SPEAKERS CONTENTS INSERTS
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REVIEW OF THE OPERATIONS OF THE FOOD STAMP PROGRAM
SUBCOMMITTEE ON DEPARTMENT OPERATIONS,
OVERSIGHT, NUTRITION, AND FORESTRY
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
AUGUST 5, 1999
Serial No. 10631
Printed for the use of the Committee on Agriculture
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COMMITTEE ON AGRICULTURE
LARRY COMBEST, Texas, Chairman
BILL BARRETT, Nebraska,
JOHN A. BOEHNER, Ohio
THOMAS W. EWING, Illinois
BOB GOODLATTE, Virginia
RICHARD W. POMBO, California
CHARLES T. CANADY, Florida
NICK SMITH, Michigan
TERRY EVERETT, Alabama
FRANK D. LUCAS, Oklahoma
HELEN CHENOWETH, Idaho
JOHN N. HOSTETTLER, Indiana
SAXBY CHAMBLISS, Georgia
RAY LaHOOD, Illinois
JERRY MORAN, Kansas
BOB SCHAFFER, Colorado
JOHN R. THUNE, South Dakota
WILLIAM L. JENKINS, Tennessee
JOHN COOKSEY, Louisiana
KEN CALVERT, California
Page 3 PREV PAGE TOP OF DOCGIL GUTKNECHT, Minnesota
BOB RILEY, Alabama
GREG WALDEN, Oregon
MICHAEL K. SIMPSON, Idaho
DOUG OSE, California
ROBIN HAYES, North Carolina
ERNIE FLETCHER, Kentucky
CHARLES W. STENHOLM, Texas,
Ranking Minority Member
GEORGE E. BROWN, Jr., California 1
GARY A. CONDIT, California
COLLIN C. PETERSON, Minnesota
CALVIN M. DOOLEY, California
EVA M. CLAYTON, North Carolina
DAVID MINGE, Minnesota
EARL F. HILLIARD, Alabama
EARL POMEROY, North Dakota
TIM HOLDEN, Pennsylvania
SANFORD D. BISHOP, Jr., Georgia
BENNIE G. THOMPSON, Mississippi
JOHN ELIAS BALDACCI, Maine
MARION BERRY, Arkansas
VIRGIL H. GOODE, Jr., Virginia
MIKE McINTYRE, North Carolina
Page 4 PREV PAGE TOP OF DOCDEBBIE STABENOW, Michigan
BOB ETHERIDGE, North Carolina
CHRISTOPHER JOHN, Louisiana
LEONARD L. BOSWELL, Iowa
DAVID D. PHELPS, Illinois
KEN LUCAS, Kentucky
MIKE THOMPSON, California
BARON P. HILL, Indiana
WILLIAM E. O'CONNER, JR., Staff Director
LANCE KOTSCHWAR, Chief Counsel
STEPHEN HATERIUS, Minority Staff Director
KEITH WILLIAMS, Communications Director
Subcommittee on Department Operations, Oversight, Nutrition, and Forestry
BOB GOODLATTE, Virginia, Chairman
THOMAS W. EWING, Illinois,
RICHARD W. POMBO, California
CHARLES T. CANADY, Florida
JOHN N. HOSTETTLER, Indiana
SAXBY CHAMBLISS, Georgia
RAY LaHOOD, Illinois
Page 5 PREV PAGE TOP OF DOCJERRY MORAN, Kansas
JOHN COOKSEY, Louisiana
GREG WALDEN, Oregon
EVA M. CLAYTON, North Carolina,
Ranking Minority Member
MARION BERRY, Arkansas
BENNIE G. THOMPSON, Mississippi
VIRGIL H. GOODE, Jr., Virginia
DAVID D. PHELPS, Illinois
BARON P. HILL, Indiana
MIKE THOMPSON, California
GEORGE E. BROWN, Jr. California 1
DAVID MINGE, Minnesota
1\ Deceased July 16, 1999.
C O N T E N T S
Clayton, Hon. Eva M., a Representative in Congress from the State of North Carolina, opening statement
Page 6 PREV PAGE TOP OF DOC Goodlatte, Hon. Bob, a Representative in Congress from the State of Virginia, opening statement
Carter, Clarence H., commissioner, Virginia Department of Social Services
Fox, Lynda G., secretary, Maryland Department of Human Resources
Goolsby, Larry, senior policy associate, American Public Human Services Association
Greenstein, Robert, executive director, Center on Budget and Policy Priorities
Howard, Douglas E., director, Michigan Family Independence Agency
Kibble-Smith, Brian, vice-president, Citicorp Services Inc.
Price, Melba L., associate director, Missouri Department of Social Services
Silliker, M. Josita, Evangelical Lutheran Church in America
Snyder, Jacki, manager, electronic payments, SUPERVALU Inc.
Watkins, Shirley, Under Secretary, Food, Nutrition, and Consumer Services, U.S. Department of Agriculture
Page 7 PREV PAGE TOP OF DOCPrepared statement
Zedlewski, Sheila, director, the Income and Benefits Policy Center, the Urban Institute
Hoback, Sandie, administrator, Adult and Family Services, Oregon Department of Human Services
REVIEW OF THE OPERATIONS OF THE FOOD STAMP PROGRAM
THURSDAY, AUGUST 5, 1999
Subcommittee on Department Operations,
Oversight, Nutrition and Forestry,
House of Representatives,
Committee on Agriculture,
The subcommittee met, pursuant to call, at 10:32 p.m., in room 1300, Longworth House Office Building, Hon. Bob Goodlatte (chairman of the subcommittee) presiding.
Present: Representatives Walden, Clayton, Phelps, and Hill.
Staff present: Lynn Gallagher, senior professional staff; Kevin Kramp, staff director, Subcommittee on Department Operations, Oversight, Nutrition, and Forestry; Wanda Worsham, clerk; Jason Vaillancourt, Callista Bisek, and Quinton Robinson.
OPENING STATEMENT OF HON. BOB GOODLATTE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA
Mr. GOODLATTE. Good morning. The Subcommittee on Department Operations, Oversight, Nutrition, and Forestry will come to order. I have an opening statement I would like to make.
Page 8 PREV PAGE TOP OF DOC This hearing is to review the operations of the Food Stamp Program. It is a necessarily vague title because we hope to review many aspects of the program. State flexibility within the Food Stamp Program, EBT interoperability, and caseload reduction lead the list of items of subcommittee interest and will be the primary focus of this hearing. Our intense and continual interest in eliminating fraud, waste, and abuse in the Food Stamp Program will be the focus of future hearings.
As this subcommittee's jurisdiction increased, so did our priority issue list. This hearing is a long time in coming. I would like to recognize Mrs. Clayton's intense interest in nutrition issues and thank her and her staff for their patience and willingness to work with us to get this hearing scheduled.
Participation in the Food Stamp Program, the Nation's largest assistance program, has dropped, according to a recent GAO study, by 27 percent during the last 3 1/2 years. The Welfare Reform Act that Congress passed in 1996 retained the Food Stamp Program as an entitlement program for qualifying participants, but it tightened the program's eligibility standards by establishing work requirements for able-bodied adults without dependents and by disqualifying most noncitizens from participating in the program.
There are many theories to explain this dramatic drop, and I suspect we will hear about most of them today. Most theories look to place blame or point fingers. I hesitate to be so negative. Some studies suggest that there is a growing gap between need and assistance. Let me make it clear, there is no argument that we should not have hunger in the world's richest country that has the world's safest, most wholesome, economical, and abundant food supply.
The strong U.S. economy, however, has provided many with first time opportunities at self-sufficiency. Why are we surprised that people are opening the door on which opportunity knocks?
Page 9 PREV PAGE TOP OF DOC If there are barriers to access for would be participants in the Food Stamp Program, they need to be identified and eliminated. There have been some barriers identified, but I don't think that suggests a systemic problem, and I caution against a knee-jerk reaction to create national policies to correct the problems of a few may be misguided.
The U.S. Department of Agriculture is not without fault. Although the Welfare Reform Act was enacted almost 3 years ago, FNS has not promulgated regulations implementing the act's food stamp revisions. It was not until May of this year that FNS published notices of proposed rule making with the rules to be finalized in December of this year. FNS regional offices have told States that they are allowed to interpret the Welfare Reform Act for themselves until these rules become binding. What is a State to do when the folks at USDA headquarters don't agree with them?
I fear that instead of giving the States greater flexibility in the Food Stamp Program, there will be pressure to create a more command and control management style. States have proven they can be the innovators of welfare reform. Their success in handling the administrative freedoms of the TANF program confirms my support for greater flexibility in the Food Stamp Program. I look forward to working with the States and USDA to see what advances can be made.
I look forward to hearing other perspectives on both the issues of caseload reduction and greater flexibility for the States in the Food Stamp Program today.
Another issue for the subcommittee's review is a bill I introduced yesterday, the Electronic Benefit Transfer Interoperability and Portability Act of 1999. The sole focus of my bill is to allow food stamp beneficiaries the ability to redeem their benefits in any eligible store regardless of location. Beneficiaries had this ability under the old paper food stamp system but lost it as States migrated to an electronic benefits transfer system.
Under the old paper food stamp system, recipients could redeem their food coupons in any authorized food store anywhere in the country. For example, a food stamp recipient living in Bath County, VAin my districtcould use their food stamps in their favorite grocery store even if it happened to be in West Virginia. Unfortunately, as we move to electronic delivery of benefits, this is currently not the case. My bill provides for the portability of food assistance benefits and allows food stamp recipients the flexibility of shopping at locations that they choose.
Page 10 PREV PAGE TOP OF DOC My bill enjoys support from many on this subcommittee, and I am optimistic about its prospects.
I look forward to hearing the witnesses' testimony today. We have assembled uniquely qualified witnesses that will provide insight into the operations of the Food Stamp Program.
It is now my pleasure to recognize the ranking member of the committee, Congresswoman Clayton of North Carolina.
OPENING STATEMENT OF HON. EVA M. CLAYTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA
Mrs. CLAYTON. Thank you, Mr. Chairman.
I am delighted that you have scheduled this hearing for the bipartisan spirit that brings us together this morning. Hunger is a matter that transcends party and politics. I know that you agree that it is important that on the issue of nutrition, we do what is best for our Nation. In 1996, although you might have disagreed as how to get there, I think you would agree that indeed the welfare reform system needed to be reformed and we were right and it was reformed.
But reform should be directed at moving people out of poverty, not into poverty. Nutrition programs are essential to the well-being of millions of our citizens, our disadvantaged, our children, the elderly, and the disabled. These are groups of people who in many cases cannot provide for themselves and need assistance for their basic existence. Nutrition programs in many cases provide the only nutritious food that millions of our Nation's poor receive on a daily basis.
Many of those of whom I am speaking, far too many, are the working people. These working Americans are struggling to make ends meet and still cannot afford to feed their families. Unfortunately, Mr. Chairman, many of those I am speaking about, all too many of them, are also children. Mr. Chairman, the reality was true then in 1996 and according to several recent reports in various publications and a GAO study, the reality is also true now.
Page 11 PREV PAGE TOP OF DOC In sum, those reports reveal that in the midst of an economic boom, we are experiencing in many parts of the country disaster. When it comes to hunger and food insecurity, there are dangerous warning signs that we must heed if we are going to be true to all Americans.
According to the GAO report dated July 2, 1999, participation in the Food Stamp Program as you have noted has dropped by 27 percent during the last 3 1/2 years. Yet this drop is only in part due to our prosperous era. Those indeed who receive a food stamp no longer need them is not the reality. In fact, the late USDA study indicated that there has been an increase, an increase of 10 million people from 1997 to 1998 with over 3 million children suffering from food insecurity on the edge of hunger.
There is a growing need for food. At the same time, these reports inform us that client and food stamp participation has been precipitous without adequate explanation in full. We do know that the low-income families are struggling and not prospering, indeed as we have indicated. Indeed, they are struggling in spite of the fact they are working because they are working at low wages and the food stamp program allows them to supplement to provide a quality of life.
That is why, Mr. Chairman, this hearing is vital. I look forward to the testimony of the witnesses and to hear the various help and forms of information that they can provide from their perspective. I want to commend the administration, the USDA, and the Under Secretary Shirley Watkins for her leadership in many areas. Madam Under Secretary, indeed, should be commended for launching the 1800 number initiative and for the President's recent large food stamp initiative outreach.
We are here today because it is time to really find a way to feed the hungry; not to pick on the poor, but to find another way to feed the hungry. Less than 3 percent of the budget is targeted for feeding the hungry. Hunger indeed has a cure, Mr. Chairman; and I think that we can be part of that remedy. Thank you for holding this hearing.
Page 12 PREV PAGE TOP OF DOC Mr. GOODLATTE. Thank you, Mrs. Clayton. We would now like to invite our first panel of witnesses to the table. The Honorable Shirley R. Watkins is the Under Secretary for Food, Nutrition, and Consumer Services for the U.S. Department of Agriculture. Ms. Watkins is accompanied by Ms. Julie Paradis, who is the Deputy Under Secretary for Food, Nutrition, and Consumer Services at the U.S. Department of Agriculture, and Mr. Samuel Chambers, Jr., who is the Administrator of the Food and Nutrition Service of the U.S. Department of Agriculture.
Ms. Watkins, we have had you with us many times before. You and your compatriots are welcomed back. Thank you, and as you know, your full statement will be made a part of the record, and we welcome your testimony.
Ms. WATKINS. Thank you, Mr. Chairman, to the members of this committee, I am indeed honored to be here with you today. If it looks like I am having some difficulty, I am sitting on my hands because I am about to freeze to death. So I hope this isn't going to be just a chillythat is not the chill, it is really a warm opportunity to be here, but I am freezing. So if I squirm and move around, you know that I am trying to get warm, Mr. Chairman.
Mr. GOODLATTE. We anticipated that things might get hot before the hearing is over, so we wanted to start off and average it out.
STATEMENT OF SHIRLEY R. WATKINS, UNDER SECRETARY, FOOD, NUTRITION AND CONSUMER SERVICES, U.S. DEPARTMENT OF AGRICULTURE
Ms. WATKINS. Thank you, Mr. Chairman. Thank you very much. I am Shirley Watkins, the Under Secretary for Food, Nutrition, and Consumer Services, and I am delighted to have the Deputy Under Secretary, Julie Paradis, with me along with Sam Chambers, the Administrator for Food Nutrition Services at the agency.
Page 13 PREV PAGE TOP OF DOC Mr. Chairman, I would ask for the committee's indulgence as my statement this morning will be a little longer than the 5 minutes that you allowed me. I would like to include my written statement for the record. But my oral statement will be just a little bit longer, if that is OK.
Mr. GOODLATTE. Depending on the meaning of the word ''little'' we will indulge you.
Ms. WATKINS. Thank you, Mr. Chairman, thank you very much. My southern accent doesn't speed up very fast.
We are discussing issues that are of great importance to us and you, and they have a wide impact. I feel I need to be very thorough in my presentation, as thorough as possible.
I would like to spend some time talking about the Food Stamp Program and its critical role in nutrition and helping working families successfully make the transition from dependency to self-sufficiency, and in helping families in need secure a healthful diet during times of financial hardship. At the Department of Agriculture, we are extremely proud of the vital role that the Food Stamp Program plays in helping low-income families, including working families, the elderly, the disabled, and children to purchase food for an adequate diet.
For many people in this country who are participating in food stamps, this can make the difference between living in poverty and moving beyond poverty. It is imperative to the success of welfare reform and fundamentally, for the well-being of our citizens that we work actively to identify and remove any barriers that prevent eligible low-income families from participating in the Food Stamp Program and to better serve the working poor. To help us all look at what this program is really all about, the staff and I wanted to look seriously at the principles that could guide us and focus our thinking as we looked at the Food Stamp Program and all of our nutrition assistance programs. So we developed some guidelines. I want to share those with you. There are a few of them, and I would like to put those seven guiding principles in the record, Mr. Chairman.
Page 14 PREV PAGE TOP OF DOC One, the Food Stamp Program fights hunger and improves nutrition among low-income households. Second, proper nutrition and sufficient food are as essential to the successful transition from welfare to work as child care and health insurance. Third, the national eligibility and benefit rules of the Food Stamp Program form a safety net across all States. Fourth, improved nutritional well-being is the ultimate measure of success in the fight to reduce hunger and improve nutrition.
Fifth, food stamp policies must address the needs of a diverse range of children, families, and single individuals including the working poor, elderly, and disabled. Sixth, administrative simplicity is important as the program meets the nutritional needs of low-income people. Seventh, the final one of prudent stewardship of program resources is critical.
The Food Stamp Program is a nutrition program, not a welfare program. Congress deserves praise, Mr. Chairman and Members, for recognizing this and maintaining the Food Stamp Program as the national Federal nutrition assistance program that has uniform national standards.
In recent years, States have taken remarkable action to revolutionize the welfare system. A strong economy combined with innovative State policies and an unyielding commitment to helping families become self-sufficient as they move from welfare to work has resulted in a dramatic decline in the number of families receiving cash assistance. Many more individuals are now working to support themselves and their families than ever before. However, critical to their success and becoming self-sufficient is the ability to feed their families adequately. I would submit to you that there are many, many challenges that remain for all of us.
Last month, as Mrs. Clayton mentioned, we released the report entitled ''Household Food Security in the United States from 1995 to 1998.'' I would also like to submit a copy of this report for the record because it shows that in spite of a booming economy of recent years, over 10 million Americans still live in households that experience hunger.
Page 15 PREV PAGE TOP OF DOC So we know that even in the midst of a booming economy, many Americans are still at nutritional risk. Nutrition assistance is not reaching everyone who needs it. Although the number of people in poverty has fallen, the number of those who still will receive food stamps has dropped even faster. In May of this year, 1999, the Food Stamp Program served 17.9 million people, the fewest in nearly 20 years. The number of people receiving food stamps over the past 5 years has fallen by 9.6 million. That is a drop of one-third. From August 1996 through May, participation dropped by almost 7 million, a 30 percent decrease.
Historically, the pattern of participation in the Food Stamp Program has closely tracked the pattern of poverty in America. However, in recent years, the two patterns have diverged and the number of people receiving food stamps has fallen far greater than the number of people living in poverty. We know, for instance, that between 1995 and 1997, food stamp participation fell five times as fast as the number of people living in poverty.
Predictably, many of the reasons why nearly 10 million people have left the food stamp rolls are indeed tied to the economy and the changes that were brought about by welfare reform. Changes in the program rules have restricted the participation by immigrants and unemployed adults with dependents. The strong national economy has provided work to former participants reducing their needs for food stamps, and the increases in the minimum wage have helped ease the transition to self-sufficiency. TANF, the Temporary Assistance for Needy Families program, has helped many low income mothers find work and increase their income which is sufficient to eliminate them from the need for the Food Stamp Program, and we are all very pleased with that. But clearly, welfare reform and a strong labor market have made a significant and positive difference in this country.
In spite of all of these successes, there are still many who need help in feeding their families. We know there are parents working harder to provide for their children who do not yet have sufficient earnings to buy the bare necessities. After paying the rent and the utility bills and the doctors bills, they are still struggling to put food on the table.
Page 16 PREV PAGE TOP OF DOC There are two unintended consequences of State and local welfare reform initiatives which cause us some concern. In some communities we found that TANF requirements discouraged people from applying for cash assistance and consequently diminished the access to the Food Stamp Program. We also found that many people are unaware of their eligibility for the program. So some leave unnecessarily and others are discouraged from applying for benefits.
On July 14, President Clinton announced several new food stamp policy changes to ease State transitions into a new way of working with families in need. Before these new policy changes, families had to report their differences in their circumstances, a new job, increase in wages, change in working hours, changes in the composition of the household or any number of other conditions. This was very burdensome, not only on those families but on new employers and those recipients. It was burdensome for State staff who were required to process the mountains of paperwork. Now, the reporting of these changes will be required only on a quarterly rather than a monthly basis.
A new food stamp vehicle policy will allow those working parents who are receiving noncash TANF assistance to have a reliable car and receive food stamp assistance for themselves and their children and States will no longer be penalized for small errors that are made by food stamp applicants or the State agency staff that do not result in the loss of significant benefit dollars.
These are new policies and they have been most welcomed by the States. We work with the States, and these are some of the things that they requested. It shows a deep commitment that this administration has in protecting the access of the American families to a nutritious diet while also focusing on ways to help States to simplify and run their programs in an efficient way. They have a business to run and we want to help them run it effectively and efficiently.
President Clinton also announced at the same time a new food stamp public education campaign. We provided a 1-800 hot line and a new food stamp tool kit which I would also like to provide for the record.
Page 17 PREV PAGE TOP OF DOC This information, we think, will provide best practices to assist working families and explain the access and eligibility requirements. I would also like to just give you that toll free number which is (1-800) 221-5689. We are receiving lots and lots of calls since we instituted that new toll free number.
We have asked our State partners to work with us to develop plans to inform low-income households about the eligibility requirements, application procedures, and the benefits of the Food Stamp Program. We also want them to help us develop simplified application procedures and work to prevent inappropriate denials and terminations.
This administration is committed to preserving and protecting access to people in this country to a nutritious diet and delivery of food stamp benefits to low-income families in a customer friendly, efficient, effective, and dignified way. One of the ways that we have been able to do that is to achieve this through EBT, the electronic benefit transfer system. Nationwide, 65 percent of all food stamp benefits are now being delivered electronically. Forty States use EBT to deliver food stamp benefits. And as of this month, 33 have implemented EBT systems statewide. Sixty-four percent of all households receiving food stamp benefits access these benefits using a card rather than a coupon.
Mr. Chairman, by October 1, 2002, we expect to have all States and all local programs on EBT. We think that will be a tremendous benefit for people in this country.
We have been actively engaged in helping our State partners meet this deadline and conform to the requirement of welfare reform law. On May 27, you are right, we published proposed rules dealing with the issues of cost neutrality, fees for replacement cards, photo IDs, among other topics. It is of vital importance that we continue to develop delivery systems that are easy to use but are still secure from fraud and abuse.
One issue of particular interest is finding a way to help food stamp recipients access their benefits wherever they are. You are exactly right, interoperability is extremely important to all of us, especially important for those bordering States that attract food shoppers in stores across State lines. While we are not requiring a State to have interoperability EBT systems, we are encouraging interoperability of their EBT systems. The department shares in all of the associated cost currently at a 5050 rate that is permitted by law. But we have found that the cost of implementing interoperability EBT systems remains a concern for many of the States. To help resolve this cost issue, we have been working with the EBT Council of the National Automated Clearinghouse Association and the States to gather additional data through an interoperability project. This project is currently under way and early results will suggest that the cost associated with interoperability may not be significant.
Page 18 PREV PAGE TOP OF DOC Many States and food retailers would like to see interoperability become a requirement and have the Federal Government pick up 100 percent of the associated cost. We are considering the benefits of this recommendation, but it is unclear how successful we could be in controlling any 100 percent funding to ensure reasonable expenditures. Mr. Chairman, we would be pleased to work with you and your staff and the committee on this issue. The Department encourages and supports interoperability, and we believe that a nationwide interoperability system is inevitable. And we want to work to make it happen and work with you to have the best system possible.
I know many of you have expressed interest in knowing where States are and where food stamp retailers stand with respect to Y2K compliance. USDA has been working with the States, the retailer, and the third-party processors to ensure that their systems are compliant well before December and to see that accurate benefits are issued to all certified households on a timely basis. We are expecting that all States will have their systems Y2K compliant.
With regard to another food stamp topic, I would like to give you just a status report on the Food Stamp Program payment accuracy for quality control system. Secretary Glickman and I have made the accurate delivery of food stamp benefits one of our top priorities. It is critical to the integrity to the program that the States deliver nutrition benefits to eligible households accurately and efficiently. The quality control system exists to monitor how well States are doing this. It also tells us when they need help.
When we see an increase in overissuance errors, as we did in fiscal year 1998, the Department is very concerned about that. We have intensified our efforts to work with States to help them improve their payment accuracy, but we are also equally concerned when we see, as we did this year, an increase in underissuances. Approximately two-thirds of the increase in payment error rate is attributable to underissuance. For fiscal year 1998, underissuances increased from 2.47 percent in the previous year to 3.7 percent or half a billion dollars in benefits. When a family is denied benefits to which it is entitled or issued fewer benefits than it should have, this does not constitute a savings but a serious problem in program access. Denying needy families access to nutrition assistance is not a reform by anyone's definition, and it certainly violates the spirit and the intent of the Food Stamp Act.
Page 19 PREV PAGE TOP OF DOC Mr. Chairman, you mentioned the July 2 GAO report. And it highlights our concerns about the drop in the food stamp participation as well as the difficulty we face in monitoring this program with increasingly limited resources. I will not sit here and deny the fact that we didn't have a problem. We did. But under the leadership of Secretary Glickman, we have reinvented the regulation process which is a cumbersome process at best. We now expect that all of the welfare reform regulations will be published by the end of this year. We have a time slot, and we are expecting to get this accomplished no later than the first of December. The staff recognizes what they have to do. They are up to the task.
I would just like to say to you, oftentimes we don't compliment the staff for doing some really hard work. But this has been a very cumbersome process. When the Food Stamp Program started in the 1970's, the agency had over 2,000 employees. We are now somewhere around 1,600 employees. It is very, very difficult for us to get all of these regulations out, but we are going to get it done. We are proud to have families and children achieve better health and more secure lives through nutritious foods and a better diet.
As a nutrition assistance program and our major safety net, food stamps help to protect at-risk families from malnutrition and disease while at the same time supporting the U.S. farm economy.
Food stamps as I said earlier, are not a welfare. They are a means to escape it. They are not a lifestyle. Most recipients are off the rolls in less than a year. Food stamps are a transition, a short-term solution that helps people complete the welfare-to-work journey. The Department is committed to working closely with this committee and Congress and our State partners to ensure that everyone who is entitled to food stamps has ready access to them. While we can all take pride in the economic growth we have enjoyed in recent years as long as we can continue to have hunger in this country, our job is not over.
I know that we can count on your support as we always have to complete this vital unfinished business.
Page 20 PREV PAGE TOP OF DOC Mr. Chairman, that concludes my remarks, and I would be happy to answer any questions of you and other members of this committee might have at this time.
Thank you very much.
[The prepared statement of Ms. Watkins appears at the conclusion of the hearing.]
Mr. GOODLATTE. Thank you, Mrs. Watkins. I am delighted to hear of your and the Department's support for EBT interoperability. I wonder if you have had the opportunityI know earlier drafts of the legislation that I introduced yesterday have been submitted to the Department. I wonder if you have any comments on the legislation that I have introduced.
Ms. WATKINS. Mr. Chairman, we reviewed it. We reviewed your legislation. We look forward to working with you, and I think that the comments that we made earlier to you still stand. But we look forward to working on this. You are right. When you look at the fact that we have paper and then we transferred to new technology and we have to move the technology with what the old system did, a manual system did. You are exactly right. We want to work with you. I think that we can get it done.
Mr. GOODLATTE. Thank you. The 1996 Welfare Reform law allows States to operate simplified food stamp programs in which food stamp eligibility is determined based on a State's rules for temporary assistance for needy families, the TANF program. How many States have expressed an interest in operating a simplified Food Stamp Program?
Ms. WATKINS. Mr. Chairman, we have had a lot of States to look at different ways of operating the programs. We are working with those States. I am not sure of the exact number. When we have an exact number, we would be glad to provide that for you. Currently we have two States, Arkansas and Illinois. They received our approval to operate a simplified Food Stamp Program. There were nine other States that are using the simplified Food Stamp Program authority to operate a mini-structure.
Page 21 PREV PAGE TOP OF DOC Mr. GOODLATTE. Do you have those States in front of you?
Ms. WATKINS. The nine other States I don't have. But I would be glad to provide that information to you.
Mr. GOODLATTE. So other than the mini-program, Arkansas and Illinois, are they the only two States that have submitted requests?
Ms. WATKINS. Currently the only two States that have received our approval.
Mr. GOODLATTE. But you don't know if they are the only two that have submitted requests?
Ms. WATKINS. South Carolina and California are in the process.
Mr. GOODLATTE. Thank you. Recently the President announced initiatives for the Food Stamp Program to ensure that work pays better than welfare, to quote the President.
They include: one, making it easier for families to own a car and receive food stamps, two, new rules to make it easier for States to help working families by easing rules on reporting earned income, and three, new outreach guidelines to inform people about the Food Stamp Program.
Is there a Federal cost for these initiatives?
Ms. WATKINS. Yes, Mr. Chairman. We have looked at those costs and that is $250 million over a 5-year period.
Mr. GOODLATTE. So $50 million a year.
Ms. WATKINS. Not much.
Mr. GOODLATTE. Well, everything is relative. Do you expect the food stamp caseload to increase as a result of these initiatives?
Ms. WATKINS. Mr. Chairman, I hope that we are able to get the information out to those families who don't understand that they may be eligible for the program. That is our intent, to ensure that those legal immigrants who were added back to the program or those working families who don't understand that they may be eligible for the program, that that information gets out to them so that they know that they have access to these programs.
Page 22 PREV PAGE TOP OF DOC If you remember when we testified before, and we recognized that based on all of the conversation we were getting, many of these families were going to food banks and soup kitchens. We hope that the message gets out to those families, that they are still eligible for these programs despite the fact that they may be working. Many of the people who have gone to work and the information that we are getting are making minimum wage. They may still be eligible for benefits but don't understand. I would imagine that we will get some of those people back on the rolls who are eligible.
Mr. GOODLATTE. As this program was designed, do you have some estimates of how many people would be added to the program as a result of these efforts?
Ms. WATKINS. As a result of that, we had looked at new participants, particularly with the vehicle change, would have been something like 22,000.
Mr. GOODLATTE. But the otherthe outreach program, do you have anybody making projections as to what kind of increase we are going to be facing and the increased costs we are going to be facing as a result?
Ms. WATKINS. Mr. Chairman, we have not looked at increased cost on those. We have not looked at the numbers that you may get back. We have looked as those numbers of people who were eligible and no longer participating in the program, with the legal immigrants and those people that the vehicle maywhere that information may get to people who may be eligible. But we have not looked at that.
Mr. GOODLATTE. What kind of measures for success do you intend to employ with this program?
Ms. WATKINS. Mr. Chairman, we will look at the benefits of the educational initiative to see if that has any impact. We will look at the statistics, increase in participation, to see if that may have an impact.
Mr. GOODLATTE. Are you going to give the States any kind of target increases or required to expand caseload?
Page 23 PREV PAGE TOP OF DOC Ms. WATKINS. No, sir. What we will look at is targeted increases. What we will look at is the number of people who are not participating where they have those numbers now where we know that there has been a dramatic drop. We will look at those percentages, but we will not give States targeted numbers.
Mr. GOODLATTE. The Food and Nutrition Service is requiring cost neutrality for States' requests for waivers for income reporting rules based on the President's July 14 announcementor it is not requiring them as I understand it. Why is cost neutrality a factor for waiver request based on the 1996 Welfare Reform law but not on waiver requests based on the President's July 14 announcement?
Ms. WATKINS. Mr. Chairman, we are always asked to look at cost neutrality on all of our programs, not just food stamps but all programs. If you are going to look at waivers, you have to look at what the cost implications are.
Mr. GOODLATTE. Thank you. My time has expired. The gentle lady from North Carolina.
Mrs. CLAYTON. Thank you. Again, following up on the welfare reform, one of the things that we need to start with the premise is that Food Stamp and Medicaid were left as national programs and were not part of or exempt from being incorporated into the welfare reform. So as such there were some modifications.
I think the chairman spoke to one, flexibility, that you could do the simplified structure of individual States. But I think it is important to put on the record that the Food Stamp and Medicaid are the two remaining national programs that we have, indeed, that this Congress felt was essential to have that commitment. And it has flexibility to the extent either the waivers or to the extent that some States elect and get approval for the simplified areas.
A couple of things. First, I want to commend you about the new initiative. I also want to follow up on the areas of cost. I gather, I am assuming and I think it is relative, $250 million5 years, $50 million a year, I think those certainly are not excessive numbers to help feed more people. But is that an all-inclusive number, a cap for the vehicle as well as the shelter or does that respond only to one?
Page 24 PREV PAGE TOP OF DOC Ms. WATKINS. That is for both the transportation and for shelternot shelter. We don't have shelter; shelter's quarterly reporting, not shelter.
Mrs. CLAYTON. So there was not any adjustment on the shelter cap?
Ms. WATKINS. No.
Mrs. CLAYTON. Just the reporting
Ms. WATKINS. Quarterly reporting and the categorical eligibility are the only two.
Mrs. CLAYTON. Last term, I guess there were about 137 Members had introducedand I was one of them and Walsh on the Republican side and others were introduced to ''Hunger Has a Cure.'' as you remember, we were asking Congress really to look both at the shelter cap as well as a cost of vehicles because we found those both to be prohibitive for poor families to be able to access food stamps.
If a car was valued at a certain value, you know, you couldn't qualify for food stamps and yet if you didn't have a car, you couldn't go find a job. One of the changes in food stamps was predicated that you would be eligible for food stamps if you were indeed searching for a job. So again the inconsistencies of those barriers made sense to us.
The other one was raising the shelter cap. Can that be done administratively or something that must be done
Ms. WATKINS. The shelter cap is set by law. We cannot do that administratively.
Mrs. CLAYTON. That is probably why we had it in the bill. We did not reintroduce that this time. We were working around in some other areas. But again ''Hunger Has a Cure'' had a lot of support nationwide. It was obviously insufficient, and we never got to a hearing, but 136 or 137, maybe more than that really, Members on both sides of the aisle.
Page 25 PREV PAGE TOP OF DOC I know that I received hundreds of letters from various faith-based communities and nonprofit groups who felt that all of these issues needed to be looked at collectively. They were indeed themselves trying to make contributions through shelters and others and they knew the value of the Food Stamp Program. So trying to remove some of these barriers to make sure that people had it was part of the intent. Again, about 38 of us wrote to both the President and to Secretary Glickman relative to the New York issue when it first came out this last summer about the large number of people being denied food stamps.
I think that you spoke to how that might have come about, that people did not give people the proper information to say that as you are removed from the welfare rolls as required by the reform, that you still had a right, if you qualified income and were working, to get food stamps. So people were actually being denied by not giving them the proper information and just the hassle of having to go back to the office to get that. The attitude of people in dealing with them made it problematic. I know there have been to my count this week at least three national reports about the statusmy time is just about upabout that.
Would you just comment on why you think that the drastic decline in food stamps, is itI don't know how you account for it when there are still people needing food. Yet we have a 30 percent decline in the use of food stamps.
Ms. WATKINS. Mrs. Clayton, I think the GAO report addressed the concerns and addressed some of the issues that are involved in the decline in the food stamp rolls. They are some of the same things that we found, either anecdotally or some of the information that we gathered from States. Not only the strength of the economy, but in moving from TANF and moving participants from welfare to work, some of those families now have sufficient incomes. Some of them do not. Many of them, working poor families, don't realize that they are eligible. Sometimes they have gone in offices and have not been given the applications. Sometimes there has been difficulty understanding some of the changes in the program either by the caseworkers who sometimes don't understand or get misinformation, families get misinformation, and just all of the changes that have taken place.
Page 26 PREV PAGE TOP OF DOC We just need to make certain that everybody understands what the rules are, what their benefit opportunities are, and then know how to access the system. This is a little different position than we might have been looking at some years ago. I think when you make major changes on a system and people don't understand the system, then it is time for us to ensure that people understand what their options are and make sure that that information is available in a language that they understand. And that is the reason the President has taken the actions that he has taken.
Mrs. CLAYTON. Thank you.
Mr. GOODLATTE. Thank you, Mrs. Clayton. The gentleman from Indiana.
Mr. HILL. Thank you, Mr. Chairman. I want to pick up with what Congresswoman Clayton was talking about.
Normally you would applaud the reduction of people being on food stamps or welfare. But what I hear you saying when you make the statement that two out of five eligible working families actually get food stamps, you are saying that three out of five people are going hungry overnight. Would that be true?
Ms. WATKINS. Mr. Hill, that is correct. We are looking at some interesting dynamics here. We need to be able to put all of this together to figure out how do we help people. One of the things that you suddenly realize is that people may be going hungry and they are doing the best they can. They recognize and they are excited about job opportunities and the new prospects. This is a real success for them. But then they suddenly realize that they can't make the ends meet on the salaries that they have. But they don't understand that they may still be eligible for benefits.
Mr. HILL. What did you mean, if you could expand upon it, please, that some are discouraged from applying for food stamps?
Page 27 PREV PAGE TOP OF DOC Ms. WATKINS. Oftentimes what we found particularly in the States where we have been working very closely and monitoring those States and local programs is that they go into a welfare office and they are given information on jobs and employment opportunities, but they are not given information on food stamp eligibility, or they may have to go to different locations for each one of those. So if they go into an office looking for job opportunities, which they think that is what they are supposed to do, they don't knowand they are not told that, they have to go to another location to apply for food stamps, either in the same building or on a different floor or in another place, some other part of the city; or in rural areas, the same thing could apply.
So there are some real issues. And of course the law states that when you go in to apply for food stamps, you should be given an application when you go in. Sometimes people were told they had to go back two or three times before they were even given an application, or they could not get an application when they went into a food stamp office or an employment area for TANF or looking for other cash assistance benefits. They just were not told.
Mr. HILL. I think what I am getting at is do you believe that this is intentional?
Ms. WATKINS. I don't think this is intentional. I would not say that people would intentionally deny people an opportunity for food and nutrition assistance, but there are some concerns as to why these things are happening.
Mr. HILL. Could you explain the policy initiatives announced by the President on July 14 ?
Ms. WATKINS. What we have done in these initiatives, it will make it easier for working families to own a car and still receive food stamps. It will make it easier for States who are serving working families by simplifying the rules so that families don't have to come in and make all of those changes every month, but they can do that quarterly. And then the educational campaign will provide more opportunities for people to learn about the program and what their eligibility status is.
Page 28 PREV PAGE TOP OF DOC Mr. HILL. Thank you, Mr. Chairman.
Mr. GOODLATTE. Thank you, Mr. Hill. The gentleman from Oregon, I apologize. I jumped over you a moment ago.
Mr. WALDEN. Thank you, Mr. Chairman. No problem at all. Thank you, Mr. Chairman, for holding this hearing today on the operation of the Food Stamp Program. I appreciate your leadership on this issue and look forward to working with you from this day forward.
The State of Oregon has long been recognized for its success at reinventing welfare for recipients of cash and public assistance benefits. In fact, when I was in the legislature in 1989, we were launching and getting the results from a pilot project that had been launched the session before looking at how you break the cycle, how you get people the things they need to be able to change their lives in a dramatic way so that the next generation doesn't follow the preceding one.
I think that we have accomplished some great success in that respect. In an effort to relay Oregon's experiences in working with this program, I would ask that I be able to submit for the record testimony of Sandie Hoback who is the administrator of the Adult and Family Services Division at the Oregon State Department of Human Resources. I believe that Sandie Hoback has great knowledge of the Food Stamp Program and would like to share with the subcommittee her thoughts on how the program could be improved. I have her written statement, Mr. Chairman, that I would like to insert into the record.
Mr. GOODLATTE. Without objection we would be pleased to have that.
[The statement of Ms. Hoback appears at the conclusion of the hearing.]
Mr. WALDEN. Thank you, Mr. Chairman.
Then I would like to direct a question to our panel here, our witness. Some of what she says exemplifies what some of the States find, that is trying to figure out how to make a one-size-fits all Federal program be more flexible at the local level. I think that we have shown in a number of areas in Oregon, whether it is Medicaid reform or welfare reform or educational reform that we have been in the forefront trying to look at new models that will work. But she raises some issues here that I would appreciate just alerting you to, Ms. Watkins, and others.
Page 29 PREV PAGE TOP OF DOC She says that here is what I know does not work or does not work well in today's Food Stamp Program. The program policies are very complex and often do not make sense when you are trying to tailor services to meet the individual needs of recipients. Staff must spend way too much time in figuring out how to apply the complex policies. Clients are very often confused by them and little time is left over to work with clients do help them obtain a better economic status and improved nutrition.
Then the second point, the rules governing food stamp employment and training program are completely out of alignment with what is needed to run a successful program especially the lack of flexibility around how the allocations are used with 80 percent of the ENT dollars needing to be spent on the ABAWD population and only 20 percent remaining for all the clients. Because of the FSENT programs that are out of step with all other employment and training programs we are unable to partner with the delivery of services to food stamp clients similar to what we are doing with welfare-to-work initiatives.
Finally, she says, the quality control process drives us toward a system that focuses on minute detail rather than a system that focuses on positive outcomes for clients.
I would ask you to respond to those three points. Before I do, though, I would just say that we have tried in Oregon to create a system within our State government structure that really focuses not on micro-management from the bottom up, but rather the results. Did we achieve some results? Did we change some people's lives? Not whether we filled out the forms right and that direction but rather if we measure the outcome, is the program accomplishing anything?
So I throw that out. I know that you are making some changes at the Federal level, and I just appreciate your reaction, if you have some comments. Thank you.
Ms. WATKINS. Mr. Walden, I appreciate you asking those questions and bringing those forward from Sandie. We have worked with her and had lots and lots of conversations with the staff in Oregon. We are looking at a variety of issues that she has raised and have some concerns, similar concerns that she has.
Page 30 PREV PAGE TOP OF DOC I think that we all need to be open and look for as many creative ways that we can do things administratively. Obviously, if there are legislative kinds of fixes, we can't do that. But we do want to be as open as we can, as flexible as we can in working with people. QC is an issue that both the Secretary and I are committed to looking at; what can we do administratively to look at outcomes? That obviously is something the Vice President and the President have talked about and encourage us to get out and do more about. How do you measure outcomes rather than getting so hung up on whether or not I make an error when I fill it out? That is troublesome. QC is something that we hope that we can reinvent. That is something that we will continue to look at. The ABOD situation and training for and getting people to work is also a cumbersome process.
I guess I look at things to figure out how can I make it simple and easy so I can understand, so I can do it. That is something that we will continue to do. Both Julie, Sam, and I will continue to work aggressively with Susan and the staff to see what are the things that we can do to work with States to make it a program that is not so complex and complicated that people don't understand what this program is all about.
Mr. WALDEN. I appreciate that response, Mr. Chairman, because I think that is exactly what we all want. Where you have got some innovation at the State level, perhaps there are waivers that can be issued. This administration frankly has been good at that in other sectors to allow States to do it their own way, to deal with their own unique populations, and the needs they have. So I appreciate you working with her, and I appreciate your interest in helping us out there.
Mr. Chairman, I would just point out in reference to your own legislation that Oregon has had the electronic card for some time. Apparently it has a forward contract about 9 years out so that they could get a very reduced rate in going through this process. It is working, and I look forward to working with you on your proposal for a nationwide system such that again where States are out there and doing things right, that we don't put a No. 9 shoe on all of them that may not work. I know that you want to make that a system that works for everybody. I look forward to working with you on that.
Page 31 PREV PAGE TOP OF DOC Mr. GOODLATTE. We do. We will also make sure those folks in the far northern reaches of northern California can come into your district and spend some money there with you.
Mr. WALDEN. Mr. Chairman, we always like it when people come out of State and come and spend lots of money in our district. Thank you, Mr. Chairman.
Mr. GOODLATTE. I look forward to working with the gentleman. The gentleman from Virginia.
Mr. GOODE. Thank you, Mr. Chairman, and thank you for holding these hearings. I would like to ask the panel, you mentioned the situation involving legal immigrants. Nationally, how many in that category are onreceive food stamps on an annual basis last year, if you have that information?
Ms. WATKINS. Mr. Goode, if you give me half a second, we will find that information. If I can't find it, I will get it to you.
Mr. GOODE. You can't beat that. Let me go on in that same categorywell, not in the same category, but in a similar category.
How many refugees get food stamps a year in the United States, would you say? Do you have that category broken down?
Ms. WATKINS. I will have to provide that for you. We will be glad to get that information to you.
The answer to the legal immigrant is some 706,000 in the summer of 1997. So we will have to get that information for you, but we would be glad to provide that for you.
Mr. GOODE. The law experienced some change between 1997 and today.
Ms. WATKINS. That is right.
Mr. GOODE. What was the impact on the figures? Do you have any idea?
Page 32 PREV PAGE TOP OF DOC Ms. WATKINS. I don't have that information, but I will get it to you. We would be glad to provide you with those numbers.
Mrs. CLAYTON. If the gentleman would yield, two things happened. There was a modification, a denial of legal immigrants and then there was rectification last year on that. So I would like to amend this to see if there has been results since 1998 because what we did in 1995 was revisited in 1996. So there should have been a drastic decrease. I know the Hispanic community and others were concerned about this. Then Congress had a legislative initiative for an attempt to fix it.
Mr. GOODE. Mrs. Clayton would know better than I would, but I think a change was made before it all went into effect, is that correct, or did it go into effect and then the change was made?
Ms. WATKINS. We had the change. We reinstatedwe had some monies and we reinstated some portions of the legal immigrants. That was a change. So we need to provide you the data that shows you before welfare reform, after welfare reform, what the changes were at first when we had the significant drop for legal immigrants, what happened when we restored monies for some legal immigrants, and what happens for this year when we restore it back, some more money to reach some more legal immigrants so that you have a group of years here so we need to provide you with that information. We can do that.
Mr. GOODE. If you could do it on a monthly basis, we could probably see where it dipped or whether it was in anticipation of a changing rule.
Ms. WATKINS. We would be glad to do that.
Mr. GOODE. Let me ask you now with regard to refugees. Do you have that, the figures on
Ms. WATKINS. The refugees, yes. 265,000 refugees in 1997.
Mr. GOODE. I would assume that figure would change like in this year when more people came from Kosovo or certainly Central America after the hurricane.
Page 33 PREV PAGE TOP OF DOC Ms. WATKINS. That number would change. We can provide you that information as well.
Mr. GOODE. Let me ask you this. Those that seek asylum, are they classified as refugees, or if they get asylum by immigration, how are they classified?
Ms. WATKINS. They are in that count that I gave you. They are in the refugee count.
Mr. GOODE. If you could get that information, I would appreciate it.
Ms. WATKINS. We would be glad to provide that for you.
Mr. GOODE. Thank you. I yield back.
Mr. GOODLATTE. I thank the gentleman. I am also interested in the same information that the gentleman has requested. So if you could forward it to the committee, we will make sure that all Members have an opportunity to see it.
Ms. Watkins, since you have identified the reduction of the food stamp caseload as a problem, and I must tell you while I think there are problem areas always to deal with, where illegal barriers are raised in some instances to people who are receiving food stamps, we have to be on our guard to do that. But nonetheless, I think most of the reduction is a sign of people taking responsibility for their own lives, for an economy creating millions of new jobs, and lifting people up and out of conditions that cause them to want to have food stamps before. Nonetheless, you have identified as a problemI wonder if you feel that the President's July 14 announcement cures the problem?
Ms. WATKINS. Mr. Chairman, I don't think that cures the problem. I think that is the first step.
Mr. GOODLATTE. Well, let me ask you this. If, as you have identified, there are millions of Americans in desperate situations, why would the President propose something that is only a first step that doesn't cure the problem?
Page 34 PREV PAGE TOP OF DOC Ms. WATKINS. I think you have to start somewhere. I think there are some things that we can do administratively, but there are some things that are legislative fixes that perhaps are needed.
Mr. GOODLATTE. Well, with regard to the budget that the administration submitted to Congress in this area this year, there are no significant fixes legislatively that the administration has proposed for this problem. Why is that?
Ms. WATKINS. Mr. Chairman, we have to identify what some of those problem areas are. We made and developed a budget based on the current data that was available for us. Obviously, we are seeing some different kinds of things happening. While you may have anecdotal information, you cannot base all of your budget decisions and financial decisions on anecdotal information. You need facts.
Mr. GOODLATTE. Let me ask you then. Are you saying that the conclusions that you have expressed to us today about a desperate situation are based upon anecdotal evidence?
Ms. WATKINS. I think that we have more definitive information now than we had, say, a year ago on where we were and where we are with some of our programs as a result of welfare reform. I think as you get more solid information and definitive information, you can then begin to assess what you need to propose. And I think as you look at it and we have indicated to you, you also have to have offsets and try to figure out what those other issues are. Obviously, we will continue to look for ways to improve the system and look for ways to finance a system if we think there are improvements, other improvements needed.
Mr. GOODLATTE. The President had a $1.25 billion rescission in the Food Stamp Program this year.
Ms. WATKINS. As I indicated, we base that information on the data that we had. Things have changed. We have new information. I think that we are in a better position to make recommendations where we did not have that information. With welfare reform and changes taking place and people were trying to understand the system, what this was all about, obviously there were a lot of things going on. It takes a lot of information to be able to make some good recommendations.
Page 35 PREV PAGE TOP OF DOC We would not want to make recommendations or decisions on knee-jerk reactions but based on good solid information. That is where we are and will continue to look for positive ways to make changes in this program as in all of the programs that we are responsible for administering. One of the things that we have tried to do is look at this nutrition assistance, all of other programs, as a business. We look at it as a nutrition business and in doing so, you have to do that with some good solid information. We would not, the three of us would not make a recommendation to anyone unless we had some good solid information. We will continue to look.
Mr. GOODLATTE. And I applaud that and I approve of that. But the President, on July 14, presumably had the same information that you share with us today. On July 14, he made, I think, an announcement that would not go to the same lengths that you seem to suggest need to be gone to if we have a problem of the depth that you think the information would indicate.
I don't want to continue the debate right now because we have a vote on. I know Mrs. Clayton would like to ask a bunch more questions before we recess for the debate. I don't want to hold you after. We will recognize Mrs. Clayton. We thank you.
Mrs. CLAYTON. I just want to follow on the same line of thought and jumping ahead on someone else's testimony. And just to share with you, there is a bipartisan concern about the underutilization of the existing programs we have now.
Representatives Johnson, Archer, and Shaw noted that the caseload data from the Food Stamp Program and the Medicaid Program seem to indicate that many adults and children who meet the demographic income and reach those standards for these benefits are not receiving them. Now, there is something there. It may be money, but what I am looking at as I sit in the Budget Committee, there is an underutilization of the dollars as well. Apparently, this, what Representatives Johnson, Archer, and Shaw are referring to here, they are looking at caseloads.
Page 36 PREV PAGE TOP OF DOC I am not sure what the President has proposedand I accept your observation that that is not the complete picture. I know it is inconsistent. It is not complete when one has a cure. I can tell you there are more than 130 people who propose that legislation knew that wasn't a complete fix either. But I think what we want to emphasize is that the economy indeed has been robust, and we are thankful for that.
Many people are off of food stamps because we have a good economy. You cannot explain away 30 percent of the reduction of food stamps in such a drastic decline when there is an increase of people needing food. Something is not consistent with that information. So I want to put on the record that we need to do more whatever that is, information, explanation, making sure that States do what they should do, making sure that people have the kind of education because there are people who need the program that are not getting it.
I can testify in eastern North Carolina, in my district, many parts of this country, we are not enjoying a good robust economy. So Mr. Chairman, I thank you for allowing me to put that in the record.
Mr. GOODLATTE. I thank you for your comments. Ms. Watkins, I thank you and Ms. Paradis and Mr. Chambers for your testimony here today. We look forward to continuing to work with you on all of these issues regarding programs under your supervision, and we will continue the hearing with the second panel after the votes. Thank you very much.
Ms. WATKINS. Mr. Chairman, thank you so much and Mrs. Clayton for all of the hard work that you do. We look forward to working with you. We do have a lot of issues and we look forward to working with both you, the committee, and the States. We have a lot of work to do. We are very encouraged with what the States are doing and look forward to making this program the best that we can make it. Thank you very much.
Mr. GOODLATTE. Thank you. The subcommittee will stand in recess.
Page 37 PREV PAGE TOP OF DOC [Recess.]
Mr. GOODLATTE. We now would like to welcome our second panel of witnesses. Mr. Clarence H. Carter is commissioner of the Virginia Department of Social Services; Mr. Douglas E. Howard is the director of the Michigan Family Independence Agency; Ms. Linda G. Fox is the secretary for the Maryland Department of Human Resources; and Mr. Larry Goolsby is the senior policy associate of the American Public Human Services Association.
I would like to welcome all of you, and we will start with Mr. Carter. We are glad to have a fellow Virginian here.
STATEMENT OF CLARENCE H. CARTER, COMMISSIONER, VIRGINIA DEPARTMENT OF SOCIAL SERVICES
Mr. CARTER. Mr. Chairman and members of the committee, I am pleased to be with you this morning. I would like to bring you greetings on behalf of Governor Gilmore and Health and Human Resources Secretary Claude Allen.
I have submitted the full text of my remarks to be submitted into the record. If I could, I would like to direct my time to a couple of specific points contained in the text.
The one thing I would like to read this morning is the compact of the Food Stamp Act, and I would just like to read briefly the declaration of policy statement in the Food Stamp Act.
It is hereby declared to be the policy of Congress, in order to promote the general welfare, to safeguard the health and well-being of the Nation's population by raising levels of nutrition among low-income households, Congress hereby finds that the limited food purchasing power of low-income households contributes to hunger and malnutrition among members of such households. Congress further finds that increased utilization of food in establishing and maintaining adequate national levels of nutrition will promote the distribution in a beneficial manner of the Nation's agricultural abundance and will strengthen the Nation's agricultural economy as well as result in more orderly marketing and distribution of foods.
Page 38 PREV PAGE TOP OF DOC To alleviate such hunger and malnutrition, a food stamp program is herein authorized which will permit low-income households to attain a more nutritious diet through normal channels of trade by increasing food purchasing power for eligible households who apply for application, or who apply for participation.
I would also commend to your attention the seven principles that Deputy Under Secretary Watkins outlined in her presentation, and using those two as a backdrop, I guess I would ask how a program that we measure only for payment accuracy, how we determine whether or not any of those goals are met.
We could deliver the food stamp benefits without one single error and we wouldn't know whether or not a child went to sleep hungry in the evening or whether or not we moved one family towards self-sufficiency.
So it seems to meas I was growing up, my father said to me on many occasions when you are up to your elbows in alligators it is difficult to remember that your original intention was to drain the swamp.
If our original intention here is to provide for healthy nutrition of low-income families, should we in some way be measuring whether or not the program accomplishes that goal, and we currently are not.
The second point that I would like to make is that I understand the emphasis that food stamps was not to be part of welfare reform, but I think the States have made monumental progress, and the principle of moving people towards self-sufficiency and not warehousing them in a condition of public dependency is appropriate public policy.
So we think in that regard that it would be appropriate for food stamps to be aligned more with the goal of self-sufficiency. Again, the things that we measure in the food stamp program currently don't let us know that we are getting one family towards not needing those services.
Page 39 PREV PAGE TOP OF DOC I would close with asking for some increased use of waiver authority. You know, States use the waiver provisions of AFDC to allow us to kind of build the foundation for what welfare reform ended up looking like in the Nation, and we think that by broadening the waiver ability in the Food Stamp Program, it could also allow States to do some experimentation so we could make programs tailored more towards its public assistance programs.
So we think by adding some performance measures, which would determine or help us know that we are meeting the original intent of the program, and also by trusting States who, I believe, have proven that we have the ability to make these programs work for the citizens of each State, that we can move the Food Stamp Program more in line with what we are doing with welfare reform.
Just two closing points: One, Mr. Chairman, is that I too consider the caseload decline not to be something which is a bad thing. We think it is actually something that is pretty good. Our public assistance caseload in Virginia has decreased by about 51 percent during welfare reform, and we think the fact that we are moving families along the way towards self-sufficiency is something that is good. It is not malicious. But I also would tell you that I would support the case workers in Virginia by saying we encourage getting benefits to every eligible individual, and so there is nothing going on at the case worker level which would suggest that we are making it difficult for individuals to obtain benefits.
I think one of the reasons that some of the information was so anecdotal and can't be more solidified is because we do not measure any of those kind of things. So we would suggest that there are some other measures that we could put in place that would make the Food Stamp Program better conform with welfare reform.
Thank you for the opportunity to share with you this morning.
[The prepared statement of Mr. Carter appears at the conclusion of the hearing.]
Page 40 PREV PAGE TOP OF DOC Mr. GOODLATTE. Thank you, Mr. Carter. Those comments are helpful.
It is good to know that efforts are ongoing, and I expect they would be ongoing because many of the same people who were signing people up for benefits prior to the changes in the law are continuing to sign people up today, and I can't believe that their attitude, in terms of making sure people get benefits they are entitled to, would change.
Mr. CARTER. That's exactly correct.
Mr. GOODLATTE. Next we would like to welcome Mr. Howard.
Let me remind all of the witnesses that your testimony will be made a part of the record. We were very liberal with Ms. Watkins because we wanted to make sure the administration had a full opportunity to air their views on this subject, but we hope you will limit your comments to 5 minutes, and I may point that out to you if you go too far beyond that.
So Mr. Howard.
STATEMENT OF DOUGLAS E. HOWARD, DIRECTOR, MICHIGAN FAMILY INDEPENDENCE AGENCY
Mr. HOWARD. Thank you, Mr. Chairman. I would like to thank you and the members of the subcommittee for the opportunity to speak today. I am Doug Howard, director of the Michigan Family Independence Agency, which is an umbrella human services agency.
We work with food stamps as well as other issues affecting children and families and adults.
Let me start by saying that the Food Stamp Act of 1977 is a program that we believe is very essential to millions of our Nation's less fortunate citizens. It provides a food and nutrition safety net that States do value. We see it both as a support to working families, but we also recognize that it is critical to those without income or to those on limited fixed income.
Page 41 PREV PAGE TOP OF DOC When we look at the programs we administer, we recognize that many Federal-funded programs are intended to either provide a safety net or to provide transitional assistance. However, these programs often send mixed messages on personal responsibility and independence, and we have seen a growing trend in administrative complexity. It is to the point where I see in daily examples clients in our frontline staff being very overwhelmed about the programs they have to administer.
In the early 1990's, Michigan Governor John Engler moved to reform welfare in our State, focusing on a system of work and work supports rather than a system of income maintenance. Michigan was one of many States that were granted waivers from policies governing the former Aid to Families With Dependent Children program.
As a result, we have seen since 1992 over 217,000 Michigan families leave welfare cash assistance due to earnings from employment. We believe we know how to design effective programs that help meet the needs of families and moving to independence while providing supports to help them in their transition.
We also attempted to secure waivers in the Food Stamp Program but met with different results. Many of our waivers were denied, and over time we really see two reasons; one was essentially, initially, because of the issue of harming clients.
I think the views of the States would be that if we submitted a waiver where we saw a greater good, that there could be a benefit to large numbers of individuals. If there was a counterbalance of harming even one or a limited number of individuals, those waivers would be denied. I would argue that that, in essence, is a lost opportunity for program improvement.
Since the passage of Federal welfare reform, the 1996 PRWORA Act, we have seen a big attention from USDA around the issue of cost neutrality, looking at policy initiatives that is not costing more in any given year than they would have under the prior policy.
Page 42 PREV PAGE TOP OF DOC Prior to PRWORA, the Federal Government looked at cost neutrality as a whole over a negotiated time frame for multiple programs. We found this multiyear approach to cost neutrality as providing much greater flexibility, giving us a much more realistic chance of implementing programs that could make a difference and bring a consistency to programs. We saw that as a benefit both to States and to families.
One example of a denied waiver we had was in the area of shelter deductions. Currently, there is a significant standard of proof around shelter costs and utility obligations. We have received from the Federal Government 75-page guidance on how to compute the excess shelter part of the budget, and we have received 24 policy memorandums on the same subject. This is a high-error-prone element that we struggle with. Staff spend lots of time on it, and we see this as one example where complexity has overcome flexibility.
I would also like to state for the record States also share the concern about the inability of current and potential clients to access food stamp systems. I think some of the policies we have in place do create an indirect dampening effect. For example, staff, faced with the possibility of making an error, look at the current $5 tolerance in an error and feel like they must repeatedly verify every aspect of the family situation.
For working families, time off work, repeated program reporting requirements can be too much.
What are we doing? We do have local offices with extended hours. We do take steps to encourage families to take advantage of food stamps, and we do view food stamps as an effective transitional support.
We do applaud the administration's recent efforts to raise the tolerance from $5 to $25, as well as other changes, but if I do quick math and think about our environment of workessentially, a rule of thumb is $3 in income effects about $1 in food stamps. So a $25 tolerance would be equivalent to about $75 in monthly income. If I divide that by $6 an hour, we are looking at a variance of 12 1/2 hours per month, roughly 3 hours a week, in an area where we are really trying to encourage people to take advantage of work. Sometimes in jobs that are stepping them up, a 3-hour tolerance is not very significant.
Page 43 PREV PAGE TOP OF DOC Governor Engler recently wrote to Secretary Glickman urging that FNS test for improved outcomes by allowing Michigan and other States unprecedented authority to administer the Food Stamp Program. He conveyed that current food stamp rules predate Federal welfare reform and often pose conflicts for staff. The unfortunate message we send to staff is that the perfect case in food stamps is one in which the client never goes to work, so that we don't have to deal with income; they never move or get better housing, so we don't have to deal with shelter or utilities; and they never get a better car. All these things affect eligibility and accuracy.
We would encourage Congress and USDA to give us the opportunity to look towards some additional flexibility and look forward to those future opportunities.
I would like to thank you for the chance to discuss this with you today and look forward to joining my colleagues in answering any questions you might have.
Mr. GOODLATTE. Thank you, Mr. Howard.
[The prepared statement of Mr. Howard appears at the conclusion of the hearing.]
Mr. GOODLATTE. Ms. Fox, we are pleased to have you with us.
STATEMENT OF LYNDA G. FOX, SECRETARY, MARYLAND DEPARTMENT OF HUMAN RESOURCES
Ms. FOX. Thank you. Good morning, Mr. Chairman, members of the committee. I am Linda Fox. I am secretary of the Maryland Department of Human Resources, and today I would like to speak to you about Maryland's attempt to conform the Food Stamp Program and make it more responsive to our vision of welfare reform, the opportunities available through our local Departments of Social Services, and most importantly, the individual needs of our customers.
I would also like to outline how some of the current legislative and administrative requirements of the Food Stamp Program hinder our attempts, but more importantly, limit our customers' efforts to use the program to become as independent as possible; to really use the program as a nutritional safety net, but also as a major support to their efforts to become and remain independent.
Page 44 PREV PAGE TOP OF DOC Our vision of welfare reform is a Maryland where people independently support themselves and their families, but currently the Food Stamp Act and regulations do not support that vision.
To realize our vision, we need greater flexibility in the Food Stamp Program either through changes in legislation or through expanded waiver authority. We also need some practical options for developing a simplified Food Stamp Program and modifications to the methodology used to calculate cost neutrality.
We strongly support the APHSA's recommendations that are going to be described in more detail by my colleague, and we want to point to the fact that those recommendations would help us develop a more effective system.
There are some examples of how the current program blurs our vision of welfare reform. We have not been able to use the limited waiver authority to support our welfare reform initiatives. When we began welfare reform, we asked to exclude the value of one vehicle per household, regardless of whether or not the family received cash assistance. We thought this was a practical and effective way to allow a household to maintain employment while continuing food stamp participation.
The waiver was denied because it did not meet cost neutrality requirements.
We have all heard stories of families denied food stamps because they own a car. We certainly applaud the recent efforts of the administration to extend categorical eligibility to those who leave welfare for work and to enable them to continue to own cars. However, there are many families that are low-income, need food stamps, but have never been on welfare or won't benefit otherwise from the TANF program.
Recently we had a mother come in. The father had abandoned the family. They didn't get cash assistance because they had a small amount of income. They would have been eligible for food stamps, but the father had left behind a car. The car was in joint title to the mother and the father. She couldn't sell the car, but the car made her ineligible to food stamps. But she couldn't feed the children sliced car for dinner.
Page 45 PREV PAGE TOP OF DOC One of our welfare reform initiatives that was initially approved was to use a flat 50 percent self-employment deduction. We thought this was an effective way to allow the self-employed to retain a little more income when determining eligibility for food stamps and to make calculations easier and record-keeping easier for both case managers and customers. When we requested an extension of this waiver, it was denied because it conflicted with the Food Stamp Act.
When the simplified Food Stamp Program was offered, we worked with the contractor provided by FNS to determine cost neutrality, but it was readily determined that the program we envisioned would not meet the cost neutrality requirements, and we also realized we would be operating two separate food stamp programs that would impose a considerable administrative burden on our frontline staff.
Our efforts to better align our success in welfare reform efforts have been restricted by unrealistic and impractical regulations that do little to assist our customers. We really think that some change in law and regulations is needed. However, in the interim, before those changes are made, we are certainly energetically engaging in the nationwide effort to make sure that all eligible persons do benefit from the Food Stamp Program. We have had just as many people walking through our front door today as prior to welfare reform, while fewer people actually obtain cash assistance.
One of our diversionary strategies has been to help people get food stamps, and we certainly support the President's initiative to expand the program to meet the needs of the working poor. We have engaged in extensive outreach to make sure that those who are entitled do indeed benefit from the program. Recently we have contracted with two of our universities who are attempting to reach everyone who has left our cash assistance program in the last 6 months and everyone as they leave to make sure they understand and are getting the benefits to which they are entitledspecifically, food stamps, but also Medicaid, child support assistance, child care assistance, the earned income tax credit, et cetera.
Page 46 PREV PAGE TOP OF DOC The initial response to this outreach has been very, very good and we have had lots of folks contact us to get those benefits.
Basically, we think that the guiding principles of the program need to be a focus on promoting independence, simplicity of program design, flexibility for local circumstances and innovation.
We really would like to see the program reformed and we want to thank you for the opportunity to speak today and certainly would like to work with the committee in the future.
Mr. GOODLATTE. We thank you, and we look forward to working with you as well.
[The prepared statement of Ms. Fox appears at the conclusion of the hearing.]
Mr. GOODLATTE. Mr. Goolsby, glad to have you with us as well.
STATEMENT OF LARRY GOOLSBY, SENIOR POLICY ASSOCIATE, AMERICAN PUBLIC HUMAN SERVICES ASSOCIATION
Mr. GOOLSBY. Well, thank you, Mr. Chairman and members of the subcommittee for the chance to testify today. I am Larry Goolsby, senior policy associate with the American Public Human Services Association, APHSA, a bipartisan organization representing the State human service administrators who administer the Food Stamp Program; and I certainly want to thank the three directors and the commissioners who have come here today to share their very pertinent viewpoints and information with you.
Last September, APHSA testified before this subcommittee and called for urgently needed food stamp reforms to simplify the program so that it can better meet the needs of the low-income families and adults it serves. Since then, APHSA has adopted policy resolutions, met with Hill staff, administration officials, and conducted Hill forums, all in an effort to make the case for broad and comprehensive Food Stamp Program reforms.
Page 47 PREV PAGE TOP OF DOC Last month, President Clinton announced several food stamp administrative changes that we have called for, including allowing more TANF families to keep a reliable car while getting food stamps; reducing the paperwork burden on working families so they do not need to miss work to report and verify income repeatedly; and increasing the threshold of payment accuracy from $5 to $25.
APHSA commends the administration for making these changes. They are an important first step toward comprehensive reform of the program.
State administrators are calling for similar but bolder changes in a variety of areas that I will briefly describe. A full description of our proposals is in our written testimony and attachments.
Our first proposal is to increase food stamp policy flexibility through waiver authority. Present food stamp law evolved in an era when few recipients worked and most received monthly Aid to Families With Dependent Children checks.
Since the enactment of welfare reform, thousands of families have made the transition from welfare to work so that now food stamp-only households make up an increasing share of all cases. For these working families, federally mandated, detailed reporting of income changes places unnecessary burdens on them and their employers, and unrealistic asset limits deprive most of them of a reliable car. To serve the new influx of working families, the Food Stamp Program must be simplified and must be allowed to use the successful designs in the TANF program.
Because States serve their low-income families through so many different approaches, the best way to accomplish this is through expanded program waiver authority. Current waiver authority is so constrained by exceptions, conditions, and unrealistic cost neutrality rules, that it is no longer useful and numerous State waiver requests have been denied.
Even the simplified Food Stamp Program option enacted to let States achieve a degree of food stamp conformity is saddled with the same problems, and as you heard from Under Secretary Shirley Watkins, only a small handful of States have been able to take advantage of it.
Page 48 PREV PAGE TOP OF DOC Congress and the administration should immediately broaden current waiver policy and allow new demonstration programs.
We also urge a reduction in program barriers for the elderly. They are one of the most underserved groups in the food stamp caseload, and the paperwork burdens and the other obstacles they face should be reduced.
Currently, many elderly recipients receive the $10 minimum benefit, hardly an amount worth the aggravation of the going through the eligibility process. Unlike the more flexible Medicaid program, recipients are not eligible for food stamps if they have saved cash, have covered burial costs or transferred resources for this purpose. The Food Stamp Program instead exempts only a $1,500 funeral agreement and a burial plot.
The elderly must also bring in receipts for all medical and prescription drug costs rather than use a standard medical deduction. APHSA calls for a $25 minimum allotment, automatic eligibility for those elderly also receiving SSI, an increase in the elderly resource limit coupled with more reasonable burial allowance rules, and a standard medical expense deduction.
For the working poor, elderly or disabled, the Food Stamp Program has grown so complex and inflexible over the years that it no longer meets the needs of the low-income families and adults it aims to serve. Something must be done to address the situation.
We acknowledge there are concerns about the decline in food stamp caseload. There are many possible reasons: a good economy, the dramatic success of State Welfare-to-Work efforts, the series of eligibility changes since 1996, especially immigrant benefit changes with conflicting TANF and food stamp eligibility messages, and the paperwork burdens and participation barriers we are identifying today.
States are undertaking extensive studies and assessments of both TANF and food stamp outcomes, and many Federal and advocacy organizations are conducting ongoing analyses as well.
Page 49 PREV PAGE TOP OF DOC Should these efforts suggest policy changes that may be necessary, APHSA looks forward to working with the subcommittee to address those recommendations.
We must also streamline the quality measurement system. The Food Stamp Program has long been measured almost exclusively on the total and predictable accuracy of reported income levels, but many entry-level jobs are short-lived and their wages fluctuate, causing, in turn, frequent changes in child care, child support and other household financial factors. The result is that as more food stamp recipients go to work, penalties for income calculation errors increase.
APHSA calls for bold reforms to improve the quality measurement system and this step, along with simplifying the program, would also reduce the currently high administrative costs which are now at a record 18.5 percent of a typical case's benefits.
If I may quickly mention two additional issues, as we testified last September, the food stamp, employment and training program sets aside 80 percent of its funds for single, childless adults, but in fact, few of these adults remain on the food stamp rolls. States have thus been forced to reduce E&T services to families, yet cannot usefully spend most of their allocation. We should be increasing job services to all who could benefit, not cutting back. APHSA strongly urges the removal of this 80 percent restriction.
Finally, the food stamp administrative cost allocation changes enacted last year have resulted in a net reduction in funds available for food stamp administrative use. This fiscal year alone, States will lose $226.6 million, even as administrative demands steadily increase.
APHSA urges that the cost allocation law and its assumptions be completely reassessed so that equity can be restored to the Federal-State administrative partnership.
Thank you very much, Mr. Chairman, for this opportunity to testify. APHSA and the State human service commissioners look forward to working with you on the changes we propose, changes we believe can greatly improve the Food Stamp Program for both administrators and participants.
Page 50 PREV PAGE TOP OF DOC I will be glad to answer any questions for you now or at a later time.
[The prepared statement of Mr. Goolsby appears at the conclusion of the hearing.]
Mr. GOODLATTE. Thank you, Mr. Goolsby.
I want to thank all four of you for your testimony and for keeping close to the 5 minutes on your testimony. It was great.
Mr. Carter, would the Commonwealth of Virginia support an initiative that allows the States to establish their own rules for the Food Stamp Program within certain parameters, much like the States now have for the welfare program, TANF?
Mr. CARTER. Mr. Chairman, we absolutely would. We think that not only in the Commonwealth of Virginia, but across the Nation, States have proventhey have taken a very innovative approach to the self-sufficiency of its citizenry; and we think that that kind of authorityif we could combine our cash assistance program with the Food Stamp Program, it would allow us to have a consistent social safety net designed and operated along the same parameters. So we absolutely would support that.
Mr. GOODLATTE. Very good.
Mr. Howard, same question.
Mr. HOWARD. Yes, absolutely. I think weas Mr. Carter stated, the same answer in our State. We believe we have proven that we can address the needs of individuals and families and children. We believe that there are ways to structure that so the parameters can still recognize the value of having a national safety net, while allowing some unprecedented flexibility for States.
Mr. GOODLATTE. And, Ms. Fox, I know you have indicated the same in your testimony.
Ms. FOX. Yes.
Page 51 PREV PAGE TOP OF DOC Mr. GOODLATTE. Is there anything you want to add to that?
Ms. FOX. No. I just think if we have the same type of flexibility that we have had in the TANF program in the Food Stamp Program, we could do a better job for the people we serve.
Mr. GOODLATTE. Thank you.
Mr. Carter, you indicated that Virginia has seen a reduction in the number of families receiving food stamps, and I think you indicated your agreement with me that that is generally a positive development.
I wonder if you have any more insight you would like to share with us as to why you think that reduction has taken place.
Mr. CARTER. Well, I do think that with the coming of welfare reform, we have changed the discussion on what the social safety net ought to be. I mean, originally I think the social safety net was intended to be a trampoline and not a hammock, but the way that we had operated it over the past 35 years it very much became a hammock that trapped people in a cycle of dependency; and in the discussion that led us to welfare reform, it actually got us back to what the original intent of the social safety net was.
In addition, I guess I would ask the questionyou know, we talk about this caseload declineis it possible that there are individuals and families that could meet the arbitrary threshold that would make them eligible for a program, but they just choose not to take advantage of the program? I mean, I think there is such a thing as free will in this country, and there are millionsor I think hundreds of thousands of Americans who, whether or not they meet the threshold, they have determined they can make their lives work without government assistance; and I don't think we ought to see that as a bad thing, but as a positive thing.
Mr. GOODLATTE. I agree with you.
Page 52 PREV PAGE TOP OF DOC Mr. Howard, what has Michigan experienced with regard to caseload? I know from what I have heard from your governor that it has declined ,and he is very proud of that. I wonder what you would say about the reasons for that and how you view that development.
Mr. HOWARD. Yes. We have seen about a 62 percent drop in our cash welfare caseload. When we look over on the food stamp caseload, if we segment those who have received public assistance and those who haven't, we have really seen our food stamp caseload for those nonpublic-assistance families stay fairly flat over essentially this entire decade. There have been some fluctuations. We have seen a very significant drop in the public-assistance-related food stamp side, those who were receiving obviously cash welfare.
I think I would echo some of Mr. Carter's comments. We know from experiencewe have families tell us that they don't want to deal with the system. They know they will struggle, but whether you call it pride or whether you call it not wanting to deal with the bureaucracy, they make the decision not to participate.
I think another interesting thing that has just recently emerged, we had a discussion at a recent States meeting around an emerging Urban Institute study, which for the first time is really trying to look at families within the welfare system versus other low-income families not in it. I characterized it kind of offhand as moving away from the traditional ''is the glass half empty'' or ''is the glass half full,'' and recharacterized it as maybe we are looking at the wrong size glass; because, actually, participation for most States among former public assistance families is still significantly higher than those families who have never entered the system.
So I don't know that we are necessarily scaring people away. I think there is an issue of there are conscious decisions out there about not using the system.
Mr. GOODLATTE. Ms. Fox, same question.
Ms. FOX. In Maryland our cash assistance caseload has decreased by 64 percent since January of 1995 through last month. Our food stamp caseload over the same time period decreased by about 20 percent.
Page 53 PREV PAGE TOP OF DOC I think we are seeing some people making a choice not to participate in the program, even though they understand that they are eligible.
I think there has also been some confusion in the community about who is and who is not eligible, and we have been trying to address that.
For example, within my department we have an office for new Americans and we have commissions that serve Hispanics, Pacific Americans and migrant and farm laborers, and we find that there was a lot of confusion about which immigrant groups were eligible at which time. We have tried to clarify that information.
Every time we do outreach and public speaking engagements we try to explain that we are trying to help families become independent, and that that means becoming employed and becoming independent of cash assistance first; but moving toward independence can include using food stamps for nutrition assistance and using medical assistance, et cetera, that it is kind of a package deal and we encourage the use of the program.
Mr. GOODLATTE. Thank you.
Mr. Goolsby, from your organization's experience in dealing with all of these State agencies and their experience in dealing with the Department of Agriculture, how long does it take to get a decision from the USDA on a waiver application?
Mr. GOOLSBY. Mr. Chairman, I think that varies from case to case. I think usually, from what we hear, there are a number of months that elapse, sometimes even longer. Usually, though, I believe it is fair to say, it does take 4 to 5, 6 months.
Mr. GOODLATTE. Thank you. Do any of you want to add to that?
Mr. CARTER. No, Mr. Chairman. We have not attempted to use the waiver processthe very narrowly constructed waiver process. We couldn't comment.
Mr. GOODLATTE. OK. Thank you.
My time has expired. The gentle woman from North Carolina is recognized.
Page 54 PREV PAGE TOP OF DOC Mrs. CLAYTON. Thank you. Those who represent the States, I would like to ask the following two questions. You have commented on this. I would just like for you to go a little further.
All three of you have acknowledged that there has been a large drop in the caseload of food stamps. How do you reconcile that with the high level of the working poor, that you have moved people from welfare to work, but yet as we look at your demographics in all of your States, we see the working poor.
The answer of some people electing not to do that, that has always been true. There will always be free will, Mr. Carter, so that is not an assumption of what I anticipate from you. I want you to analyze how it is that you have movedand I will just share with you where I am coming from. I am trying to acknowledge the success of all the States moving people to work, and that is a good thing. I am trying to make a distinction between the working poor struggling and not getting food stamps. How do you reconcile that, all three of you?
Then if you do, tell me what specific stepsand I appreciate what I heard from Ms. Fox. She understood there are some variances. Tell me, if you are doing othersthe information, I would appreciate. What are you doing, without making a cavalier assumption that people don't want it, to try to make sure that the working poor that you have successfully moved are now taking advantage of feeding their families, if nutritional adequacy is part of the program?
Mr. CARTER. Mrs. Clayton, I would say the first part of my response would be that we did an analysis, and only about 16 percent of all of those individuals who fell below the poverty level in the Commonwealth of Virginia access our public assistance programs. And so, therefore, from the beginning, a significant segment of the population that is eligible for it makes some kind of decision not to.
While we don't have an outreach program for public assistance programs in the Commonwealth other than children's health, we have a very active and aggressive case worker operation in the Commonwealth which wants to provide benefits for any individual that would be eligible for it.
Page 55 PREV PAGE TOP OF DOC So I don't think that we are being the least bit cavalier when we suggest that there are a large number of Virginians and Americans who simply have made the determinationwhatever the determination is, whether it is based on not wanting to deal with the bureaucracy, not wanting to have a public assistance stigma, whatever that isthat have made the determination that they can make their life work; their personal infrastructure is constructed in such a way that they can make their life work without this benefit.
Mrs. CLAYTON. Mr. Carter, let me make sure I understand you correctly because I don't want to assume.
Did I understand you to say 16 percent of all the poor who need assistance in Virginia are accessing it? I would assume that 84 percent of all the eligible poor for public assistance are not receiving it, and that is not a big red flag? Or did I misunderstood you?
Mr. CARTER. No, you are suggesting that because an individual or family meets the criteria described by the Government that they have made the determination that they need Government assistance. I am saying that those that fall in those arbitrary categories, 16 percent of those that fall in that arbitrary category, have made the determination that they need these kinds of public assistance.
Mrs. CLAYTON. Is that good news or bad news?
Mr. CARTER. I think it is a fact. I don't consider whether it is good or bad.
Mrs. CLAYTON. Mr. Howard.
Mr. HOWARD. Thank you. The issue of the working poor, I think, it is one that we all struggle with; and it goes back probably to the heart of the goal of welfare reform, and are we really trying to solve the full problem or are we looking at a bridge or a first or a second step. I think most States have taken the position that it can't be the whole answer; it has to be a part of a bigger picture.
Page 56 PREV PAGE TOP OF DOC Mrs. CLAYTON. Even as a bridge?
Mr. HOWARD. Yes. So, in fact, we are moving many families into the ranks of the working poor, but when we look at the numbers and the income, we would argue clearly that they are still better off than before, and without that step, they can't move on.
We are doing, I think, some innovative things around, looking in the coming year at expanding our outreach for our traditional work and training programs to look at families who receive only child care or only food stamps or only Medicaid, to try to help them upgrade their skills and move them up.
So we are trying to take a holistic look.
The other thing I think I would say about the working poor, there may be a lesson learned here, I am not sure, but it just occurred to me and there are some slightly different goals, I acknowledge, but our line staff do view food stamps as a very critical transitional program to help people stay off of cash assistance. The other one that jumps out, in addition to Medicaid, of course, is child care. The lesson learned here, we have seen a growthI believe our numbers in 1990, we had about a $20 million child care budget. Our budget for next year is $611 million.
I think the lesson learned there is, that program is much more streamlined, there is much less paperwork, it is much simpler to access and we don't have this stigma out there that this is just another welfare program.
So somehow we probably need to penetrate that and figure out the lessons learned.
To your question of, what are we doing about those families not accessing the system, I think some basic things. We are looking at how we reshape the image of our local agencies to one of a community service center designed to build stronger families. Some of those offices are looking at extended, and have implemented extended office hours. We have tried to be more aggressive in visual signs around the offices around making sure people understand that they can continue to receive food stamps.
Page 57 PREV PAGE TOP OF DOC We have had discussions with nonprofit agencies about how they share information, and help some of their individuals access our services. And we have a heavy agriculture sector, heavily reliant on migrant labor, and a number of those individuals are eligible. We have actually some offices in some areas that we will go out and do some outreach on employer sites. So I think we are taking some steps to try to draw people in.
Mrs. CLAYTON. Thank you very much.
Ms. FOX. I think one of the barriers may be that some low-income working families believe that the reduced level of benefit that they get when they are working doesn't make it worth their while to take the time to come in and apply and doesn't make it worth their while to reveal their whole financial history and provide all the pay stubs and things that are required.
I think if the program were made more user friendly in terms of eligibility determination, more of the low-income working families would be interested in accessing the program.
Now, one of the other things that we have done is try to make the program more accessible. Many of our local Departments of Social Services have changed their office hours from traditional office hours to being open either early in the morning or late at night 1 or 2 days a week, and some have even gone to being open on Saturday mornings to make the program more accessible.
We also, in our outreach efforts, worked with the Southern Regional Institute, which I know worked with several other States south of the Mason-Dixon line. We put out brochures that were directed not only at potential program participants, but also brochures directed at employers, particularly employers who hire large numbers of low-income workers, letting them know about the Food Stamp Program, medical assistance, the earned income tax credit, child support, et cetera, and encouraging employers to encourage their employees to access our programs.
Page 58 PREV PAGE TOP OF DOC We also put videos that we prepared in conjunction with the Southern Regional Institute in our waiting rooms, also explainingactually, the name of the brochure and the video was, It Is Not So Scary to Leave Welfare, explaining that there are these other components of the safety net there for the taking. I think that was fairly effective.
We also provided those materials in Spanish, which is the language of our largest minority group.
We have done a lot of outreach to the faith-based community and to the advocacy community and we certainly do get a lot of referrals from homeless shelters, from soup kitchens and particularly from churches in our more urban areas.
Mrs. CLAYTON. I appreciate that.
Let me just ask the connection between your Medicaid CHIP program in Maryland and food stamps. Can you share if there is a relationship?
Ms. FOX. Yes. In Maryland, the Maryland Children's Health Insurance Program serves children and pregnant women with incomes of up to 200 percent of poverty. Application for that program can be made either through the local health department, which is not under my umbrella agency, or it can be made through a local Department of Social Services.
If the family has an open food stamp case or an open cash assistance case, then the eligibility determination is done in the local Department of Social Services. But we have worked together jointly in terms of outreach for that program, and of course, when someone applies for CHIP, we also make sure that they aren't eligible for another category of Medicaid first.
We have recently tried to really again increase the outreach for both that program and Medicaid in general.
Mrs. CLAYTON. OK. I have some questions for the next panelist but my time is up. I will just say I acknowledge thatmany of your recommendations, I concur with. I was a little disappointed you didn't give some recommendations for some flexibility for the elderly. I can just see how the costs for the elderly for diabetes and all that would haveand your organization, I know, does good work. So I just urge you to consider that your acknowledgment of the elderly as a problem needs to have some recommendations similar, as you have put forth for others in that area.
Page 59 PREV PAGE TOP OF DOC Thank you, Mr. Goolsby.
Mr. GOOLSBY. Thank you.
Mr. GOODLATTE. I have one more question. It is kind of a rhetorical question, but knowing that some of you agree with me that the reductions are cause for celebration in many instances and not for concern, recently the President was in Chicago and he pointed out that for the AFDC-TANF programsoriginally AFDC, now TANFthat decline in participation has been 34 percent; and he celebrated that as an indication that Welfare-to-Work was working; people were being lifted up and out of poverty. That is a 34 percent decline.
On the other hand, we have had a significantly smaller decline in participation in the Food Stamp Program, a 24 percent decline, and yet that seems to be cause for great concern.
I wonder if any of you want to comment on that?
I noted, Mr. Carter, for example, that in Virginiaand in Michigan, as well, and I think in Maryland, as wellthe declines in the TANF program have been significantly higher percentage-wise than declines in food stamp participation. So that would indicate that, as one would suspect, as people move from welfare to work and they are in lower-paying jobs and need to supplement their income, they are availing themselves in many instances of the Food Stamp Program even though they are no longer participating in the other program.
Mr. CARTER. Mr. Chairman, I think that the scenario you laid out highlights the schizophrenia in this whole discussion, and I would just would go back and say thatI mean, again, I think that we have changed the discussion to go back to what the original intent of the social safety net was to be. It was to be temporary assistance to move people from a place where they cannot do for themselves to a place where they can, and that is sound public policy.
Page 60 PREV PAGE TOP OF DOC It is because of that, I think, that we are seeing these precipitous declines in our caseload, and I think that that bodes well for our Nation and not poorly.
Mr. GOODLATTE. Thank you.
Mr. HOWARD. I agree with your statement. Essentially, we have seen a significant drop in cash welfare. We have some drop in food stamp, but not as much as TANF. Therefore, some continue to take itnot as significant a drop in the food stamp as in TANF. So obviously some are continuing to take advantage, and as I stated earlier, essentially all of our drop in food stamps is on the welfare-related side of the caseload. So we don't see an issue really on the side of the equation that is not welfare-related.
We have had 217,000 families go to work since 1992. So it follows many of them would also leave the Food Stamp Program.
Mr. GOODLATTE. Ms. Fox.
Ms. FOX. In Maryland, we have made a concerted effort to try to find out what has happened to families that have left the caseload, and what we are finding is that those families are working, but the wages at which they are working are wages that leave them still eligible for food stamps and, I believe, probably in most cases still in need of food stamps. So we have seen movement from cash assistance with food stamps to food stamps only, or food stamps and MA only, and we think that that is a good move.
Mr. GOODLATTE. In point of fact, most of them are still receiving food stamps?
Ms. FOX. We believe most of them are, yes. We have had, again, a food stamp caseload decline, but nothing like the decline that we have seen in cash assistance, about one-third.
Mr. GOODLATTE. In August 1998, you had 111,000 TANF participants, which was a decline of 83,000, a 42 percent drop, which the President presumably was celebrating for Maryland, as well as for the rest of the country; but at the same time, you had 307,000 food stamp participants, nearly three times as many, and a 15 percent drop from the 364,000 at the beginning.
Page 61 PREV PAGE TOP OF DOC So I would say that a healthy economy, coupled with changes in the law that required able-bodied citizens between the ages of 18 and 50 to forgo food stamps, which I think is an entirely appropriate policy, single citizens without children, the decline, I think, is entirely explainable. And we still have, nationwide, nearly 11 million more people receiving food stamps than are receiving TANF benefits, 8.1 million TANF participants and 18.9 million food stamp participants.
So I think this program is declining in an appropriate fashion and in ways that I think are very explainable, given the economy and the changes in the law.
Mrs. CLAYTON. You can imagine that precipitated a response.
Well, I think we would agree that there is reason to celebrate and there is reason to be concerned. We celebrate, yes, a 34 percent decline in the TANF program, meaning with the assumption that people have now moved from dependency and receiving tax assistance to work. And that is good news. That is reason to run around the stadium.
We have, though, concern that you take that equation and say that same percentage of people we should assume to be dropping off of the food stamps because we know that the working poor, people who oftentimesfamilies of four still making $8, a mother with three kids, who would be eligible for food stamps.
We also know too many of the military who are on food stamps. We know there are working poor who need the food stamps.
So we are adamant in not assuming the transitionthe assumption that when you move people to work that they are always in a position to notor they are not eligible or not in need to get food stamps.
So I want to be with you and everyone else to celebrate the good news that a large number of people are working, so the welfare reform system is working. I also, though, want to be that challenger to make a clear distinction of working on the assumption, because they have gone to work, now they are in no needand you certainly know the law; the law says they are eligible if they meet the incomebut there is no need there.
Page 62 PREV PAGE TOP OF DOC So I want to urge that we don't work on that premise; that we try to find how we indeed make people whole in aI like your word, Mr. Howardholistic way, make sure there is a nutritional safety net there that allows them to have the food they need.
If they don't need it, we don't want them to have it. I mean, that is not the point. But I get concerned when there is a large need. So I would be scared, you know, if there were 84 percent of anything that we weren't taking advantage of.
You know, I pushed for immunization. I found that there were 40 percent of certain kids who weren't getting immunization. That is why when I first cameI was part of the system that saw immunization be increased, not because people could elect not to have it; I wanted to make sure people knew about it.
So I am concerned there is underutilization of food stamps where there shouldn't be.
Mr. GOODLATTE. Thank you.
The gentleman from Virginia.
Mr. GOODE. Thank you, Mr. Chairman.
I simply just want to say thanks to Mr. Carter for the cooperation that his department gives on so many different issues. I know we call you about child support and a number of other matters, TANF, and I appreciate it. You all have done a great job working with my office, and I thank you.
Mr. CARTER. Thank you, Mr. Goode. I appreciate that.
Mr. GOODLATTE. And I want to second that as well. I think that we have had very good help, but we have a lot of constituents who contact us at the Federal level with questions about matters that are handled by State agencies; and it is always nice to have a very good working relationship and the ability to provide those kind of answers and assistance to our constituents. We thank you for making that possible.
Page 63 PREV PAGE TOP OF DOC I don't see anybody else to ask questions, so we are going to thank you for your participation. You made a very valuable contribution to our hearing today.
We want to advise you that if you have any additional documentation you want to submit for the record, we will at the end of this hearing ask for unanimous consent to hold the hearing open for a period of time, probably 10 days, and if you want to submit something for the record, please feel free to do so. We thank you all.
We will now go on to our next panel.
Ms. Melba L. Price is the associate director of the Missouri Department of Social Services; Ms. Jacki Snyder is the manager of electronic payments for SUPERVALU, Inc., and is testifying on behalf of the Food Marketing Institute; Mr. Brian Kibble-Smith is vice-president of Citicorp Services, Inc.
I want to thank all of you for joining us today, and we will start with Ms. Price. We welcome your testimony.
STATEMENT OF MELBA L. PRICE, ASSOCIATE DIRECTOR, MISSOURI DEPARTMENT OF SOCIAL SERVICES
Ms. PRICE. Thank you, Mr. Chairman. It is nice seeing you again.
Good morning. My name is Melba Price, and I am an associate director with the Missouri Department of Social Services. I also serve as chair of the Southern Alliance of States, or SAS. We now consist of 10 StatesAlabama, Arkansas, Florida, Georgia, Kentucky, Missouri, North Carolina, Tennessee, West Virginia and Mississippiand that is our coalition working together.
I also serve on the board of the EBT Council, and that EBT Council is sponsored by NACHA, and I will be referencing that a little later in my testimony.
Page 64 PREV PAGE TOP OF DOC I want to thank the committee and especially you, Mr. Chairman, and Congresswoman Clayton, for allowing me to speak today on EBT interoperability and portability. We appreciate this committee's support of EBT in the past, and we hope to provide helpful information to you today.
I am going to cover three areas: the lack of portability of food stamps now that we are in an electronic environment; a pilot project on EBT interoperability that is currently going on; and critical next steps that we hope you will support.
Now, in just a second, I have charts I would like to share with you that are being put up as we speak, and they are attached in my testimony.
When food stamps were paper, and it has already been talked about in the hearing today, food stamps were accessible coast to coast at any licensed food stamp retailer, and that is what this map is trying to show, that when we were paper, accessibility was uniform nationwide. I chose the color red just because I like red. There is no significance to the color red.
The other chart shows, unfortunately, the patchwork quilt that has now developed by moving from paper to plastic; and the States in red therewe have 31 States who have stepped up and said they want to use a uniform set of operating rules and do EBT technically alike.
The States that are in patchwork have not necessarily reached that conclusion yet. Today some of them are definitely considering it very strongly. Like the State of Virginia, we do believe that they will wind up using QUEST, Mr. Chairman, Congressman Goode. And some of the other States came up before standards and interoperability were even thought about, but it is a patchwork quilt. Down the road, we would like to see, with your help, getting the country back to the first chart, accessibility coast-to-coast with any licensed food stamp retailer.
Page 65 PREV PAGE TOP OF DOC The national EBT Council I spoke of earlier, sponsored by NACHA, is made up of representatives of State governments, payment networks, third-party processors, retailers, banks and EBT vendors. These representatives have devoted a lot of time. I have been on this council since the beginning. It has probably been a good 3 years' worth. We have spent a lot of time developing operating rules or a standard.
Let me share with you what that means. It basically means we are trying to do what MasterCard and Visa did a long time ago. When a person walks into an establishment and on their card they have a logo saying MasterCard, and the establishment has MasterCard on the door of their business, they can use their card. They know it will work.
That is all we are trying to get to with the national standard, an EBT card that would have some sort of designation on it and a retailer that would have the same designation. When a client sees that designation, they know their card would work and the retailer would know that the card would work as well. So that is what we are trying to get to.
I have attached a background document with my testimony on the EBT Council and how QUEST was derived, and I would be happy to take any questions on that later in the testimony.
Another thing that is going on is that we have this pilot project trying to measure how big is the bread box. If interoperability were to happen in this country, Congressman Goodlatte, with your legislation, how much would it cost? What kind of experience would there be?
There is a 6-month pilot going on. I serve on the project team that has been managing that project. Other folks that have been on that team are NACHA, are retailers, SUPERVALU, a third-party processor (Bypass), three EBT vendors, including Citibank, Deluxe, Lockheed Martin and USDA.
We have also competitively secured a company called Benton International to actually, in an objective fashion, look at the results of the study. Two things were being measured. One is, what volume of transactions would you expect to happen in an interstate fashion in food stamps? Second of all, the cost of switching those in an interstate fashion, what would that typically cost the Government in the private marketplace? So Benton International analyzed those two things.
Page 66 PREV PAGE TOP OF DOC I am pleased to report the following results, and this is out of an interim report about midway through the project: 1.1 percent of food stamp transactions are actually transacted in an interstate environment, and in the commercial marketplace today, the range of gateway fees typically to switch transactions of that nature range from 3 cents to 10 cents.
What Benton International did was, they did some simple calculations on some simple estimates, and it turns out that their belief is, for roughly $500,000 a year, that is all it would take in this country to pay for interoperability, switching of transactions between States, which gets us back to a national view of EBT the country back in the red. That is all that that would take.
The administration saves a lot of money with EBT goingin the price, going from paper to plastic, they save 58 cents a month a case. They pay the Federal Reserve $20 million a year to take the paper coupons in and convert them to cash. So we think it is a pretty good trade-off. $500,000 for $20 million is all it takes to get back to national in comparison to the paper system.
That is why we are also pleasedhaving said all of this today on this background, we are very pleased with Electronic Benefit Transfer Interoperability and Portability Act of 1999 that was introduced by you, Mr. Chairman, yesterday. We are very appreciative of that. That legislation, as we understand it, would require USDA to adopt a national technical standard that the majority of the States use.
The U.S. Treasury also adopts rules that NACHA has made before. It is a model that exists, has existed in the Federal Government, before. States would incorporate the interoperability requirement in future contracts. No States would be impacted midcontract in any way. USDA would pay $500,000 a year, roughly what the switching fees are for interoperability for the national aspect of the program.
Page 67 PREV PAGE TOP OF DOC So we appreciate that that bill was filed. We ask for the committee's support in the passage of that bill, and we believe that with this step we can finally complete what we believe has been your intent all along, and that is to have uniform accessibility in the country.
I would be happy to take questions when appropriate. Thank you.
[The prepared statement of Ms. Price appears at the conclusion of the hearing.]
Mr. GOODLATTE. Thank you, Ms. Price. We will accept your definition of the phrase, ''getting back in the red,'' for the purposes of this issue only.
Ms. PRICE. Thank you.
Mr. GOODLATTE. At this time I would like to welcome Ms. Snyder, and ask for her testimony.
STATEMENT OF JACKI SNYDER, MANAGER, ELECTRONIC PAYMENTS, SUPERVALU INC., AND CHAIR, FOOD MARKETING INSTITUTE'S ELECTRONIC PAYMENT SYSTEMS COMMITTEE
Ms. SYNDER. Thank you. Chairman Goodlatte, Congresswoman Clayton and members of the committee, good morning. My name is Jacki Snyder and I am responsible for the electronic payments activity at SUPERVALU, the Nation's largest grocery wholesaler, based in Minneapolis, MN.
Additionally, I currently chair the Food Marketing Institute's Electronic Payments Committee, and I am a representative board member on the National Automated Clearinghouse's, or NACHA's, EBT council.
I would like to thank you on behalf of the 21,000 food retailers that FMI represents in our Nation for this opportunity to testify regarding legislation that will allow us to get back in the red, as Melba says, and achieve interoperability for our Nation's food stamp recipients.
Page 68 PREV PAGE TOP OF DOC We very much appreciate the work that Chairman Goodlatte has done on this bill and his staff and the full committee.
A great deal of my time and that of my associates in this industry is spent assuring that our Nation's food stamp recipients can access their benefits seamlessly in our stores. As we have converted from paper coupons to electronics, this has not always been easy. Under the old paper food coupon program, a food stamp recipient that lived in Fargo, ND, could easily shop for their groceries in Moorhead, MN. Similarly, a food stamp recipient that perhaps lived in Colorado could travel to Illinois to visit their mother and purchase food for their family while away from home.
Unfortunately, as we have moved into the electronic delivery of benefits this is no longer possible. And the legislation that we are discussing today, that has been introduced just yesterday, would once again allow for the portability of food stamp benefits, allowing food stamp recipients to shop where they choose.
Supermarkets service food stamp recipients in a variety of locations that are similar to Fargo-Moorhead. People need to shop across State borders for a variety of reasons, one of which is convenience, another is the cost of goods. The supermarket industry is very competitive. We advertise in newspapers week after week and people need to have the right to shop where products are the most cost effective and things are most convenient for them.
As a working mother of three children, I certainly need the flexibility to shop where it is most convenient for me. One of those children is also a teenager that eats quite heftily. I need to shop where it is cost effective as well, and I am lucky to live in an area where there are a lot of supermarkets and I am able to meet my needs that way.
Unfortunately, a lot of people are not that lucky. There are a lot of people that live in areas like Washington, DC and find themselves having to go and shop in Virginia or Maryland to meet their food requirements; and customers paying with every type of tender, except EBT, have the flexibility to choose where they shop. Shouldn't the Nation's food stamp recipients have the right to stretch their food dollar the way that everybody else does?
Page 69 PREV PAGE TOP OF DOC To simply define, EBT portability allows consumers the opportunity to shop across State borders without any limitations. The legislation that we are talking about today also allows for interoperability of food stamp transactions and, simply defined, interoperability means that all the different computer systems involved in routing and authorizing and settling EBT transactions can actually talk to one another.
Now, we have been doing this with ATM cards for quite some time in this Nation. A consumer living in Pittsburgh may be issued a MAC debit card by their bank, and when that card is presented to a merchant in Pennsylvania it works exactly the same as when it is presented to a merchant that has a store in Florida, for example.
Unfortunately, once again, this is not the case with EBT cards today. If every State operated under standard operating rules, such as those that we are discussing today, companies like mine would be able to operate much more effectively and service the food stamp recipients more efficiently.
Not approving the legislation in discussion today is really no different than authorizing States to print their own currency. We converted to a common currency in this country many years ago because the lack of interoperability created a great deal of confusion and inefficiency.
Imagine the confusion today if a person that lived in Stillwater, MN arrived at a merchant's location in Hudson, WI, with purple $20 dollar bills in their wallet with their own Governor's picture on them. This is not acceptable in the cash environment and simply should not be acceptable in the EBT environment, either.
I won't go into, out of respect for time, the details that Melba has already covered related to the National Automated Clearing House's study that is under way, but I would like to state that the food retailers represented by FMI support this study, participated in the pilot and believed that the findings represented by Benton International, that are attached to Melba's testimony, are accurate and represent well the quantity and the costs associated with EBT interoperability.
Page 70 PREV PAGE TOP OF DOC The legislation that Chairman Goodlatte has introduced is very straightforward and it would solve both the portability and interoperability issues that we have talked about today.
To quickly summarize, the pilot that we have talked about is due to expire in September. It would be very much appreciated if the legislation could be passed so that we do not have to try to explain to food stamp recipients that can shop in our stores today why they can't tomorrow.
Implementing a new technology should really move us forward. It shouldn't result in a step backwards. And the legislation simply would allow us to continue to meet the same requirements that we have in the past.
Thank you very much, Chairman, Congresswoman Clayton and members of this committee. We appreciate the opportunity to testify on this and for your work on this issue.
[The prepared statement of Ms. Snyder appears at the conclusion of the hearing.]
Mr. GOODLATTE. Thank you, Ms. Snyder.
Mr. Kibble-Smith, we are glad to have you with us as well.
STATEMENT OF BRIAN KIBBLE-SMITH, VICE-PRESIDENT, CITICORP SERVICES INC.
Mr. KIBBLE-SMITH. Thank you, Mr. Chairman, members of the committee. Thank you, Ms. Price and Ms. Snyder, for your excellent summaries, making my job a lot easier. There is an advantage to going last.
I am Brian Kibble-Smith. I am a vice-president of Citicorp Services. We manage a number of EBT projects in the United States. EBT involves the use of debit card technology to deliver Food Stamp Program benefits and other Government payments or entitlements. EBT reduces financial losses due to fraud, reduces State administrative costs, and approves services to benefit recipients.
Page 71 PREV PAGE TOP OF DOC It is appropriate at this time to recognize that EBT is a success story, thanks to the dedicated efforts of government officials, retailers, financial institutions, EBT contractors and other EBT stakeholders, including the benefit recipients themselves.
As EBT has matured, one of several issues that must be addressed is EBT's system interoperability, or the ability of EBT cards issued in one EBT project to be used in any other EBT project. This would replicate the historic ability of benefit recipients to use food stamp coupons interstate to the extent this ability existed prior to EBT.
Interoperability presently exists between the Dakotas, between Texas and New Mexico, within the NCS, SAS, WSEA, State EBT coalition projects, and in the pilot interoperability project operated under an arrangement between Citicorp Services and the National Automated Clearinghouse Association, or NACHA, which has been mentioned several times today.
Many EBT projects, however, are not interoperable, though there usually are special arrangements to permit limited out-of-State shopping where those shopping patterns existed prior to EBT.
To address a number of technical issues in EBT, the EBT Council developed the QUEST uniform EBT operating rules now adopted by almost 30 States. The QUEST rules enable EBT systems to operate using methods and practices that are similar to those of the commercial electronic funds transfer, EFT, infrastructure, but that reflect the requirements of EBT that are very distinct from the commercial environment.
Our company strongly supports interoperability, and we are prepared to deliver this service in our projects. To do so will require negotiating contract amendments to cover price and policy issues with their various State agency clients. We wish to comment on some aspects of the legislation that the committee is now considering since the legislation as drafted would have a significant impact on our business practices.
First, with respect to currently operating projects, we prefer and believe other EBT contractors will prefer that full interoperability be introduced gradually on a basis to coincide with the renewals, modifications, or rebids of the current contracts.
Page 72 PREV PAGE TOP OF DOC Second, we understand that the legislation calls for the Secretary to regulate interoperability based on whatever standard is adopted by the majority of the States, presumably the QUEST rules. However, we would oppose transforming the QUEST rules themselves into Federal regulations. Amendment of operating rules through a private body like NACHA is more expedient than changing a Federal regulation. ALS membership in NACHA's EBT council allows States, network processors, financial institutions, EBT contractors, and others most affected by the rules to have a direct voice in the process.
The matter of EBT operating rules should be left to industry participants rather than mandated by a Government agency. Proposed EBT regulations recently issued by the USDA Food and Nutrition Service illustrate an appropriate balance. They contain certain technical requirements to help ensure that transactions would be interoperable, but allows specific EBT operating rules and practices to remain within the control of the private sector. Finally, we urge Congress in considering its appropriations for interoperability to seek the opinion of the private sector on actual costs. The interim report mentioned already by NACHA has placed the annual cost at $500,000, but our analysis of the report indicates that this figure is low. Since it is the responsibility of the EBT contractor to perform the tasks required for implementation of the interoperability, the EBT contractor community should play a major role of defining the tasks required and the costs so that Congress can appropriate adequate funds for implementation.
In summary, we strongly support interoperability, 100 percent Federal funding for its costs, and a phased in implementation. However, which we oppose federally regulated standards and maintain that greater attention to the issue of cost is required with direct input from the EBT contractor community.
That concludes my testimony, but I would like to leave something with the committee. Earlier today the gentleman from Oregon mentioned that State's EBT project. I thought that you might be interested in seeing what a few EBT cards look like. These are representations from some of our projects.
Page 73 PREV PAGE TOP OF DOC [The prepared statement of Mr. Kibble-Smith appears at the conclusion of the hearing.]
Mr. GOODLATTE. Thank you very much. Ms. Price, let me break this down into plain terms. We talked about and your chart I think properly shows that under the old program that is being phased out where you had paper food stamps, they were fungible, usable anywhere in the country. And so it is a convenience to food stamp recipients to be able to use their electronic card in two different States, particularly if they live close to the border of one State and it is more convenient to shop in other State.
We found from Ms. Snyder's testimony we found that this is a convenience, I think, also for the food marketers. Let me just ask you, starting with Ms. Price, if my understanding is correct, we are going in every single State in the country to electronic benefit transfer. That has already been mandated by the Welfare Reform Act some years ago.
Ms. PRICE. That is correct.
Mr. GOODLATTE. So if we don't have interoperability and you are a small grocer in or near Martinsville, VA or Danville, VA just to pick two communities totally at random that happen to be in the gentleman from Virginia's district, and that grocer has been receiving business from folks across the North Carolina border, not to take anything away from, at all, from Mrs. Clayton, or if you have a store in or near Rocky Mount, NC and you have customers coming across the Virginia border to do business in North Carolina and you are a very small operator, you are going to have to have machines to handle this because you are going to have EBT cards and you are not going to have paper food stamps any longer, no matter what happens to my legislation. That is already a fact. If you don't have interoperability that small grocer is going to have to have two machines, two systems to operate under?
Ms. PRICE. There are many solutions that exist today, and all of them are difficult. There is that option. If the State across the border chooses to allow their card to go to that small retailer across the border in another State, they can choose to set a second piece of equipment there. But that is just one option. We also have States that choose not to allow their card to go out of their State ever. We have States who have chosen to let their cards go out of their States but to an arbitrary boundary, like 3 miles outside of the State it will work, but not 3.1 miles out of the State.
Page 74 PREV PAGE TOP OF DOC It is all over the board. There is no uniform way of handling the interstates. But your bill would make that uniform because the operating standard, all they needed was one machine that their original State gave them. And any card would work on it, any EBT card. That is what this uniform technical standards would deliver.
Mr. GOODLATTE. We are talking about a federally funded program, and we are talking about a circumstance which under the old use of paper food stamps the States would have had no ability to impose those kind of arbitrary standards?
Ms. PRICE. That is correct.
Mr. GOODLATTE. What have you found in your experience is the ability to address the fraudulent misuse of food stamps with interoperability and without interoperability?
Ms. PRICE. We believe in two things. One is that we certainly believe in people who should be eligible for food stamps should receive food stamps. We are very supportive of what the President just did. At the same time, we also believe in program integrity. We do monitor the EBT transactions and try to determine if any patterns exists that show potential abuse. I have to say to that the abuse statistics that we found are very, very small.
That is good news. But we do need to keep accountability of program integrity. I think that was part of the reason why you mandated EBT back in 1996 was for program integrity. We have also been watching when our cards have been used outside of Missouri to see what the experience has been. We basically chose 90 recipients off of the list we had that had been shopping outside of Missouri for whatever reason, and unfortunately, we did find an example of double dipping where a person was receiving benefits from Missouri as well as in other States. They had two EBT cards. We would have had no way of finding that had we not found it by monitoring interstate EBT transactions.
Page 75 PREV PAGE TOP OF DOC We also found a certain group of people that were still getting benefits that had moved outside of Missouri, they had left our State, but they had just not told us that just yet. So we were able to work on those cases right away. So we have found value in analyzing the interstate transaction activity for program integrity.
Mr. GOODLATTE. Thank you. We have a vote on, a motion to recommit H.R. 2488.
Mrs. CLAYTON. I don't have any questions for this panel
Mr. GOODLATTE. I have more. I want to ask them to stay.
Mrs. CLAYTON. I will just save mine then. If you weren't planning on coming back, I would
Mrs. CLAYTON. No, I do plan on coming back.
Mr. GOODLATTE. Very good. The subcommittee will stand in recess while we go vote.
Mr. GOODLATTE. The hearing will reconvene. At this time it is my pleasure to recognize the gentle woman from North Carolina.
Mrs. CLAYTON. I don't have a lot of concern, but I do want to acknowledge the success of EBT and to know this was one of the legacies that Representative Emerson left us, that he loved EBT. When North Carolina was trying to move in that direction and had some concerns and he brought it to me and we were certainly able to get his advice on that. In the cities of North Carolinaalthough it says we already are, but I want you to know we are still getting there so we will be there by the date certain.
I happen to live in a rural area and I have had occasion to go out and speak to a couple of these groups that bring them together and explain the system. Part of this is to alleviate the fear. So I can appreciate what it takes to make sure that everybody is using the same tool. Also, I know the value or think I know the value of having a system that is easy to use not only for the customer themselves, but also for the Government to manage it, to see if there is fraud. We certainly want to make sure that as we give people tools that we don't put barriers and that they can't use those same tools as you and I who don't use food stamps use our dollars. So I support the concept.
Page 76 PREV PAGE TOP OF DOC Now, the legislation that has been introduced, I think someone talked to me earlier, I guess two of you talked to me earlier about 6 weeks ago. I said to the Chairman that I would be supportive of that. I want to applaud him for introducing it. There are some concerns that I have about that. I am going to try to work those out. I think the concept is good, and I was reading through your interim report. I would gather there are 20 States from Alabama to Washington
Ms. PRICE. Twenty-three States.
Mrs. CLAYTON. And so I would like to see this and see whatI think we would have some chances to make some adjustments in the legislation as it goes forward.
Mr. Smith, I was struck by your support of the concept but also the challenge that we ought to look at that gradually. I guess for the same reason that the States are moving in this with some implementation stage, you wantwhere do you see the problem? Why would you say a gradual staging? Once the technology is there, just put that card in and go about your business.
Mr. KIBBLE-SMITH. I really wish it was that easy.
Mrs. CLAYTON. That is what Citibank tells me about that card, if I have it.
Mr. KIBBLE-SMITH. They told me about my card, too. The legislation provides correctly for the gradual implementation of interoperability over existing contracts. I think the concern that we would have if someone were to fix an arbitrary date, for example, is the fact that while we do have other work to do, we are, in fact, in the process of implementing your State. We have contract requirements that are timed out in different parts of the coming years we have to respond to. It would be more difficult, I think, for the vendor community to work toward an arbitrary date when all of this will happen because there are procedures that have to be gone through and contract amendments that have to be made and technological connections that have to be established. And managing that within the scope of our existing contracts as they come up for renewal or re-bid is just an easier way for us to plot that work against all other contract requirements.
Page 77 PREV PAGE TOP OF DOC Mrs. CLAYTON. I gather you think that the estimated costs are lowwhat was it, 500,000?
Ms. PRICE. Yes, 500,000.
Mr. KIBBLE-SMITH. I want to clarify that a little bit. I think the real question that I have in my mind right now is as we look down the road in the future where the interoperability of EBT cards has become a common part of the culture in the same way that the interoperability of an ATM card has become, then are we going to see an increase in the number of out-of-state transactions? Because the costs are really driven on the basis of the number of transactions that occur. I can remember when I got my first bank ATM card, I could use it in three ATMs, all in Oak Park, IL. It still amazes me that I can go all across the country and put this card in machines and get money out. I think that remains something of an unknown, but we are indeed working with NACHA on the contents of the report, how the calculations were established. Right now we are reviewing the interim report and keep working with them.
Mrs. CLAYTON. I guess the distributors and the retail with the marketingyou distribute to over 21,000; and they are retail vendors, supermarkets, and stores? They see a value in having that ability.
I live on the border of North Carolina 3 miles from Virginia, but there are no big supermarkets. If there were big supermarkets, they would see the value of those transactions coming. That is sort of like the cost of doing business. Do they see any problem with this?
Ms. SNYDER. We see no problem with encouraging interoperability. In fact, we see a lot of difficulty without interoperability. We have a lot of stores all across the country right now that are operating without interoperability. If they have been lucky enough to get approval from a bordering State, they may have been given one terminal that may allow a food stamp recipient to come and shop in one lane. So you can also imagine the difficulty of that as this customer comes into the store trying to guess which lane they are supposed to be checking out to and where the equipment may be placed. So interoperability will simply bring us back to the point that we had with paper coupons. That is what we are attempting to achieve.
Page 78 PREV PAGE TOP OF DOC Mrs. CLAYTON. I support the goal of making us red again.
Only in this instance. I was struck by Mr. Kibble-Smith not minding 100 percent finance, but not wanting to have the Federal Government promulgate the regulation?
Mr. KIBBLE-SMITH. Yes. I think that we have a parallel in how the automatic clearinghouse and the EFT networks operate in that while the Federal Government might establish that standards are required, the actual content of those standards are left to the appropriate association such as NACHA to work through to create and amend as needed.
Mrs. CLAYTON. Is there a parallel that you can reference where we are doing that?
Mr. KIBBLE-SMITH. Yes. In fact it has been pointed out to meactually, Melba might have a better answer to that.
Ms. PRICE. Very recently just as an example that I know of is NACHA promulgates rules on the ACH community on the movement of money. The U.S. Treasury just adopted those operating rules from the movement of money for their purposes and use. So since that model already exists today, that is the language that Congressman Goodlatte paralleled in this bill which is simply the adoption of operating rules that an operating rule body establishes. Those rules continuously change. Those rules will never be left and are actually put, according to this bill, in Federal regulations. They are constantly changing. But the Food Nutrition Service is an advisor to the development of those rules. So we feel like it is already a model that exists well.
Mrs. CLAYTON. Thank you, Mr. Chairman.
Mr. GOODLATTE. Thank you. Mr. Smith, you mentioned that the USDA has promulgated regulations that will achieve what we say are the goals without the need of legislation. When did the USDA promulgate those regulations?
Mr. KIBBLE-SMITH. I don't believe that is exactly what I said. Over time and in the most recent regulations on PROWRAdid I get the initials right? Well, the Reform Act, there are some very general sort of higher standards. I think USDA has picked out a few operating requirements generally to meet, such as the way that the retailers point-of-sale terminals operate, so that they maintain how they work in the EFT infrastructure always within the EBT infrastructure, and that is what will be required to get interoperability in a very cost effective and as quickly a manner as possible. But they have not regulated down to the level of, say, the QUEST operating rules which we were just discussing. And the legislation is needed if interoperability is going to go forward on a national standard. We prefer that kind of uniformity also.
Page 79 PREV PAGE TOP OF DOC Mr. GOODLATTE. I believe to quote from your testimony, you said proposed EBT regulations recently issued by the USDA Food and Nutrition Service illustrate an appropriate balance that contains certain technical requirements to help ensure that transactions will be interoperable, but allow specific EBT operating rules and practices to remain within the control of the private sector.
Mr. KIBBLE-SMITH. Yes. That would be the regs that were issued in the Federal Register on May 27. One example I am talking about specifically under the heading of system compatibility is a lengthy discussion about POS devices and IOS standards, the International Organization for Standardization, that issues some mechanisms that retailers such as those represented by Ms. Snyder and their vendors for electronic equipment observe to make sure thatwell, for example, when I use my Citibank debit card whether it is in a Dominick store in Chicago or a Safeway in Virginia, that the systems will operate in such a way that I can execute a transaction.
Mr. GOODLATTE. Ms. Price, do you want to respond to that?
Ms. PRICE. Well, I think that we are seeing a couple of different things. In the current Federal regulations, there are a couple of high-level equipment issues. But it is not down to the level of operating rules that is necessary to be adopted for interoperability nationwide. I stand behind the legislation that you have drafted, and I think Mr. Kibble-Smith does as well. I don't think there is a difference of opinion on that at all.
Mr. KIBBLE-SMITH. Absolutely.
Mr. GOODLATTE. How do you feel about the level of input by industry and the State stakeholders that have concerned Mr. Kibble-Smith with regard to this?
Ms. PRICE. Well, as I mentioned in my testimony, the EBT council is derived of every kind of stakeholder. We have lots of States on there, retailers, networks, third party processors. I think maybe there has been some misunderstanding of the legislation in that adopting a set of operating rules does not necessarily mean establishing a set and putting them in Federal Register Simply adopting a set of rules that continue to be altered, continue to have a life of their own by NACHA and the EBT council.
Page 80 PREV PAGE TOP OF DOC Mr. GOODLATTE. So these rules are going to be driven by private industry and State agencies. You simply want a mandate from the Federal Government to say that you have got to get it done and when you get it done, that is what everybody is going to use.
Ms. PRICE. That is correct.
Mr. KIBBLE-SMITH. I agree.
Mr. GOODLATTE. There are very few companies competing for EBT service contracts. Has this been a barrier to further interoperability, Ms. Price?
Ms. PRICE. From a State view, States always like to have lots of competition. We believe in competition. When we put an RFP out on the street, we like to have quite a few bidders bid on it so we know that we are getting the best quality and the best price. We believe that with this legislation's passage, we have heard from a couple of vendors on this that are not currently working on EBT, to have finally a national standard of operating rules so that you have an accounting system connection one time now instead of an EBT vendor having lots of different versions of software because the cards operate differently, we think that you might very well see more vendors now get into the EBT world thereby increasing competition by the passage of the bill.
Mr. GOODLATTE. How does Citicorp feel about that?
Mr. KIBBLE-SMITH. Well, since we have been competing for EBT contracts since 1988, we take an all comers. Actually, I agree completely with Ms. Price in that not only uniformity of standards induce more people to compete for the contracts, it just makes our life easier. It is difficult for us to build special solutions for every project. That is not how we achieve cost efficiency.
Mr. GOODLATTE. Ms. Snyder, Mr. Smith understandably doesn't want any unnecessary government regulations to govern the operating standards of EBT interoperability. I don't believe there is any argument that all of the stakeholders in EBT food stamp arena should have input. Do you think that this bill provides enough input for industry?
Page 81 PREV PAGE TOP OF DOC Ms. SNYDER. Absolutely. There are currently about eight retailers on the NACHA EBT council. We hold four representative board seats that allow us to vote and have great input on the formation of the EBT rules.
Mr. GOODLATTE. Thank you. Mrs. Clayton.
Mrs. CLAYTON. I just have one final question. The QUEST program, is that a design of a system that you developed? Explain that for me. What is a QUEST program?
Ms. SNYDER. The QUEST program could be compared to a debit logo that you might have on your bank ATM card. So it is simply a set of standards and operating rules that everyone that issues the card and accepts the card needs to follow. So it governs things like how the transactions are processed, settled, how discrepancies are resolved.
Mrs. CLAYTON. Could I have that card right there, that beautiful card? How would that affect the
Ms. SNYDER. I am not sure how many of those cards are actually QUEST cards, how many States that Mr. Smith has on there are actually QUEST cards.
Mr. GOODLATTE. I think all but two or three are red States.
Ms. SNYDER. What that means is that all but those two or three, all today have to follow the same rules when it comes to, let's say, resolving a transaction that doesn't process correctly. Or as the rules require, interoperability between the States. But the two or three cards on there that do not have the QUEST logo on, from a merchant standpoint, we have to follow potentially a different set of rules in those States. Take Illinois, for example, today we actually have to manually enter cards differently on our in store software which is inefficient and requires us to basically have different software in that State than we do just across the border in Missouri.
Mrs. CLAYTON. Thank you for that explanation.
Page 82 PREV PAGE TOP OF DOC Mr. GOODLATTE. I want to thank all of you for your participation. This is a complicated process with hopefully a very simple solution at the end. That is our goal. I think that if we all work together we can achieve that goal. I think it is a good goal. I am pleased to introduce the legislation and pleased to work with Mrs. Clayton and other members of the committee to get it done as quickly as we can to make it as easy as you can to get everybody working together. We thank you all for your participation today.
We will now go onto our final panel. Ms. Sheila Zedlewski is the director of the Income and Benefits Policy Center for the Urban Institute; Mr. Bob Greenstein is director of the Center for Budget and Policy Priorities; and the Reverend Jodie Silliker is a registered nurse and is representing the evangelical Lutheran Church in America and Christ Lutheran Church.
Mrs. Zedlewski, you are welcome to proceed.
STATEMENT OF SHEILA R. ZEDLEWSKI, DIRECTOR, THE INCOME AND BENEFITS POLICY CENTER, THE URBAN INSTITUTE
Ms. ZEDLEWSKI. Good afternoon. Thank you for the opportunity to address the committee about the recent unprecedented declines in Food Stamp Program participation. I am Sheila Zedlewski, director of the Income and Benefits Policy Center at the Urban Institute. My testimony focuses on families with children who left food stamps between 1995 and 1997. It addresses the relationship between leaving cash assistance and remaining in or dropping out of the Food Stamp Program.
Specifically, I want to draw the attention of the committee to the preliminary results of a recent Urban Institute analysis of this relationship. The results show that the majority of families who left welfare also stopped participating in the Food Stamp Program even though most of these families had incomes below the eligibility cutoff for these food stamps. The findings suggest that policy makers need to consider new ways to ensure that the working poor know about and can easily access food stamps.
Page 83 PREV PAGE TOP OF DOC In summary, we found that one, at all levels of income, former welfare recipients left food stamps at higher rates than families who had not received cash assistance, two, most food stamps leavers had incomes that still left them eligible for benefits, and three, families that left welfare have joined other low-income working families who have historically low rates or participation in this program.
My testimony draws on research that we have conducted at the Urban Institute as part of a large multi-use study called Assessing the New federalism. It relies on data collected through the National Survey of America's families, or NSAF as we call it, a new nationally representative survey of over 44,000 nonaged families. NSAF was collected between February and November of 1997. We asked families whether they received welfare and/or food stamp benefits at the time that we spoke to them, and for families not currently receiving benefits we asked whether they had received some benefits since January 1995. We first examined whether families who left welfare also left food stamps and compared those results to families who had not been left on welfare. My colleague, Pamela Lopez, who is with me today, recently completed a study of women who left welfare since 1995 and found that only 31 percent of them had food stamp benefits at the time of the interview.
Her study raises concerns that many former welfare families are still eligible but receiving food stamps. My results show that former welfare recipients left the Food Stamp Program at higher rates than their nonwelfare counterparts at all levels of income. On average, 62 percent of former welfare recipients left food stamps compared to 46 percent of families who had not received cash assistance since 1995.
Exit rates of former welfare recipients were unusually high among those with very low incomes. For example, 45 percent of former welfare recipients of incomes below 50 percent of the poverty line were no longer receiving benefits compared to 23 percent of families who had not been on cash assistance. To what extent are families who left food stamps still eligible? We estimated current family income to address this question and found that 62 percent of all former food stamp families with children had monthly incomes below 130 percent of poverty, the gross income test for food stamp eligibility. Forty-five percent had incomes below poverty and nearly one quarter of former welfare recipients who left food stamps had monthly incomes below 50 percent of poverty.
Page 84 PREV PAGE TOP OF DOC These results indicate that many families who left food stamps appeared to be eligible but are not participating. The finding is consistent with previous studies of program participation. Low-income families who do not receive cash assistance have had historically low rates of participation in the Food Stamp Program.
Why don't families participate? We can't tell you why so many eligible families were no longer participating. We did ask families on the NSAF about this. And when asked, the vast majority of families said they left food stamps because of earnings or a job. We don't know if this means they are no longer eligible or no longer want this assistance. Their low participation rates, however, are consistent with the past behavior of low-income working families. At a minimum, our preliminary findings emphasize the need to ensure that families leaving welfare and all low-income working families know about and have easy access to food stamps.
Thank you, Mr. Chairman, and Congresswoman Clayton for the opportunity to testify on this important topic.
[The prepared statement of Ms. Zedlewski appears at the conclusion of the hearing.]
Mr. GOODLATTE. We thank you. Mr. Greenstein, welcome.
STATEMENT OF ROBERT GREENSTEIN, EXECUTIVE DIRECTOR, CENTER ON BUDGET AND POLICY PRIORITIES
Mr. GREENSTEIN. Thank you and thank you for the invitation to be here today. As a number of witnesses have said today, the Food Stamp Program could be very important to working-poor families. In a report on welfare reform that Speaker Hastert and Representatives Johnson, Archer, and Shaw issued in late May, they noted that the food stamp benefits were an important part of the Government's commitment to making work pay.
Page 85 PREV PAGE TOP OF DOC If we go back to the late 1980's, since then leaders of both partiesI think the Heritage Foundation was among the first to advance the goal that if a family works full time year round at minimum wage, they shouldn't have to be in poverty. As the board over here shows on a bipartisan basis Congress has nearly achieved this goal. The combination of a minimum wage and the earned income tax credit, which both parties played a role in expanding, and food stamps brings a family of four with full-time, year-round minimum wage earnings almost to the poverty line.
This is an outstanding and important bipartisan achievement. But the achievement is realized, these families are essentially brought out of poverty, only if these working poor families do receive food stamps. In the last several years, we have seen a substantial decline in food stamp participation. Studies by CBO and GAO as well as mathematical analysis all find that the decline in participation is larger than the economy alone and the food stamp changes and the welfare law can explain. Clearly the economy is an important factor, but other things are going on. In its new report released this week, the GAO noted in 1997 the number of children living in poverty dropped by 350,000 while the number of children participating in food stamps dropped by 1.3 million. We have essentially conducted the same kind of analysis as GAO but over a longer period from 1994 when food stamp participation reached its peak through 1997, the last year for which we have poverty data.
What the data show is that the number of people receiving food stamps in an average month fell 20 percent during this period while the number of poor people fell 6 1/2 percent. After one factors in the legal immigrants and childless adults made ineligible by the welfare law, there continues to be a large gap between the size of the decline in participation and what would normally be explained from the economy and the changes in the welfare law.
Mr. Chairman, you noted during an earlier panel that the percentage decline of food stamps was less than the percentage decline in TANF. But I think when we compare the percentages, we need to take into account that something close to 40 percent of the food stamp cases are elderly or disabled cases. There hasn't been a big decline there. That hasn't been a part of the big change in the welfare system so that we would therefore expect a smaller percentage decline in the food stamp caseload, only part of which is families with children, and the TANF caseload, all of which is families with children.
Page 86 PREV PAGE TOP OF DOC This decline in participation has actually led to much larger reductions in food stamp expenditures than this committee and the Congress expected when passing the welfare law. What the next chart shows is the CBO's estimates of food stamp costs prior to enactment of the welfare law. The lines that are bunched closely together are the various CBO and OMB estimates of the cost of the program that were made after enactment of the welfare law. The bottom line is the actual expenditures in the Food Stamp Program. Largely because the caseload decline is so much larger than had been forecast, the cost of benefits over the past 3 years is about $10 billion less than CBO had expected after the welfare law was enacted.
How should we think about all of this? Mr. Chairman, I think one of the best statements on this actually is that which the Speaker and Chairman Archer and others made in their report. They noted and I quote, ''Food stamps and Medicaid are part of a work support system that is an important achievement.''
If families leaving welfare earn too much to qualify for some or all of these programs or don't want welfare, those are positive outcomes. I think that is what you were referring to, Mr. Chairman. But they go on to say, ''But if there are families leaving welfare that don't know that they are eligible for the benefits or encounter lots of bureaucratic hassle when trying to get the benefits, that these are policy problems that must be addressed.''
When families are deflected from applying for cash aid and move into the low-wage labor force as part of welfare reform, it appears that in a number of cases they may not be informed or they may not understand that they can still qualify for food stamps and Medicaid as a supplement to their low wages. Increasingly it appears that State and local offices need to take affirmative steps to make sure that families do understand that food stamps and Medicaid can supplement low-wage work.
Food stamp participation among eligible working poor families has always been relatively low. But that problem is now more significant than in the past. If we want to promote welfare reform and move families from welfare to work, we surely don't want families to think that you have to leave your job and go back on welfare to get food stamps or Medicaid. Efforts to move particularly a hard-to-serve family still on the welfare rolls off will be harder to achieve if low-income families think that you have to stay on welfare to get food assistance.
Page 87 PREV PAGE TOP OF DOC As the first chart shows, if a family does get off welfare and works at a low wage, its children can be thousands of dollars below the poverty line without food stamps. The bottom line is I think we need to think of food stamps and Medicaid not in the old style welfare way but as part of what we are trying to make work pay and enable families to make it in the low-wage labor market without being on welfare.
I think that we need further research to understand more adequately the problems the working poor face in gaining access to food stamps. We need to understand better the causes of the recent declines in food stamp participation. I think USDA should do more to encourage States to take advantage of the flexibility they have under the welfare law and the earlier State panel notwithstanding. This committee and this Congress did give States many new options and significantly broadened flexibility in the welfare law compared to what they had before, and the Department should also help encourage and spread knowledge of best practices. Where some States are being effective in serving the working poor, other States need to know more about it.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Greenstein appears at the conclusion of the hearing.]
Mr. GOODLATTE. Thank you. Ms. Silliker, we are pleased to have you with us as well.
STATEMENT OF M. JOSITA SILLIKER, EVANGELICAL LUTHERAN CHURCH IN AMERICA; CHRIST LUTHERAN CHURCH; HARRISBURG, PA
Ms. SILLIKER. Thank you, Mr. Chairman, and Congresswoman Clayton. My name is Jodie Silliker. I am a Lutheran minister, a professional nurse, and a teacher. For the past 21 years, I have worked with severely disadvantaged urban people. Currently, I am the pastor of a church in one the poorest neighborhoods in Harrisburg, and I also operate a free medical clinic and a soup kitchen near the church 5 days a week. The congregation that I serve, which only has a worshipping attendance of 50 each week, extends its mission to food vouchers and educational programs to about 500 indigent neighbors every month.
Page 88 PREV PAGE TOP OF DOC At the medical outreach service and St. Francis soup kitchen, we provide 800 free patient visits every month, and our services include physical assessments, simple lab tests, education, and to the best of our ability, some of the basic necessities like prescription drugs, transit, bus passes, eyeglasses, hygiene items, socks, underwear, that sort of thing.
My work in the soup kitchen also involved being available to the poorest folks so I do make house calls. I make apartment calls. I make stairwell calls, and I also have clients who live in cardboard boxes under the bridge. The numbers that have been presented here today you know better than I do, so I don't need to go over them again. But please don't mistake that the fact that the utilization of public assistance, including Food Stamp Program and WIC, the fact that those numbers are down doesn't tell the whole story because the pressure on private charity is up considerably, and it is up so far that we are being stretched beyond our means and ability. I am very worried in that in this time of plenty almost no one is aware of the reality of the lives of the poor and the reality of hunger.
I would like to try to share with you some of the voices of the ones who are crying in the wilderness. There are tiny hobo jungles still existing in the hearts of our city. One homeless man took me to a hidden lot surrounded by overgrown weeds and trash just three blocks from our State Capitol building. There, gathered around a make-shift barbecue grill, I met 12 different people who live under the bridges of Harrisburg. They gather there daily so that they can pool their money to be able to afford an entire package of hot dogs so that all can eat.
I gave other examples of hunger in my written testimony. The only thing that I have to add to that is the example of the man that I gave you who had not had any food for 3 days, since I wrote that has died. He Committed suicide by hanging himself in the shelter in which he was living.
One of the problems that I have seen is that folks don't know that they might be eligible for benefits other than cash assistance. Knowing of the 5-year limitation for benefits, confused families are not applying for medical benefits or food assistance in order to conserve their option for a time of greater need.
Page 89 PREV PAGE TOP OF DOC Access to the system itself has not changed in response to accommodate the changes in the system. Appointments in the area that I live in are still available only during the daytime, on weekdays. Working poor are required to take time off of work, which may not be possible at all, to be able to keep their appointments.
In Christian scripture, we are bid to love and we are also bid to love wisely. I think that we love very deeply, but I am not sure how well we are loving sometimes. Private charity has inadvertently complicated some of the problems. For example, most of the food banks and food pantries have a surplus of soft drinks and highly sugared beverages of poor nutritional quality. Donations of infant formula are erratic in quantity. Some have iron and some don't.
The charity is so easy to access, many mothers have come to rely on these donations instead of going to WIC. They don't understand that the nutritional quality is different or that some babies should not be getting supplemental iron. Their concern is to get anything they can into the baby's belly. Infants are quieted with baby bottles of soda, and this results in the kids often becoming malnourished, yet obese, developing excessive appetites for sugar, sets the stage for dental problems, and the premature loss of baby teeth leads to speech disorders. I mention this because I am thinking of Joshua, a little child that I have whose front teeth rotted out long before he learned how to speak. He cannot even say his name intelligibly. His inability to be understood leads him to fits of rage.
He is black. He is male. He is poor and he cannot even speak clearly. It hurts me terribly to look into the face of a 5-year-old and to suspect that he is doomed. Had he been getting appropriate food and informed attention, this could have been prevented.
The programs are still needed but they need to be examined to remove barriers to the access.
For many of the people that I serve, I can't think in terms of emergency food relief but of chronic food relief. The street wisdom is that you must always pay your rent or you are going to be evicted, but food you can always get somehow. Food is the only commodity that is available for free, but the pressure on the valve is getting too high.
Page 90 PREV PAGE TOP OF DOC Any and all efforts to shore up and stabilize the working poor must be taken. It is a lot easier to fall into homelessness and indigence than it is to get back out, and I am telling you from the meanest streets there is no more room down here. We can't have any further gutting of programs that help folks hold on to their jobs, their health and their home.
Thank you very much.
[The prepared statement of Ms. Silliker appears at the conclusion of the hearing.]
Mr. GOODLATTE. Thank you, Ms. Silliker.
We commend you for your work in that area. I am a very strong supporter of the kind of outreach that private charitable organizations do.
One of the issues that we deal with here today in terms of addressing the decline in the Food Stamp Program enrollment is what are the causes of that, and we all agree that certainly the economy is one reason.
A recent GAO report found that that was the principal reason but also tighter food stamp eligibility requirements that were passed into law a number of years ago are a reason, especially for able-bodied persons with no children who are between the ages of 18 and 50, and noncitizens; and, three our welfare reform initiatives enacted by a number of the States.
It is clear also that a number of people are making choices that lead them to receive and therefore need an increased amount of that private charitable support that you have described.
I have introduced legislation in the last Congress and intend to continue pushing for an increase in the amount of money for the emergency food assistance program, or TEFAP, that many organizations like yours rely upon to be able to meet those private needs. If we are seeing a change in behavior, directed in that way, wouldn't it make sense that if able-bodied adults without children are leaving the food stamp program, we have some reasons whywe know why, we may not know other reasons; and there is well over $100 million left over in the USDA's account for employment and training programs that was intended to help that population stay on the Food Stamp Program; since they are leaving the program and by some accounts putting additional pressure on the community that you represent, would it make sense to transfer a portion of that money from the food stamp employment and training programs to the TEFAP program?
Page 91 PREV PAGE TOP OF DOC Ms. SILLIKER. Yes. I think TEFAP should be supported, but I do have great reservations about increasing thegiving more money to the private sector for us to be able to take care of the problems, because we are just not equipped to do that.
You know, I speakI represent a church. I am not a social service agency. I have a deep commitment to the work that we do, but we do other things as well, and we do not do it as well as the Federal programs do.
Mr. GOODLATTE. The problem we are talking about here is not that the money isn't available for those Federal programs; it is that individuals are not availing themselves of those programs and for reasons, some of which we may know and some of which we may not know, they are coming to you and, I would agree, in somewhat greater numbers than they have in the past. I think it varies from place to place and organization to organization, but generally I would say there has been an increased demand, and in order to try to help meet that demand, it would seem to me that if some of the money isn't being used elsewhere, as long as there still is money available to meet the needs that are being demanded in the government programs, that some of it could be spared to help your programs.
Ms. SILLIKER. I will agree with that.
Mr. GOODLATTE. Mr. Greenstein.
Mr. GREENSTEIN. I think when we arewe are talking particularly now about the 18- to 50-year-old childless individuals, and I remember when Congressman Kasich offered his proposal on the House floor in 1996 that he said the purpose wasn't to cut them off; it was to get them to go to work. And there was a work requirement and that if they participated in a workfare slot, they would receive foodbe able to receive food stamps while they were in the workfare slot.
Then after the law was passed and it took effect, it turned out that very few States had workfare slots for that group. So in the 1997 Balanced Budget Act, Congress provided funding for States to create the work slots. I think what you are referring to is those amounts of money that Congress provided in 1997 that have not been used.
Page 92 PREV PAGE TOP OF DOC Mr. GOODLATTE. That is correct.
Mr. GREENSTEIN. I think, in this case, part of the reason why less of the money has been used, I think this is an area where there is a problem with the Federal regulations governing the use of the money.
The Federal Government set for the States a reimbursement rate. The State gets paid a certain amount for each work slot it creates for these individuals. Some of the States say that that reimbursement rate is not sufficient to cover the costs of creating and administering the work slot.
The Department did allow, I think, eight or nine States, I forget the exact number, as a kind of a pilot project toI am not sure if they got a waiver or what was the nature of itto have a different reimbursement rate structure. I haven't seen results yet, because this is relatively recent, as to whether more work slots are being created for these people with a different rate structure. If they are, then I would hope that the Department could be encouraged to allow that procedure to extend to other States, because I would think that everyone's first goal would be, in a welfare reform spirit, to put together the food stamp assistance and the workfare and the work support. And when someone goes to a private agency, a food pantry, a food bank, there isn't a work program connected with that. There isn't employment and training; there isn't a workfare slot. So my
Mr. GOODLATTE. There isn't, but let me say that in many respects I think that there is something that takes the place of that that is very good, and it can't completely replaced by what you are talking about. But that is that I find with local, grass-roots, church-run and other private charitable organizations, that person doesn't just get a bag of groceries when they show up at that organization. They get, how is your family doing? Are your children in school? Are you healthy? Do you need a ride to the doctor? Do you have a job? I have got a lead on a job.
Page 93 PREV PAGE TOP OF DOC There are a lot of things that they do get in that regard that is very good, and I don't want to see that transplanted by simply going back to a system that relies totally upon government agencies taking care of that, because I really believe that that kind of community involvement is what we have lost in this country over the years; and we are getting back to it, in some respects. I think that that is a positive thing in terms of neighbors helping neighbors with problems.
Mr. GREENSTEIN. I would agree. And I think we need a mix. It is my understanding, and if I am wrong, Ms. Silliker can correct me, that when people go to a private food pantry to get aid, that often you can only go once every 3 months, once every 6 months, that they vary. Also, that the private agencies vary tremendously in the degree to which they are able to provide the kind of counseling and support you have just mentioned.
I don't think it should be an either/or. The point I am making simply was that as I understood the purpose of this part of the Welfare Reform Act, it wasn't simply to be an arbitrary cutoff. It was to say, you can either get a job in the private sectorI think I am paraphrasing Mr. Kasich's words on the flooror get a workfare slot through the agency, and if you meet those and you are still poor, you will qualify for food stamps.
We have had difficulty in making this part of the system work that is supposed to provide these workfare slots, and I think part of what we need to do is to look again at why is that not working better? Are there rigidities in the Federal rules on that? If resolved, would States, could States create more work slots for these people? I would think that that would be a positive thing to do.
Mr. GOODLATTE. Mrs. Clayton.
Mrs. CLAYTON. Thank you.
By the way, I think it certainly is a good thing for those of us who care about our neighbors to be engaged. Our church, tooI am not Lutheran, but Presbyterian, and we have just started a food pantry some 3 years ago, and it is a supplement, not ain this small town, the Salvation Army has one, a far more sophisticated one than our church.
Page 94 PREV PAGE TOP OF DOC Our church is not the only church. We sometimes go with the soup kitchen of a larger church, but all of these are acts of charity and caring for our neighbors; not only the people who receive it have benefit, but those of us who give it, we are enhanced by it. So it is a two-way street. Indeed, those who give charity are blessed by it.
The Government's roleit seems to me that this is an opportunity to supplement those kind of activities that may be in that area.
I was struck by what I thought I heard was the stress in the volume of people who are at the very bottom that are not seen. I don't know why they don't go to the Government, but I do know we have to find a way to overcome that barrier because I don't think there are enough charitable organizations, or at least their structure is not developed and sophisticated enough to deal with that, and some of them would like to be engaged in additional activities.
So I would not urge us to have the whole responsibility of feeding the hungry on the charity or on the church, as much as I applaud that and think we have to do that to encourage individual people of faith.
I wanted to go a little bit further on the childless adult, 50 and under, and what other things can we do, Mr. Greenstein, to make sure that we are using those dollars and they are not sitting there? I think they weren't just there to be there.
Mr. GREENSTEIN. Well, I admit to being a little puzzled on this myself, but the one thing thatI guess the one thing that we have focused on to some degree, talking to, listening to some of the States, is that they do have some concerns on the structure under which they get reimbursed for these work slots.
The other thing that I have heard is, a number of States took awhile to
Mrs. CLAYTON. Are they limited just to work slots? They can't dothey can't get reimbursed if they are counseled in job readiness?
Page 95 PREV PAGE TOP OF DOC Mr. GREENSTEIN. But under the law, I think you must actually befor example, if you are simply engaged in job search and the State is administering job search, that does not meet the test under this provision of the welfare law. I am a little fuzzy. I think a training slot does, but it has to be a real training program. It isn't, you know, a job search program. It is a work program, a work slot, a workfare slot, actual employment, or an approved training program.
Part of the difficulty here, I think, is both that historically, both through the welfare system and the job training system, that these very poor, generally not well-educated, not highly skilled, single individuals without children never were really served very well in any kinds of job or training programs.
Second, for very understandable reasons, States have focused their energies on the switch to the TANF block grant. They have had a lot to do to institute Welfare-to-Work programs for the mothers with children who have moved from AFDC to TANF, and that has really been a priority for the States over, I think, putting into place work programs for these single individuals.
One can understand a State that has more to do than it can get done, with so many changes going on in the system, at the same time making that a priority. My hope is that as the TANF system matures that more energy can be devoted to making the work and training system work better, using in part these food stamp, employment and training funds for these single individuals.
To be candid, I don't think we know yet whether we can make this a lot more effective, but I think we have to try further. I admit the results have been disappointing, to date, with these provisions of the 1997 Balanced Budget Act, but I think we need to try harder and further to make them work effectively.
Mrs. CLAYTON. Do you know whether there is data to show if there is an increase in that category without using the dollars so the dollars could be assumed not needed, or using the dollars as a way of indicating whether effort is being made?
Page 96 PREV PAGE TOP OF DOC Mr. GREENSTEIN. What I am really kind ofwhat we have looked at, to some degree, is to what degree the States have actually created and filled these workfare or other job slots.
Mrs. CLAYTON. I just want to note the Urban Institute finding and the study. Mr. Chairman, I ask if that full report can be included in thedid you bring your report, your study?
Ms. ZEDLEWSKI. The report is not complete. It will be at the end of this month.
The report I think you might be referring to is my colleagues' report, which is just focused on single mothers who left welfare.
Mrs. CLAYTON. Right. Is that completed? That one is completed?
Ms. ZEDLEWSKI. Yes.
Mrs. CLAYTON. If we could have that as part of the record, Mr. Chairman, I would appreciate it because it does give, I think, important information that we can benefit from.
Mr. GOODLATTE. Without objection.
Mrs. CLAYTON. Thank you.
Mr. GOODLATTE. Thank you. We will do another round of questioning, if you would like.
Ms. Zedlewski, do you agree that there are some families who leave welfare for work and do not continue to receive food stamps and do so at their own choice, whether that is because they do not want to bother with the food stamp application process for a small amount of money, or because they want to stay off welfare; they have made the transition on TANF and they are saying, well, you know, they are proud of that fact and they are going to make the entire transition and therefore choose not to take the food stamps?
Page 97 PREV PAGE TOP OF DOC Ms. ZEDLEWSKI. I do believe that that is part of what is going on. I think it is a complex picture. It is that, plus it is families who don't know that they are still eligible. It can be a complicated process to keep your information up-to-date to appear for certification, as you have heard today. And I think, in part, we might also be looking at a transition period where families, who have left welfare and are moving into the working poor now have to navigate the system on their own and really didn't have to do that before.
So I think in order to make it work well, we really do need to have outreach; have good information; make it easier for families to know that nutrition assistance is available, because I think, while you are right that some of what yousome of the families are choosing to leave a system, others just don't know that benefits are still available to them.
I would add a statistic, for example, that was not in my study. The very lowest-income families who left welfare reporta much higher percentage report that the reason that they left food stamps was because of the administrative difficulties, like at least a quarter of them. So we are seeing that there is some relationship between leaving welfare, leaving food stamps, and some who just are having difficulty navigating the system.
Mr. GOODLATTE. Since the President applauds the caseload reduction on the TANF program, would it be a positive step to make similar reforms to the Food Stamp Program as were made to the old AFDC program back in 1996?
Ms. ZEDLEWSKI. My personal belief is that this is a nationwide, basic income support of nutrition for all families, and nutrition and health care are key elements of well-being, and that it is really good to have it be uniform across the country.
Mr. GOODLATTE. Mr. Greenstein, getting back to the employment and training program, it is my understanding that more than two-thirds of the able-bodied adults without children have been waived from the workfare requirements and that, of the remaining percentage, a great many of them are just not showing up for that program.
Page 98 PREV PAGE TOP OF DOC Wouldn't that justify trimming back the amount of money made available for the program to utilize for other purposes like what we have obviously identified and agree upon is a need to support the private charitable efforts through the TEFAP program, which is not a very expensive program compared to the Food Stamp Program? I think the total amount is $100 million as compared to $18 billion to $20 billion for food stamps, even at the reduced level of food stamps today.
Mr. GREENSTEIN. My understanding is, I think the waivers which cover certain areas with higher rates of unemployment cover about one-quarter of the 18 to 50's. At the time the 1997 Balanced Budget Act was passed, I think it was more like 35 percent, but the State of California accounted for a significant share of those waivers and it has since let most of its waivers lapse.
It certainly is true, from what I have heardI don't know the figures; I am not sure there are good figures available. I am not sure there is a study, at least until the Urban Institute comes out with one. In those areas where there are not waivers and where they do have workfare programs for these clients, what percentage of them turn up to comply and what percentage do not show up? It is true that among this population, the single adults without children, rates of noncompliance with work requirements tend to be higher, at least historically in the past, than rates of noncompliance among mothers with children.
I certainly agree with you and applaud your interest and support for the TEFAP program.
My hope would be that we could try somewhat longer to make this part of the food stamp changes in the Welfare Act, the 1997 Balanced Budget Act, work better, and find another source of funding for some augmentation of TEFAP.
It is not my intention to get into a broader debate on other issues here, but it does seem to me that the projected surpluses ought to be able to accommodate the kinds of increases you are talking about on TEFAP.
Page 99 PREV PAGE TOP OF DOC You know, this gets into a broader question of how much does one allocate for tax cuts and things of this sort? But my preference would be to, at least for awhile, maintain that food stamp funding and try and make the employment and training work better and, separately, to augment the TEFAP funding to the degree that that is needed.
Mr. GOODLATTE. Thank you.
Mrs. CLAYTON. Just so I understand the Urban Institute's studyand I guess this is the one that you reported onto what extent are families who left food stamps still eligible? Sixty-two percent of former food stamp families had monthly incomes of 130 percent of poverty. Is that correct?
Ms. ZEDLEWSKI. Sixty-two percent had monthly incomes below 130 percent of poverty; below the gross income for the Food Stamp Program.
Mrs. CLAYTON. And 45 percent had below the poverty level?
Ms. ZEDLEWSKI. That is right.
Mrs. CLAYTON. One-quarter of them had below 50 percent of the poverty level?
Ms. ZEDLEWSKI. One-quarter of families with children who left welfare and also left food stamps had incomes below 50 percent of poverty.
Mrs. CLAYTON. Now, will your study, which is in progress, I gather, because it is not complete
Ms. ZEDLEWSKI. It is in the editorial process, the editing process.
Mrs. CLAYTON. OK. The construct of your study, did it go toyou surveyedI have forgotten the methodology. You surveyed people. Did you get to the question of why, in terms of what theyif this is the case
Page 100 PREV PAGE TOP OF DOC Ms. ZEDLEWSKI. We asked families why they left the Food Stamp Program, and we allowed them to give a free-form response to that question and they could provide multiple answers to it as well. Most of them gave one answer. The vast majority said it was because of earnings or a job; 70 percent, for example, of former welfare recipients said they left food stamps because of a job.
As I noted in my testimony, we can't tell whether that means they think they are no longer eligible or if they are choosing to leave food stamps, the Food Stamp Program.
The next most common reason that people give is indeed administrative or program hassles; difficulties in getting benefits and maintaining their benefits. And as I noted earlier, that tends to be a more frequent response among those with the very low incomes. So, in other words, you really have some groups with higher incomes moving out of the program. Maybe, as the chairman said, their benefits are relatively low and it is less of a payoff for them to maintain them. But on the other hand, we have families with very low incomes who are not participating in the program and they attribute it to administrative or reasons that it is a hassle to get the benefits.
So I think we have a complex picture and need to think about that.
Mrs. CLAY. OK. Mr. Greenstein, can you tell us, what do you think would be the impact of removing the caps on the shelter deduction? What would that do for us in the Food Stamp Program?
Mr. GREENSTEIN. That would certainly be something I would be in favor of.
As you know, theI think the cap is nowfor the elderly and disabled, there is no cap. The amount by which
Mrs. CLAYTON. Families with children, though, is what I am talking about.
Page 101 PREV PAGE TOP OF DOC Mr. GREENSTEIN. The amount by which your shelter costs exceed half your income is deductible in determining the food stamp benefit. For the nonelderly and disabled, which is primarily families with children, I think the cap is $275 a month now and is scheduled under the welfare law to rise to $300 in 2000, in the year 2000.
The provision enacted in 1993 would have gradually equalized the treatment of families with children and the elderly and disabled. It wouldn't have had a cap. The effect of that would be that for those families, primarily families with children on food stamps, that do not have any governmentFederal, State usuallyor local housing assistance, they are not in public housing, they don't have a section 8 housing voucher, and that pay very high proportions of their income for housing, thereby putting them in a situation of having difficulty paying the rent and utilities and buying food, enough food to last through the month as well, they are the people that would be affected by this. It is a fairly targeted group.
It would be those families with children whose shelter costs exceed half their income by more than $300 a month.
Now, interestingly enough, this is not primarily welfare families, because in most cases welfare families can't afford to come close to making a payment of that sort. I think when we looked at it, there is a significant portion of working poor families that are in that circumstance whose food stamps would be augmented if one raised the shelter cap.
The other thing, if one is talking aboutthis, of course, would take a legislative change and it would cost some money and it would have to be accommodated in a budget.
The other thing that several of the States mentioned, that I would very much endorse, would be the notion of a legislative change if and when the money becomes available, that gives States the option of conforming the food stamp vehicle limit to the vehicle limit they use in their TANF or Medicaid Program. I think that would be a helpful change, too.
Page 102 PREV PAGE TOP OF DOC Mrs. CLAYTON. Is there a shelter cost used in the Medicaid Program?
Mr. GREENSTEIN. To the best of my knowledge, Medicaid programs do not have a similar shelter cost deduction.
Mrs. CLAY. They just have an income limitation on that?
Ms. ZEDLEWSKI. Right.
Mr. GREENSTEIN. They have earned income deductions. I think they may havesome child care may fit into the calculation. I am not sure. I am not that expert on how the Medicaid income calculations are done.
Ms. ZEDLEWSKI. It doesn't have a special shelter deduction.
Mrs. CLAYTON. OK. Reverend Silliker, I know you do not run a shelter program, but do you find that those that run the shelter program find difficulty in accessing programs with USDA as far as shelter costs, whereas the commodity program or other programs, they use for their food kitchen programs?
Ms. SILLIKER. Some do and some don't. Quality is very uneven, has been my experience; and shelter is really not something that I am terribly up to date on. I have medicine and food where I concentrate.
Mrs. CLAYTON. You get food through which program?
Ms. SILLIKER. I operate the free medical clinic and the soup kitchen. The soup kitchen has its own administration, but it is a Catholic food kitchen. So almost everything is coming through the Catholic parishes.
Mrs. CLAYTON. So they would be eligible, though, for the commodity food programs or whatever?
Ms. SILLIKER. There may be eligibility there, but the ability to do that might not exist at the same time.
Page 103 PREV PAGE TOP OF DOC Mrs. CLAYTON. I see. Mr. Chairman, thank you for having this hearing and these are all the questions I have. If we could get the reports from the Urban Institute when they finish it, I think it would be beneficial, and if we could submit the report on families with children now for the record, I think that would be helpful.
Mr. GOODLATTE. Certainly. We will ask unanimous consent to hold the record open for 10 days for anything you have now, but if you have the report later, please send that to the committee. We would welcome seeing that, if even it is not made a part of the record of this hearing, and I want to thank all of the witnesses for their contribution today and for coming to be with us.
Mrs. Clayton, do you have anything you want to say in closing?
Mrs. CLAYTON. No. Thank you. We are almost at the end of our session, but I think we did get this hearing in. Perhaps we can look forward to benefiting from what we heard and trying to make some correction in the area. Again, hunger is an area that shouldn't be political. HungerI think it is true, hunger allows for both the private and charitable, but also it does not diminish that the Government should have an obligation, and I think this is one way the Government keeps its commitment to the poor, by providing food where it is needed.
Mr. GOODLATTE. And in that further regard, since the Ways and Means Committee's report has been cited to make a point, that I agree with in part. And I agree with you in part, but I disagree with you in part. I am going to read a paragraph from the executive summary of that report to give the other side of that; that will be my closing comment.
It has now been more than 5 years since the majority of States got a head start in implementing strong welfare programs by requiring waivers from previous law, nearly 3 years since enactment of the national welfare reform law, and almost 2 years since all States were required to implement its essential features. The review of available evidence demonstrates that the 1996 law has already produced many striking successes. It has converted most local welfare offices from check-writing operations into Welfare-to-Work programs; produced by far the greatest exodus from the rolls in the history of American welfare programs; resulted in a substantial increase in per family funding; played a major role in an unprecedented increase in labor force participation by low income, especially never-married mothers; been associated with important declines in poverty, especially among black children; and may have influenced a historic reversal in illegitimate births.
Page 104 PREV PAGE TOP OF DOC These dramatic successes were produced by the Republican revolution in Welfare-to-Work requirements, combined with the system of Federal work programs that provide cash tax credits, health insurance, child care and other benefits to low-wage working families.
Again, let me thank everyone who has participated today, and at this point, if I can find my magic words, I will ask unanimous consent to allow the record of today's hearing to remain open for 10 days to receive additional material and supplementary written responses from witnesses to any question posed by a member of the panel. And if Mrs. Clayton has no objection, she won't make a liar of me for all the promises I made earlier that we would hold it open, and without objection, it is so ordered.
This hearing of the House Agriculture Subcommittee on Department Operations, Oversight, Nutrition, and Forestry is adjourned.
[Whereupon, at 3:05 p.m., the subcommittee was adjourned subject to the call of the Chair.]
[Material submitted for inclusion in the record follows:]
Testimony of Shirley R. Watkins
Good morning, Mr. Chairman and members of the committee. I am Shirley R. Watkins, Under Secretary for Food, Nutrition and Consumer Services at the U.S. Department of Agriculture. It is a pleasure for me to be here this morning to talk about the Food Stamp Program and the critical role nutrition plays in helping working families successfully make the transition from dependency to self-sufficiency, and in helping families in need secure a healthful diet during times of financial hardship.
At the U.S. Department of Agriculture, we are proud of the vital role the Food Stamp Program plays in helping low-income families, including working families, the elderly, and people with disabilities, to purchase food for an adequate diet. For many people, food stamps can make the difference between living in poverty and moving beyond it. It is also an important component in helping people move from welfare to work. To achieve these purposes, we must identify and remove any barriers that prevent eligible low-income families from participating in the Food Stamp Program and find ways to better serve the working poor.
Page 105 PREV PAGE TOP OF DOC We take this mission very seriously and we are governed by the following seven guiding principles:
The Food Stamp Program fights hunger and improves nutrition among low-income households;
Proper nutrition and sufficient food are as essential to the successful transition from welfare to work as child care and health insurance;
The national eligibility and benefit rules of the Food Stamp Program form a safety net across all States;
Improved nutritional well-being is the ultimate measure of success in the fight to reduce hunger and improve nutrition;
Food stamp policies must address the needs of a diverse range of children, families, and single individuals, including the working poor, elderly and people with disabilities;
Administrative simplicity is important as the program meets the nutritional needs of low-income people; and
Prudent stewardship of program resources is critical.
The Food Stamp Program is a nutrition program and Congress deserves praise for recognizing the importance of the Food Stamp Program and maintaining it as a Federal nutrition assistance program with uniform, national standards.
In recent years, States have taken remarkable action to revolutionize the welfare system. A strong economy combined with innovative State policies and an unyielding commitment to helping families become self-sufficient as they move from welfare to work has resulted in a dramatic decline in the number of families receiving cash assistance. Many more individuals are now working to support themselves and their families than ever before. Critical to their success is the ability to feed their families adequately. But many challenges remain to ensure families off welfare have the supports they need to remain employed and off welfare.
Page 106 PREV PAGE TOP OF DOC Last month, the Food and Nutrition Service released Household Food Security in the United States: 1995-1998, a report showing that in spite of the economic prosperity of recent years, over 10 million Americans still live in households that experience hunger. So we know that, in spite of booming economic prosperity, nutrition assistance is not reaching everyone who needs it.
In May 1999, the Food Stamp Program served 17.95 million people, the fewest in nearly 20 years. Not since December 1979 have fewer people received food stamps. The number of people receiving food stamps over the past five years has fallen by 9.6 million, a drop of over one-third. From August 1996 through May, participation dropped by almost 7 milliona 30 percent decrease.
Historically, the pattern of participation in the Food Stamp Program has closely tracked the pattern of poverty in America. However, in recent years, the two patterns have diverged and the number of people receiving food stamp benefits has fallen far greater than the number of people living in poverty. We know, for instance, that between 1995 and 1997, food stamp participation fell five times as fast as the number of people living in poverty.
As you might expect, there are a number of factors contributing to the decline in food stamp participation, such as:
The strength of the Nation's economy has allowed some former participants to find work, reducing their need for food stamps;
The success of the Temporary Assistance for Needy Families (TANF) Program has helped many low-income mothers gain self-sufficiency through work, with an increase in income sufficient to eliminate the need for food stamps; and
Changes in program rules under welfare reform have restricted the participation of immigrants and unemployed childless adults.
Clearly, welfare reform and a strong labor market have combined to make work more attractive and jobs more accessible. Still, there are many who need help in feeding their families. We know there are parents who are out there working hard to provide for their children who do not yet have sufficient earnings to buy the bare necessities. Families with earnings up to $8.50 an hour for a family of three can be eligible for food stamps to supplement their income and help buy food for their families, but only 2 out of 5 eligible working families actually get food stamps. With more and more families leaving welfare for work, this low participation rate among working families becomes more important.
Page 107 PREV PAGE TOP OF DOC Let me be clear. The Food Stamp Program is important not only for the nutritional well-being of low-income Americans; it is a support whose benefits will likely be critical to the success of welfare reform. Many of the families leaving welfare today have made similar attempts in the past, often ending up back on welfare. Making food stamps, like TANF, more work friendly and increasing awareness among working poor families that the Food Stamp Program is a work supportand not a welfareprogram will increase the likelihood that families do not return to welfare.
States have made great strides in developing programs that focus on work. Some of these welfare reform initiatives have had unintended consequences:
Sometimes State and local practices discourage people from applying for cash assistance, thereby diminishing access to food stamps;
Lack of awareness of eligibility for the program may cause some participants to leave the program unnecessarily and discourage others from applying for benefits; and
Requirements for the reporting of earned income have made it difficult for the increasing number of eligible working families to receive food stamps. As a result, many eligible working families have left the food stamp rolls.
On July 14, President Clinton announced several new food stamp policy changes to ease States' transitions to a new way of working with families in need. Income reportinga major paperwork hassle both for recipients and State agency staffmay now be required quarterly, rather than monthly. A new food stamp vehicle policy will allow some working parentsthose who are receiving noncash TANF benefits and servicesto have a reliable car and receive nutrition assistance for themselves and their children. And States will no longer be penalized for small errors made by food stamp applicants or State agency staff.
Page 108 PREV PAGE TOP OF DOC These new policies have been most welcome by the States and show the deep commitment this administration has to supporting working families, rewarding work, family, and responsibility, and protecting American families access to a nutritious diet, while focusing on finding ways to help States simplify and run their programs in an efficient way.
President Clinton also announced a new food stamp public education campaign, a food stamp hotline, and a new food stamp tool kit that will provide state, local, and community leaders with information about best practices to assist working families and clearly explain the food stamp law's access requirements. We are seeking additional resources in our FY 2000 budget to help fund these efforts. We have asked our State partners to work with us to develop plans to inform low-income households about the availability, eligibility requirements, application procedures and benefits of the Food Stamp Program; to develop simplified application procedures; and to prevent inappropriate denials and terminations.
This administration is committed to preserving and protecting Americans access to a nutritious diet and delivering food stamp benefits to low-income families in an efficient, effective way that maintains the dignity of the individual.
One way we are able to do that is through electronic benefit transfer (EBT) systems. Nationwide, sixty-four percent of all households receiving food stamp benefits access their benefits using a card now, rather than coupons. Forty States use EBT to deliver food stamp benefits and, as of this month, 33 have implemented EBT systems statewide. Under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, States are required to implement an EBT system for the Food Stamp Program by October 1, 2002, unless the Secretary grants them a waiver.
To help our State partners prepare to meet the deadline and conform to a number of new requirements of the welfare reform law, on May 27, 1999, FNS published proposed rules addressing issues related to cost neutrality, fees for replacement cards, and photo id's, among other topics. It is of vital importance that we continue to develop benefit delivery strategies that clients find easy to use and that are secure from fraud and abuse and that appropriately protect the privacy of the recipients personal information. One issue that is of particular interest to States is how to help food stamp recipients access their benefits wherever they are. This is of particular interest to States which have many border stores that attract food shoppers across State lines. This issue, known as interoperability, is the ability of EBT cards to be accepted by retailers in another State.
Page 109 PREV PAGE TOP OF DOC While the law does not require that States have interoperable EBT systems, FNS has encouraged interoperability and has long supported States choosing to require interoperability of their EBT systems. The Department shares in all associated costs at the 50/50 rate permitted by law. Nevertheless, the cost of implementing interoperable EBT systems remains a concern for States.
To help resolve the cost issue, we have been working with States and the EBT Council of the National Automated Clearinghouse Association (NACHA) to gather additional data through an interoperability project. This project is currently underway and early data suggests that the costs associated with interoperability are not significant.
Many States and food retailers would like to see interoperability become a requirement and have the Federal government pick up 100 percent of the associated costs. As we consider the benefits of this recommendation, the Department is nevertheless mindful that interoperability charges are not based on actual incremental costs (from what we have learned from EBT processors), and that USDA is not a party to the State EBT contracts. This gives the Department some pause, as it is unclear how successful we could be in controlling any 100 percent funding to ensure reasonable expenditures. Mr. Chairman, we would be pleased to work with your staff and this Committee on these issues. We believe that any proposed changes must take into consideration administrative feasibility, the burden on States, contractors, and retailers, and their overall effect on Federal spending. The Department heartily encourages and supports interoperability, believes that a nationwide, interoperable system is inevitable, and wants to work to help make that happen.
While I am on the subject of benefit delivery systems, I know a number of you have expressed interest in where States stand with respect to Y2K compliance. USDA has been working with the States to make sure their systems are Y2K compliant before January 2000, to ensure that accurately determined benefits are issued to all certified households on a timely basis. We expect that the States will have their systems Y2K compliant before January.
Page 110 PREV PAGE TOP OF DOC With regard to another food stamp system that is always in the public eye, I would like to give you a status report on the Food Stamp Program's payment accuracy system. It is critical to the integrity of the Food Stamp Program that States deliver nutrition benefits to eligible households accurately and efficiently. The quality control (QC) system exists to monitor how well States are doing this and when they need help.
It is damaging to the public confidence and support our nutrition programs deserve when benefits are issued to households who are not entitled to them. This not only constitutes a substantial loss of program dollars, but leads to a significant loss of public confidence in and support for a nutrition program upon which so many truly needy families depend. The accurate delivery of food stamp benefits to households who depend upon them has always been one of the administration's highest priorities.
When we see an increase in overissuance errors, as we did for fiscal year 1998, the Department is concerned. We have intensified our efforts to work with States to help them improve their payment accuracy.
But we are also very concerned when we seeas we did this yearan increase in underissuances that also counts toward a State's overall error rate. As I discussed earlier, when a family is denied benefits to which it is entitled or is issued fewer benefits that it should have, this does not constitute a savings but a serious problem in program access. Denying families access to food assistance when they are in need and are entitled to it is not a reform by anyones definition and certainly violates the spirit and intent of the Food Stamp Act.
American agriculture is the envy of the world and the Department of Agriculture has been proud to help needy Americans achieve better health and nutrition through nutritious foods and a better diet. As a nutrition program, food stamps help protect families at or below the poverty line against malnutrition and disease, while supporting the U.S. farm economy. This committee has oversight over the Food Stamp Program and recognizes that reducing nutrition support for American families struggling to become self-sufficient is a sure fire way to undermine the efforts of people trying to get on their feet while putting their health and that of their children at risk.
Page 111 PREV PAGE TOP OF DOC The Department is committed to working closely with this Committee, the Congress, and our State partners to ensure that every American who is entitled to and needs food stamps has ready access to them. While we can all take pride in the economic growth we have enjoyed in recent years, as long as we continue to have hunger in our midst, our job is not over. I know we can count on your support to help us complete this vital unfinished business.
Mr. Chairman, this concludes my remarks. I would be happy to answer any questions you or the other Members might have at this time.
["The Official Committee record contains additional material here."
Testimony of Jacki Snyder
Chairman Goodlatte, Congresswoman Clayton and members of the committee:
Good Morning. My name is Jacki Snyder and I am the Manager of Electronic Payments for SUPERVALU INC. I also chair the Food Marketing Institute's (FMI) Electronic Payment Systems Committee and am a Representative Board Member of the National Automated Clearinghouse Association's EBT Council.
I want to thank you for the opportunity to testify on behalf of the 21,000 retail food stores represented by FMI regarding legislation to achieve interoperability and portability of EBT benefits. We very much appreciate the work this Committee has done on EBT and the Interoperability/Portability issue.
Before I proceed, I would like to take a moment to tell you about my company, SUPERVALU INC. SUPERVALU is based in Minneapolis, MN and is one of nation's largest food distributors and the largest wholesaler for independent food retailers in the United States, supplying 3,100 supermarkets and 700 limited-assortment food stores in 48 states. We also own over 300 supermarkets operating under a variety of names and formats, making us the eleventh largest food retailer in the United States.
Page 112 PREV PAGE TOP OF DOC A large part of my time and that of my colleagues in the industry is spent working to ensure that recipients of our nation's food assistance programs are able to access their benefits without difficulty in our stores. The conversion from paper food coupons to EBT can make this a challenge at times.
Under the old paper food coupon system, recipients could redeem their food coupons in any authorized food store anywhere in the country. For example, a food stamp recipient living in Moorhead, MN could use their food stamps in Fargo, ND. Similarly, a recipient living in Colorado could visit their mother in Illinois and purchase food for their children while away from home. Unfortunately, as we move to electronic delivery of benefits, this is currently not the case. The legislation we are discussing today would once again, provide for the portability of food assistance benefits and allow food stamp recipients the flexibility of shopping at locations that they choose.
Supermarkets service food stamp recipients in numerous locations across the country that are similar to Fargo/Moorhead where people live in one state and shop in another. This cross border shopping is conducted for a variety of reasons. One of them is convenience, another is the cost of goods. The supermarket industry is a very competitive industry. Every week our stores advertise specials in newspaper ads across the country. I am a mother with three children including a 14-year-old son who knows how to eat and a three year old that still requires a great deal of time and attention. I not only shop at locations convenient to me but I also shop around for the best prices. While I am lucky enough to live in a location that offers a variety of stores within my state borders, a lot of people are not. There are many people who may live in an area like Washington, DC but find they drive to a store in Maryland or Virginia for a particular product or special sale price. Customers paying with every type of tender except EBT have the flexibility to shop where they choose. Why shouldn't recipients of food assistance benefits be allowed to stretch their dollars in the same way that other consumers do, without regard to state borders?
Page 113 PREV PAGE TOP OF DOC EBT portability is simply allowing recipients of benefits under the food stamp program to redeem those benefits without regard to state borders at the stores they choose.
In addition to portability, the legislation we are discussing today allows for the interoperability of EBT transactions. Interoperability can be simply defined as the ability of various computers involved in authorizing, routing and settling an EBT transaction to talk to each other.
Interoperability works well today with ATM/Debit cards, the type of cards that EBT was modeled after. Consumers and merchants are confident that when a MAC card issued by a bank in Pittsburgh is presented, authorization and settlement of that transaction will work the same as when a Star card, issued by Bank of America in California is presented. This occurs regardless of where the merchant is located.
Unfortunately, this is currently not the case with EBT cards. If every state operated their EBT program under a standard set of operating rules as this legislation requires, companies like mine, operating in 48 states, could be more efficient, resolve any discrepancies in customer accounts more quickly and ultimately hold down the price of groceries for all of our customers. When a customer comes in to our store and their EBT card does not work, they blame the store and our equipment, not the lack of interoperability.
Not approving the legislation in discussion today would be no different than authorizing individual states to print their own currency. Hundreds of years ago, states (or colonies) had the flexibility to do this. We converted to a common currency to eliminate the confusion and uncertainty that was the result of the lack of interoperability. Imagine the situation today if a resident of Stillwater, Minnesota arrived at a store in Hudson, Wisconsin with purple $20 bills with our governor's picture on them. This is not acceptable in the cash environment and should not be acceptable in the food stamp environment either.
Currently, the National Automated Clearinghouse Association's EBT Council is sponsoring an interoperability pilot. This pilot facilitates interoperability for EBT transactions issued under the QUEST operating rules that have been adopted by 31 states, 23 of which participated in the pilot. The purpose of this pilot has been to measure the quantity of interoperable EBT transactions and to project the costs for nationwide interoperability of EBT transactions. While this pilot is due to terminate in September, the results from an interim report that was prepared by Benton International were reviewed by Chairman Goodlatte's staff prior to drafting the legislation being discussed today.
Page 114 PREV PAGE TOP OF DOC This legislation Chairman Goodlatte has introduced is very straightforward. It would solve both the portability and interoperability problems that I have mentioned here today.
Specifically, the legislation introduced by Chairman Goodlatte:
requires interoperability by October 1, 2002, with a few exceptions needing a waiver; requires USDA to adopt the national standard used by the majority of the States; requires USDA to pay for all interoperability costs (currently estimated by Benton International to be no more than a maximum of $500,000 annually when all states are on EBT systems or $160,000 for the current year); these figures are based on the above mentioned study conducted on behalf of the National Automated Clearing House EBT Council (This is significantly less than the $20 million USDA pays annually to the Federal Reserve to redeem coupons); requires contracts entered into after the date when the national standard is adopted to use the standard, and for USDA to pay 100 percent of the interoperability costs; includes transitional funding for states currently using a national standard. Upon enactment, FNS will pay 100 percent of the costs of interoperability fees for current states using a national standard (While the interoperability pilot sponsored by NACHA is due to expire in September, this would allow those states and beneficiaries in states participating in the pilot to continue to have interoperable transactions beyond the pilot period without interruption.).
Requires current contracts that are not using the national standard to convert at the point of a new contract; includes a waiver process for current states with significant technological challenges to provide time to convert to the national standard (This is intended to cover current smart card states).
To summarize, the current interoperability pilot project continues through the end of September. It would be very helpful to retailers, states and recipients to pass this legislation prior to the expiration of the pilot so that consumers' transactions are not interrupted. It is easy to see the potential for confusion when a recipient walks into a store where they purchased groceries last week and can no longer use their EBT card because the interoperability project sponsored by the National Automated Clearinghouse Association has ended. This reduction in service would be quite difficult to explain to clerks or beneficiaries.
Page 115 PREV PAGE TOP OF DOC Again, Chairman Goodlatte, Congresswoman Clayton and members of this Committee I would like to thank you for the opportunity to testify on this important topic. I am glad to answer any of your questions.
Statement of M. Josita Silliker
Dear Chairman Goodlatte and members of the committee,
Thank you for the opportunity to address you concerning the operations of the Food Stamp Program. I am the pastor of an inner city church in Harrisburg, PA and, with a background in nursing and education, in October, 1995, I founded and continue to be responsible for a medical outreach clinic site located in a soup kitchen two blocks from the parish I serve. Thus, I have daily intimate contact with the poor and homeless of my neighborhood.
I intend to divide my testimony between an overview of the numbers involved and sharing some of the faces behind those numbers.
In the population I serve, 89.4 percent of the households have an annual income of less that $15,000; 64.9 percent of them live on less than $10,000 a year.
From 1993 through 1996, Congress decreased Federal nutrition support by 12 percent. Unfortunately, this resulted in $5 billion worth of food each year being taken out of the budgets of low-income households. The Federal welfare reform law, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, formally went into effect in Pennsylvania in March, 1997. It required that welfare recipients be employed at least 20 hours each week by March, 1999 or risk losing their cash assistance. From January 1996 through April 1999, food stamp usage in Pennsylvania was reduced by 26 percent. This is due, in part, to the widespread misunderstanding, among welfare recipients and welfare case workers, that losing welfare cash assistance also means losing food stamp benefits.
Page 116 PREV PAGE TOP OF DOC According to the USDA, from 1995 to 1997 the share of U.S. households experiencing hunger decreased from 3.9 percent to 3.1 percent. However, from 1997 to 1998, the frequency of hunger increased to 3.6 percent of all households. This means that 10 million people in the U.S. experienced no-doubt-about-it-hunger last year.
In Pennsylvania, an estimated 325,000 people experienced hunger sometime over the past year, while an additional 1,130,000 experienced food insecurity -the inability to access sufficient nutritious food with no need for recourse to emergency food or other extraordinary measures. Attached are charts and an article from the Harrisburg PATRIOT that further describe this need.
Nationally, 10 million households experience food insecurity last year. Second Harvest, the nation's largest food bank network, reported an increase of 1035 percent in food assistance, with 70,000 people turned away in 1997 because there was not enough food.
Most charitable food distribution systems in Pennsylvania report great increases in demand since welfare reform. My colleagues in the greater Philadelphia area, Philabundance (a prepared and perishable food rescue program), report an 18 percent increase in food assistance in the last year. The Interfaith Coalition of Food Centers in Delaware County reported steady demand in 1998, but a sharp increase in requests from March 1999. The Greater Pittsburgh Community Food Bank finds there has been no decrease in the number of households relying on charitable food since 1996. In my hometown, the South Central PA Food Bank reports a 12 percent increase in new neighborhood charitable food pantries, including those in rural areas. Most of them report serving more people than anticipated -Millersburg reported a 78 percent increase of people asking for help this year. My own congregation distributed 3 food vouchers a week prior to welfare reform: Last week we distributed 45 family vouchers, serving 144 individuals.
Network, a Catholic social justice lobby, in conjunction with five other Catholic groups, recently released their findings of a 15-month, 10-state Welfare Reform Watch Project. The findings in Poverty Amidst Plenty: the Unfinished Business of Welfare Reform are that ''children are experiencing serious deprivation -and social service facilities [food banks, soup kitchens] are stretched beyond their limits.''
Page 117 PREV PAGE TOP OF DOC They found that in the states with the highest welfare caseloads (CA, FL, IL, MA, MI, NJ, NY, PA and TX), numbers on welfare dropped from 33 percent to less than 5 percent; the number of disconnectedunemployed people not receiving any welfare benefits- rose sharply, from 52 percent to 79 percent; and, fewer poor people are receiving Medicare (down from 76 percent to 60 percent) or food stamps (down from 63 percent to 52 percent). In some states such as New York and Tennessee, fewer than 30 percent of people leaving welfare found work. Even in Wisconsin, where 83 percent made the shift from welfare to jobs, only 62 percent were still employed six months later. Network estimates at least one million children lack basic necessities.
The drop in utilization of government benefits is not balanced with an increased population of former recipients working and no longer in need of benefits. I echo Doug O'Brien, Executive Associate for Public Policy of Second Harvest, when he says, ''Food security is not solved by soup kitchens and food pantries. A just society depends on charities to fill the gaps; we must object to the trend of replacing public programs with private charity.''
In my work with the homeless and indigent, I firmly believe that we cannot afford any more cuts in nutrition programs.
FACES, STORIES AND RECOMMENDATIONS
Hunger is real. J, mother of 3, confides that she eats 4 or 5 hot dog rolls, commonly given away as surplus, and quickly drinks ''a lot of water'' so that they will swell in her stomach, creating a feeling of fullness so that she can sleep.
Another mother guesses that her child's lead level continues to increase because ''she's so hungry all the time she licks out the ashtrays.''
This week a man admitted to me he had not had any food in three days. He is too ashamed to return to begging to his elderly mother, yet again.
Another man in his 50's, who lost his job after a heart attack in January and is too healthy for disability and too impaired for his former employment, says ''I'm hungry. I got to make me a hustle.'' ''Hustles'' may be legal, such as fixing a neighbor's porch for $30, or illegal such as theft or prostitution.
Page 118 PREV PAGE TOP OF DOC The charitable food distribution system must be de-romanticized. The larger food banks and food reclamation programs tend to be efficiently and competently run. But, as one gets to the small, unsupervised individual pantries, food safety becomes a concern. In our own congregation's food pantry I found inappropriate, outdated, opened and insect-infested food. Distribution is typically done by elderly volunteers, with the expected physical limitations and erratic schedules, and with no background or experience in nutrition or sanitation from a public health perspective.
Barriers to Federal programs must be addressed. Communication and notification among the poor is haphazard. It was shocking how many folks did not know about the welfare changes that were going to greatly affect them. Information, often inaccurate, is passed on the street in lieu of access to TV, radio or newspapers. Many are illiterate and could not read the notices sent to them, others cannot speak English. Therefore, the current misperception is They changed the law. No more food stamps or anything.
The current system requires women to be in training or working; yet access to the system remains unchanged. WIC and welfare appointments are still available only at daytime, when mothers are already supposed to be elsewhere.
Last week I spoke with the mother of a 5 month old baby who was drinking, and vomiting, cherry KoolAid. The mother did not know the difference between juice, available from WIC, and juice-drink, available from charitable pantries. Highly transient -the baby had already lived in three states- and non-English-speaking, she had no benefits at all for her or her two children. Ignorance of resources, coupled with the ease of access to charity and difficulty of access to Federal programs have resulted in this baby falling through the cracks. Neither child's immunizations were up to date. She was dependent on our charity to provide antibiotics for the baby.
Stop the slide from working poor to indigent. My personal stake in this is that I deal primarily with the desperately poor. When the working poor slide into this population, demand for already scant resources increases and charity often ends up going disproportionately to the most adept poor, rather than the most fragile and needy. A family with a rickety car can visit multiple food pantries, while the poorest person, often elderly or infirm, can only access the one pantry she can walk to.
Page 119 PREV PAGE TOP OF DOC Additionally, once a person lacks electricity or becomes homeless, their food costs increase because they can no longer store food for later or save leftovers.
Strengthen the working poor. Groundwork for a Just World, a faith-based social change organization operating in Michigan and Indiana, finds that most are cycling off and on work at jobs that pay less than $7 per hour, with only 25 percent receiving health benefits, and 60 percent receiving no benefits at all such as sick time.
Enhance job security. Those with child care and health care are more likely to keep jobs. Some oversight must be made regarding the quality and longevity of the entry-level jobs former recipients are taking. Steady employment does not equate to family self-sufficiency.
One of my clients has four children, two of whom have severe asthma. When the children are sick, she must stay home with them. Therefore, she loses jobs due to unreliable attendance.
Another client did find a 20-hour a week job at $7.66 per hour. But that rate caused her and her husband (but not the children) to become ineligible for Medical Assistance. Her food stamps were adjusted downward and she is incurring child care costs. They are one medium-sized illness away from socioeconomic destabilization.
On Tuesdays I meet with my congregation at 6:30 AM. Driving there I pass women I know as clients from the Outreach Service, all dressed and waiting outside the temporary labor office for an assignment. I know how many of them have children at home, and that they've had to arrange (or have not arranged,) daycare in order to be there by 6:15 AM. Later that day, I often see them again at the Service. They'll tell me that the job ended by 10 AM, or that they'd gotten to the site only to be told they weren't needed after all.
Strengthen the Food Stamp Program. Working with the national anti-hunger lobby Bread for the World, the Food Research and Action Center and other food advocates, the Evangelical Lutheran Church in America (ELCA) supports passage of Senator Ted Kennedy's Hunger Relief Act of 1999. This bill, which still awaits introduction in the Senate, would improve services and fight hunger among working families by:
Page 120 PREV PAGE TOP OF DOC Restoring food stamps to legal immigrants: Last year's restoration of food stamps to legal immigrants affected less than one-third of the 900,000 cut by the 1996 welfare law.
Allowing states to let food stamp recipients own a car worth more than $4,650. This would make the food stamp vehicle allowance consistent with what most states, including Pennsylvania, allow for their Temporary Assistance to Needy Families (TANF) recipients. There are not enough jobs in the urban or rural centers and public transportation is inadequate to absent. Reliable personal transportation is crucial for job retention.
Eliminating the cap on the shelter deduction: This would allow families with high rents to receive increased food stamp benefits.
Increasing authorization for the Temporary Emergency Food Assistance Program (TEFAP). This would provide additional funds for commodity purchases and also allow the efficient charitable food distribution system to strengthen its infrastructure. Assistance in the purchase of refrigerators, freezers, ovens and dishwashers at soup kitchens and food bank and pantry sites is needed.
There are other critical policy recommendations, not contained in the Kennedy bill, that must be considered if hunger is to be adequately addressed.
Healthcare benefits are necessary for everyone. This includes pharmaceutical assistance.
Food stamp eligibility guidelines must be adjusted to each area's cost of living.
The minimum wage must be increased and the Earned Income Tax Credit must be strengthened.
I am a pastor ordained by The Evangelical Lutheran Church in America (ELCA). This year, the ELCA celebrates the 25th anniversary of its World Hunger Appeal. Since 1974, we have raised $200 million, which has helped relieve worldwide famine and address disasters in the United States and abroad. Lutheran hunger funds support the digging of wells and other development projects in poor nations. They also bring hope to children of poverty in devastatingly poor American neighborhoods.
Page 121 PREV PAGE TOP OF DOC Lutherans, therefore, agree that the church is responsible for addressing hunger and other human need. But charity cannot begin to even out the erratic nature of poverty. Only a partnership between private resources and government programs can bring hope and help to those in need. The Food Stamp continues to be the essential foundation for relieving U.S. hunger.
I am here today to urge that this committee enhance and strengthen this essential hunger relief program.
Testimony of Melba L. Price
Good morning, my name is Melba Price. I am an associate director with the Missouri Department of Social Services. I also serve as chair of the Southern Alliance of States or SAS, which is a coalition of states including Alabama, Arkansas, Florida, Georgia, Kentucky, Missouri, North Carolina, Tennessee, West Virginia and Mississippi. I am also on the board of the EBT Council, which is sponsored by the National Clearing House Association, known as NACHA. I want to thank the committee and especially you, Mr. Chairman, for inviting me to speak on the topic of interoperability and portability of food stamps through EBT. We appreciate this committee's support of EBT and hope to provide helpful information to you today.
My testimony will cover three areas:
Lack of portability of food stamps in today's electronic environment
Pilot project on EBT interoperability
Critical next steps
Portability of food stamp benefits has always been a component of the national food stamp program. The food stamp coupon has always been redeemable at any FNS authorized retailer in any state regardless of the state issuing the coupon. We believe that the method for delivering food stamp benefitswhether through paper coupons or electronically through EBT systemsshould not affect a food stamp recipient's access to licensed food stores.
Page 122 PREV PAGE TOP OF DOC When food stamps were paper, clients could use their paper benefits without regard to arbitrary boundaries. Prior to EBT, neither the Federal Government, nor state governments nor retailers ever worried about where benefits were issued or had to be accessed. Food stamps were universally accepted by all licensed food stamp retailers from coast to coast. Unfortunately, now that food stamps are being delivered electronically, access to food stamp benefits resembles a large patchwork quilt rather than a nationwide program. [Charts are attached] Interstate commerce, retailers, and recipients have clearly been impacted negatively.
EBT was first piloted in this country when there were no universal operating standards or rules. Each system was implemented on a stand alone basis. Approximately ten states implemented their EBT systems in this environment. They were our true pioneers and we have learned a lot from those systems. However, now that we have had the opportunity to review the impact of stand alone systems on the programs' stakeholders, it is time to act on our years of study and experience and implement an EBT system that is portable and interoperable.
The National EBT Council, sponsored by NACHA, is made up of representatives of state governments, payment networks, third party processors, retailers, banks and EBT vendors. These representatives have devoted time and resources in the development of a standard or universal operating rules that they believe will help guide implementation of the most efficient and effective interoperable EBT system. These operating rules are known as QUEST, a symbol purchased by NACHA. It is merely a symbol and no payment is made to a private company or NACHA for its usage. I have attached a background summary of how the EBT Council and QUEST were derived. In the development of QUEST, the Council has worked closely with USDA to ensure that the operating rules comply with applicable and relevant Federal rules.QUEST represents technical standards and operating rules much like the set of operating rules underlying MasterCard or Visa. In other words, clients should be able to use their EBT cards whenever they see the QUEST symbol at a store, the way customers use their MasterCard wherever they see the MasterCard symbol. Similarly, a retailer should be able to accept any card issued with the QUEST symbol on it. QUEST provides a standard way to use the commercial infrastructure similar to MasterCard/Visa.
Page 123 PREV PAGE TOP OF DOC To date, 31 states plus DC & Puerto Rico have agreed to implement their EBT systems using the QUEST national standards. As more and more states use the national standard, we are slowly meeting the resolution sponsored by Chairman Goodlatte in the 1996 welfare law that EBT systems should be interoperable. But we need congressional help to achieve full compatibility among state systems.
With Federal, state and private funding, 23 states with statewide EBT systems operating under a common standard are participating in a 6-month pilot project to examine certain components of interoperability. The pilot is designed to determine the volume of interstate transactions that will likely result in an interoperable system, and the range of gateway fees for switching interstate transactions typically found in the commercial market place. The pilot results are being analyzed and produced by Benton International, an independent firm selected through a competitive process. The pilot provides us with a national cost estimate for these gateway fees when the entire country is converted to EBT by 2002.
I serve on the project team managing this project. The project team also includes NACHA, a retailer, (Super Value), a third party processor, (Bypass), three EBT vendors (Citibank, Deluxe and Lockheed Martin) and USDA. All of these members have signed off on an interim report prepared in June by Benton. The exciting results are: 1.1% of food stamp transactions were transacted out of state; and market gateway fees ranged from 3 cents to 10 cents depending on different technical and service level issues. According to the report, based on these calculations, an annual maximum total of $500,000 would be necessary for uniform, coast to coast electronic accessibility to food stamps. The interim report presented to NACHA is attached to my testimony for your review.
Food stamps are a critical Federal benefit. As you are aware, the Federal Government saves significant dollars when a state's food stamp paper coupon delivery system is converted to an EBT system. As an example, the Federal Government saves 58 cents per month, per household due to the elimination of costs associated with printing and processing paper stamps. Also, the Federal Government currently pays the Federal Reserve more than $20 million dollars annually to process paper coupons, which, of course, will no longer be necessary, when EBT is nationwide. Paying electronic gateway fees is the equivalent of paying the Federal Reserve to redeem food stamp coupons nationwide. It is a Federal component of the food stamp program.
Page 124 PREV PAGE TOP OF DOC By paying these gateway fees, the Federal Government can once again achieve a seamless, coast to coast food stamp delivery system that restores client freedom of choice and access to all licensed retailers.
We believe the pilot project has already demonstrated the feasibility of establishing a nationwide interoperable EBT system. That is why we are pleased with the Electronic Benefit Transfer Interoperability and Portability Act of 1999 that is about to be introduced by Chairman Goodlatte. This legislation would require USDA to adopt a national technical standard used by the majority of states, which all states would need to incorporate in any new EBT contracts by 2002. It would also authorize USDA to pay interoperable gateway fees. To obviate the need to pay for retrofitting costs, states with current EBT contracts would have until the expiration of their contracts to meet the interoperability requirement. One state, Maryland, has already moved to QUEST in its new contract without any added costs associated with converting to QUEST. Moreover, states with significant technological barriers to achieving interoperability by 2002 would have the right to request a waiver of the deadline. With this legislation, we will finally be able to provide electronically the same access to food stamps that the paper system provided.
In conclusion, we believe that this legislation will help us achieve the goals set forth in the 1996 welfare bill that food stamps should be uniformly accepted regardless of how they are issued, whether as paper coupons or electronically. The pilot project interim results show that it would cost no more than $500,000 annually to achieve uniform access, and this minimal cost would be clearly offset by savings the Federal Government realizes as delivery systems are converted from food stamp coupons to EBT. We ask for your support of this legislation, when introduced, to achieve full portability of food stamps through EBT.
Thank you, Mr. Chairman, for your leadership in EBT and allowing me to testify today. I will be happy to answer any questions when appropriate.
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Statement of Brian Kibble-Smith
Thank you, Mr. Chairman, and members of the committee, for this opportunity to testify.
Our company, Citicorp Services Inc., manages a number of EBT projects in the U.S. EBT involves the use of debit card technology to deliver Food Stamp Program benefits and other government payments or entitlements. EBT reduces financial losses due to fraud, reduces state administrative costs, and improves services to benefit recipients. It is appropriate at this time to recognize that EBT is a success story, thanks to the dedicated efforts of government officials, retailers, financial institutions, EBT contractors and other EBT stakeholders, including the benefit recipients themselves who have embraced this technology.
As EBT has matured, one of several issues that must be addressed is EBT system interoperability, or the ability of EBT cards issued in one EBT project to be used in any other EBT project. This would replicate the historic ability of benefit recipients to use Food Stamp Coupons interstate to the extent this ability existed prior to EBT.
Interoperability presently exists between the Dakotas, between Texas and New Mexico, within the NCS, SAS and WSEA state EBT coalition projects, and in a pilot interoperability project operated under an arrangement between Citicorp Services Inc. and the National Automated Clearinghouse Association, or NACHA. Many EBT projects, however, are not interoperable, though there usually are special arrangements to permit limited out-of-state shopping where those shopping patterns existed prior to EBT.
To address a number of technical issues in EBT, NACHA's EBT Council developed the QUESTtm Uniform EBT Operating Rules, now adopted by almost 30 states. The QUEST rules enable EBT systems to operate using methods and practices that are similar to those of the commercial Electronic Funds Transfer, or EFT infrastructure, but that reflect the requirements of EBT that are very distinct from the commercial EFT environment. The QUEST rules, however, do not address issues of transaction costs or benefit policy.
Page 126 PREV PAGE TOP OF DOC Our company strongly supports interoperability and we are prepared to deliver this service in our projects. To do so will require negotiating contract amendments to cover price and policy issues with our various state agency clients. We wish to comment on some aspects of the legislation that the committee is now considering, since the legislation as drafted would have a significant impact on our business practices.
First, we understand that the legislation requires states with EBT systems to implement interoperability no later than the expiration date of their EBT service contracts. We prefer, and believe other EBT contractors will prefer this approach, with full interoperability introduced gradually, on a basis to coincide with the renewals, modifications or re-bids of current EBT contracts.
Second, we understand that the legislation calls for the Secretary to regulate interoperability based upon whatever standard is adopted by a majority of the states, presumably, the QUEST rules. However, we oppose transforming the QUEST rules into federal regulation. The QUEST rules were the result of a lengthy process to obtain an industry consensus and they have proven their merit. The rules go beyond technical requirements and include other areas of policy and practice. In the private-sector EFT industry, the government has recognized the wisdom of allowing industry experts and participants the ability to establish and maintain appropriate rules and guidelines for many, valid reasons.
Amendment of operating rules through a private body like NACHA is more expedient than changing a federal regulation. Also, membership in NACHA's EBT Council allows states, networks, processors, financial institutions, EBT contractors and others most affected by the rules to have a direct voice in the process. The matter of EBT operating rules should be left to industry participants rather than mandated by a government agency. Proposed EBT regulations recently issued by the USDA Food and Nutrition Service illustrate an appropriate balance. They contain certain technical requirements to help ensure that transactions will be interoperable, but allow specific EBT operating rules and practices to remain within the control of the private sector.
Page 127 PREV PAGE TOP OF DOC Finally, we urge Congress in considering its appropriations for interoperability to seek the opinion of the private sector on the actual costs of interoperability. An interim release of a NACHA study on interoperability preliminarily suggests that the annual cost of interoperability could be $500,000. This figure is low. The NACHA study is admirable and useful, but from the perspective of an EBT processor we believe that the report's treatment of costs is incomplete due to necessary limits on the scope of the study.
Since it is the responsibility of the EBT contractor to perform the tasks required for implementation of interoperability, the EBT contractor community should play a major role in defining the tasks required and their costs so that Congress can appropriate adequate funds for implementation.
In summary, we strongly support interoperability, 100% Federal funding for its costs, and a phased-in implementation. However, we oppose Federally regulated standards and maintain that greater attention to the issue of cost is required, with direct input from the EBT contractor community. While we would enjoy the opportunity to address interoperability in detail, the time available for the review of the proposed legislation in advance of this hearing was limited.
We hope these comments are of assistance to you.
Statement of Larry Goolsby
Good morning, Mr. Chairman and members of the Subcommittee. I am Larry Goolsby, senior policy associate with the American Public Human Services Association (APHSA), and I am testifying on behalf of our constituents, the state public human service administrators. APHSA was founded in 1930 and is a non-profit, bipartisan organization representing the state human service departments, local public human service agencies, and individuals. As those who carry out national assistance program policies, including the Food Stamp Program, we have an important and highly relevant point of view to add to the subcommittee's deliberations and we appreciate this opportunity to testify.
Page 128 PREV PAGE TOP OF DOC Last September, Mr. Chairman, you held a hearing on the Emergency Food Assistance Enhancement Act of 1998. APHSA presented testimony then and strongly supported provisions in the Act to remove restrictions on Food Stamp Employment and Training (E&T) Program funding enacted in the Balanced Budget Act of 1997. These changes would have reduced administrative burdens and would have made E&T services available to many additional food stamp recipients. In that testimony, we also presented briefly other urgently-needed Food Stamp Program reforms that likewise will simplify the program and expand its access to low-income families.
Since last year, APHSA has developed a more detailed and comprehensive set of proposals for reforming the Food Stamp Program. We have adopted policy resolutions, met with Hill staff and administration officials, and conducted Hill forumsall in an effort to make the case for broader and more comprehensive Food Stamp Program policy reforms. Our proposals were presented at a Capitol Hill forum we held March 9, where three state human service commissionersClarence Carter of Virginia, Lynda Fox of Maryland, and Gary Weeks of Oregonforcefully catalogued the problems and inequities caused by many areas of current food stamp policy. Those proposals are laid out in an Issue Brief paper that is attached to our written testimony.
Our proposals have generated widespread interest and support. Today's hearing is an important example of the interest policymakers have expressed in learning more about our ideas. We are also heartened by the series of food stamp administrative changes announced last month by President Clinton, which are among those we have long called for. These changes allow TANF families to retain a reliable car and remain eligible for food stamps; reduce the paperwork reporting burden on working families so they do not need to take time away from work to verify their income with a food stamp office; and increase the threshold of payment accuracy calculations from $5 to $25. We commend the Administration for this important first step in the journey toward toward comprehensive program reform.
Page 129 PREV PAGE TOP OF DOC State administrators are calling for similar and perhaps bolder changes in a variety of areas that I will briefly summarize.
Increase flexibility in the Food Stamp Program through waiver authority. While Food Stamp Program policy is rightly determined largely at the Federal level, the program nevertheless remains one component in an array of benefits and services provided through states to participants. For example, many participants also receive TANF and Medicaid along with food stamps, or have just left TANF yet still need food stamps as they transition into self-sufficiency. Nearly all those on TANF or leaving TANF are working in entry-level jobs and doing their best to succeed in the world of work. An even larger group of working families rely on food stamps alone. Many of the problems we have identified hurt most this large and rapidly growing segment of the food stamp caseload as they try to combine a job with participation in the program. Mandates for frequent and detailed reporting of changes place unnecessary burdens on recipients and their employers, and at the same time unnecessarily drive up state error rates. Unrealistic asset limits deprive most working food stamp families of a reliable cara virtual necessity to seek and retain a job. These limits also severely curtail the savings families can accumulate from their earnings.
Present food stamp law evolved in an era when few recipients worked and most received monthly Aid to Families with Dependent Children (AFDC) checks. Since the enactment of welfare reform, thousands of families have made the transition from welfare to work and food stamp only households are making up an increasingly larger share of all cases served. To serve the new influx of working families, the Food Stamp Program must be simplified and allowed to use the successful designs in the Temporary Assistance to Needy Families (TANF) program. Because states serve their low-income families through so many different approaches, the best way to mesh food stamps with these efforts is through expanded program waiver authority. Current waiver authority is so constrained by exceptions, conditions, and unrealistic cost-neutrality rules that it is no longer useful, and numerous state waiver requests have been denied. Even the Simplified Food Stamp Program option (SFSP), enacted in 1996 to let states achieve a degree of food stamp/TANF conformity, is saddled with the same problems and has been used by only one state.
Page 130 PREV PAGE TOP OF DOC We urge that Congress and the administration take immediate steps to broaden current waiver policy and allow demonstration programs.
Reduce program barriers for the elderly. At APHSA's summer meeting in Washington last month, our state administrators adopted a resolution calling for Food Stamp Program changes that would ease access for elderly recipients and reduce the paperwork burden and other program obstacles they must deal with. (A copy is attached.) The administrators noted that the elderly are one of the most underserved groups in the food stamp caseload. Currently, many elderly recipients receive the $10 minimum benefithardly an amount worth the aggravation of going through the eligibility process. Unlike the more flexible Medicaid program, recipients are not eligible to receive food stamps if they have saved cash to cover burial costs, or transfer resources for this purposefood stamps exempts only a $1500 funeral agreement, and a burial plot. The elderly must bring in receipts for all medical and prescription drug costs each month, rather than use a standard medical deduction. The APHSA resolution calls on the Administration and Congress to increase the minimum allotment to at least $25; extend automatic eligibility to the elderly who are also receiving SSI; raise the elderly resource limit sufficiently to enable them to retain ownership of a reliable car and an adequate savings account; put in place more reasonable burial fund rules, including elimination of the penalty for transfer of savings into such a fund; and allow the elderly a standard medical expense deduction.
Whether working poor, elderly, or disabled, the Food Stamp program has grown so complex and inflexible over the years it no longer meets the needs of the low-income families and adults it aims to serve. Something must be done to address this situation.
We want to acknowledge concerns that have been expressed about the declining food stamp caseload. There are many factors involved, with the most obvious being the good economy, the dramatic success of state welfare-to-work efforts, the series of eligibility changes since 1996 (particularly immigrant benefit changes with conflicting TANF and food stamp eligibility messages), and the paperwork burdens and participation barriers we are addressing today. Less clear are the roles of factors such as the presence or absence of program information and education activities.
Page 131 PREV PAGE TOP OF DOC In the TANF area, states already are in the midst of the most extensive information-gathering campaign in the history of cash assistance programs. Activities range from broad Federal data collection mandates to a variety of publicly and privately funded studies and extensive state tracking initiatives. Many of these efforts include the Food Stamp Program. Many Federal and advocacy organizations are conducting ongoing analyses as well. Should these efforts suggest policy changes that may be necessary, APHSA looks forward to working with this Subcommittee to address those findings.
Streamline the quality measurement system. The Food Stamp Program has long been measured almost completely on the total and predictable accuracy of income levels, which in turn means that wages must be tracked meticulously to avoid errors in the program. Anyone who works must report changes in wage rates, hours, child care costs, and so on in detail, and must report to the food stamp office frequently for interviews to minimize these errors. States that exceed a certain threshold of errors are subject to stiff financial penalties. But the nature of entry-level jobs is that wage fluctuations are frequent, and many jobs do not last very long. In turn, child care, child support, savings, and other elements of household finances also fluctuate, and all bear on food stamp eligibility and must be reported and verified. The result is that as more food stamp recipients go to work, penalties for errors increase.
Eligibility workers thus find themselves in this dilemma: should they encourage recipients to work, or should they discourage working cases in the hope of keeping errors down? They know that the best case for error rate purposes is one that never changesprecisely the opposite profile of a typical earned-income case. As mentioned earlier, the administrative changes announced last month are welcome improvements that provide a degree of relief for this situation. But APHSA calls for bold reforms to improve the quality measurement system by simplifying the program. Doing so would consequently reduce the administrative costs associated with the current program that are now at an all-time high of 18.5 percent of a typical case's benefits.
Page 132 PREV PAGE TOP OF DOC Allow more flexible use of E&T funds. As we testified last September, the Food Stamp Employment and Training (E&T) program currently operates under severe funding restrictions that keep families from using E&T services and keep most E&T funds inaccessible to states. The Balanced Budget Act of 1997 set aside 80 percent of E&T funds for single childless adults, or ABAWDs, in the belief that these persons would lose food stamp eligibility unless job slots were provided for them from the set-aside funds. In fact, the number of ABAWDs on food stamp rolls has declined sharply, and spending on their behalf has consequently been limited. On the other hand, for the many families who could be actively using E&T services, states can access only 20 percent of their allocations. The unfortunate result is that many states have been forced to reduce family E&T services. APHSA strongly urges the removal of the 80 percent/20 percent restriction on E&T expenditures. While we understand the concern that prompted the restriction, events have proved it is not justified. We must remove the restriction now and give states the flexibility they need to again serve all food stamp recipients who can benefit from E&T.
Cost allocation reductions. There are several other food stamp policy areas we would like to address briefly today. The first and most serious is the cost allocation reductions in food stamp administrative funds required by last year's Agriculture Research law. That law required the Department of Health and Human Services to determine the food stamp administrative dollars included in state TANF block grants, and directed USDA to deduct these amounts from state matching fund claims beginning with the current fiscal year. Most states, with the full approval of HHS, charged the old AFDC program for common administrative costs incurred by the food stamp and Medicaid programs, and these additional amounts were used in the base-year calculations for TANF block grants. Congress determined that the cost reductions were necessary to prevent states from both having these additional funds and in addition fully charging food stamps and Medicaid for current administrative costs.
But in fact states have suffered a net reduction in funds available for food stamp administrative use. In the current fiscal year, states will lose $226.6 million at a time when administrative costs are rising. APHSA urges that the cost allocation law and its assumptions be completely reassessed so that equity can be restored to the Federal/state administrative partnership.
Page 133 PREV PAGE TOP OF DOC Electronic benefit transfer interoperability. States have always strongly supported EBT, and are well along toward the goal of nationwide implementation in 2002. The great advances in EBT have been accomplished in an environment where all EBT stakeholders have successfully worked together without Federal mandates. We are aware that new interoperability legislation is being considered, and will be pleased to share our evaluation of such legislation when it is introduced.
Thank you, Mr. Chairman, for this opportunity to address the Subcommittee. APHSA looks forward to working with you on the changes we proposeones that we believe can greatly improve the Food Stamp Program. If I can answer any questions for you now or at a later time, I will be pleased to do so.
Statement of Lynda G. Fox
Good morning, Mr. Chairman and members of the subcommittee, I am Lynda Fox, secretary of the Maryland Department of Human Resources.
I am here today to speak about Maryland's attempt to make the Food Stamp Program more responsive to our vision of welfare reform, the needs and opportunities available in our local departments of social services and the individual needs of our customers.
I am also here to underline how some of the current legislative and administrative restrictions hinder those attempts; but, more importantly, limit our customers' efforts to use the program to become as independent as possible, to really use the Food Stamp Program as a safety net and a major support to their efforts to become and remain independent.
OUR VISION OF WELFARE REFORM AND HOW THE CURRENT PROGRAM BLURS THAT VISION. OUR VISION OF WELFARE REFORM IS A MARYLAND WHERE PEOPLE INDEPENDENTLY SUPPORT THEMSELVES AND THEIR FAMILIES AND WHERE INDIVIDUALS ARE SAFE FROM ABUSE AND NEGLECT.
As it stands now the Food Stamp Act and regulations do not fully support our vision.
Page 134 PREV PAGE TOP OF DOC To realize this vision we need greater flexibility in the Food Stamp Program either through needed changes in Food Stamp legislation or through expanded waiver authority. We also need practical options for developing a Simplified Food Stamp Program and modification of the methodology used to calculate cost-neutrality.
We strongly support the APHSA recommendations and will not restate them here, but rather point out why they are needed for Maryland and a more effective, better-integrated system for serving our customers.
EXAMPLES OF THE BLURRED VISION ABOUND
We have not been able to use the limited waiver authority to support our welfare reform initiatives. When we first began our welfare reform initiatives we requested a waiver to exclude the value of one vehicle per food stamp household regardless of whether or not the family also received Temporary Cash Assistance. We thought this a practical and effective way to allow a household to maintain employment while continuing to participate in the food stamp program. The waiver was denied because it did not meet cost-neutrality requirements.
We all have heard the stories about families that have been denied food stamps because they own a car. We applaud the recent efforts of the Administration to extend categorical eligibility to those who leave welfare for work. However, they do not help those who were never on welfare or do not receive any benefits from the welfare reform block grant. These actual situations continue. Recently, we learned about a mother and her children who applied for food stamps because the father of the children had left the home. Because of modest income, they were not eligible for welfare. The father left behind a 1999 vehicle that was jointly owned with the mother. This family could not get food stamps because of this vehicle.
One of our approved welfare reform initiatives allowed us to use a flat 50 percent self-employment deduction for self-employed income instead of the cost-to-produce and 20 percent earned income deduction. We thought this was an effective way to allow households with self-employment to keep more of what they made when determining eligibility for food stamps and it simplified the calculations and record keeping for both customers and the case manager. We requested an extension of a waiver to allow a flat 50 percent earned income deduction for self-employed households. This extension request was denied because an administrative waiver of this kind conflicted with the Food Stamp Act.
Page 135 PREV PAGE TOP OF DOC When the Simplified Food Stamp Program was offered we began working with the contractor provided by FNS that would determine cost neutrality. It was quickly evident that the program we envisioned could not possibly meet the cost-neutrality requirements. We also realized we would be operating two food stamp programs. The administrative and fiscal difficulties inherent in such a prospect caused us to abandon this idea almost immediately.
WITHOUT CHANGES, THE FUTURE VISION IS ALSO BLURRED
Our efforts to better align our successful welfare reform efforts have, for the most part, been restricted by unrealistic and impractical regulations that do little to assist our customers. Our past and current endeavors to make the Food Stamp Program more responsive to our customers' needs are now, unfortunately, always tempered by our background knowledge that the application of a narrow interpretation of cost-neutrality will result in a denial of our most creative and most promising initiatives. Because of this, we need changes in the law.
WE ARE JOINING IN EFFORTS TO MAKE SURE THAT ALL ELIGIBLE PEOPLE CAN PARTICPATE
The President's initiative to expand the Food Stamp Program to meet the needs of the working poor and APHSA's proposals are steps in the right direction. We have also engaged in extensive outreach efforts to ensure that all eligible households participate in the program. We have contracted with the University of Baltimore and the University of Maryland to call every family, with a telephone, leaving welfare to inform them of the transitional services available to them, including participation in the Food Stamp Program. The initial response to this initiative has been very positive with a large number of people calling our Information and Referral for further help in accessing these benefits.
BUT MORE CAN BE DONE
A different approach is needed. I would like to offer a few observations of my own. Much of the current discussion of the Food Stamp Program as the last Federal safety net now that welfare reform has happened is far too narrow.
Page 136 PREV PAGE TOP OF DOC The program is better seen as one of several significant supports to independence. Only if we begin to look at the program in this way will we spend less time trying to defend it as the last safety net and spend more time getting it to be more responsive to the goal of helping people become independent.
States should have the flexibility to responsibly tailor the program in ways that will meet that goal. The guiding principles need to be a focus on promoting independence simplicity of program design, flexibility to respond to local circumstances and innovation.
In Maryland local departments were given the flexibility to establish employment and training programs geared to their localities. They have been successful in tailoring their TANF employment and training programs to help families achieve independence.
We have spoken to them about ways to better combine their efforts to serve those who receive cash assistance and Food Stamps. Local departments would welcome the opportunity to use the knowledge they have gained in developing their TANF work programs to establish meaningful employment and training activities for food stamp customers.
Our goal for families participating in the Food Stamp Program should be the one we are realizing in our cash assistance program. We want to see parents of families leaving welfare who are working, do not return to welfare and preserve their families
Maryland has developed and implemented a successful welfare reform program. The hallmarks of that program have been local flexibility and an individualized approach based on an individualized assessment of the family's situation.
Unfortunately, the current Food Stamp Program provides neither State flexibility, nor an opportunity to respond to individual circumstances. The APHSA proposal before you will go a long way to make the Food Stamp Program as responsive to customer need as our welfare reform program.
Page 137 PREV PAGE TOP OF DOC Thank you, Mr. Chairman, for this opportunity to address the Subcommittee. Maryland is committed to its vision of welfare reform and will continue to seek ways to better serve our customers. If we are to be truly effective, states and the Federal Government must form meaningful partnerships and work together to find new and innovative ways to move people toward independence. Maryland stands ready to work with the subcommittee in any way necessary to realize this goal.
Statement of Sandie Hoback, Administrator, Adult & Family Services, Oregon Department of Human Services
WHY OREGON WANTS MORE FLEXIBILITY IN THE FOOD STAMP PROGRAM AND THEIR EXPERIENCE TO DATE.
Oregon is nationally recognized for being extremely successful at reinventing welfare for recipients of cash public assistance benefits. By focusing on each client's unique strengths and providing intensive case management and job readiness services, Oregon has developed a process which, without question, moves public assistance clients toward self-sufficiency. The results are astounding. Over the past 5 years, the public assistance caseload has dropped over 60 percent. As the caseload diminishes, the savings are reinvested in two main areas: (A) Services to help remaining, harder to serve population; and (B) Services to help newly employed clients retain heir employment and enhance their wages.
With the movement of thousands of clients into the workforce, Oregon, along with most States, has discovered the Food Stamp Program has not kept up with changing needs of low0income households. Congress intended that the Food Stamp Program, through the Food Stamp Act of 1977, helps increase the food purchasing power of lo-income households to promote the health and well-being of the Nation's population. We all know the current Food Stamp Program as it is now designed, cannot assure sufficient food security or improved nutritional status of participants.
Page 138 PREV PAGE TOP OF DOC Oregon embarked on its ambitious efforts to reform its welfare program even before implementation of the Welfare Reform Act of 1996. Our success in moving welfare recipients to greater self sufficiency came not through punitive measures but through a planful process of helping each family take those first steps in a longer range plan for improving their economic situation. We believe we can have a similar success with the Food Stamp Program but would need much greater flexibility to implement some of the strategies we knew work from our experience with welfare reform.
Here's what we know does not work or does not work very well in today's Food Stamp Program.
The program policies are very complex and often do not make sense when you are trying to tailor services to meet the individual needs of recipients. Staff must spend way too much time on figuring out how to apply these complex policies, clients are very often confused by them and little time is left over to work with clients to help them attain a better economic status and improved nutrition.
The rules governing the Food Stamp Employment and Training Program are completely, out of alignment with what is needed to run a successful program, specially the lack of flexibility around how the allocations are used, with 80 percent off the EBT dollars needing to be spent on the ABAWD population and only 20 percent remaining for all other clients. Because the FS E&T program is so out of step with all other employment and training programs we arc unable to partner around the delivery of services to Food Stamp clients similar to what we are doing with welfare-to-work initiatives.
The Quality Control process drives us toward a system that focuses on minute detail rather than a system that focuses more on positive outcomes for clients.
Oregon has approached FNS about our desire to move forward with a demonstration project that would allow us to operate the Food Stamp Program in a manner consistent with our self-sufficiency strategy. The response to date has been less than enthusiastic, with the agency believing that they do not have the authority to approve our request. We believe that it is time to move forward and allow states the flexibility to experiment with program strategies that have proven to be successful. Advocate groups have voiced concerns that welfare reform may not be helping many people move out of poverty. We agree with that, but feel welfare reform has taken a big step in helping people move closer to that goal. We believe that reforms now need to be made in those programs that support low-income working people in order for true progress to be made in moving people out of poverty and imp, roving their nutritional situation.
Page 139 PREV PAGE TOP OF DOC We also believe that improving clients economic status will not in itself improve their nutritional situation. Many studies show that the Food Stamp Program is more of an income support program than a nutritional program. We know from our experience in working with welfare clients that to change behaviors is often time-consuming and complex. We sincerely believe we can positively impact behavior if given the opportunity to bring the wide array of services to the Food Stamp population that we have successfully brought to our welfare population. We cannot do that with the current restrictive Federal program. We also believe we cannot do this alone. We need the program flexibility to design processes and politics that work in alignment with the other resources and services needed to help individuals and clients be successful.
President Clinton's recent initiative is a first step, but a small step, in moving forward. However, much more needs to be done.
"The Official Committee record contains additional material here."