Background on the Nutrition Reform and Work Opportunity Act

Posted by Connor Walsh on

Today, the House will vote on H.R. 3102, the Nutrition Reform and Work Opportunity Act. 

Our nation's safety-net programs aren't designed to be a permanent way of life. Consider the following:

  • One in seven Americans is on food stamps.
  • The federal government has embarked on an unprecedented advertising and recruitment effort to expand the number further.
  • Loopholes in the law have allowed people to enroll even though their income exceeds the normal threshold.
  • The number of able-bodied adults under the age of 50 without children enrolled on the program grew by 163.7% from 2007 to 2011.
  • And while this is the very group that is supposed to be subject to a work requirement, the requirement has been waived in almost every state.
  • Newscasts tell stories of young surfers who aren’t working, but cash their food stamps in for lobster. 
  • Costing taxpayers $80 billion a year, middle class families struggling to make ends meet themselves foot the bill for a program that has gone well beyond a safety net for children, seniors, and the disabled.

The Nutrition Reform and Work Opportunity Act lives up to its title, addressing these problems head on while preserving the safety net for those who really need it.

Specifically, the bill will:

  • Ensure that work requirements for able-bodied adults without children are enforced not waived
  • Eliminate the ability of individuals to be deemed “categorically eligible” when they don’t meet the income or asset requirements for public assistance
  • Prevent the gaming of the system through the “heat-and-eat loophole” whereby food stamp benefits are increased above what individuals are entitled to received
  • Prevent taxpayer funded advocacy campaign designed to sell people on enrolling in the food stamp program
  • Empower states to engage able-bodied parents in work and job training as part of receiving food stamps 

This bill not only restores the integrity of this safety-net program, it will help beneficiaries become more self-sufficient. These reforms will also generate approximately $40 billion in savings for taxpayers over the next ten years. This memo provides additional information on these reforms and addresses some of the misconceptions about the proposal.

Work Requirements

Able Bodied Adults Without Dependents (ABAWDS) 

Since the enactment of bipartisan reform in 1996 during the Clinton Administration, adults between the ages of 18 and 50 have been ineligible to receive Supplemental Nutrition Assistance Program [SNAP] benefits for more than 3 months out of any 3-year period without working at least 20 hours per week or participating in workfare or an employment training program of similar duration. States have been permitted to exempt participants from this time limit in cases where the state’s unemployment rate exceeds 10 percent, or in places where no jobs are available. Additionally, states may exempt a total of 15 percent of this group of beneficiaries from the work requirement and time limit.

The Obama Administration’s stimulus law of 2009 provided a nationwide waiver of the 1996 work requirement from April of 2009 through September 30, 2010. Since the nationwide stimulus waiver expired, the Administration has repeatedly requested an extension of this national waiver in Obama’s annual budget submissions, a policy not adopted by the Congress. However, the Administration has used the availability of extended unemployment benefits to offer state-wide waivers to the work requirement to virtually every state and territory that provides SNAP benefits. Specifically, the Obama Administration sent out Policy Memorandums for Fiscal Years 20112012 and 2013offering waivers to the work requirement to 49 states and territories in 2011 and 46 in 2012 and 2013. Prior to the stimulus in Fiscal Years 2007 and 2008, a total of 8 states received a state-wide waiver and in 2009 only 12 states received a state-wide waiver.

The nonpartisan Congressional Research Service [CRS] has estimated that the number of able-bodied adults without dependents receiving food stamps grew by 163.7% from 2007 to 2011 (the last year for which CRS has compiled data).

This isn’t just the result of the overall food stamp population growing, as able-bodied adults grew from 6.6% of the food stamp population in 2007 to 10.2% in 2011 – a 54% increase.

 

Preliminary Estimates of the Number of ABAWD Participants: FY07-FY11
Year ABAWD Participants Total SNAP Participants ABAWD as a Percent of Total
2007 1.705 25.926 6.60%
2008 1.906 27.791 5.90%
2009 2.759 32.889 8.40%
2010 3.869 39.759 9.70%
2011 4.495 44.148 10.20%
Percent Change 163.70% 70.30% 3.60%

 

The elimination of the work requirement for able-bodied adults without dependents has led to reports by major news organizations which reveal abuse of the program by persons who use their $200 monthly benefits to support work-free lifestyles of surfing or playing in garage bands. Not all states have joined in the expanded waivers, however. The State of New York has allowed New York City to decline waivers of the ABAWD work requirement due to Mayor Bloomberg’s strong advocacy of work-focused solutions to poverty. An official from the Mayor’s office defended the decision to decline the waiver, stating, “This decision is consistent with our work focused welfare program and supports New York City’s longstanding policy that able bodied individuals between 18 and 50 years old who do not have children are required to work in order to receive food stamp benefits.”

Nutrition Reform and Work Opportunity Act Proposal

Under the House nutrition bill proposal, waivers of the 1996 ABAWD work requirement will be cancelled, restoring the 3-month time limit on benefit receipt by non-working able-bodied childless adults. States will still be allowed to exempt from the work requirement up to 15 percent of the total number of ABAWDS on the benefit rolls (calculated from a base year of 2011) based on hardship or lack of jobs in a given area. This policy is expected to generate at least $20 billion in savings over the next 10 years.

Able Bodied Adults With Dependents

In addition to the work requirement for childless able-bodied adults, the SNAP program requires heads of household over age 15 and younger than 60 to register for the Food Stamp Employment and Training Program (though participation is not required). Applicants must search for a job, though benefits are not contingent on job search. If a job is offered, beneficiaries must accept if the job is suitable. The requirement to register for the Employment and Training program is waived for anyone:

  • younger than 16 or older than 59
  • 16 or 17 years old and not the head of household
  • in the second or third trimester of pregnancy
  • with a physical or mental condition, either permanent or temporary, that prevents working
  • caring for a dependent child under age 6, whether or not that child is part of the household
  • caring for an incapacitated person, whether or not that person is part of the household
  • meeting the work requirements of another assistance program such as TANF
  • getting unemployment compensation benefits and meeting program requirements
  • working 30 hours a week or earning an amount at least equal to the federal minimum wage
  • taking part in an approved drug or alcohol treatment, vocational rehab, or mental health program
  • who is a student, half-time or more

Based on the most recent (2011) United States Department of Agriculture [USDA] statistical report on the SNAP caseload, 70 percent of heads of SNAP households are exempt from work registration, 26 percent by reason of disability. Only 23 percent of heads of households had registered for work, with more than half of that group not participating in SNAP Employment & Training activities.

In comparison, the Temporary Assistance to Needy Families [TANF] program, the nation’s cash welfare program for low income families with children, requires states to engage 50 percent of their cash assistance caseload in one of 12 statutorily defined work activities. To be counted as part of the state’s work participation rate, a TANF participant must work or participate in an eligible training or job readiness activity for at least 30 hours per week, or 20 hours per week if the household contains a child under 6.

States are required to assess a newly enrolled TANF beneficiary’s skills, work experience, and employability within 90 days, and engage them in work within 24 months of coming onto the rolls. States must sanction a beneficiary for refusing to participate in the required work activities by either reducing the benefit amount to exclude the non-working parent, or by denying benefits to the family entirely until the parent complies with the requirement.

Nutrition Reform and Work Opportunity Act Proposal

Under the House nutrition bill proposal, states will have the option of applying the TANF work requirements to non-working able bodied parents of children receiving SNAP benefits. States may require 20 hours of work activities per week from any able-bodied adult with a child over age 1 if child care is available, and for all parents whose children are over age 6 and attending school. States may exempt parents from the requirement if they are disabled or for good cause, such as victims of domestic violence. Work activities include (among other things) regular or subsidized employment, job search, job training, community service, workfare (where benefits are provided in exchange for work), and providing child care for others complying with the work requirement.

As the nation experienced with TANF, engaging SNAP recipients in work activities is expected to help move them more quickly into self-sufficiency which means they will spend less time receiving SNAP benefits. Because states will bear the burden of engaging these individuals in work activities, they will receive 50 percent of any cost savings that result of implementing this policy in their state. The proposal is essentially the same policy as the Southerland Amendment to HR 1947 as adopted by the House on June 20, 2013.

In addition to the above policy, the House bill will also modify the requirements by which states may receive a 50 percent match to any state expenditure under the SNAP Employment and Training Program. Under the proposal, the 50 percent federal match will be available only to states opting in to the Southerland Amendment.

This proposal mirrors the approach taken by the federal government in the early 1990s. States such as Wisconsin seeking to reform their welfare system obtained waivers from the federal government to conduct demonstration projects that required beneficiaries to engage in job search and work participation activities.

The success of these demonstration projects in reducing welfare caseloads and moving individuals off of welfare and onto work led to the landmark 1996 federal welfare reform law, which placed a time limit on cash welfare payments, converted the program into a block grant to states and required that states have at least 50 percent of their welfare caseloads participating in work activities for at least 20 hours per week.

Within 5 years, welfare caseloads nationally fell more than 60 percent, while work participation by never-married single mothers reached historic highs, earnings of beneficiaries increased substantially, and child poverty fell to historic lows. Today, the 1996 welfare reform is considered a bipartisan success.

Ensuring that Benefits Go to Only Those Who Qualify

Categorical Eligibility 

Under current law, an individual can automatically qualify for SNAP based on receipt of benefits through other low-income assistance programs, including the TANF block grant, Supplemental Security Income (SSI), or state‐run General Assistance (GA) programs.

The Obama Administration has actively encouraged states to implement a policy called “broad-based categorical eligibility,” which means states are conveying SNAP eligibility based upon a household receiving any TANF‐funded benefit. As the nonpartisan Government Accountability Office found, amazingly this could include receipt of a brochure or referral to a toll-free hotline.

According to the GAO report, in January 2012 there were 43 jurisdictions – 40 states, the District of Columbia, Guam, and the Virgin Islands – implementing this policy. Of the 43 jurisdictions using broad-based categorical eligibility, 39 had no asset test and 27 had a gross income limit above 130% of the federal poverty guidelines.

The nonpartisan Congressional Budget Office [CBO] estimates that reforming categorical eligibility would result in 1.8 million individuals no longer qualifying for SNAP benefits based on the program’s income and asset requirements over a 10 year period. A recent study by Harvard professor Jeffrey Liebman estimates a similar impact.

Individuals eligible for other safety-net programs would still be able to apply for SNAP benefits and qualify if they meet the income and asset requirements as stated in SNAP law. While current law requires households to undergo benefit calculation based on their net income, they are allowed to bypass asset and gross income tests through categorical eligibility. It is under this loophole that lottery winners and millionaires are able to still receive SNAP benefits.

Nutrition Reform and Work Opportunity Act Proposal

The House nutrition bill would restrict categorical eligibility to only those households receiving cash assistance from Supplemental Security Income [SSI], TANF, or a state‐run General Assistance program. Receiving a TANF-funded brochure or a referral to an “800” number telephone hotline would no longer automatically make a household SNAP eligible.

According to CBO, this proposal would save $11.6 billion over ten years. While this change would render some households no longer eligible for SNAP, any household that meets the eligibility requirements in SNAP law will continue receiving its SNAP benefits. This policy change would only affect those who are not truly eligible for the program under SNAP law.

LIHEAP/SNAP Interaction

Under current law, low-income households receiving any Low Income Home Energy Assistance Program (LIHEAP) payments also qualify for the SNAP Standard Utility Allowance (SUA) which automatically increases their SNAP benefits.

Approximately 16 states and DC are abusing this interaction (often at the behest of advocacy groups) by sending $1 or $5 LIHEAP checks to low‐income households so they may automatically take advantage of the SUA. In practice, if a participant receives $1 in LIHEAP, they can automatically deduct the SUA from their income, so their net income goes down and they receive more SNAP benefits. This can trigger as much as $130 in additional SNAP benefits per month. In New York, for example, households whose heating costs were already included in their rent nevertheless started receiving a $1 LIHEAP check. As a result, 115,000 households saw their SNAP benefits increase by an average of $118 per month.

Nutrition Reform and Work Opportunity Act Proposal

The House nutrition bill would change current law so that SNAP applicants must receive at least $20 in LIHEAP payments before automatically triggering the SUA deduction, closing this avenue for abuse. This provision in no way prevents those households that are paying their utility bills out-of‐pocket from receiving the SNAP SUA. Any household paying their utility bills can still receive this deduction if their utility expenses meet program requirements for the allowance.  According to CBO, this proposal would save $8.7 billion over ten years.

Response to Common Criticisms

Some advocacy groups, notably led by the liberal Center on Budget and Policy Priorities have attacked the House proposal as “very harsh,” cutting off food stamps for millions of individuals. But as discussed above, the savings in the House proposal and the reduction in individuals receiving food stamps are the result of three policies that simply restore the intent of bipartisan reforms adopted in 1996 and eliminate loopholes that have been exploited in just the last few years to avoid the program’s income and asset tests. No individual who meets the income and asset guidelines for the SNAP program will be denied access to benefits as result of the change to categorical eligibility or “heat and eat.” With respect to the work requirement time limit, under the bill it is only mandatory for able-bodied adults without children. States will still be able to exempt up to 15 percent of that population from the mandate. And with respect to the provision permitting states to impose work activity requirements on able-bodied adults with children with access to child care; in those instances, the state has to make such work activities available.

It is also important to remember that many of the same groups criticizing the policies included in the House nutrition bill made similar criticisms of the 1996 Welfare Reform law, which were later shown to be inaccurate and alarmist.

For example, the Center on Budget and Policy Priorities contended that the 1996 welfare law would increase the number of children who are poor and "make many children who are already poor poorer still.... No piece of legislation in U.S. history has increased the severity of poverty so sharply [as the welfare reform will].”

Instead, within 7 years of passage of the 1996 law, 2.9 million fewer children lived in poverty. The number of children living in “severe poverty” (defined as living on incomes half the poverty level) fell from 5.9 million in 1995 to 5.1 million in 2001, the opposite of what critics predicted. Within the first few years of the 1996 law’s enactment, employment among single mothers who were high school dropouts increased by two-thirds.





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