Today is the last day to submit comments to USDA for its proposed changes to utilities calculations for SNAP benefits. The below student post describes the changes contemplated by USDA.
Following the Senate’s rejection of the House’s proposed restrictions on enrollment to the Supplemental Nutrition Assistance Program (SNAP), the United States Department of Agriculture (USDA) Food and Nutrition Services (FNS), the federal executive agency charged with the oversight of SNAP, has proposed three changes in 2019 that are likely to undermine this statutory compromise. Most recently, on October 3, 2019, the USDA proposed to change the methodology for calculating standard utility allowances (SUA), an important factor to the overall SNAP benefits that a household is entitled to. This proposed rule will upend years of state autonomy over SUA’s and cut benefits for millions of households.
SNAP benefits, established through the Food and Nutrition Act of 2008 (the Act), are determined by first subtracting a series of allowable income adjustments from a household’s gross income. Specifically, twenty percent of earned income, dependent care expenses necessary to continue work or education, certain medical expenses for elderly or disabled members of the household, child support payments, and excess shelter costs that exceed half of household income after all other adjustments are removed. Thirty percent of the resulting amount (i.e. the household’s net income) is then subtracted from the maximum set benefit amount, updated annually. Take as an example a family of three: if that family had no income, it would receive the 2019 maximum benefit of $505 per month; if it had $600 in net monthly income, it would receive the maximum benefit ($505) minus 30 percent of its net income (30 percent of $600 is $180), or $325. Net monthly income determines the value of a beneficiary’s monthly SNAP benefit. As such, by decreasing net monthly income, income adjustments have a direct relationship with the amount of a household’s SNAP benefits.
The excess shelter costs adjustment, in particular, is meant to alleviate financial strain for American families who allocate more than half of their income to housing-related expenses, including utilities and rent, mortgages, and taxes. However, keeping track of each household’s utility expenses is a tremendous task and most states choose to implement standard utility allowances (SUA) to simplify the process. These are flat rates based on the average cost of utilities in the state that vary on household size or location.
Current rules grant states vast discretion to regulate SUA implementation and assessment. In its proposed rule, the USDA seeks to dramatically alter how states may make HCSUA calculations and undermine state authority. This Proposed Rule is problematic for several reasons. Most importantly, the Proposed Rule would have devastating impacts on households that would lose much needed support. Furthermore, USDA proposes to rely upon inferior data sources to set adjustment rates and would effectively eliminate Congressionally-sanctioned state discretion in the implementation and calculation of SUAs.
The Proposed Rule threatens to reduce or eliminate benefits for thousands of households. By the Administration’s calculations, the rule is expected to cut food benefits by $4.5 billion over five years and completely eliminate SNAP eligibility for approximately 8,000 households. While certain states may see some gains in benefits, the rule would cripple others. Vermont stands to lose 20.94% of its benefits—the highest in the country—while Mississippi has the highest projected increase in benefits at 4.86%. The proposal would result in differential impacts within states as well. By way of example, in 2017, New York City’s HCSUA was $758, Suffolk’s HCSUA was $706 and the rest of New York State’s HCSUA was $627. The revised 2017 HCSUA using the proposed USDA methodology is $447. As a result, 30.78% of households in NY would see their benefits decrease and 1.63% of households in NY would see their benefits increase. The state would suffer a net loss of 7.82% of SNAP benefits.
The Proposed Rule also stands to disproportionately impact households with elderly or disabled members that are not subject to the excess shelter costs adjustment cap. The average benefit loss or gain is larger for these households because the HCSUA more directly determines the income adjustment; a lower HCSUA means a lower income adjustment and, in most cases, less benefits. Low-income elderly and disabled SNAP participation has been linked to higher food security and medication use. Elderly individuals with sufficient funds to purchase food have more flexibility in allocating their resources to appropriate medical treatment (i.e. taking medication), thus lessening the burden on our healthcare system. Asian households may feel the brunt of this change much more acutely given that half contain an elderly individual compared to one-fourth of all American households.
Adding insult to injury, USDA proposes to calculate HCSUAs from unreliable data sources. In an effort to eliminate state methodology that the administration claims is created from unreliable and outdated data, USDA proposes to base the standardized HCSUA calculation methodology on two national surveys that it believes “more accurately reflect utility costs for low-income households”: the American Community Survey (ACS) and the Residential Energy Consumption Survey (RECS). However, these are equally, if not more, unreliable as the data individual states currently use currently.
On one hand, the ACS relies on self-reported data and does not reflect different utility uses within a household. On the other hand, the RECS distinguishes between end uses, but does not account for all States and is not published every year. USDA itself acknowledges that “the use of these specific sources would not be codified in the Proposed Rule to maintain flexibility in the event better sources become available or these surveys cease to provide the necessary information.”
As noted above, states currently have significant discretion in deciding how to calculate SUAs. While updates to these methodologies may have advantages, the Proposed Rule would undermine years of state autonomy to tailor the SUAs to fit their residents’ needs. If the proposed rule is enacted, states may shift from the SUA mechanism to an individualized household utility usage calculation to ensure low-income households with utility expenses above the proposed new standard HCSUA continue to receive SNAP benefits. Currently, 48 states rely on SUAs. The Proposed Rule’s shift could create a considerable verification burden, increase administrative costs, and undermine USDA’s expressed goals to simplify and expedite SNAP applications.
In sum, USDA’s proposal to resolve discrepancies in the current SUA calculation methodology will harm thousands of households, result in SUAs based on subpar data, and eliminate state autonomy in SNAP administration. The Proposed Rule should be discarded.