The Food Stamp Program helps low-income individuals and families obtain a more nutritious diet by supplementing the funds they have to spend on food with food stamp benefits. In fiscal year 1995, the average monthly food stamp benefit was $172 per household. These benefits are generally provided through coupons or electronically on debit cards (similar to a bank card) that may be used to purchase food at authorized stores. The Food Stamp Program is a federal-state partnership, with the federal government paying the full cost of the food stamp benefits and approximately half of the states’ administrative costs. USDA’s Food and Consumer Service administers the program at the federal level. States’ responsibilities include certifying eligible households, calculating benefit amounts, and issuing benefits to participants who meet the income and asset standards set by the Congress. After a household is certified as being eligible for food stamps, the household’s monthly food stamp benefit is computed on the basis of several factors, including the household’s net monthly income. A household’s net monthly income is computed by subtracting six allowable deductions from the household’s gross monthly income: a standard deduction, an earned income deduction, a dependent care deduction, a medical deduction, a child support deduction, and an excess shelter expense deduction. A household’s monthly food stamp benefit is computed by subtracting 30 percent of the household’s net income from the maximum allowable food stamp benefit for the household’s size. This last step is based on two assumptions. First, the maximum food stamp benefit represents the amount a household with zero net income would need to purchase food for nutritious but inexpensive meals each month. Second, a household is expected to spend 30 percent of its net income to buy enough food for a month. See appendix I for an example of how the net monthly income and food stamp benefit were calculated for a single female-headed household with three children in fiscal year 1995. In fiscal year 1995, about two-thirds, or about 7.2 million, of the almost 10.9 million food stamp households took the deduction for excess shelter expenses. Of the households taking the deduction, about 2.3 million were not subject to the deduction cap because they contained an elderly or disabled person. Of the remaining households taking the excess shelter expense deduction and subject to the cap, about 1.1 million households would have received more in food stamp benefits in the absence of the cap. These 1.1 million affected households, which represent about 10 percent of all food stamp households, would have received more in food stamp benefits in the absence of the cap because they (1) had excess shelter expenses they could not deduct from their income and (2) were not receiving the maximum allowable food stamp benefit. In contrast, about 90 percent, or about 9.8 million households, were not affected by the cap on the excess shelter expense deduction in fiscal year 1995 because (1) they did not take the deduction, (2) they had household members who were elderly or disabled, (3) their excess shelter expenses were lower than the cap, or (4) they were already receiving the maximum allowable food stamp benefit even though they had excess shelter expenses that were greater than the $231 cap. Table 1 shows the number and percentage of households taking the excess shelter expense deduction, and table 2 shows the number and percentage of households affected and not affected by the cap on the excess shelter expense deduction in fiscal year 1995. In fiscal year 1995, the 1.1 million households affected by the cap on the deduction for excess shelter expenses differed in several aspects from households not affected by the cap. Appendix III provides more detailed information on the characteristics of affected households. Below is a description of the characteristics of households affected by the cap in terms of their composition, income, shelter expenses, geographic location, and level of food stamp benefits. In fiscal year 1995, households affected by the excess shelter cap were more likely than households not affected to (1) contain children, (2) be headed by a single female, (3) have more members, and (4) have more noncitizen members. Children were members of about 93 percent of the 1.1 million food stamp households affected by the excess shelter cap. In contrast, children were members of about 56 percent of the food stamp households not affected by the cap. See figure 1. 6.7% Households without children In total, affected households contained about 2.3 million children under the age of 18. These children represented about 17 percent of all children receiving food stamp benefits in fiscal year 1995. Moreover, slightly more than half of the affected households, 51.4 percent, contained preschool children, while about one-third, 32.2 percent, of households not affected by the cap on the excess shelter expense deduction contained preschool children. Single females headed almost two-thirds of the food stamp households affected by the excess shelter cap in fiscal year 1995. In contrast, slightly more than one-third of the households not affected by the cap were headed by single females. (See fig. 2.) The average size of affected households was larger than not affected households, 3.4 and 2.4 members, respectively (see fig. 3). The difference was primarily due to the fact that a greater percentage of affected households had children. A higher percent of affected households, 18.2 percent, contained a noncitizen compared with 9.8 percent of not affected households (see fig. 4). Under the 1996 welfare reform act, many noncitizens will no longer receive food stamp benefits. Households affected by the cap tended to have more income than households not affected by the cap. In fiscal year 1995, a smaller percentage of affected households had gross monthly incomes equal to or below 50 percent of the poverty level than did not affected households, 34.8 percent and 43.4 percent, respectively. Figure 5 shows these differences. Gross income is over 50% of poverty level Households affected by the cap had higher average gross monthly incomes than households not affected by the cap, $643 and $500, respectively. Gross income can include both earned and unearned income. The sources of unearned income came from public assistance programs, such as Aid to Families With Dependent Children (AFDC), General Assistance, Supplemental Security Income, and Social Security. A greater percentage of affected households—about one-third—had earned income than not affected households—about one-fifth. (See fig. 6.) The percent of households with children having earned income was comparable for affected and not affected households, 31.3 percent and 29.8 percent, respectively. Affected households had average shelter expenses more than twice as high as not affected households, $618 and $254, respectively. Affected households with children had average monthly shelter expenses of $621 compared with $262 for not affected households with children. Figure 7 shows the average monthly shelter expenses for affected and not affected households with and without children. Households affected by the cap tended to be located in different parts of the nation than those not affected by the cap. Affected households tended to be concentrated in the Northeast, 37.5 percent, and West, 27.9 percent, while not affected households tended to be located in the South, 41.5 percent. However, both affected and not affected households, 88.8 and 76.4 percent, respectively, tended to be located in urban areas. Table 3 shows the differences and similarities in the location of these households. Over half, 53.9 percent, of food stamp households affected by the cap, were located in four states—California, Michigan, New York, and Pennsylvania. In comparison 26 percent of households not affected by the cap were located in these four states. Affected households had larger monthly food stamp benefits than not affected households. The average monthly food stamp benefit for affected households was $261 compared with an average monthly food stamp benefit for not affected households of $162. This was also true for affected households with children compared with not affected households with children; $271 and $225 per month in food stamp benefits, respectively. Figure 8 shows the average monthly food stamp benefit for affected and not affected households with and without children. In fiscal year 1995, almost 70 percent of affected households were receiving more than 75 percent but less than 100 percent of the allowable maximum food stamp benefit. Food stamp benefits for the 1.1 million households affected by the cap would have increased by about 12 percent, on average, or about $31 per month, in absence of the cap in fiscal year 1995. Appendix III contains detailed information on the characteristics of food stamp households that would have received increases in benefits in the absence of a cap. As a result of the increased benefit, an affected household’s average monthly food stamp benefit would have increased from $261 to $292 in fiscal year 1995. Food stamp benefits for affected households with children would have increased from $271 to $303. By geographic location, affected households in the Northeast, where average shelter costs for households receiving food stamps were the highest at $688, would have received the largest average monthly increase, $41. Households in urban areas would have received larger average monthly increases, $32, than in rural areas, $25. Figure 9 shows the average monthly increase in food stamp benefits by state in absence of a cap on the excess shelter expense deduction in fiscal year 1995. In the absence of the cap, total federal food stamp expenditures would have increased by approximately 1.9 percent, or $34.7 million monthly, for a total of $417 million, in fiscal year 1995. More than 95 percent, or $400 million, of the total increase would have gone to households with children. Almost 80 percent of all additional benefits would have gone to households in 10 states. Of these 10 states, California and New York would have received almost half of these additional benefits.