When the president signs the farm bill on Friday, he’ll be enacting a huge set of policies including an $8.6 billion cut to food stamps over the next decade. But the cuts are concentrated: they will only affect individuals in about a third of states and Washington, D.C.
The reason is that it closes what many consider a loophole utilized in some states — one which hunger advocates argue is necessary in light of underfunding. CBO projects it affects about 850,000 households, or 4 percent of beneficiaries of food stamps, formally known as the Supplemental Nutrition Assistance Program. Total SNAP spending had been projected to be $764 billion over the next decade, according to the nonpartisan Congressional Budget Office’s baseline estimate. The $8.6 billion is just a fraction of that, but it’s impact is limited to 15 states.
Here’s how the loophole, known as “heat and eat,” is used in those states, according to the CBPP:
Food-stamp eligibility is based on a household’s disposable income. If it’s low enough, you qualify. But to calculate disposable income, the state takes your total income and subtracts some allowable deductions for essentials. Since things like rent and utilities are considered household necessities, they’re subtracted. To calculate how much a potential food stamp recipient spends on utilities, states used to collect multiple utility bills from each and calculate the average. To streamline things, they came up with a standard utility allowance. Prove that you — not your landlord — pay for your utilities (furnish just one bill as proof), and the state assumes you pay some predetermined amount, deducting it from your total income.
To make things even easier, Congress added another way to streamline proof of utility payments. If a household is getting heating or cooling assistance through a separate program known as the Low Income Home Energy Assistance Program, it can be assumed that the household is responsible for paying utilities. If it’s responsible for paying utilities, it qualifies for the state utility deduction.
Here’s the problem the farm bill seeks to fix: recently, some states began providing nominal amounts of LIHEAP assistance — as little as $1 a year — meaning some households got credit “for utility costs they don’t actually pay,” according to CBPP President Robert Greenstein. As a result, they got more SNAP benefits than they would have otherwise. The farm bill fixes that by only allowing households to get the utility deduction if they receive at least $20 of such assistance.
Administrators of LIHEAP routinely say that the funds they receive don’t even come close to covering all the people who need it. The same goes for the SNAP benefits, according to hunger advocates. So, in their eyes, it’s a necessary loophole. The Food Research Action Center, for example, argues that the practice increases SNAP benefits “to more realistic levels.” CBPP’s Greenstein agrees that that funding is too low, but sees it as better than the alternatives. An earlier House bill would have cut five times the amount from food stamps.
“There’s no denying that the 4 percent of beneficiaries who would be affected are low-income people who would face a significant benefit reduction,” Greenstein wrote. “But congressional rejection of the agreement because of this provision would risk future harm to far larger numbers of low-income people who rely on SNAP.”
At least 15 states and D.C. have been known to use the loophole, according to a May 2013 report from the nonpartisan Congressional Research Service, which cited June 2012 Agriculture department data. Those “heat and eat” states are: California, Connecticut, Delaware, Maine, Massachusetts, Michigan, Montana, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, Wisconsin. Some lists compiled by non-profits lists add or subtract a state or two from that lineup.