LGN’s Federal Relations Group is closely monitoring the Supplemental Nutrition Assistance Program (SNAP) proposed rule change that was released by the Department of Agriculture (USDA) on July 24th, 2019. This proposed rule entitled “Revision of Categorical Eligibility in the Supplemental Nutrition Assistance Program (SNAP),” would eliminate “broad-based categorical eligibility,” a voluntary standard that states can use to automatically qualify recipients of non-cash welfare assistance for SNAP benefits. Once enacted, this proposed rule would have significant direct impacts on state and local governments, families and children.

States currently have the flexibility to use broad-based categorical eligibility and 43 states chose to utilize this option. If enacted, the USDA’s proposed rule change would narrow categorical eligibility for SNAP. Under SNAP’s current categorical eligibility rules, states are not required to review a person’s total assets and can consider program applicants with incomes above 130 percent of the federal poverty level. This flexibility allows recipients of all non-cash, in-kind, and Temporary Assistance for Needy Families (TANF) services to be considered for SNAP eligibility. The USDA’s proposed rule would narrow these eligibility rules to apply only to individuals receiving TANF benefits for subsidized employment, work supports, or childcare benefits.

According to estimates from the USDA, this would result in approximately nine percent of SNAP households no longer qualifying for the program and more than 3 million people across the country losing eligibility for federal food assistance. For Minnesota, it is estimated it will result in more than 12,000 Minnesotans losing eligibility for federal food assistance.

Secretary of Agriculture Sonny Perdue and Acting Deputy Under Secretary Brandon Lipps said the proposed new rules for SNAP were aimed at ending automatic eligibility for those who were already receiving federal and state assistance. The proposed rule drew a sharp rebuke from Congressional Leaders including House Speaker Nancy Pelosi. Congressman Collin Peterson (D-MN), Chair of the House Agriculture Committee said in a press release he viewed the new USDA proposal as an extension of the earlier fight to limit federal food aid. He said that “the rule from USDA ignores the bipartisan work we did on the 2018 Farm Bill.” USDA’s proposal does not require Congressional approval, however, it must go through an administrative review process before taking effect.

The USDA is now accepting comments from the public regarding their thoughts and concerns on the proposed rule change. The comment period will be open through September 23, 2019.  After the USDA considers these comments, the agency will issue a final rule. A number of Congressional Leaders who oppose the rule change have suggested that it will likely be taken up by the courts in lawsuits over the change.

Below is a full analysis of the proposed rule by LGN’s Megan Knight. Ms. Knight provides clients of the Lockridge Grindal Nauen Federal Relations Group a unique and highly developed skillset in many policy areas including healthcare and human services.

SNAP Categorical Eligibility

SNAP provides benefits to low-income, eligible households on an electronic benefit transfer (EBT) card. Benefits can then be exchanged for foods at authorized retailers. SNAP reaches a large share of low-income households. In Fiscal Year 2018, a monthly average of 40.3 million persons in 20.1 million households participated in SNAP. To be eligible for SNAP, a household’s gross income must be below 130 percent of the federal poverty line. In 2019, that works out to $32,640 a year for a family of four. In addition, households currently remain eligible with up to $2,250 in countable assets (such as cash or money in a bank account) or $3,500 in countable assets if at least one member of the household is age 60 or older, or is disabled. These amounts are updated annually.

Categorical eligibility regarding the SNAP program eliminates the requirement that households who already meet financial eligibility rules in one specified low-income program go through another financial eligibility determination in SNAP. This allows states to confer SNAP eligibility to households if they’re receiving some kind of TANF benefits. The option allows states to get around the typical asset limits and expands the income limits for SNAP in some cases. For example, the typical gross income limit for SNAP is 130 percent of the federal poverty level. By using broad-based categorical eligibility, many states are able to offer SNAP benefits to households with a gross income of up to 200 percent of the federal poverty level.

Ongoing Debate over SNAP

The announcement of the new proposed rule change is the latest evolution in a battle over SNAP that took place most recently in the negotiations leading up to the 2018 Farm Law (Public Law 115-334) enacted in December 2018. The bill was in part stalled and required a number of short term extensions as a result of disagreements over the food assistance program and requests to tighten eligibility and work requirements. Neither the Agriculture Act of 2014 (“2014 Farm Bill,” P.L. 113-79) nor the Agriculture Improvement Act of 2018 (“2018 Farm Bill,” P.L. 115-334) made changes to SNAP categorical eligibility rules. In the 113th Congress (2013-2015), the House passed a version of the law that would have eliminated broad-based categorical eligibility, but the change was not included in the final agreement. In the 115th Congress (2017-2019), the House-passed version of the 2018 law would have made changes to limit but not eliminate broad-based categorical eligibility. These changes were also ultimately rejected by Congress in the final bipartisan deal.

The Administration has, however, continued to support these policy proposals, including a proposed rule released in December 2018 that would tighten work requirements for SNAP recipients. It would restrict states from exempting work-eligible adults to receive food aid if they’re not seeking employment. This proposal is also currently working through the federal rule change administrative process.

The White House 2020 budget request included the categorical eligibility proposal and was brought up during a House Agriculture subcommittee hearing last month. Republicans at the hearing specifically referenced a story from the Washington Free Beacon about Rob Undersander, a millionaire from Waite Park, Minnesota who applied for food aid benefits via the broad-based categorical eligibility standard and was then approved to receive benefits. Mr. Undersander has previously testified in front of committees of the Minnesota legislature on this issue. Advocates for the proposed rule change cited the story to support cutting the eligibility standard.

What is the proposed policy change?

Current rules give states latitude to raise SNAP income eligibility limits so that in certain cases, more low-income families are eligible to continue to receive federal food aid benefits. The current rules also allow states to adopt less restrictive asset tests. Forty states, including Minnesota and the District of Columbia, currently use alternative eligibility criteria that allow participants in some federally funded welfare programs to automatically receive food aid as long as their income is less than double the poverty level.

The proposed regulation would only allow automatic enrollment of people in SNAP if they receive welfare benefits worth at least $50 a month on an ongoing basis for at least six months. Other than cash, the only welfare benefits that would qualify are subsidized employment, work supports such as transportation, and childcare, according to Brandon Lipps, Acting Deputy Undersecretary at USDA. Deputy Undersecretary Lipps said that in some cases, states enroll residents for food assistance even though they are receiving federal welfare benefits of minimal value and that this proposal will restrict less needy individuals from qualifying for benefits.

The USDA’s proposed rule would rein in states’ ability to enroll recipients earning more than 130% of the federal poverty guidelines, in most cases capping eligibility to an annual income of $32,640 for a family of four. Households are also limited in most cases to $2,250 in countable assets, such as cash or money in bank accounts.

Secretary of Agriculture Sonny Perdue said the proposed new rules for SNAP were aimed at ending automatic eligibility for those who were already receiving federal and state assistance. “That is why we are changing the rules, preventing abuse of a critical safety net system, so those who need food assistance the most are the only ones who receive it.” according to the Secretary’s press release.

In a cost-benefit analysis, the USDA estimates that changing the policy would cut 3.1 million people from the program, saving taxpayers about $1.9 billion a year. As a result, state and local governments would face greater administrative burdens, costing them an estimated extra $231 million per year nationally.

Congressional Response

A number of elected officials on Capitol Hill quickly responded to the Administration’s proposal, with those opposed arguing that the USDA is essentially going around Congress to enact a policy that lawmakers already rejected and with those in favor arguing that the system needs to be reformed in order to ensure that it isn’t abused.

Chairman Collin Peterson (D-MN) predicted that the proposed rule would result in lawsuits and be taken up by the courts. The proposal, he told the Minneapolis Star Tribune, is “a meat ax approach that has [USDA] getting sued and [the rule] will never get done.”

Congressman Mike Conaway (R-TX), the ranking Republican on the House Agriculture Committee, in a press release, said that “[A] system that allows millionaires to receive these benefits is a system in desperate need of reform.” Congressman Conaway was Chairman at the time of 2018 farm law negotiations and led the push for stricter work requirements.

House Ways and Means Committee Chairman Richard Neal (D-MA) said in a press release that “Congress rejected this very proposal in the 2018 Farm Bill, and it is unlawful for the administration to attempt to override the law without congressional authorization.”

Senator Debbie Stabenow (D-MI), the Ranking Member of the Senate Agriculture Committee, said in a press release the Agriculture Department’s proposal “is yet another attempt by this administration to circumvent Congress and make harmful changes to nutrition assistance that have been repeatedly rejected on a bipartisan basis.”

Senator Amy Klobuchar (D-MN) told the Minneapolis Star Tribune the proposed rules make “changes that were overwhelmingly rejected on a bipartisan basis by the Senate during the amendment process for the 2018 Farm Bill.”

Congressman Jim Hagedorn (R-MN), also a member of the House Agriculture Committee, supports the new rules as part of necessary welfare reform. “We do not want to see anyone, especially children, go hungry, which is why I support the Farm Bill and its nutrition provisions. But food stamp benefits must be directed to people truly in need,” he told the Minneapolis Star Tribune.

Unintended Consequences: Child Nutrition

Following the USDA’s release of its proposal, Congressman Bobby Scott (D-VA), chairman of the House Committee on Education and Labor, sent a letter to the department making it aware that 500,000 children could lose their free lunches. Currently, children whose families receive SNAP benefits automatically qualify for free and reduced school breakfast and lunch at school. In his letter, Congressman Scott asks the USDA to revise the analysis to include any impact on school meal eligibility and a confirmation that information provided to the committee is accurate. The department released a written response, saying that the USDA cannot provide additional information during the public comment period, but acknowledged the rule could affect the use of direct certification of SNAP participants for free school meals.

In addition, the proposal has also complicated Senate efforts to negotiate a reauthorization of government child nutrition programs. The federal school lunch program, with its budget of more than $23 billion in 2018, is governed by the child nutrition law, as is the nutrition program for Women, Infants, and Children, better known as WIC. The programs haven’t been reauthorized in almost 10 years.

Senate Agriculture Committee Chairman Pat Roberts (R-KA) told Bloomberg Government that, “[t]here are some things that are happening from an executive standpoint that affect directly child nutrition that are problematic.” Chairman Roberts had set a goal in April 2019 to get a bill approved by his committee before the annual August congressional recess. He had shared bill language with his committee members and the measure was “pretty well complete.” However, the proposed rule and new developments have “sort of clouded the picture right now,” according to the Chairman.

What are the next steps

The USDA is now accepting comments from the public regarding their thoughts and concerns on the proposed rule change. The public comment period will be open through September 23, 2019. After the USDA considers these comments, the agency is expected to issue a final rule. The last USDA proposal on SNAP received more than 100,000 comments. Comments can be submitted to the USDA on their website and can be found by clicking here.

Both the House and Senate are out for the annual August recess. Both chambers will be back in session next on Monday, September 9, 2019. There are no committee hearings currently scheduled regarding this proposed rule change, but it is possible that once the House and Senate are back in session, the proposal will be discussed as part of a committee hearing.

Finally, a number of elected officials have suggested that the proposed rules change is likely to be taken up by the courts in lawsuits by advocates on behalf of those losing access to food.