Q&A: NC food stamp growth

Food stamp recipients in North Carolina had a tough time in 2013.

The launch of new technology left tens of thousands of families waiting months for benefits. The expiration of a federal law triggered a decrease in the benefits each family received. Congress continued its long squabble over a farm bill that, at one point, could have drastically cut funding for food stamps altogether.

Amid all of that turmoil, demand for nutrition benefits continued an upward trend that put serious strain on county social services agencies – despite signs that the North Carolina economy was steadily improving.

But with the dust from the new system roll-out settling and a bipartisan farm bill now signed into law, things may improve for food stamp recipients in 2014.

In North Carolina, the {{a href="external_link-13427744" _fcksavedurl="external_link-13427744" _fcksavedurl="external_link-13427744" _fcksavedurl="external_link-13427744" }}Supplemental Nutrition Assistance Program{{/a}}, or SNAP, is a federally funded, state-supervised and county-administered program to help low-income families and individuals pay for food. It's more commonly known as "food stamps," a holdover from a time when states distributed nutrition assistance using actual stamp or coupon booklets. Congress changed the name to SNAP in the 2008 farm bill, the last one passed into law.

Recipients now receive funding monthly via Electronic Benefit Transfer cards, which work much like debit cards.

Aside from special rules for the elderly and disabled, recipients of food stamps must meet certain requirements based on household income relative to the poverty line. Components of that income include paychecks as well as other factors, such as Social Security.

In general, a four-person household would be eligible only if they earn less than $2,552 a month. But other deductions – calculated based on factors such as child support, housing costs and child care costs – determine final eligibility.

Every six months, food stamp clients must recertify, providing documentation to show they remain eligible.

A family's food stamp allotment, which is paid monthly via Electronic Benefit Transfer cards, is based on the expectation that households spend about 30 percent of their resources on food.

So, after deductions to earned income such as child support, housing costs and child care costs, allotments are calculated by subtracting 30 percent of that income from the maximum allotment, set by the size of the household.

For a family of four, that maximum allotment is $632 per month. But in North Carolina, the average SNAP household receives $264.10. Adjusting for inflation, that's down about 9 percent over the last five years.

Electronic Benefit Cards, which carry the balance of food stamp allotments, are redeemable only at retailers authorized by the U.S. Department of Agriculture. They can't be used to withdraw benefits as cash.

Stores must meet certain USDA criteria before they're authorized to accept food stamps, including carrying a variety of foods in the four main food groups. Stores must also make most of their money from these staple foods and not other items, such as gas and alcohol.

Authorized retailers, according the to USDA, can include farmers selling directly to consumers at farmers markets.

Places such as casinos or cruise ships, however, are not authorized to accept EBT cards, and only four states allow some food stamp clients to use benefits in restaurants. North Carolina is not one of them.

Food stamp clients can use Electronic Benefit Cards only to purchase food that will be consumed or prepared at home. That means most food items bought in a grocery store, including breads, fruits and meats.

The USDA explicitly excludes alcohol and tobacco, household supplies like soap, over-the-counter medications and food intended to be eaten in a store.

Allowable purchases include items some food stamp critics point to as wasteful and extravagant, such as lobster, steak and junk food, since they are, by definition, edible items.

"Several times in the history of SNAP, Congress had considered placing limits on the types of food that could be purchased with program benefits," the USDA says. "However, they concluded that designating foods as luxury or non-nutritious would be administratively costly and burdensome."

Because all food stamp transactions are conducted electronically via the EBT card, ineligible items are automatically excluded from purchase at the register, leaving a remaining balance the client must cover.

In most cases, able-bodied adults between 18 to 49 with no dependent children can only get three months of food stamp benefits over a three-year period if they don't work or join job-training programs. Aside from the elderly, disabled and those with children, recipients can be disqualified for the program if they don't accept employment or register for work placement or training. 

There are some exceptions to that requirement, and some economically distressed counties are exempt.

It's worth noting that many food stamps recipients already have jobs. Census data from the 2012 American Community Survey show that three-quarters of SNAP households had at least one wage earner. More than a quarter – 26.2 percent – had two wage earners, yet they still qualified for assistance.

Food stamp fraud can occur when clients sell food stamp benefits, at a discount, to stores for cash – a federal crime. The USDA says switching to the EBT system has reduced the rate of that trafficking to about a penny on the dollar, but it does still happen.

The USDA investigates suspicious activity by retailers using undercover techniques and data analysis and calculates its estimates of illegal activity accordingly. The most recent study, released in August 2013, showed trafficking ticked up to 1.3 percent from 2009 to 2011 compared with 1 percent from 2006 to 2008. But the study shows the number is still down from about 4 percent in the 1990s.

By the federal agency's estimate, about 11 percent of stores authorized to use SNAP engaged in trafficking from 2009 to 2011. That's an increase from 8.2 percent from 2006 to 2008.

The fraud is far more common in small grocery and convenience stores, which account for 85 percent of the trafficking and only 15 percent of SNAP spending.

In the 2012 fiscal year, the federal agency conducted about 730,000 fraud investigations, 9,000 of them in North Carolina. Those investigations culminated in the collection of about $328 million.

North Carolina Families Accessing Services through Technology, or NC FAST, is a $50 million system launched in stages in 2013 to streamline the processing and delivery of social services. The state signed the contract for the software, built by IBM and customized for the Department of Health and Human Services by Accenture, under a Democratic administration.

Counties already use the software to process Food and Nutrition Services cases and some forms of Medicaid. But the system will eventually allow a "universal worker" approach in which one case manager can deal with all forms of social assistance to a client in need of benefits.

The rollout has been problematic at times. In July and August, technical issues with the software {{a href="blogpost-13173174" _fcksavedurl="blogpost-13173174" _fcksavedurl="blogpost-13173174" _fcksavedurl="blogpost-13173174"}}significantly slowed down the processing{{/a}} of food stamp cases, creating a backlog of cases the USDA estimated at almost 70,000.

DHHS data showed state and county workers largely eliminated that backlog by Feb. 10, the date of a USDA deadline that put $88 million in federal funding for the program at risk.

DHHS counts new food stamp applications and recertifications as "untimely" if they've been processing in the system for more than 30 days. Expedited applications, which are processed faster due to emergency circumstances, are untimely if they're processing for more than seven days.

The state has pointed out that not all cases considered "untimely" left clients waiting. Benefit allocations are staggered throughout the first few weeks of the month. So some clients that show up as pending between than 30 to 45 days may not know their case is behind because their benefits don't normally hit their cards until later in the month.

But for months, the state tracked thousands of cases that had been pending for three or four months or more.

Officials at the county and state level say food stamp delays started with the old system – before the implementation of NC FAST – but they haven't quantified the extent of those delays.

The USDA criticized the state's failure to determine the number of overdue cases in September, when the federal agency's own estimates put the backlog at about 70,000 cases.

That summer peak, driven by a July software upgrade in NC FAST that caused major glitches and processing slowdowns, is what plagued county workers for months.

But as those technical defects began to subside, DHHS and county directors pointed to other complications like understaffing, increased demand for benefits and changing Affordable Care Act rules on Medicaid eligibility as reasons it took so long to catch up.

According to data from the USDA, an average of 786,064 households received SNAP benefits every month in fiscal year 2013. That ranks it No. 10 among the rest of the country, exactly where the state also ranks in population size. Those households represent about 1.7 million people monthly.

In the last five years, the number of households receiving food stamps rose by about 55 percent. But that growth slowed considerably from 2012 to 2013, when it only grew by 0.1 percent.

All told, the total cost of SNAP across the country was about $79.9 billion in 2013. Benefits issued to clients make up about 95 percent of that total, with the rest going to administrative costs such as case worker salaries and fraud investigations.

But the USDA's Food and Nutrition Service pays only about half the cost to administer the program in each state, so North Carolina picks up the rest of the tab. That works out to be about an $88 million contribution from each entity.

In fiscal year 2012, North Carolina families on SNAP received $2.4 billion in food assistance.