The Ladder

A Blog from New America's Asset Building Program

Warning: Solutions to non-Existent Problems Ahead

Published:  March 13, 2013
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Or, so should have been labeled the justification to cut SNAP in the budget proposal from House Budget Chair Rep. Paul Ryan (R-WI) yesterday. Underlying this move was the need to increase integrity in the program. In its own words: “These programs also have little incentive to root out waste, fraud, and abuse…"

And the compelling example of why this is necessary?

“In Michigan, two lottery winners received SNAP benefits.”

I hope you were sitting down for that one. The proposal goes on to include a couple of other examples with about the same level of gravity.

This anecdote is frequently cited as a justification to inflict cuts on the program and impose a strict asset test in evaluating eligibility, so it was of little surprise to see it emerge there. In fact, the same argument was levied last year during the Farm Bill debate when the House Agriculture Committee passed a version that would have eliminated the ability of states to raise the SNAP asset limit above the federal floor of $2,000. At that time, we wrote a piece for Spotlight on Poverty and Opportunity drilling down into why using lottery winners as the litmus test for whether or not a program is working is problematic. Here’s an excerpt:

Allowing individuals who win the lottery to continue to receive SNAP is an irresponsible use of taxpayer dollars. But it’s also irresponsible to disregard the overwhelming success of this policy based on these two isolated cases – clear outliers – and fear of others emerging. Verifying assets requires valuable time and resources that could be better spent elsewhere. These limits also prevent families from achieving financial stability by stunting the growth of one critical anti-poverty tool—savings.

The reality is that asset limits make for bad policy for both states and SNAP participants. Earlier this year, we reached out to state human services administrators to get their perspectives on SNAP asset tests. In most cases, asset tests were a solution in search of a problem that rarely exists.

In Idaho, for example, only 2.2 percent of SNAP denials from June 2011 to March 2012 were due to assets exceeding the state’s $5000 limit. This is compared to 45.5 percent of denials due to excess income. To provide some context, just over 20 percent of applications were denied in FY 2011—meaning that the percentage of total applications denied for excess resources was probably just around half of one percent. These data confirm previous findings from the USDA that the average SNAP household has only $333 in savings, well below the $2,000 ceiling set by the federal government.

Freeing caseworkers from the obligation to verify something that usually doesn't exist has become even more important in the current fiscal climate. State budgets have been slashed and staffing has been reduced significantly, even as the recession has caused caseloads to balloon. Eliminating the asset test allows program staff to use their time more efficiently, and some states have found that their program integrity has increased as a result.

So, are there incentives for “rooting out” waste, fraud, and abuse and improving program integrity? Clearly there are and eliminating asset limits is part of the solution, not the problem. If the concern were truly about keeping lottery winners off SNAP, both the House and Senate versions of the Farm Bill that were proposed last summer included provisions that would explicitly exclude lottery winners from receiving benefits. This type of narrow, focused policy reform would increase program integrity without punishing millions of hardworking families that have turned to SNAP to get back on their feet in the wake of the recession.

Are there problems with SNAP that need to be addressed? Absolutely. Right now the program is serving only 3 out of every 4 eligible families and even fewer working families. That’s a problem. Another: the average monthly benefit is $133.41 per person. That works out to less than a buck fifty a meal. This is why so many families who receive SNAP run out of money by the third week of the month. That’s a problem.

These are the numbers that should be driving the policy making when it comes to SNAP. Budgeting based on outliers, as the Ryan budget has, isn’t in the interest of the stated objectives of the cuts and certainly not in the interest of the families who are served by the program.

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