The District of Columbia Council and Income Maintenance Administration (IMA) should be commended for recent changes to the “Supplemental Nutrition Assistance Program” (SNAP), more commonly known as the “food stamp program.” SNAP provides over 80,000 District residents with badly needed subsidies to buy food. Without recent reforms, many low-income District residents would have been wrongfully denied benefits, or mired in debt collection or litigation, through no fault of their own.
Until recently, the rules used to determine whether a household was financially eligible to receive Food Stamps were complex. Federal law required state employees to calculate a household’s expenditures on certain goods and services, such as housing and utilities, and the value of certain household assets, such as personal savings, that could be used to purchase food. Unsurprisingly, the states made a significant number of mistakes, resulting both in eligible households being denied benefits to which they were entitled, and in ineligible households receiving benefits to which they were not entitled.
The federal government realized it was inefficient to calculate households’ assets to the last penny, and simplified SNAP by allowing states to eliminate the asset requirement for certain Food Stamps households that are deemed “categorically eligible” for benefits. Through the use of categorical eligibility, states can also increase the gross income level beneath which households will be eligible for Food Stamps to 200 percent of the federal poverty guidelines, a change that reflects much more realistic assumptions about the cost of nutritious food.
Last fall, the District enacted the Food Stamps Expansion Act, co-sponsored by Councilmembers Michael Brown and Tommy Wells. Through the Food Stamps Expansion Act, the District used the flexibility of categorical eligibility to eliminate the asset test and increase the gross income eligibility level to 200 percent of the federal poverty level. Additionally, as of May 2010, the District has also simplified the Food Stamps program and increased benefits for many Food Stamps recipients by allowing individuals to get a higher deduction for utility expenses. The Council and the Administration should be commended for taking these badly needed steps to expand Food Stamps eligibility in a time of economic crisis. Legal Aid is concerned, though, about the timing of the implementation of these expansions and would call upon the District to ensure that all who were eligible for these benefits at the time of enactment receive them.
In addition to expanding access to benefits, IMA also recently addressed a different problem: what to do when it mistakenly awards households more Food Stamps than they are entitled to receive. Although it might seem obvious that IMA should recover money it mistakenly overpays, the problem is actually more complex. Households that are overpaid receive benefits in the form of Food Stamps; but IMA frequently demands repayment in cash, even if the household was not at fault for the overpayment. Cash is more valuable than Food Stamps (which can only be spent on food), but IMA does not discount the amount it seeks to recover in cash. As a result, a household that mistakenly receives an overpayment of Food Stamps could end up losing money, or become saddled with a debt it cannot repay, worse off than had it never applied for Food Stamps at all.
It is also inefficient for IMA to pursue every overpayment. Many overpayments are for small dollar amounts; but the cost of pursuing an overpayment is essentially the same regardless of the dollar amount at stake. As a result, it will frequently cost IMA far more than it is worth to recover small overpayments. And, of course, many households that receive an overpayment have already spent the benefits by the time IMA catches its mistake, and cannot afford to pay back the debt.
To fix these problems, federal law allows participating states to “compromise” (that is, to reduce or eliminate) Food Stamps overpayment claims if the state reasonably believes that a household will be unable to repay the benefits it received within three years. Until recently, IMA denied it had such authority. Instead, IMA argued that it was required to pursue every overpayment, no matter the circumstances or the dollar amount at stake. This position was both inefficient and unfair to households that received overpayments of Food Stamps through no fault of their own. It was also contrary to federal law.
Thanks in large part to legal and policy advocacy by the Legal Aid Society and other public interest organizations, IMA has now reversed its position and adopted guidelines that will require it to consider households’ requests to compromise overpayment claims. This change will benefit Food Stamp recipients, the District, and taxpayers alike. IMA should exercise its compromise authority to promote fairness and good government, and focus its collection efforts on the largest overpayments and overpayments that are the result of fraud. Households that receive Food Stamps in good faith should not be penalized because of the government’s errors.
Peter Wilson, former Legal Aid Equal Justice Works Fellow
Jennifer Mezey, Supervising Attorney for Public Benefits