Posts Tagged ‘Facts on SNAP series’

Facts on SNAP, Part 4: SNAP Responded to the Recession and Will Shrink as the Economy Improves

May 15, 2013 at 12:04 pm

As the Senate and House Agriculture Committees consider changes to SNAP (formerly food stamps) this week, we’ve laid out some basic facts about the program:  the people it serves, the ways that it encourages work, and its strong record of efficiency.  This last post in our series explains that SNAP’s recent growth is temporary and shows that the program is working as designed.

  • SNAP responded quickly and effectively to the recession. SNAP spending rose considerably when the recession hit.  That’s precisely what SNAP was designed to do:  quickly help more low-income families during economic downturns as poverty rises, unemployment mounts, and more people need assistance.

    As the Congressional Budget Office (CBO) has stated, “the primary reason for the increase in the number of participants was the deep recession from December 2007 to June 2009 and the subsequent slow recovery.”

  • A temporary benefit increase accounted for some of that growth. President Obama and Congress boosted SNAP benefits as part of the 2009 Recovery Act in order to reduce hardship and deliver high “bang-for-the-buck” economic stimulus.  This provision accounted for 20 percent of the growth in program cost between 2007 and 2011, according to CBO. The temporary benefit increase is phasing out and will end on October 31.
  • SNAP spending growth has slowed in the past year and is expected to reverse in the coming year or two (see graph). As the economy has recovered, SNAP caseload and spending growth have slowed substantially.  SNAP spending in the first quarter of calendar year 2013 was only 0.3 percent higher than the same period in 2012.  In coming years, caseloads and spending are expected to begin declining as households’ economic circumstances improve and the Recovery Act’s benefit increase ends.

  • Policy changes — notably, expanded categorical eligibility — have not been a major factor in recent SNAP spending growth. Categorical eligibility allows states to provide food assistance to households that struggle to meet their food needs — mostly working families and seniors — with gross incomes or assets just above federal SNAP limits.  But this option accounts for only about 2 percent of program costs, according to CBO.  The other factors cited above dwarf the effects of the categorical eligibility state option.

  • Because SNAP is projected to shrink as a share of the economy, it is not contributing to the nation’s long-term budget problems. Unlike health care programs and Social Security, there are no significant demographic or programmatic pressures that will cause SNAP costs to grow faster than the economy.

SNAP serves vulnerable populations, encourages work, is efficient and effective, and is working as it was designed to — all good reasons to protect this critical program from damaging cuts.

For more information about SNAP, see our Chart Book.

The Facts on SNAP, Part 3: SNAP Is Efficient

May 10, 2013 at 9:00 am

The first two parts of this series examined the people whom SNAP serves and the ways that it encourages work.  This post highlights its strong record of efficiency.

  • SNAP has one of the most rigorous quality control systems of any public benefit program. Each year, states pull a representative sample of cases (totaling about 50,000 nationally) and review their decisions on which applicants received benefits and how much.  Federal officials then double-check a subsample of the cases.  States face federal financial sanctions if they don’t lower high error rates.

  • Only 3 percent of SNAP benefits represent overpayments, meaning they either went to ineligible households or went to eligible households but in excessive amounts. SNAP achieved its lowest error rate on record in fiscal year 2011, with a national overpayment rate of just 2.99 percent (see graph).  The underpayment rate that year was 0.81 percent. Thus, the net loss to the federal government — the amounts lost through over­payments minus those saved by underpayments — was only 2.2 percent.

  • Relatively few payment errors reflect dishonesty or fraud. The overwhelming majority result from honest mistakes by recipients, eligibility workers, data entry clerks, or computer programmers.  States report that almost 60 percent of the dollar value of overpayments and almost 90 percent of the dollar value of underpayments were their fault, not recipients’.  Much of the rest of the overpayments resulted from innocent errors by households that had trouble navigating SNAP’s complex rules.
  • The Agriculture Department estimates it has cut the sale of SNAP benefits for cash by three-quarters over the past 15 years, to 1 percent of all benefits. To reduce SNAP trafficking, which violates federal law, SNAP benefits now come in the form of an electronic debit card that recipients can use only to buy food.  Retailers or recipients who defraud the program by trading SNAP for money or misrepresenting their circumstances face tough criminal penalties.  Over the years, the Agriculture Department has disqualified thousands of retail stores from the program for trafficking or other violations of program rules.
  • Almost 95 percent of federal SNAP spending goes directly to families to buy food. Most of the rest goes toward administrative costs, including reviews to determine that applicants are eligible, monitoring of retailers that accept SNAP, and anti-fraud activities.

For more information, see our Chart Book.

Next up:  SNAP responded as designed to the recession and will shrink as the economy recovers.

The Facts on SNAP, Part 2: SNAP Supports Work

May 9, 2013 at 12:51 pm

Part 1 in this series showed that SNAP (food stamps) provides modest benefits to vulnerable people.  Here, we explain that most SNAP recipients who can work do work, and that SNAP rules both encourage and reward work.

About two-thirds of SNAP recipients aren’t expected to work, mostly because they are children, elderly, or disabled.  But, among SNAP households with at least one working-age, non-disabled adult, 58 percent work while receiving SNAP — and 82 percent work in the year before or after receiving SNAP.

The rates are even higher for families with children:  62 percent work while receiving SNAP and 87 percent work in the prior or subsequent year.

(These figures are based on data from the mid-2000s, but preliminary analysis finds that they fell only modestly during the Great Recession.)

The number of SNAP households with earnings has been rising for more than a decade, reaching 6.4 million in 2011 (see chart).  The increase was especially pronounced during the recent deep recession, suggesting that many people have turned to SNAP because of under-employment — for example, when one wage earner in a two-parent family lost a job, when a worker’s hours were cut, or when a laid-off worker took a lower-paying job.

The high labor force participation among SNAP recipients is no accident:  SNAP is designed to act both as a safety net for people who are elderly, disabled, or temporarily unemployed and to supplement the wages of low-income workers.

  • SNAP’s benefit formula includes work incentives to ensure that households are financially better off if they get a job or raise their earnings. For example, SNAP rules deduct 20 percent of a household’s gross earnings before computing benefit amounts, which allows a household with a wage earner to qualify for higher benefits.  Also, when a SNAP recipient increases her earnings, her SNAP benefits decline only modestly and gradually — by 24 to 36 cents for each additional dollar earned.
  • Consequently, SNAP typically boosts low-wage workers’ incomes by 10 percent or more. For example, a three-person family whose breadwinner works 35 hours a week at $10 an hour qualifies for $276 a month in SNAP benefits, raising the family’s income by 20 percent.  SNAP’s role in supplementing low wages is particularly important given the stagnant wages and shortage of jobs for workers with limited education and skills.

For more information, see our paper on the relationship between SNAP and work and our Chart Book.

Next up:  SNAP is efficient and effective.

The Facts on SNAP, Part 1: SNAP Provides Modest Benefits to Vulnerable People

May 8, 2013 at 11:12 am

With the Senate and House Agriculture Committees considering changes next week to SNAP (the Supplemental Nutrition Assistance Program, formerly food stamps), we are beginning a series of posts today that will lay out basic facts about the nation’s most important anti-hunger program.  This first one starts with the people it serves.

  • SNAP households have very low incomes. Over 80 percent of SNAP households have gross incomes below the poverty line ($23,500 a year for a family of four in 2013).  Over 40 percent have gross incomes below half the poverty line (see graph).

  • Close to two-thirds of SNAP recipients are children, elderly, or disabled. Also, most SNAP families with children that include at least one working-age, non-disabled adult are working households.
  • For many of the poorest Americans, SNAP is the only form of income assistance they receive. Temporary Assistance for Needy Families (TANF) cash assistance, state general assistance, and unemployment insurance are simply not available to millions of jobless households.  Only about 1 in 4 poor families with children receive TANF cash assistance, for example.
  • SNAP helps many households lift themselves out of poverty. SNAP lifted about 4.7 million Americans above the poverty line in 2011, including about 2.1 million children, according to CBPP analysis using a measure of poverty that counts SNAP as income.

    SNAP is also a
    powerful antidote to extreme poverty.  The number of U.S. families living on less than $2 per person a day — one World Bank definition of poverty for developing nations —doubled between 1996 and 2011, as did the number of extremely poor children.  However, counting SNAP benefits as income cuts the number of households in extreme poverty in 2011 from 1.46 million to nearly 800,000 and cuts the number of children in extreme poverty from 2.8 million to 1.4 million.

  • SNAP benefits average less than $1.50 per person per meal. That figure will drop to about $1.40 this fall, when the 2009 Recovery Act’s temporary benefit boost ends.  The SNAP benefit formula assumes that families will spend 30 percent of their net income for food; SNAP provides enough benefits to meet the cost of the “Thrifty Food Plan,” the Agriculture Department’s estimate of a bare-bones, nutritionally adequate diet.

For more information, see our Chart Book.

Next up: SNAP Supports Work.