Farm bill closes ‘heat and eat’ loophole that gives extra food stamp benefits in Maine, other states

U.S. Senate Agriculture Committee Chairman Debbie Stabenow (D-MI) smiles with ranking member Senator Thad Cochrane (R-MI), center, at a news conference after the final passage of the Farm Bill at the U.S. Capitol in Washington, February 4, 2014.
JONATHAN ERNST | REUTERS
U.S. Senate Agriculture Committee Chairman Debbie Stabenow (D-MI) smiles with ranking member Senator Thad Cochrane (R-MI), center, at a news conference after the final passage of the Farm Bill at the U.S. Capitol in Washington, February 4, 2014.
Posted Feb. 06, 2014, at 6:18 a.m.
Last modified Feb. 06, 2014, at 6:33 a.m.

WASHINGTON — When President Barack Obama signs the farm bill on Friday, he’ll be enacting a huge set of policies including an $8.6 billion cut to food stamps in the next decade. But the cuts are concentrated: they will affect individuals in about a third of states and the District of Columbia.

The reason is that the measure closes what many consider a loophole used in some states — one that hunger advocates argue is necessary in light of underfunding.

The nonpartisan Congressional Budget Office 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 before the bill was projected to be $764 billion in the next decade, according to the CBO. The $8.6 billion is a fraction of that, and its impact is limited to 15 states.

Here’s how the loophole, known as “heat and eat,” is used in those states, according to the Center on Budget and Policy Priorities, a fiscal policy think tank that focuses on middle- and low-income individuals:

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 such as 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 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.

‘More realistic levels’

Here’s the issue the farm bill seeks to address: recently, some states began providing nominal amounts of LIHEAP help — as little as $1 a year; one state, California, does a dime — meaning some households got credit “for utility costs they don’t actually pay,” according to CBPP President Robert Greenstein. As a result, they received more SNAP benefits than they would have otherwise. The farm bill addresses 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 come close to covering all the people who need it. The same goes for the SNAP benefits, hunger advocates said. 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.” Greenstein agrees 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 the District of Columbia have been known to use the loophole, according to a May 2013 report from the nonpartisan Congressional Research Service, which cited June 2012 data from the Agriculture Department.

Those “heat and eat” states are California, Connecticut, Delaware, Maine, Massachusetts, Michigan, Montana, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and Wisconsin. Some lists compiled by nonprofit groups add or subtract a state or two from that lineup.

 

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