Established as a national program in the mid 1970s, WIC is designed to improve the health and nutritional well-being of pregnant and postpartum women, infants, and young children by providing nutritious supplemental foods, nutrition education, and referrals to health and social service programs. Research has shown that WIC helps to improve birth and dietary outcomes and contain health care costs, and USDA considers WIC to be one of the nation’s most successful and cost-effective nutrition intervention programs. The program is available in each state, the District of Columbia, 34 Indian Tribal Organizations, and five U.S. Territories. USDA’s Food and Nutrition Service (FNS) oversees the program, which is administered by state and local agencies through approximately 10,000 clinic sites. Federal WIC appropriations and participation have generally increased since the program was established and totaled $7.2 billion and 9 million participants in fiscal year 2011 (see figure 1). WIC is almost entirely federally-funded. WIC is not an entitlement program; the federal government is not legally required to provide benefits to every eligible individual. Instead, WIC is a federal grant program for which Congress appropriates a specific amount of funds each year. In order to help inform budgetary decisions for the program, USDA annually estimates the number of people who are eligible for the program and the number who are expected to participate. Although federal funding has been sufficient to serve all eligible people who sought program benefits in recent years, some eligible people do not participate in WIC. Since 2000, WIC’s national coverage rate has been around 60 percent, but coverage rates vary by state and participant type. For example, in 2009, the coverage rate for children aged 1 to 4 was 51 percent, while the coverage rate for infants was 83 percent. In enacting WIC, Congress intended the program to provide women, infants, and young children with supplemental foods during critical times of growth and development. WIC participants typically receive food benefits in the form of vouchers or coupons that they redeem at authorized retail vendors to obtain, at no cost to the participants, certain approved foods, including infant formula. State WIC agencies then reimburse the retail vendors for the food purchased by WIC participants. Since 1989, state WIC agencies have been required by law to contain the cost of infant formula using a competitive bidding process to award sole- source contracts. Under these contracts, formula manufacturers agree to provide a rebate to the state WIC agency for every container of infant formula purchased under the WIC contract. Infant formula rebates have become an important source of funding for the WIC program, and in fiscal year 2011, infant formula companies provided more than $1.3 billion in rebates to states. As a result, while the average monthly WIC benefit cost to the federal government was $47 per participant in that year, the average monthly benefit value per participant was $59. Pregnant and post-partum women, infants, and children up to age 5 are eligible for WIC if they are found to be at nutritional risk and have incomes below a certain threshold. Federal law and regulations set the WIC income eligibility threshold at a maximum of 185 percent of the federal poverty guidelines, specify certain income sources that must be included and excluded when determining income eligibility, and require applicants to provide proof of income. However, federal regulations also provide state WIC administrators with discretion to further define income eligibility criteria. For example, federal regulations indicate that state agencies have the flexibility to decide whether to use an applicant’s annual or current rate of income, as well as the specific time period that equals current income, when determining applicants’ income eligibility. In addition, federal regulations broadly define the family or economic unit to be used for WIC income eligibility determination purposes, and federal guidance provides further clarification of this definition while also acknowledging that an answer is not available for every question that may arise in a specific case. Because of this, federal guidance also indicates that state and local agencies need to exercise discretion and use judgment in determining each applicant’s income eligibility within the general framework of regulatory requirements and basic program policy. Applicants may also be deemed income-eligible for WIC if they receive benefits from certain other federal assistance programs for low-income families—a policy known as adjunctive eligibility. Adjunctive eligibility was created by the Child Nutrition and WIC Reauthorization Act of 1989, and it makes recipients of Medicaid, TANF, and SNAP automatically income- eligible for WIC. In practice, once WIC applicants provide proof of their participation in one of these programs, they are determined income- eligible and do not need to provide proof of their incomes. As a result, adjunctive eligibility streamlines the determination of income eligibility, easing the paperwork burden on both the applicant and the administrator. When adjunctive eligibility was enacted, income eligibility thresholds for Medicaid, TANF, and SNAP were below WIC’s income eligibility threshold of 185 percent of the federal poverty guidelines. While WIC is not necessarily time-limited, because of the types of individuals it serves, it is generally a short-term program. WIC participants are certified as eligible for program benefits for time periods that vary based on the type of WIC participant—pregnant, post-partum, or breastfeeding woman; infant; or child—and state policy choices. The longest period for which any participant may be certified is 1 year. Once a participant’s certification period ends, the participant may reapply for benefits, at which time eligibility is redetermined. Between certification periods, WIC participants are generally not required to report changes in their circumstances—such as income or family size—that may affect their eligibility. Federal regulations require FNS to monitor state administration of WIC. To meet this requirement, FNS conducts Management Evaluations of states through its regional offices. The evaluations assess the accomplishment of program objectives and state and local agency compliance with federal requirements, including those related to income eligibility determination. FNS produces a report following each state evaluation that includes review findings and observations. If state or local program operations are found to be non-compliant with federal requirements, FNS identifies required corrective actions in the report. States are then required to develop a corrective action plan and implementation timeframes. Federal regulations also require states to monitor all local agencies administering WIC biennially and define the minimum number of clinic sites that states must review for each local agency. Income eligibility determination must be reviewed. Similar to federal reviews of states, local agencies must be notified of areas in which they are found to be non- compliant with requirements and must develop and implement corrective action plans to address these findings. States must also require local agencies to establish a system for reviewing their own operations, including those at clinic sites. The discretion granted by federal law, regulations, and guidance in certain areas of WIC income eligibility determination has resulted in some variation in policy across states and localities. As a result, a family may be correctly deemed income-eligible for WIC in one locality even though in another locality, the family would be considered ineligible. State and local WIC administrators we spoke to discussed the use of discretion in determining income eligibility and noted its importance because some WIC applicants have unique income and family situations that make income determination particularly difficult. Similarly, an FNS official noted that because of varied family circumstances, guidance cannot provide clarification on every situation that may arise. Federal guidance also states that discretion is necessary in part because the department does not intend WIC income eligibility determination to be a complicated and lengthy procedure. The time period for which an applicant’s income is assessed is one area in which states are granted flexibility in federal regulations, and while there are some similarities in state policies, there are also some differences. Although federal regulations provide state agencies discretion to assess applicants’ current or annual income, the one example provided in regulations requires states to use current income when assessing the eligibility of unemployed applicants. According to national survey data, most states assess current income to determine eligibility for all applicants. However, how states define current income differs. In 5 of the 10 state WIC policy manuals we reviewed, 2 define current income as income from the last 30 days, 1 defines it as income from the last 60 days, and 2 others do not clearly define it. In practice, this means families with a temporary drop in income—such as those in which a parent’s work hours have been reduced—may be found eligible for the program at the time of application, even if their annual incomes are above 185 percent of the federal poverty guidelines. The 5 other state manuals we reviewed indicate that local agencies may assess an applicant’s current or annual income, depending on which most accurately reflects the applicant’s income situation. For example, one state’s manual indicates that the decision of whether to use current or annual income should be made on a case-by-case basis. The policies of these 5 states indicate that these states chose to pass the discretion explicitly provided to them in federal regulations to their local agencies. This is consistent with national survey data, which show that about half of the states pass some of the federally-allowed discretion for WIC income eligibility determination on to their local agencies. Another area in which states are given flexibility is in determining an applicant’s family size. Because the family’s total income is assessed to determine income-eligibility for WIC, and total income must fall below 185 percent of the federal poverty guidelines, determination of the applicant’s family size directly impacts income eligibility. According to national survey data, 42 percent of states give additional discretion to local agencies in determining the WIC family or economic unit. In the 10 state WIC manuals we reviewed, 9 suggest that local agencies have discretion in defining the applicant’s family size, though all provide specific examples of family situations in order to assist local agencies with these determinations.