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The following table (Insert T-16) supplied in the testimony of Jodie Allen reveals two things. First, that the simple dichotomy of poverty level vs. non-poverty level does not adequately describe the distribution of program benefits. Second, there is a potential for continued large program growth among the 50-60% of eligible nonparticipants above the poverty line. The following tables also supplied by Ms. Allen demonstrate that a considerable percent of nonparticipant eligibles have relatively high incomes (above $7,000) and moderate family size (2-4 persons). Congress should be informed of social circumstances of these persons in order to judge whether program benefits should be made available.

In general, USDA has not provided either a clear definition of target population or clear data about present and potential program participants from which Congress and the public can form expectations about program coverage and growth. Until this is done, the program runs a grave threat of misrepresentation and political backlash and at the same time is open to criticism for inadequacy in serving the persons who need its help.

PARTICIPANTS AND ELIGIBLE NONPARTICIPANTS BY POVERTY STATUS AND AGED, NONAGED

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T-16

Participants

Percent

Eligible non-
participants

Percent

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CURRENT FOOD STAMP PLAN-ELIGIBLE NONPARTICIPANTS BY HOUSEHOLD SIZE AND ANNUAL INCOME

[Percent distribution)

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CURRENT FOOD STAMP PLAN-PARTICIPANTS BY HOUSEHOLD SITE AND ANNUAL INCOME

(Percent distribution/

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Senator Chiles in his opening statement said, “We (the Subcommittee) are ever mindful that criticism without remedy serves no constructive purpose”.

Remedial suggestions were submitted by all of the witnesses and carefully considered by the Subcommittee both in its hearings and in follow-up investigations by the staff. The major areas where we recommend action are:

A. The Certification Process.
B. Relations with HEW.
C. Outreach and Targeting to Meet Program Objectives.

D. Quality Control, Administrative Efficiency and Program
Accessibility.

E. Program Evaluation and Experimentation.

FOOD STAMP REPORT-RECOMMENDATIONS

A. CERTIFICATION PROCESS

The several difficulties discussed by witnesses-high rate of certification errors, long waits and inconvenience for applicants, inequities in dealing with gross income, dual certification for AFDC recipientsall seem to point to one direction. Forms and regulations for determining eligibility are all too complex. Since there is a 60% overlap of clients with the AFDC program, a revised eligibility determination form should be worked out jointly with HEW, so that applicants would only have to go through one certification interview. This would also produce a considerable savings in administrative costs.

Two major approaches to simplifying the certification process were presented at the hearings: a "standard deduction” and a "consolidated deduction". Either of these approaches would seem likely to meet the need of a simpler, more reliable process. However, they have very different outcomes in terms of equitable distribution of benefits.

The "standard deduction" approach currently being contemplated by USDA is simply a formula by which all applicants would have their gross income adjusted downward to reflect average levels of such minimum allowances as payroll tax deductions, and also provide credit for such special circumstances as presence of an elderly person in the household. However, the major thrust of this method would be to eliminate special considerations for such expenses as housing, medical costs, utility costs, school tuition, child care and alimony costs. The rationale for eliminating these, as noted in the study which Mathematica, Inc. performed for USDA, is that these deductions have the effect of making the food stamp program “remedy the defects in adequacy and coverage" of other social programs. This effect seems to the Subcommittee to be part of the trerd for food stamps to lose their nutritional objective and become an income transfer program. Instituting a standard deduction would have the effect of eliminating a large number of persons with a gross income of over $10,000 who are currently eligible for the program. Depending upon the particular formula adopted, savings of up to 15 percent of bonus value could be realized. In addition, the simplified procedure would reduce both administrative costs and certification errors.

A major criticism of the stanard deduction is that while it increases income equity by insuring that only poor persons are eligible, it introduces geographic inequities. That is, since living costs are higher in urban areas and coastal areas, the same gross income level leaves the applicant less money to buy food. Moreover, if food costs are more in these areas, then the same bonus value of stamps buys the recipient less nutrition.

The "consolidated standard” approach proposed to the Subcommittee attempts to deal with regional variations while achieving administrative efficiency. It was proposed that the authorizing legislation be amended to give the Secretary of Agriculture discretion to allow States to institute a consolidated standard system. The State would then be responsible for calculating and justilying to the Secretary the average costs of deductible items, such as rent, utilities, etc. Moreover, the State could also attempt to justify different cost levels for its various counties. These average cost levels would then be deducted from applicants' gross income to determine eligibility:

There seem to be several difficulties with the consolidated standard Pstem. First, there is a lack of reliable data on living costs at the State level. Second, since the program is 100 percent federally funded, there would be an incentive to States to set deduction levels as high as possible in order to maximize federal benefits to their economies. Third, the net impact would be to distribute the greatest level of federal benefits to those areas with the highest income levels. One could even envisage a situation of a marginal family moving across state boundaries to become eligible for benefits. Finally, since the impact of deduction systems is on those with the highest levels of Income, not the poorest, the overall effect would be to increase eligibility for a large percentage of the population with only a marginal level of need. This would exacerbate the problems of orientation already experienced by the program.

57-400-73

A compromise method seems possible which could incorporate the best elements of standard and consolidated deductions. BLS costof-living and cost-of-food data are available by region, and by urban vs. rural area within region. The USDA could develop a standard deduction formula, but index it for major differences in cost-of-living levels. Similarly, bonus value of stamps would be adjusted for costof-food differences. The maximum number of schedules required could be 28, and probably far fewer, since many areas would be substantially the same. The fact that the deduction and bonus levels were determined by the Federal Government would eliminate the possible incentive to states to drive up program costs. In addition, it would have sufficient authority based on acceptance of BLS data to avoid "equal protection of the laws suits” which might be brought against state-set levels for a 100 percent program.

The subcommittee is developing legislation to provide for this method.

B. RELATIONS With HEW

The large overlap of food stamp and AFDC recipients has caused many persons to suggest that the program be transferred to HEW. However, the subcommittee has concluded that such a transfer would aggravate the loss of the program's primary objective of enhancing nutrition, and would drive it to being simply an income transfer. Since poverty and malnutrition are related but not congruent, this would be a serious loss to the welfare of the nation.

Since there is such a large overlap, however, the subcommittee sees that several areas of coordination with HEW are necessary if efficient spending practices are to be achieved as follows:

1. USDA and HEW should develop a single form for eliciting information required for eligibility certification and reporting of data about participants.

2. USDA and HEW should develop a joint outreach program. The Assistant Secretary of HEW for SRS recently testified that while only 60 percent of AFDC recipients are enrolled in food stamps, HEW does no outreach in informing them of their automatic eligibility under the law.

3. USDA and HEW should develop and submit to Congress a proposal for a cooperative nutritional status monitoring system. The Health and Nutrition Examination Survey (HANES) developed by HEW (NCHS) is oriented to monitoring the nutritional status of a nationwide sample, with some differentiation of socioeconomic groups. It should be expanded to meet the objective of inonitoring the distribution of nutritional status among geographic areas and more narrowly defined demographic groups. It would then provide a means for targeting the food stamps program-particularly its outreach efforts-on areas of low nutrition. It appears that this monitoring objective could be performed by establishing two additional components to the Survey:

(a) A systematic analysis of the relationship of demographic groups' nutrition levels in the nation-wide sample to the nutritional status of geographic areas with a high concentration of these social groups.

(b) A regular method of following up the nation-wide survey with small-sample surveys of nutritional status of counties whose demographic composition seems to make them "high risk" areas. This effort should be coordinated with the USDA's program for evaluating the impact of the food stamp program.

C. OUTREACH AND TARGETING

In general, there seems to be need for improvement in three types of outreach efforts:

1. Assisting the states to mount public information campaigns to make potentially eligible persons aware of the program, its objectives, its separation from welfare and their potential eligibility.

2. Working with other programs which are likely to have high concentration of eligible persons-such as AFDC, compensatory education, community development, maternal and child health to make participants aware of nutritional needs and of the existence of the program.

3. Developing better data about nutritional status of demographic groups and geographic areas of the country. Bevond clearly defining the target population in nutritional as well as income criteria, better data is needed as a guide to program management and evaluation. While outreach is mandated as a general effort for all areas, it would seem reasonable to focus intensive outreach efforts on specified high-risk areas. A more detailed discussion of how to obtain appropriate data is included

in the recommendations about relationships with HEW. It is clear from the testimony of both Department of Agriculture and State witnesses that the Federal Government has not taken an active role in assuring that the program is administered in such a way as to assure either an adequate degree of quality control or providing accessibility of the program to applicants. Long waits and multiple trips to certification offices have become common. The Administrator of the Food and Nutrition Service was unable to provide the subcommittee with a firm rationale for national goals of reducing certification error, with a clear set of administrative procedures designed to achieve these goals or with an organized approach to outreach. The subcommittee's recommendations in the following two areas are designed to provide a workable level of program administration so that Congress and the people can be assured that the program is being run efficiently and responsively. We have emphasized the creation of structures which will encourage innovative efforts by the States and recognize that they each face different problems. D. SUGGESTIONS FOR QUALITY CONTROL, ADMINISTRATIVE EFFICIENCY

AND PROGRAJ ACCESSIBILITY 1. Pre-screening should be accomplished by extensively interviewing potential clients before applications are made. Community Action Organizations could be used for prescreening.

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