservatives believe to be rampant with fraud, SNAP has remained the ongoing target for many Republicans in Congress throughout these farm bill negotiations. In June 2013, House Republicans rejected a farm bill that would have cut $20.5 billion from food stamps, claiming that the cuts were not severe enough. In September, the House passed a nutrition-only bill—having split the bill’s farm and nutrition titles back in July—that would have cut nearly $40 billion from food stamps over ten years. The bill also called for implementing a number of extreme provisions that, according to the Congressional Budget Office, would have caused the number of food stamp recipients to decline by 30% over the next decade.
Cutting only $8.6 billion versus a proposed $40 billion is, in some respect, a win for liberals. But advocates of the “Heat and Eat” policies and the overall food stamp program still believe difficult times are ahead for food-insecure households. Many feel that the benefit boost received through these policies is necessary since federal funding to LIHEAP is too low to effectively support the number of low-income households requiring utility assistance. It is widely known that food stamps don’t last most recipients the whole month; statistics from the hunger-relief charity Feeding America reveal that 90% of SNAP benefits are redeemed by the third week of the month, and that 58% of SNAP participants resort to food banks at least six months out of the year. The “Heat and Eat” provision helps alleviate the difficult choice nearly 48 million Americans must make each month between buying food and paying utility bills.
At a time when anti-hunger organizations are already stretched too thin, what can be expected for the next decade? The services provided by these nonprofits will be critical to managing the fallout from the new food stamp legislation. A steadily recovering economy will help ease the burden, but the results will not be seen immediately. In reaction to the new farm bill, Julie Zaebst, policy manager for the Greater Philadelphia Coalition Against Hunger, explains, “Food banks and other charities in our state already can’t keep up with the skyrocketing need, and they certainly can’t fill the $136 million gap in food aid left by this Farm Bill.” Ms. Zaebst’s statement reinforces the plight that many anti-hunger organizations and food-insecure Americans face in the coming years.