Implementation of the Food Stamp Eligibility and Certification Provisions of the 2002 Farm Bill

June 1, 2004

Author: Barbara Weiner

A companion article in this issue of the LSJ discusses the publication of proposed federal regulations by the Food and Nutrition Services of the United States Department of Agriculture (FNS) that implement the provisions of the 2002 food stamp reauthorization legislation expanding the eligibility of immigrants for food stamp benefits. See this issue, page 8. The food stamp reauthorization provisions were a part of the Farm Security and Rural Investment Act of 2002 (FSRIA). The proposed regulations were published on April 16, 2004 in Volume 69 of the Federal Register, beginning at page 20724.

This article concentrates on the sections of the proposed regulations that implement non-immigration related provisions of the Farm Security and Rural Investment Act (FSRIA), including simplified household reporting requirements; simplified definition of income and resource, simplified determination of deductions, and expansion of the transitional benefit alternative. In general, FSRIA greatly expanded the ability of states to simplify food stamp program administration, including permitting state food stamp agencies to adopt income counting rules from other programs in order to bring more conformity to the state’s administration of its various public benefit programs.

Many of the options provided to the states in the 2002 legislation and discussed below have already been implemented by New York under earlier guidance issued by FNS, even before the publication of these proposed regulations.

Simplified Reporting Requirements

Under the simplified reporting rules currently in effect, food stamp households with earned income are only required to report changes in household circumstances every six months except those changes that bring the household’s income over 130% of the federal poverty line or reduce work hours of a household member subject to the ABAWD rules below the statutory requirement. During the six month simplified reporting period, local districts must act on changes that are reported and verified by a food stamp household that would increase the household’s benefits and on changes in public assistance grants and other sources that are considered verified upon receipt by the agency.

In New York, food stamp households with earned income must recertify every six months. The proposed regulations make clear that households certified for periods of six months or less do not have to submit separate, six month periodic reports. At recertification, the household will have to provide all the information about income, household composition, shelter expenses and so on that would otherwise be required in the periodic report. (See 7 CFR § 273.14.)

FSRIA provided states with the option to extend simplified reporting to all food stamp households, not just those with earned income. The state may include any household in the simplified reporting system that is certified for at least four months. Households that are certified for periods of more than six months must submit a periodic report at least every six months. In New York, households receiving public assistance generally must recertify every 6 months. Thus, as with earned income households, food stamp households in receipt of public assistance will have their certification periods coincide with the federal simplified reporting period and so will not have to submit a periodic report. Districts have the option to use a twelve month certification period for food stamp households with unearned income other than public assistance. These households would be required to submit a periodic report in the sixth month.

Households that are statutorily exempt from food stamp periodic reporting requirements, which includes migrant workers, homeless households, and households in which all members are either elderly or disabled, can be subject to simplified reporting rules as long as their certification period coincides with the reporting period, since then there would be no need for a periodic report.

Since the simplified reporting period cannot exceed six months, this is not a good option for elderly and disabled households, who are otherwise eligible to be certified for benefits for up to 24 months. New York has been seeking approval of its variation of the simplified reporting system for these households, that only requires the elderly or disabled household to return the 6 month reporting form if there were any changes to report. OTDA was recently informed by FNS that it will not be permitted to continue to use this system. Effective May 1, 2004, elderly and disabled food stamp households have been converted back to ten-day change reporting rules. These households were notified in April that they must report changes in household circumstances within ten days of becoming aware of the change. (See 04 ADM-02.)

The state is provided two options for acting on changes in household circumstances that are reported outside the periodic report (other than changes in monthly gross income that exceed the household’s monthly gross income limit). The first is the current procedure of only acting on changes that a household reports if the change would increase the food stamp benefits. For changes reported that would decrease benefits, the food stamp agency may only reduce the food stamp benefits if the change reported by the household or by another source is verified upon receipt or is a change in the household’s public assistance grant. This is the procedure followed in New York.

The second option provided in the proposed regulations is for the state to act on all reported changes, regardless of whether they would increase or decrease the food stamp benefit. FNS states that it is providing this as an option because some state food stamp agencies have already been granted waivers prior to the publication of these regulations allowing them to do this.

If households fails to submit a required periodic report, or submits one that is incomplete, the food stamp agency must send a notice advising the household of the missing or incomplete report within 10 days of the date the report should have been submitted. If the household does not respond, the household’s benefits must be terminated. However, if the household fails to provide sufficient information about a deductible expense, the household’s benefits should not be terminated. Instead, the household will simply not receive the benefit of the deduction.

Finally, FNS propose to require that periodic reports be subject to the current requirements for quarterly reports, namely that they be written in clear, concise and simple language and meet the bilingual requirements of the food stamp law, which are described in 7 CFR § 272.4(b).

Simplified Definition of Income, Resources and Deductions

Many, if not most, of the proposed simplifications in the definition of income, resources and deductions were implemented by New York almost two years ago, shortly after the enactment of FSRIA. The districts were informed of these changes through 02 ADM-7, issued in August of 2002.

However, with the publication of the proposed regulations, several of the revisions made by New York will not survive the adoption of final regulations. On the other hand, certain clarifications made by the proposed amendments may open other opportunities for the state to disregard certain types of income or resources in calculating food stamp eligibility.

The explanatory section accompanying the proposed regulation expressly rejects the rule adopted by New York in 2002, excluding adoption subsidies and foster care payments from counting as income for the purpose of food stamp eligibility and benefit amount. These payments have not counted as income in New York since October 1, 2002. Another income exclusion adopted by New York and rejected by FNS are VISTA payments made under Title I of the Domestic Volunteer Service Act of 1973.. (See 69 FR 20724, at 20743 and 20744.)

FNS clarifies that child support payments made on a voluntary basis, like legally obligated child support payments, are to be counted as income, unless they qualify to be excluded under food stamp rules for the treatment of infrequent or irregular income. The proposed regulations also implement the option provided by FSRIA and long adopted by New York, of treating legally obligated child support payments as an income exclusion rather than a deduction. This has the effect of permitting a household with gross income over 130% of poverty that would otherwise be ineligible for food stamps to participate in the food stamp program if a member of the household is making child support payments large enough that, if subtracted from the household’s gross income, the household’s income would be brought within the allowable maximum income level. In calculating the 20% earned income deduction, states which exclude rather than deduct child support must apply the earned income deduction to the child support excluded from gross income.

The proposed regulations provide the option to the state to rely solely on the records of the child support enforcement agency in determining the amount of child support the household pays, without any additional verification or reporting required of the household. This of course would only apply if the payments are being made through the child support enforcement system. States choosing this option must require the household to sign a statement authorizing the release of the household’s child support records to the state food stamp agency. FNS invites public comments on this proposal. To the extent that advocates have concerns about the accuracy of these records, FNS should be made aware of these concerns. In the explanatory material, FNS also welcomes suggestions as to other simplified methods the states could use in determining the amount of child support deduction or exclusion.

FSRIA gave states the option, which New York took, of making the Standard Utility Allowance (SUA) mandatory, rather than permitting households to provide evidence of higher payments. The advantage of choosing this option is that the state food stamp agency can provide the highest SUA deduction, the heating/cooling SUA, to residents of public housing units with a central utility meters but who are charged for excess heating or cooling costs. In addition, states adopting the mandatory SUA are no longer required to prorate the SUA when two or more food stamp households share living quarters.

In the explanatory material to the proposed regulations, FNS reports that some question has been raised by state agencies as to whether the SUA must be prorated if eligible food stamp household members reside with ineligible members if the ineligible member pays all or a part of the expenses included in the SUA. In response to this question, FNS invites the public to vote on one of two alternatives. (See 69 FR 20724, at 20750.) FNS intends to incorporate the alternative that gets the most public support into the final rule! The first alternative, and the one FNS originally intended be followed, is to provide the food stamp eligible household with the benefit of the entire SUA, regardless of who pays the bills. The second alternative is to prorate the SUA if the ineligible member pays part or all of the households expenses.

Advocates should definitely weigh in on this question. If New York were required to go back to prorating the SUA, even if just for food stamp households residing with ineligible members, it would be extremely harmful. In the past, proration of the SUA was a major cause of food stamp budgeting errors in the state. The elimination of proration has not only reduced New York’s error rate, it also
has, perhaps more importantly, maximized the food stamp benefits for which New York households are eligible. To reinstate proration would mean the loss of food stamps to many food stamp households, including food stamp households comprised primarily of children living with adult household member who are ineligible because of their immigration status.

FSRIA gave states the option of disregarding changes in household expenses which would effect the amount of deductions for which a household is eligible until a household’s next recertification, with the exception of changes in earned income or change in shelter costs arising out of a change in residence. New York adopted the option and instructed local districts not to decrease deductions in childcare, medical costs or excess shelter costs, unless the change in shelter expenses is the result of a move or the change is being budgeted in the public assistance grant. See 01 ADM-7. However, the State instructed local districts to process all verified increases in deductible expenses during the certification period. In the proposed regulations FNS rejects exercise of the option only in one direction, objecting that to ignore decreases in deductions and only budgeting increases would raise program costs beyond what was anticipated when the option was enacted.

The proposed regulations also provide flexibility for the states with respect to the counting of resources, allowing resources excluded under the state’s TANF or Medicaid programs to be excluded under the food stamp program, within certain limits. For example, a state could use its Medicaid rule exempting Individual Retirement Account (IRAs) in the food stamp program if the exemption is conditioned on there being a penalty for early withdrawal, other than a loss of interest. (Unfortunately, New York’s Medicaid and TANF rules do not provide for the exemption of retirement accounts.)

The exemption of resources could extend to any resource excluded by a state’s Medicaid or TANF programs that meets FNS” definition of “not readily available.” Readily available applies to “...resources in a financial institution that can be converted into cash in a single transaction, without going to court to obtain access or incurring a financial penalty other than loss of interest.” (Proposed Rule 273.8, 69 FR 20724, at 20759.)

Transitional Food Stamp Benefits for Households Leaving Welfare

The last major provision of FSRIA addressed in the proposed regulations concerns the implementation of transitional food stamp benefits. New York was the first state to adopt the transitional food stamp benefit option, at a time when it was only an option provided by FNS through regulation. A year or so later, Congress enacted the authority for the states to provide transitional benefits in FSRIA, and extended the period during which such benefits could be provided from three months to five months. In addition, Congress amended the food stamp law to allow food stamp certification periods to be extended beyond the statutory 12 month period if necessary to accommodate the transitional period. Households receiving transitional food stamps are not required to report any changes in household circumstances during the transitional period.

In the explanatory material accompanying the proposed regulations, FNS notes that under FSRIA states are provided with complete discretion to decide which households will be eligible to receive transitional benefits, except for certain households that are specifically excluded by law. Therefore the proposed regulations eliminate the current requirement that, at a minimum, states opting to implement the transitional benefit program must provide such benefits to households leaving welfare due to earned income. This should have little effect in New York which has, since the beginning, provided transitional benefits to all eligible households whose TANF case closes, whether the public assistance case is closed because of increases in earned income or because of increases in unearned income or simply because the household no longer wishes to receive public assistance. See 01 ADM-16, November 7, 2001.

The regulations provide that during the transitional benefit period, the household will receive the same food stamp benefit allotment it received in the month prior to the close of the TANF case, adjusted for any reductions in income due to the loss of TANF. However, states are given the option of adjusting the household’s benefit during the transitional period to take into account changes in circumstances that it learns about from another program in which the household participates. One circumstance that the state does not have the option to ignore is if a member of the transitional food stamp household leaves the household and becomes a participant in another food stamp household. The prohibition against duplicate participation requires that the transitional benefits paid to the initial household be reduced to reflect the departure of that household member.

Pursuant to FSRIA, households who experience changes in circumstances that would increase their benefits may report such changes to the food stamp agency but, in order to receive an increase in benefits, the household will not be able to continue in the transitional benefit program but must recertify for participation in the regular food stamp program.

FNS clarifies that households may participate in the transitional benefit program even if only some of the members were receiving TANF before the assistance case closed (mixed households). New York does include these households in the transitional program.

Though the states are given wide discretion in determining which households can participate in the transitional program, households leaving TANF due to a TANF sanction or all of whose members are ineligible to participate in the food stamp program may not participate in the transitional benefit program. Because New York does not impose household sanctions in either the food stamp or public assistance programs, it is difficult to imagine under what circumstances a household that was participating in the food stamp program would become ineligible for transitional benefits when its TANF case closed. Nevertheless, in 01 ADM-16, OTDA states that a household will be ineligible for transitional benefits if a member of the household at the time of case closing is sanctioned for having violated a food stamp work requirement, committed a food stamp or public assistance intentional program violation or failed to comply with food stamp reporting requirement.

This is in contrast to the proposed regulations, which provide that it is only if the entire household is ineligible to receive food stamps or is leaving TANF because of a sanction that the household is ineligible for transitional benefits. If the sanction or disqualification applies only to an individual household member, FNS states that the household is still eligible for transitional benefits. The ineligible member must be excluded in calculating the amount of the transitional benefits. In response to questioning on this point, OTDA staff has indicated that in practice, New York’s program in fact does work that way, since it is the public assistance case closing code that determines whether a household is placed in the transitional program, not the presence of a sanctioned member in the household.

One issue that has troubled New York advocates is that when the TANF case is closed at the end of a certification period because of the household’s failure to recertify, New York does not automatically extend the food stamp certification period in order to provide the household with 5 months of transitional benefits. Since the certification periods for households receiving both public assistance and food stamps ordinarily coincide, OTDA considers the failure of the household to recertify for TANF benefits as a failure by the household to meet food stamp reporting requirements. Advocates may want to monitor whether households are inadvertently losing access to transitional food stamp benefits when their TANF and food stamp benefits close at the same time for failure to recertify.