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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), though benefits are distributed by each U.S. state's Division of Social Services or Children and Family Services.
SNAP benefits cost $76.4 billion in fiscal year 2013 and supplied roughly 47.6 million Americans with an average of $133.08 per month in food assistance. It is the largest nutrition program of the fifteen administered by FNS and is a critical component of the federal social safety net for low-income Americans.
The amount of SNAP food stamps a household gets depends on the household's size, income, and expenses. 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. EBT has been implemented in all states since June 2004. Each month, SNAP food stamp benefits are directly deposited into the household's EBT card account. Households may use EBT to pay for food at supermarkets, convenience stores, and other food retailers, including certain farmers' markets.
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) ceased to exist.
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 included 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 $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."
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 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.
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.
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.
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.
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.
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:
In addition to EPR, the Food Stamp Act of 1977 included several access provisions:
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.
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:
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:
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:
In December 1979, participation finally surpassed 20 million. In March 1994, participation hit a new high of 28 million.
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:
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:
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.
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 requiring 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."
The ARRA raised SNAP benefits to help people affected by the recession. This temporary expansion to expire on November 1, 2013, resulting in a relative benefit decrease for SNAP households. For families of three, the cut will be $29 a month — a total of $319 for November 2013 through September 2014, the remaining months of fiscal year 2014. Following the expiration of the benefits expanded by the ARRA, SNAP benefits are expected average less than $1.40 per person per meal in 2014
In June 2014, Mother Jones reported that "Overall, 18 percent of all food benefits money is spent at Walmart," and that Walmart had submitted a statement to the U.S. Securities and Exchange Commission stating,
"Our business operations are subject to numerous risks, factors, and uncertainties, domestically and internationally, which are outside our control. These factors include... changes in the amount of payments made under the Supplemental Nutrition Assistance Plan and other public assistance plans, [and] changes in the eligibility requirements of public assistance plans."
Companies that have lobbied on behalf of the SNAP program include "Pepsi, Coke, and the grocery chain Kroger". Kraft, which receives "One-sixth [of its] revenues ... from food stamp purchases" also opposes food stamp cuts.
Because SNAP is a mandatory, or entitlement, program, the federal government is required to fund the benefits of all eligible participants. There are income and resource requirements for SNAP, as well as specific requirements for immigrants, elderly persons and persons with disabilities.
For income, individuals and households may qualify for benefits if they earn a gross monthly income that is 130% (or less) of the federal poverty level for a specific household size. For example: the SNAP-eligible gross monthly income is $1,245 or less for an individual. For a household of 4, the SNAP eligible gross monthly income is $2,552 or less. Your gross monthly income is the amount you make each month before any deductions, i.e. taxes, insurance, pensions, etc.
There is also a resource requirement for SNAP, although eligibility requirements vary slightly from state to state. Generally speaking, households may have up to $2,000 in a bank account or other countable sources. If at least one person is age 60 or older and/or has disabilities, households may have $3250 in countable resources.
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:
The adjusted net income, including the deduction for excess shelter costs, is used to determine whether a household is eligible for food stamps.
The 2002 Farm Bill restores SNAP eligibility to most legal immigrants that:
Certain non-citizens, such as those admitted for humanitarian reasons and those admitted for permanent residence, may also eligible for the SNAP program. Eligible household members can get SNAP benefits even if there are other members of the household that are not eligible.
To apply for SNAP benefits, an applicant must first fill out a program application and return it to the state or local SNAP office. Each state has a different application, which is usually available online. There is more information about various state applications processes, including locations of SNAP offices in various state, displayed on an interactive Outreach Map found on the FNS website. Individuals who believe they may be eligible for SNAP benefits may use the Food and Nutrition Services’ SNAP Screening Tool, which can help gauge eligibility.
As per USDA rules, households can use SNAP benefits to purchase:
Additionally, restaurants operating in certain areas may be permitted to accept SNAP benefits from eligible candidates like elderly, homeless or disabled people in return for affordable meals.
However, the USDA clearly mentions that households cannot use SNAP benefits to purchase the following to eat or drink:
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 results in $1.73 of economic activity. 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.
A summary statistical report indicated that an average of 47.6 million people used the program in FY 2013. Nearly 72 percent of SNAP participants are in families with children; more than one-quarter of participants are in households with seniors or people with disabilities.
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%.
Amounts paid to program beneficiaries rose from $28.6 billion in 2005 to $76.6 billion in 2013. This increase was due to the high unemployment rate (leading to higher SNAP participation) and the increased benefit per person with the passing of ARRA. SNAP average monthly benefits increased from $96.18 per person to $133.08 per person. Other program costs, which include the Federal share of State administrative expenses, Nutrition Education, and Employment and Training, amounted to roughly $3.7 million in 2013. There were cuts into the program's budget introduced in 2014 that were estimated to save $8.6 billion over 10 years. Some of the states are looking for measures within the states to balance the cuts, so they would not affect the recipients of the federal aid program.
While SNAP participants and other low-income nonparticipants spend similar amounts on food spending, SNAP participants tend to still experience greater food insecurity than nonparticipants. This is believed to be a reflection of welfare of individuals who take the time to apply for SNAP benefits than the shortcomings of the SNAP program. The theory behind this is that those households facing the greatest hardships are the most likely to bear of the burden of applying for program benefits. Therefore, SNAP participants tend to be, on average, less food secure than other low-income nonparticipants.
Because SNAP is a means tested, entitlement program, participation rates are closely related to the number of individuals living in poverty in a given time period. In periods of economic recession, SNAP enrollment tends to increase and in periods of prosperity, SNAP participation tends to be lower. Unemployment is therefore also related to SNAP participation. However, ERS data shows that poverty and SNAP participation levels have continued to rise following the 2008 recession, even though unemployment rates have leveled off. Poverty levels are the strongest correlates for program participation.
Self-selection by more food-needy households into the SNAP program makes it difficult to observe positive effects on food security from survey data. While SNAP participants and other low-income nonparticipants spend similar amounts on food spending, SNAP participants tend to still experience greater food insecurity than nonparticipants. This is believed to be a reflection of welfare of individuals who take the time to apply for SNAP benefits than the shortcomings of the SNAP program. In other words, households facing the greatest hardships are the most likely to bear of the burden of applying for program benefits. Statistical models that control for this endogeneity suggest that SNAP receipt reduces the likelihood of being food insecure and very food insecure by roughly 30 percent and 20 percent, respectively.
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, i.e. the Supplemental Nutrition Assistance Program for Women, Infants and Children (WIC), SNAP does not have nutritional standards for purchases. Critics of the program suggest that this lack of structure represents a missed opportunity for public health advancement and cost containment. In April, 2013, the USDA research body, the Economic Research Service (ERS), published a study that examined diet quality in SNAP participants compared to low-income nonparticipants. The study revealed a difference in diet quality between SNAP participants and low-income nonparticipants, finding that SNAP participants score slightly lower on the Healthy Eating Index (HEI) than nonparticipants. The study also concluded that SNAP increases the likelihood that participants will consume whole fruit by 23 percentage points. However, the analysis also suggests that SNAP participation decreases participants intake of dark green/orange vegetables by a modest amount.
In 2011, Secretary of Agriculture Tom Vilsack gave a statement regarding SNAP benefits: "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.
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."
In March 2012, the USDA published its fifth report in a series of periodic analyses to estimate the extent of trafficking[clarification needed] in the SNAP program. Although trafficking does not increase costs to the Federal Government, it 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 one cent of each SNAP dollar ($330 million annually) from SNAP benefits 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. SNAP benefit fraud, generally in the form of store employees buying EBT cards 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 SNAP 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 SNAP benefits for cash and/or for items not eligible for purchase with EBT cards. In 2011, the Michigan program raised eligibility requirements for full-time college students, to save taxpayer money and to end student use of monthly SNAP benefits.
In Maine, incidents of recycling fraud have occurred in the past where individuals once committed fraud by using their EBT cards 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. Cato also reported that the erroneous payout rate dropped significantly from 5.6 percent in 2007 to 3.8 percent in 2011.
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.
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 and buying unhealthy foods. 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.
Economists consider SNAP one of the most effective forms of economic stimulus. Moody’s Analytics estimates that in a weak economy, every dollar increase in SNAP benefits generates about $1.70 in economic activity. Similarly, CBO 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.
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