Food Stamps and Nutrition Programs in the 2002 Farm Bill
Released: 2006-10-12T00:00:00

Background

Federal nutrition program policies, as well as farm support and other agriculture-related programs, are governed by a variety of separate laws. Although these laws may be and often are considered and amended in free-standing legislation, many of them, including those setting rules for food stamps and several other nutrition programs, are evaluated periodically, revised, and renewed through an omnibus, multi-year farm bill . The most recent farm bill, the Farm Security and Rural Investment Act (FSRIA) of 2002 ( P.L. 107-171 ), the first since 1996, reauthorized appropriations for and substantially revised the Food Stamp program and a number of other domestic food aid programs. Much of the Agriculture Department's mandatory spending is and was for food stamps and other programs in its nutrition title (Title IV). In 2007, Congress is scheduled to take up the next farm bill because many of the provisions and authorizations for appropriations expire at the end of FY2007. Proposed changes affecting food stamps and other nutrition programs covered by the farm bill will likely, as in 2002, play a major role in any congressional consideration.

As a historical source and in the expectation that some of the same nutrition program issues and provisions of law addressed in 2002 will again come up—and that the effects of the changes made in 2002 will be explored in designing any 2007 farm bill—this report lays out in some detail what happened in 2002.

Nutrition Programs and Activities Covered by the Farm Bill

Farm bills typically cover the following nutrition/domestic food assistance programs and activities, all within the jurisdiction of the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry:

the Food Stamp program, operated under the Food Stamp Act; inflation-indexed nutrition assistance block grant programs, included in the Food Stamp Act, for Puerto Rico and American Samoa—that are operated in lieu of the regular Food Stamp program; the Food Distribution Program on Indian Reservations (FDPIR)—offered, under the Food Stamp Act, in lieu of the regular Food Stamp program to those tribal organizations that choose it; The Emergency Food Assistance Program (TEFAP), governed by provisions of the Food Stamp Act and the Emergency Food Assistance Act; the Commodity Supplemental Food Program (CSFP), authorized under Sections 4 and 5 of the Agriculture and Consumer Protection Act of 1973 and Section 1114(a)(2) of the Agriculture and Food Act of 1981 (i.e., the 1973 and 1981 farm bills); Community Food Projects, established under the Food Stamp Act; and rules governing the provision of federally acquired food commodities to domestic feeding programs (e.g., school meal programs).

In addition, the 2002 farm bill included new programs and provisions in areas not included in past farm bills:

It put into law a Seniors Farmers' Market Nutrition program. It established a Fruit and Vegetable pilot program for schools and authorized a program to increase domestic consumption of fresh fruit and vegetables. It set aside funding to be used to purchase fresh fruit and vegetables for schools. It authorized Congressional Hunger Fellowships. It included provisions to encourage schools to purchase locally produced foods. It changed eligibility rules affecting military families applying for free or reduced-price school meals and benefits under the Special Supplemental Nutrition Program for Women, Infants, and Children (the WIC program).

The Senate Committee on Agriculture, Nutrition, and Forestry exercises jurisdiction over all the programs/activities noted above. On the other hand, the House Committee on Agriculture has more limited jurisdiction. It shares jurisdiction over provisions affecting school meal programs (the provision of commodities) with the House Committee on Education and the Workforce and has no jurisdiction over the WIC program (which is covered by the Education and the Workforce Committee). As a result, farm bills covering shared jurisdictional areas have involved participation by the Committee on Education and the Workforce.

Overview of Nutrition Programs in the 2002 Farm Bill

The 2002 farm bill—the Farm Security and Rural Investment Act (FSRIA) of 2002 ( P.L. 107-171 ; H.Rept. 107-424 )—was enacted on May 13, 2002. Earlier, the House approved its version ( H.R. 2646 ; the Farm Security Act of 2001) on October 5, 2001; the Senate approved its version ( S. 1731 ; the Agriculture, Conservation, and Rural Enhancement Act of 2001) on January 13, 2002; and the House and Senate agreed to the conference report on the renamed Farm Security and Rural Investment Act of 2002 ( H.Rept. 107-424 ) on May 2, 2002, and May 8, 2002 respectively. With the exception of an expansion of the Fruit and Vegetable pilot project established by the 2002 law (see later discussion), no significant changes to the nutrition program provisions of the 2002 farm bill have been made since.

At each stage, major provisions affecting food stamps and other nutrition programs were included. This contrasted with the previous farm bill of 1996. In 1996, virtually all of the changes in law affecting food stamps (the largest of the food assistance programs) and other nutrition programs were made in the 1996 welfare reform law ( P.L. 104-193 ). The farm bill of that year included only appropriations authority extensions and minor revisions affecting nutrition programs.

Nutrition Programs in the Funding Context of the Farm Bill

Inclusion of food stamps and other nutrition programs in farm bills has historically been viewed as a way of garnering support for farm legislation from non-farm sectors. However, the balance of any new spending (or spending cuts) between domestic food assistance provisions and other parts of each farm bill has been a subject of negotiation and contention. In the case of the 2002 bill, this was particularly true.

In May 2001, Congress agreed to a budget resolution ( H.Con.Res. 83 ) that allowed for substantial added funding for programs covered by the upcoming farm bill. The availability of this "new" money and how it would be divided up among the various farm bill components dominated much of the farm bill debate that began in earnest in July 2001. For example, the Senate version of the farm bill provided more new funding for nutrition programs than the House bill (see the last portion of the table at the conclusion of this report). And the fact that the ability to tap the new funding would end in the spring of 2002, pushed the Agriculture Committees to take up the farm bill earlier than would normally be the case. In the end, the nutrition title of the enacted farm bill claimed between 5% and 6% of the total estimated new spending in the enacted bill, depending on which Congressional Budget Office projection was used (also see later discussion of nutrition program spending under the farm bill).

Nutrition Program Issues in the Farm Bill

In addition to the debate over how much new spending would go into nutrition programs, significant substantive debate arose with regard to food stamps, TEFAP, the CSFP, and support for initiatives to increase the availability of fresh fruit and vegetables in meal programs like the School Lunch program.

Food Stamps

Three developments were basic to the farm bill food stamp debate: the relatively low level of program participation at the time; frustration with federal food stamp eligibility, benefit, and administrative policies; and the concerns of some over ineligibility of many legally resident noncitizens (as provided for in the 1996 welfare reform law).

Although food stamp enrollment was increasing, in 2001-2002 it was well below its peak in the spring of 1994 and only a bit over 10% higher than the all-time low. More than half of the decline over the 5 years since the last major food stamp amendments was estimated to have come from a sharp drop in the rate at which those who were eligible actually participated.

State officials, program advocates, and supporters of the 1996 welfare reform law (with its goal of moving families from welfare to work), maintained that various aspects of food stamp eligibility, benefit, and administrative rules thwarted participation and effective administration—denying needed support to working poor families and others in need, and interfering with efforts to coordinate assistance. They pointed to overly complex policies that burden administrators and applicants/recipients, food stamp rules that differ too much from those applied by states in other welfare programs, and inadequate benefits not worth the "hassle" of applying and maintaining eligibility. Finally, they contended that the program's "quality control" system for measuring state performance penalized too many states too harshly for erroneous benefit/eligibility determinations—thereby pressuring states to "over-administer" the program and limiting participation.

Food stamp advocates, states, and welfare reform supporters all expressed their dissatisfaction with this state of affairs, but there was not a single, unified reform agenda, and most alternatives for change imposed significant new costs. States called for simplified federal food stamp rules, much greater state control over policies, lifting federal limits on work and training activities, and revamped and more standardized benefit and eligibility rules to help administrators and applicants/recipients. They also wanted major revision of the quality control system and a more open federal policy as to waiving food stamp rules. Program advocates emphasized the inadequacy of benefits and the need to grant eligibility to legally resident noncitizens. Although they supported reform of the quality control system and selective changes to make eligibility/benefit determinations easier for applicants/recipients, they resisted vesting too much decision-making with states and tampering with what they saw as a nationally uniform food stamp "safety net." Welfare reform supporters also agreed with quality control reforms, but stressed the need to ensure that the food stamp program fulfills a major role in supporting the working poor as its first priority.

Within cost constraints, the farm bill's food stamp provisions responded to many of these criticisms, by easing/lifting administrative requirements, allowing states to achieve greater conformity between rules used by food stamps and other welfare programs, reforming the food stamp quality control system, increasing benefits, and opening up eligibility for noncitizens.

To a large extent, the Administration's food stamp reform package also recognized the concerns voiced by states, advocates, and welfare reformers. It included: (1) a modest benefit increase for larger households (similar to the final law); (2) standardizing or giving states control over several important federal rules; (3) liberalizing eligibility rules by excluding the value of one vehicle per adult; (4) making eligible all low-income noncitizens who have resided in the U.S. legally for 5 years (similar to the final farm bill); (5) restructuring and reducing spending for employment and training programs for food stamp recipients (similar to the final bill); (6) ending automatic eligibility for some welfare beneficiaries; and (7) significantly reforming the food stamp quality control system to penalize fewer states and give bonuses to states performing well (although in a different way than the final farm bill). Advocates and state representatives welcomed the Administration's proposals, with reservations about the extent of the quality control reforms and restrictions on food stamp eligibility for welfare recipients.

TEFAP

While federal food donations under TEFAP had increased in recent years and private-sector donations to emergency feeding organizations were on the rise, many contended that federal help was not keeping pace with growing demand. Perhaps more important, they argued that the costs of storing and distributing food given out by state/local providers, (whether privately or federally donated) were seriously underfunded. Both these criticisms were addressed in the final farm bill.

The CSFP

CSFP operators were concerned over limits on how much of the program's funding could be used for administrative and related costs. The enacted farm bill increased money for these costs.

Fruit and Vegetable Initiatives

Both agriculture and nutrition program advocates argued for specific initiatives to expand the availability of fresh fruit and vegetables. The farm bill took tentative steps to do this (e.g., a pilot project for schools, which was later expanded by the 2004 Child Nutrition and WIC Reauthorization Act, P.L. 108-265 ).

Major House-Senate Differences in the Farm Bill

In addition to disagreement over how much new spending to allocate to the nutrition title of the farm bill, the House and Senate differed over substantive issues with regard to the Food Stamp program. The House bill included significant structural changes intended to increase benefits to families with children and ease burdens on administrators and applicants/recipients, all of which were largely included in the final bill. The Senate bill included amendments that—much like the House bill—raised benefits to larger households, allowed states to conform some rules to those for the Temporary Assistance for Needy Families (TANF) program and Medicaid and grant transitional food stamps to those leaving the TANF program, eased quality control penalties, and instituted new bonus payments to states for high performance. However, it went well beyond the House measure, primarily by:

Expanding eligibility for noncitizens (more extensively than proposed by the Administration); Setting up state options to: establish when eligibility will be redetermined, reduce recipient reporting requirements, simplify benefit calculations, and conform asset eligibility rules with TANF and Medicaid standards; Increasing benefits for recipients with very high shelter costs; Liberalizing and simplifying work requirements for able-bodied adults without dependents (ABAWDs); Ending limits on spending of work/training funds and changing the federal share of this spending; and, Permitting use of food stamp benefits to buy dietary supplements.

Nutrition Program Costs in the Farm Bill

During the consideration of the 2002 farm bill, the Congressional Budget Office (CBO) issued two cost estimates for the farm bill's nutrition title—one based on its April 2001 spending "baseline" and another based on its March 2002 "baseline." However, Congressional decision-makers on the farm bill's provisions used only the first (April 2001) version, although the estimate based on the second (March 2002) version was noticeably higher. Details of the varying cost estimates for the nutrition title are included at the end of this report's table laying out specific provisions of the nutrition title (Title IV).

Cost Estimates

Under the April 2001 baseline estimate, the total new cost of the Title IV nutrition provisions—over the 6 years until the next scheduled farm bill—was $2.66 billion (new budget authority) and $3.17 billion (outlays). Food stamp revisions represented 82% of new budget authority and 85% of new outlays. On the other hand, the March 2002 baseline estimate envisioned new 6-year costs brought on by Title IV at $2.79 billion (new budget authority) and $3.18 billion (outlays), with food stamps still consuming the lion's share.

Experience Since the 2002 Farm Bill

No direct measure of the actual cost of the 2002 farm bill's nutrition title (as opposed to costs incurred due to other variables like unforeseen participation changes related to economic conditions or increased participation rates) is available. However, through FY2005, total actual costs—including "baseline" spending and new spending caused by the farm bill—for the domestic food assistance programs covered by Title IV were 12% higher than projected by the March 2002 baseline (including new spending). If current CBO estimates for FY2006 and FY2007 are added in and compared to the March 2002 estimates for those years, the gap widens to 20%.

Outline of the Enacted Nutrition Program Provisions

The nutrition title of the final 2002 farm bill made substantial changes to almost every covered domestic food assistance program, although not every proposal on the table was addressed. It also included some new initiatives. The specific provisions of the enacted law and the House and Senate versions are laid out in the table following this outline (in the order of their appearance in the bill), and the specific items discussed are noted by item number, as delineated in the table.

Reauthorization

(Discussed in Table 1 —items A23 , B1 and B2 , and D2 .) Title IV reauthorized all expiring authorizations of appropriations and other authorities through FY2007.

Food Stamp Eligibility for Noncitizens

(Discussed in Table 1 —item A26 .) Most important, Title IV expanded eligibility for legally resident noncitizens (compared to the limits imposed by the 1996 welfare reform law) by making eligible (1) legal permanent residents under age 18, regardless of their date of entry to the United States or length of residence, (2) legal permanent residents receiving federal disability benefits, without regard to their date of entry or length of residence, and (3) individuals who have resided in the United States legally for a period of 5 years (e.g., as legal permanent residents, refugees/asylees, but not as temporary residents). These changes accounted for the majority of the costs incurred under the provisions of Title IV.

Increased Food Stamp Benefits and Liberalized Food Stamp Financial Eligibility Rules

(Discussed in Table 1 —items A3 and A7(a) .) Title IV increased food stamp benefits, particularly for larger households, by increasing and inflation-indexing the amount of income that is disregarded when calculating their benefit (the "standard deduction") and varying it by household size. Title IV also increased the food stamp eligibility limit on liquid assets held by eligible households with disabled members from the standard $2,000 to $3,000.

Significant New State Options in Administering the Food Stamp Program

Five provisions of Title IV provided states with new options to vary from regular food stamp rules.

Disregarded Income. (Discussed in Table 1 —item A2 .) Title IV allowed states, when determining food stamp eligibility and benefits, to disregard (exclude) any type of income the state does not consider under its Temporary Assistance for Needy Families (TANF) cash assistance program or its Medicaid program. Tracking Household Expenses. (Discussed in Table 1 —item A6 .) Title IV permitted states to disregard changes in household expenses (such as shelter costs) until the household's next eligibility redetermination. Household expenses affect benefits by lowering (or raising) the amount of income counted in calculating benefits. Disregarded Assets. (Discussed in Table 1 —item A7(b) .) Title IV allowed states, when determining food stamp eligibility, to disregard (exclude) liquid assets that they do not consider under their TANF or Medicaid programs. Reporting Changed Household Circumstances. (Discussed in Table 1 —item A9 .) With some exceptions, Title IV gave states the option to require households to report changes in their circumstances as infrequently as every 6 months. Transitional Benefits. (Discussed in Table 1 —item A16 .) Title IV allowed states to give up to 5 months' "transitional" food stamp benefits to those leaving the TANF program. The transitional amount would effectively be the food stamp benefit received prior to leaving the TANF program.

Changes to Quality-Control-Based Penalties and Bonus Payments

(Discussed in Table 1 —item A18 .) The Food Stamp program's quality control (QC) system measures the degree to which states erroneously determine eligibility and benefits. Based on the extent to which they exceed certain thresholds, they may be assessed financial penalties. On the other hand, if they fall below certain thresholds, they may receive "bonus" payments.

Title IV substantially changed the food stamp QC system of penalties and bonus payments. It raised the threshold above which states are assessed penalties and effectively penalized only those states with persistently (over 3 years) high rates of erroneous determinations. It also changed the system of bonus payments to a requirement for performance bonuses totaling $48 million a year to states meeting federal standards for high/most-improved performance.

Changes to Employment and Training Provisions

(Discussed in Table 1 —item A20 .) In addition to continuing the requirements for unmatched federal funding for employment and training programs for food stamp recipients (at $90 million a year) and unlimited state-match (50%) funding, Title IV provided up to $20 million a year in unmatched federal funding for employment/training services to able-bodied adults without dependents (ABAWDs), eliminated a state "maintenance of effort" requirement, and eliminated limits on funding for participant support costs (e.g., child care).

Puerto Rico and American Samoa

(Discussed in Table 1 —item A24 .) Title IV consolidated the nutrition assistance block grants for Puerto Rico and American Samoa and increased the new consolidated grant to an amount slightly above what it would have been under regular inflation indexing. Inflation indexing for future years was retained, and Puerto Rico's share of the new grant was set at 99.6%.

Program Access Grants

(Discussed in Table 1 —item A19 .) In a new initiative, Title IV required the Agriculture Department to spend up to $5 million a year on grants to improve program access.

TEFAP

(Discussed in Table 1 —item B1 .) Title IV increased required funding for TEFAP commodities from $100 million to $140 million a year and raised the authorized funding level for TEFAP administration/distribution costs from $50 million to $60 million a year.

CSFP

(Discussed in Table 1 —item B2 .) Title IV increased and indexed funding for CSFP administrative costs.

School Meal and WIC Eligibility

(Discussed in Table 1 —item C2 .) Title IV required schools to disregard housing allowances paid to military personnel living in "privatized housing" when determining eligibility for free and reduced-price school meals. It also allowed states the option to implement this same disregard in the WIC program.

Community Food Projects

(Discussed in Table 1 —item D2 .) Title IV increased the required funding for community food projects from $2.5 million to $5 million a year.

Purchase of Locally Produced Foods

(Discussed in Table 1 —item D5 .) Title IV authorized a program to encourage the purchase of locally produced foods and required that schools in Puerto Rico purchase food produced in the Commonwealth to the extent practicable (as was already the case for Hawaii).

Seniors Farmers' Market Nutrition Program

(Discussed in Table 1 —item D6 ). Title IV placed into law provisions, authorizing a pre-existing Seniors Farmers' Market Nutrition program and provided mandatory funding of $15 million a year.

Fruit and Vegetable Pilot Program

(Discussed in Table 1 —item D7 .) Title IV established a pilot program making free fruit and vegetables available in schools. It was provided funding of $6 million for the 2002-2003 school year. Later law, the Child Nutrition and WIC Reauthorization Act of 2004 ( P.L. 108-265 ) extended and expanded this project. In a related action, a separate part of the farm bill (Section 10603) provided $50 million a year in fresh fruit and vegetable purchases (through the Department of Defense procurement system) for schools and institutions participating in child nutrition programs.

Congressional Hunger Fellows

(Discussed in Table 1 —item D8 .) Authorized a Congressional Hunger Fellows program (to be funded from the proceeds of a trust fund and gifts). However, this program was, and continues to be, funded through annual Agriculture Department appropriations at the level of $2.5 million a year.

Outline of Significant Issues Not Addressed in the Farm Bill

Several notable proposals for changes in the Food Stamp program were not covered in the enacted 2002 farm bill.

Administration Proposals

Title IV did not include the Administration's proposal to liberalize eligibility rules by excluding the value of one vehicle per adult in judging households' assets; however, it did include provisions that have the effect of allowing states to do so if it conforms with the way they treat vehicles in their TANF program. It also did not address the Administration's proposal to limit the granting of automatic (categorical) food stamp eligibility to recipients of TANF benefits.

Shelter Costs

(Discussed in Table 1 —item A4 .) Title IV did not have a provision (suggested in the Senate bill) to raise benefits for those with very high shelter costs.

Able-Bodied Adults Without Dependents

(Discussed in Table 1 —item A10 .) Title IV did not (as recommended in the Senate bill) ease work requirements for able-bodied adults without dependents (ABAWDs).

Eligibility Reviews

(Discussed in Table 1 —item A15 .) Title IV did not include a change (put forth in the Senate bill) to allow states to conform their method of reviewing households' food stamp eligibility to the method used for other public assistance programs.

Dietary Supplements

(Discussed in Table 1 —item A25 .) Title IV did not encompass a proposal (in the Senate bill) to permit the use of food stamp benefits to purchase dietary supplements providing vitamins or minerals.

It is likely that several of the issues noted above that were not taken up in the 2002 farm bill will reappear as proposals for the 2007 farm bill: the recommendation to restrict automatic (categorical) eligibility to public assistance (particularly TANF) recipients, increasing benefits for those with very high shelter costs, loosening rules for ABAWDs, and allowing the use of food stamps for dietary supplements. In addition, two areas in which the 2002 farm bill took action will probably come under scrutiny: the trend in quality control "error rates" since the liberalization of the state penalty system in 2002 and the degree to which states have taken up the new options they were given in 2002.