Indicators of Welfare Dependence, 2001

Appendix A:
Food Stamp Program

The Food Stamp Program, administered by the U.S. Department of Agriculture’s (USDA) Food and Nutrition Service, is the largest food assistance program in the country, reaching more poor individuals over the course of a year than any other public assistance program.  Unlike many other public assistance programs, the Food Stamp Program has few categorical requirements for eligibility, such as the presence of children, elderly or disabled individuals in a household.  As a result, the program offers assistance to a large and diverse population of needy persons, many of whom are not eligible for other forms of assistance.

The Food Stamp Program was designed primarily to increase the food purchasing power of eligible low-income households to the point where they can buy a nutritionally adequate low-cost diet.  Participating households are expected to be able to devote 30 percent of their counted monthly cash income (after adjusting for various deductions) to food purchases.  Food stamp benefits then make up the difference between the household’s expected contribution to its food costs and an amount judged to be sufficient to buy an adequate low-cost diet.  This amount, the maximum food stamp benefit level, is derived from USDA’s lowest-cost food plan, the Thrifty Food Plan (TFP).

The Federal government is responsible for virtually all of the rules that govern the program, and, with limited variations, these rules are nationally uniform, as are the benefit levels.  Nonetheless, States, the District of Columbia, Guam, and the Virgin Islands, through their local welfare offices, have primary responsibility for the day-to-day administration of the program.  They determine eligibility, calculate benefits, and issue food stamp allotments.  The Food Stamp Act provides 100 percent federal funding of food stamp benefits.  States and other jurisdictions have responsibility for about half the cost of state and local food stamp agency administration.

In addition to the regular Food Stamp Program, the Food Stamp Act authorizes alternative programs in Puerto Rico, the Northern Mariana Islands, and American Samoa.  The largest of these, the Nutrition Assistance Program in Puerto Rico, had an average of 1.2 million participants in 1999, funded under a Federal block grant of $1.2 billion.  Unless noted otherwise, the food stamp caseload and expenditure data in this Appendix include costs for the Nutrition Assistance Program in Puerto Rico.  Prior to 1982, the regular Food Stamp Program operated in Puerto Rico, under modified eligibility and benefit rules.

The Food Stamp Program has financial, employment/training-related and “categorical” tests for eligibility.  The basic food stamp beneficiary unit is the “household.”  Generally, individuals living together constitute a single food stamp household if they customarily purchase food and prepare meals together.  Members of the same household must apply together, and their income, expenses, and assets normally are aggregated in determining food stamp eligibility and benefits.  Except for households composed entirely of TANF, SSI, or general assistance recipients (who generally are automatically eligible for food stamps), monthly cash income is the primary food stamp eligibility determinant.  Unless exempt, adult applicants for food stamps must register for work, typically with the welfare agency or a state employment service office.  To maintain eligibility, they must accept a suitable job if offered one and fulfill any work, job search, or training requirements established by the administering welfare agencies.

Food stamp benefits are a function of a household’s size, its net monthly income, its assets, and maximum monthly benefit levels.  Allotments are not taxable and food stamp purchases may not be charged sales taxes.  Receipt of food stamps does not affect eligibility for or benefits provided by other welfare programs, although some programs use food stamp participation as a “trigger” for eligibility and others take into account the general availability of food stamps in deciding what level of benefits to provide.

Recent Legislative and Regulatory Changes.

Title IV and Subtitle A of title VIII of the PRWORA contains major and extensive revisions to the Food Stamp Program, including strong work requirements on able-bodied adults without dependents, restricted benefits for legal immigrants, and a reduction in maximum benefits.  These three provisions, and subsequent amendments, are discussed below; their impact on program participation and expenditures begins to appear in food stamp administrative data for 1997, with the fuller impact shown in data for 1998.

First, a new work requirement was added for able-bodied adult food stamp recipients without dependents (ABAWDs).  Unless exempt, ABAWDs between the ages of 18 and 50 are not eligible for benefits for more than 3 months in every 36-month period unless they are  (1) working at least 20 hours a week; (2) participating in and complying with a work program for at least 20 hours a week; or (3) participating in and complying with a workfare program.  Under the original legislation, the Department of Agriculture was authorized to waive application of the work requirement to any group of individuals at the request of the state agency, if a determination is made that the area where they reside has an unemployment rate over 10 percent or does not have a sufficient number of jobs to provide them employment.  The provision was further moderated under the Balanced Budget Act of 1997 (Public Law 105-33), which allowed states to exempt up to 15 percent of the ABAWD caseload (beyond those subject to waivers) and which increased funds for the Food Stamp employment and training program for the creation of job slots for able-bodied adults subject to time limits.

Separately, title IV of PRWORA made significant changes in the eligibility of noncitizens for Food Stamp benefits.  As first enacted, most qualified aliens (including legal immigrants -- illegal aliens are already ineligible) were barred from Food Stamps until citizenship.  Subsequently, the Agriculture Research, Extension and Education Reform Act of 1998 (Public Law 105-185] restored food stamp eligibility to certain groups of qualified aliens who were legally residing in the United States before passage of PRWORA (August 22, 1996).  Specifically, the ban on food stamp eligibility was lifted for children, the disabled and people who were 65 on August 22, 1996.

Finally, the 1996 legislation restrained growth in future program expenditures by making changes in the benefit structure for eligible participants, including a reduction in the maximum food stamp allotment.  Other provisions of the 1996 act disqualified from eligibility those convicted of drug-related felonies and gave states the option to disqualify individuals, both custodial and noncustodial parents, from food stamps when they do not cooperate with child support agencies or are in arrears in their child support.

Recent regulatory and legislative changes have been made to increase access to food stamps among working poor families.  Regulatory changes announced in July 1999 and expanded in November 2000 allow states to reduce reporting requirements and make it easier for working families to report income changes on a semi-annual basis.  Under the November 2000 regulations, states also have the option of providing a three-month transitional food stamp benefit to most families leaving TANF.  In addition, the Agriculture Appropriations Bill for 2001 (P.L. 106-387) provides states with the option of liberalizing the treatment of vehicle assets to align with the states’ TANF rules on vehicle eligibility.  These changes were intended to address concerns that some of the decline in food stamp caseloads may be leaving poor families without nutritional assistance as they make the transition from welfare dependence to full self-sufficiency.

Food Stamp Program Data.

The following six tables and accompanying figure provide information about the Food Stamp Program, including information about the Nutrition Assistance Program in Puerto Rico:

• Tables FSP 1-2 and Figure FSP 1 present national caseload and expenditure trend data on the Food Stamp program, as discussed below;
• Table FSP 3 presents some demographic characteristics of the food stamp caseload; and
• Tables FSP 4-6 present some state-by-state trend data on the Food Stamp program through fiscal year 1999.

Food Stamp Caseload Trends (Tables FSP 1-2).  Average monthly food stamp participation (including participants in Puerto Rico’s block grant) has continued to fall from its peak of 28.9 million in an average month in 1994 to an average of 19.3 million persons in 1999.  Both in absolute numbers and as a percentage of the population, food stamp recipiency is lower than at any point in the past twenty years.  See also Table IND 3b and Table IND 4b in Chapter II for further data on the recent decline in food stamp recipiency and participation rates.

Considerable research has demonstrated that the Food Stamp program is responsive to economic changes, with participation increasing in times of economic downturns and decreasing in times of economic growth (see Figure FSP 1).  Economic conditions alone did not explain the caseload growth in the late 1980s and early 1990s, however.  A Congressionally mandated study in 1990 concluded that a variety of factors contributed to this caseload growth, including expansions in Medicaid eligibility, and changes in immigration laws, particularly the legalization of undocumented aliens, as well as a rise in unemployment (McConell, 1991).  Longer spells of participation also contributed to the caseload increase, according to an analysis of longitudinal data from the Survey on Income and Program Participation.  (Gleason, 1998).

Economic conditions were a significant factor in explaining the drop in food stamp caseload since 1994, according to an Economic Research Service review of recent research (ERS, 2000).  Several econometric models suggest that economic variables explain between 25 and 44 percent of the decline in caseload.  The full effect of the economy may be even higher, to the extent that some of the unexplained variation in the models reflects local economic conditions not captured in state-level economic variables.

Policy changes, most notably the enactment of the Personal Responsibility Act of 1996, have also contributed to the recent decline in food stamp caseload.  The most direct impact was the elimination of eligibility for most legal immigrants and for many childless adults aged 18-50.  Participation for these two groups fell sharply between 1994 and 1998 (Genser, 1999).  In addition, changes in TANF policy may have affected food stamp participation, although these effects are less certain.  Many studies of families leaving TANF cash assistance have found that many families leave the Food Stamp Program as well, despite appearing eligible for food stamp benefits.  Econometric studies of the effects of specific changes in TANF policy, however, have found that only a small share of the decline in state food stamp caseloads was associated with waviers to AFDC policies.  Increased stigma about welfare use and unintentional diversion from the Food Stamp Program may be additional factors affecting food stamp participation.  Finally, a study of trends in Food Stamp Program Participation rates (USDA, 2000) found that the program is reaching a smaller percentage of eligible individuals in 1998 than it did during the three previous years.

Food Stamp Expenditures.  Total program costs, shown in Table FSP 2, have declined in recent years, along with the decline in caseloads.  In fiscal year 1999, total program costs (including Puerto Rico) were $19 billion, reaching their lowest levels since 1980, after adjusting for inflation.  (Average monthly participation in fiscal year 1999 was 21.0 million).  Average monthly benefits per person have also declined in recent years after adjusting for inflation.  Benefits were $72 per person in fiscal year 1999, considerably lower than the $82 per person benefit (in constant dollars) paid in 1992, but higher than the $68 per person paid in 1987.

Food Stamp Household Characteristics.  As shown in FSP 3, the proportion of food stamp households with earnings has increased, from about 20 percent for most of the 1980s and early 1990s, to 26 percent in 1998 and 27 percent in 1999.  At the same time, the proportion of households with income from AFDC/TANF has declined, from 42 percent in 1982 to 27 percent in 1999, following the dramatic decline in AFDC/TANF caseloads.  Over half of all food stamp households have children, although the proportion has declined somewhat from over 60 percent in most of the 1980s and 1990s to 56 percent in 1999.  The vast majority (89 percent) of households have incomes below the federal poverty guidelines.

Figure FSP 1.  Persons Receiving Food Stamps

Note:  Shaded areas are periods of recession.
Sources:  U.S. Department of Agriculture, Food and Nutrition Service, National Data Bank.

Where to?

Top of Page
Table of Contents of Report
Executive Summary
Introduction
Indicators of Dependence
Predictors and Risk Factors Associated with Welfare Receipt
Appendix A:  Program Data
Appendix B:  Alternative Definition of Dependence
Appendix C:  Additional Non-Marital Birth Data
Appendix D:  Sources of Data

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Last updated December 10, 2001