New USDA Rule Will Help Reduce SNAP Abuse and Encourage Work | Citizens Against Government Waste

New USDA Rule Will Help Reduce SNAP Abuse and Encourage Work

The WasteWatcher

The U.S. Department of Agriculture’s (USDA) Supplemental Nutrition Assistance Program (SNAP) is the nation’s largest federally-funded nutrition assistance program, serving, on average, more than 40.3 million households annually and costing taxpayers $60.6 billion in 2018.    

At the height of the Great Recession, between 2007 and 2011, the SNAP program grew by 135 percent and program costs topped out at $78 billion.  Enrollment began to decline in 2013, but the number of SNAP enrollees and the cost of the program remain stubbornly high by historical standards even though jobs are plentiful. 

SNAP exhibits several structural weaknesses that make it difficult to manage and highly vulnerable to waste, fraud, and abuse.  On December 4, 2019, the USDA announced a final rule to address some of its longstanding vulnerabilities.  The rule is west to go into effect on April 1, 2020. 

Like many federal programs, SNAP operates with dual accountability.  The federal government underwrites the costs, sets eligibility guidelines, benefit levels, and exercises oversight, while the states are responsible for its on-the-ground administration, and determining an applicants’ eligibility. 

But the laws of unintended consequences are immutable.  Program loopholes and lax oversight have resulted in billions of dollars in wasteful improper payments.

In order to reduce overhead costs, Congress in 1985 allowed state agencies to streamline the application process using a procedure called categorical eligibility.  Caseworkers could summarily accept a SNAP application if a potential participant had already met income and asset verification standards for another federal safety net program.  Today, SNAP categorical eligibility is tied to the federal cash benefit program, Temporary Assistance for Needy Families, or TANF. 

In 1999, the Clinton Administration once again redefined eligibility into broad-based categorical eligibility (BBCE), pushing it a step further away from congressional intent.  According to the new interpretation, SNAP applicants need not have received cash benefits from TANF at all, only any “benefit” that was underwritten by TANF.  If TANF grants to the states are spent to print brochures that mention SNAP or create a website or toll-free number that refers to SNAP, simply providing that information is enough to satisfy the new BBCE standard.  Given that budget-strapped states are always seeking ways to cut costs, it’s no surprise that by 2012 68 percent of all SNAP households qualified for program benefits under the BBCE rubric, and 42 states are now relying on that process.   

The Secretary’s new proposed rule will redefine categorical eligibility as ongoing and substantial, worth at least $50 or more per month, targeted toward clear benefits like transportation or childcare support. 

However, the $16.5 billion TANF program, upon which the BBCE eligibility rubric is built, is itself wide open to waste, fraud, and abuse and has failed to report improper payments for several years.  If most SNAP recipients are deemed eligible for SNAP based on state caseworkers’ adherence to TANF’s slack eligibility guidelines, there is every reason to believe that SNAP shares the same vulnerabilities and that its improper payments are much higher than officially reported.

A September 2015 USDA Office of the Inspector General (IG) report stated that both the federal agency with oversight responsibility over SNAP, as well as the states’ quality control (QC) processes for measuring error rates, significantly understate the SNAP error rate “since BBCE recipients’ eligibility was not assessed during the QC reviews.”  Had the households reviewed in the 2015 audit been correctly evaluated, the SNAP error rate would have been 6.8 percent higher, which translates into an additional $178 million in improper payments.

A May 2017 USDA Office of Inspector General (IG) report again found that because of splintered, ineffective oversight, SNAP is at high risk for abuse and is out of compliance with federal statutes that require agencies to accurately measure improper payment rates annually. 

Robust quality control is crucial because measuring and reporting accurate payment rates carry financial implications for states, which receive federal bonuses for payment accuracy and penalties for poor performance.  Since 2004, USDA has shelled out more than $200 million in bonuses.  Multiple states employ contractors to verify income eligibility and measure payment accuracy. 

Not only does this represent another costly bureaucratic layer, but contractors in several states have been found to have manipulated applicants’ income data in order to make the states’ error rates appear low.  On June 19, 2019, a contractor in the state of Washington was forced to reimburse the federal government $751,000 to resolve allegations that it engaged in SNAP data falsification and the Justice Department reported that it had reached agreements with SNAP contractors in three others states who had allegedly engaged in the same pernicious practices and recovered more than $17 million. 

The SNAP program was meant to be temporary and supplemental.  It was never meant to benefit higher income individuals and families or those with unlimited assets.  The program today has little meaningful oversight and is persistently susceptible to fraud.  The USDA’s new rule will begin to return the program to its original intent, ensure that benefits are flowing to those who are truly needy and who qualify for the assistance, reinstate program integrity, and help move able-bodied individuals back into the growing workforce.        
 

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The WasteWatcher: The Staff Blog of Citizens Against Government Waste