Indicators of Welfare Dependence: Annual Report to Congress, 2008. Legislative Changes

12/20/2008

Title IV and subtitle A of title VIII of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) made major changes to the Food Stamp Program, including strong work requirements on able-bodied adults without dependent children, restricted eligibility of 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 and beyond.  

First, a work requirement was added for able-bodied adult food stamp recipients without dependents (ABAWDs).  Unless exempt, ABAWDs between the ages of 18 and 59 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 was 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 (Public Law 104-193) made significant changes in the eligibility of noncitizens for food stamp benefits.  As first enacted, most qualified aliens, including legal immigrants (illegal aliens were already ineligible) were barred from receiving 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 on August 22, 1996 and were over 65 years of age on that date or were under age 18 or disabled.

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 non-custodial parents, from food stamps when they do not cooperate with child support agencies or are in arrears in their child support.

Between 1996 and 2001, regulatory and legislative changes were made to increase access to food stamps among working poor families.  Regulatory changes announced in July 1999 and expanded in November 2000 allowed states to reduce reporting requirements and made it easier for working families to report income changes on a semiannual basis.  Under the November 2000 regulations, states also were given the option of providing a three-month transitional food stamp benefit to most families leaving TANF.  Regulations that went into effect in 2001 expanded categorical eligibility to those receiving noncash TANF benefits, excluded vehicles with little equity from the assets test, and eliminated the equity test for most vehicles.  In addition, the Agriculture Appropriations Bill for 2001 (Public Law 106-387) provided 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.

The Farm Security and Rural Investment Act of 2002 – also known as the 2002 Farm Bill – reauthorized the Food Stamp Program through fiscal year 2007. This law brought a number of significant changes to the program, including some that supersede earlier changes made through PRWORA and subsequent FSP legislation and regulations.  Specifically, the 2002 Farm Bill restores food stamp eligibility to legal immigrants who have lived in the country at least five years and to legal immigrants receiving disability benefits, regardless of entry date.  Children of legal immigrants also are eligible for food stamps regardless of entry date.  Effective in fiscal year 2004, the requirement that income and resources of an immigrant’s sponsor be counted in determining the eligibility and benefit amounts for immigrant children was eliminated. Each provision became effective at a different time, but all restorations were in effect by October 1, 2003.

The 2002 Farm Bill also increased the asset limit from $2,000 to $3,000 for households with a disabled member, making it consistent with the limit for households with elderly, and replaced the fixed standard deduction with a deduction that varies according to household size and is indexed to cost-of-living increases, in recognition of the higher expenses larger households incur.  For households in the 48 contiguous states and DC, Alaska, Hawaii and the Virgin Islands, the deduction is set at 8.31 percent of the applicable net income limit based on household size.  (Households in Guam will receive a slightly higher deduction.)  No household receives an amount less than the previous fixed standard deduction or more than the standard deduction for a household of six.

Other 2002 Farm Bill changes include the authorization of $5 million per year for education and outreach grants to help inform the low-income public of their eligibility for food stamps, and increased flexibility for states in spending Employment and Training program funds to promote work.  States also are now allowed to extend from three months to up to five months the period of time households may receive transitional food stamp benefits when they lose TANF cash assistance.  Benefits are equal to the amount the household received prior to termination of TANF with adjustments in income for the loss of TANF.  This change helps individuals moving off cash assistance to make the transition from welfare to work.

The 2002 Farm Bill also implemented a number of administrative reforms and program simplifications, including:

  • changing the quality control system so that only those states with persistently high error rates will face liabilities;
  • awarding bonuses to states that improve the quality and accuracy of their service;
  • allowing states to exclude certain types of income and resources not counted under TANF or Medicaid, such as educational assistance, when determining food stamp eligibility;
  • allowing states to deem child support payments as income exclusions rather than deductions as an incentive for parents to pay child support;
  • allowing states to simplify the standard utility allowance (SUA) if the state elects to use the SUA rather than actual utility costs for all households, thus reducing administrative burden, costs and errors;
  • permitting states to use a standard deduction from income of $143 per month for homeless households with some shelter expenses;
  • allowing states to extend simplified reporting procedures to all households, not just households with earnings;
  • eliminating the requirement that the Electronic Benefit Transfer (EBT) system be cost-neutral to the federal government to help support the EBT conversion process;
  • allowing USDA to use alternative methods for issuing food stamp benefits during times of disaster when use of EBT is impractical;
  • requiring food stamp applications be made available through the Internet; and
  • combining Puerto Rico and American Samoa’s block grants into one grant and indexing both with inflation.

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