Commissioners All States

On May 13, 2002, the President signed Public Law 107-171, which includes the Food Stamp Program reauthorization. A number of provisions in that law affected the Food Stamp Program. This letter describes some of the new statutory requirements for State agency implementation of the Food Stamp Program (FSP) provisions of Title IV of Public Law 107-171, the Food Stamp Reauthorization Act of 2002. Additional letters will address the quality control and employment and training provisions. In this letter, we are asking that State agencies provide us with information about which options State agencies are choosing and how they intend to implement the options. This information will be useful to USDA in developing regulations.

Provisions and Implementation Dates

A. State Mandatory

Section 4103. Standard Deduction

Effective October 1, 2002, the current, fixed standard deduction will be replaced with a deduction that varies according to household size and is adjusted annually for cost-of-living increases. Larger households will receive a higher deduction than they currently do. For households in the 48 contiguous States and the District of Columbia, Alaska, Hawaii, and the Virgin Islands, the law sets the deduction at 8.31 percent of the applicable net income limit based on household size. The standard deduction for Guamanian households is set at 8.31 percent of twice the applicable net income limit based on household size. No household would receive an amount less than the current deduction or more than the standard deduction for a household of six. A chart showing the standard deduction amounts for Fiscal Year 2003 is attached.

Section 4107. Simplified Definition of Resources

This provision increases the resource limit for households with a disabled member from $2,000 to $3,000, consistent with the limit for households with an elderly member, effective October 1, 2002.

Section 4110. Cost Neutrality for Electronic Benefit Transfer Systems

Effective October 1, 2002, this provision eliminates the requirement that Federal costs of EBT cannot exceed the costs of the paper issuance systems they replace. Regulatory language addressing cost containment issues will be forthcoming.

Section 4114. Availability of Food stamp Program Applications on the Internet

This provision amends Section 11 of the Food Stamp Act to require any State agency that has a website to make the State agency’s food stamp application available on the website in each language in which the agency makes a printed application available. The provision does not require interactive applications. The provision takes effect November 13, 2003.

Section 4401. Partial Restoration of Benefits to Legal Immigrants

This provision restores food stamp eligibility to any qualified alien who is otherwise eligible and who:

• Receives blind or disability benefits, regardless of the date of entry. This part of the provision takes effect on October 1, 2002.
• Is under 18 years of age, regardless of the date of entry. This part of the provision takes effect on October 1, 2003.
• Has lived in the U.S. for 5 years as a qualified alien, beginning on the date of entry. This part of the provision takes effect on April 1, 2003.

This provision also eliminates the deeming requirements for immigrant children. Those requirements count the income and assets of the immigrant’s sponsor in determining food stamp eligibility and benefits for the immigrant’s child. In a conforming amendment, the provision eliminates the 3-year deeming requirements for children under Section 5(i) of the Food Stamp Act. This part of the provision takes effect on October 1, 2003. State agencies that now operate State-funded programs need to consider keeping these programs in operation until the effective dates of the restoration of federal benefits to the affected categories of non-citizens.

B. Optional

Section 4101. Encouragement of Payment of Child Support

Under this provision, State agencies may opt to treat legally obligated child support payments to non-household members as income exclusions or may choose to continue to allow deductions from income for such payments. This provision is effective October 1, 2002. If a State agency opts to treat such payments as exclusions, the State agency must notify the appropriate regional office in advance of implementing the option. Such an option may be made at any time beginning on October 1, 2002. If a State agency does not opt for the exclusion, legally obligated child support payments must continue to be handled as a deduction from income. The deduction must be taken prior to calculation of the shelter deduction.

This provision also requires FNS to establish simplified procedures by regulation for State agencies to use to determine the amount of child support deductions to be used in the certification process. Until regulations are published and are effective, State agencies may develop their own procedures for determining the amount of child support deductions to be used in the certification process. These procedures must rely on averaging payment history information from the Child Support Enforcement Program agency. We expect that State agencies will submit their procedures to the appropriate FNS regional office for information purposes.

Section 4102. Simplified Definition of Income

Under this provision, State agencies may opt to exclude certain types of income that are not counted under specified programs authorized under the Social Security Act (SSA). States are allowed to exclude: educational assistance not counted under the SSA; State complementary assistance not counted under section 1931 of the SSA; and any type of income not counted for Medicaid purposes under section 1931 of the SSA or TANF except for wages or salaries, benefits from major assistance programs, regular payments from a government source (such as unemployment benefits or general assistance), worker’s compensation, child support payments, or other types of income as determined by USDA through regulations. This provision is effective October 1, 2002. Until regulations are published, State agencies may exclude the educational assistance not counted under Medicaid and State complementary assistance not counted under section 1931 of the SSA. In addition, until the publication of regulations, State agencies may identify additional types of excluded TANF and Medicaid to exclude under the FSP. We expect the State agency to notify the appropriate FNS regional office regarding the types of income it will exclude under this option.

Section 4104. Simplified Utility Allowance

This provision allows States to simplify the Standard Utility Allowance (SUA) if the States elect to use the SUA rather than actual utility costs for all households. For these States, the provision eliminates the current requirement to prorate the SUA when households share living quarters and it allows the use of the heating/cooling SUA for households in public housing with shared meters that are only charged for excess utility costs. This provision is effective October 1, 2002. For State agencies that already mandate the use of SUAs, the States may implement this provision beginning October 1, 2002. Any such State agency must notify its appropriate regional office of the date it is implementing the provision. Any State agency that wants to implement mandatory SUAs effective October 1, 2002, or later, must follow the procedures already in the regulations for obtaining approval for using mandatory SUAs (7 CFR 273.9(d)(6)(iii)(E)). In providing documentation that use of mandatory SUAs will not increase costs, State agencies should not include costs that would otherwise result from not prorating the SUA for households that share living quarters or for giving the SUA to households in public housing with shared meters that are only charged for excess utility costs. When going to mandatory standards, State agencies must maintain cost neutrality but may increase the standards to reflect (1) the higher costs of households that had claimed actual costs and (2) more current data on utility costs.

Section 4105. Simplified Determination of Housing Costs

Effective October 1, 2002, this provision allows States to use a standard deduction from income of $143 per month for homeless households that are not receiving free shelter throughout the month. This provision replaces the existing option for a homeless shelter allowance of up to $143 for homeless households with some shelter expenses. This standard deduction must be used in lieu of the procedures for calculating the excess shelter deduction. State agencies that have already implemented the existing homeless shelter allowance need take no action pursuant to this provision unless their allowance is less than $143. Such a State agency would need to raise the dollar amount to $143. In the case of any State agency that has not implemented the existing homeless shelter allowance prior to October 1, 2002, and decides to implement this homeless standard deduction, either on October 1, 2002, or later, we expect the State agency to notify its appropriate regional office prior to implementation of the date it intends to implement the provision.

Section 4106. Simplified Determination of Deductions

Effective October 1, 2002, this provision allows States to disregard reported changes in deductions during certification periods except for changes associated with a new residence or earned income until the next recertification. Any State agency deciding to implement this provision needs to advise its appropriate regional office prior to implementation. We expect the State agency to include in the notification to FNS the procedures the State agency will use to advise applicant and participant households that changes in deductions reported during a certification period will not result in changes in benefits. The State agency must advise us if a current reporting waiver needs to be modified by adoption of this provision.

Section 4107. Simplified Definition of Resources

This provision provides, effective October 1, 2002, a State agency option to exclude certain types of resources that the State agency does not include for TANF or Medicaid (SSA, section 1931). Under this option, States could not exclude cash, licensed vehicles, amounts in financial institutions that are readily available, or other resources as determined by USDA through regulations that are essential to fair determinations of food stamp eligibility and benefit amounts. Until regulations are published and are effective, we expect State agencies to advise FNS what specific type of resource or resources the State agency has decided to exclude under this provision.

Section 4109. State Option to Reduce Reporting Requirements

Effective October 1, 2002, this provision allows State agencies to extend semi-annual reporting of changes to all households not exempt from periodic reporting. Under current regulations, this option is limited to households with earnings. For State agencies choosing this option, households required to report less often than every three months would only have to report when income exceeds the gross monthly income limit. In order to implement this option, we expect State agencies to adhere to the following guidelines:

a) For a State agency that has implemented semi-annual reporting prior to October 1, 2002, in accordance with the regulations, we expect that the State agency will notify its appropriate regional office that it is adopting this option, when it will implement semi-annual reporting for additional categories of households, and which categories they are. We expect that the State agency will also notify the regional office how it will bring households under the new reporting system and how it will notify households of the change in reporting requirements.

b) For a State agency that has implemented semi-annual reporting prior to October 1, 2002, through a waiver, the State agency must notify its appropriate regional office that it wishes to modify its waiver to incorporate this option, when it will implement semi-annual reporting for additional categories of households, and which categories they are. The State agency must also notify the regional office how it will bring households under the new reporting system and how it will notify households of the change in reporting requirements.

c) A State agency may adopt semi-annual reporting in accordance with the regulation after October 1, 2002, for any type of household not exempt from periodic reporting, regardless of earnings.

d) A State agency may request a semi-annual reporting waiver for any type of household not exempt from periodic reporting effective October 1, 2002, or later.

The provisions of 7 CFR 273.12(a)(1)(vii), the reporting requirements for able-bodied adults subject to the time limits in 7 CFR 273.24, will continue to apply.

Section 4112. Alternative Procedures for Residents of Certain Group Facilities

This provision requires the Department to conduct pilot projects to test the feasibility of issuing standardized benefits to residents of certain group homes. States wishing to participate in a demonstration project under this authority should submit a project plan for approval that includes: 1) a specification of the covered facilities in the State that will participate in the pilot project; 2) a schedule for reports to be submitted to FNS on the pilot project; 3) procedures for standardizing allotment amounts that takes into account the allotments typically received by residents of covered facilities; and 4) a commitment to carry out the pilot project in compliance with project requirements as specified in section 4112 of the Farm Bill. Plans may be submitted to John Knaus, Food and Nutrition Service - Room 800, 3101 Park Center Drive, Alexandria, Virginia 22302-1594 with a copy to your regional office.

Section 4113. Redemption of Benefits Through Group Living Arrangements

Effective May 13, 2002, this provision allows FNS to authorize specified group homes and institutions to redeem EBT benefits directly through banks in areas where EBT has been implemented rather than going through authorized wholesalers or other retailers. State agencies are not required to implement this provision and, therefore, no State agency action is necessary. However, if a State agency that has an operational EBT system in place deems implementation of the provision as advantageous, the agency may begin equipping centers, organizations, institutions, shelters, group living arrangements or establishments described in Sec. 10 of the Food Stamp Act of 1977 (7 U.S.C. 2019) with an EBT point-of-sale device so that food stamp benefits can be deposited directly into their financial institution accounts. Benefits redeemed by the client would transfer from the client's food stamp account to the facility's financial institution account. Equipage of these facilities must be in accordance with the EBT regulations at 7 CFR 274.12. State agencies that were granted waivers to operate a demonstration project for this function may continue operations without further action and are no longer bound by the survey requirements of the waiver.

Section 4115. Transitional Food Stamps for Families Moving from Welfare

Under this provision, States may extend from the current 3 months up to 5 months the period of time households may receive transitional food stamp benefits when they lose TANF cash assistance. The provision also extends through the end of the transitional period the length of time households can be certified for benefits (currently limited to 12 months for most households). Benefits issued under the transitional benefit program would be equal to the amount received by the household prior to the termination of TANF, adjusted to account for the loss of the TANF income. In addition, State agencies may opt, when establishing the transitional benefit amount or throughout the transitional benefit period, to modify the transitional benefit amount based on information from another program in which the household participates. A household would not be eligible for the extension if it was losing TANF cash assistance because of a sanction, was disqualified from the Food Stamp Program, or is in a category of households designated by the State as ineligible for transitional benefits. This is more restrictive than current policy. Current policy only prohibits providing transitional benefits to a household if the household is noncompliant with TANF and subject to a comparable food stamp sanction; the household has violated a food stamp work requirement; a household member has committed a food stamp intentional program violation; or the household failed to comply with food stamp reporting requirements. Households may apply for recertification during the transitional period with benefits determined according to current circumstances. This provision is effective October 1, 2002. In order to implement this provision, we expect the State agency to notify its appropriate regional office that it is going to implement a transitional benefits program, what type(s) of households will be included in the program, and the length of the benefit period the State agency is choosing. In addition, we expect the State agency to indicate whether it will choose to adjust benefits based on information from another program in which the household participates (and which programs) and whether it will extend certification periods beyond the 12-month limit as authorized in this provision.

C. Other

Section 4108. Alternative Issuance Aystems in Disasters

Effective May 13, 2002, this provision allows FNS to approve alternate methods for issuing food stamp benefits during disasters when reliance on electronic benefit transfer systems (EBT) is impracticable. In disaster situations, the Secretary will consult with States to determine available means of benefit delivery. In the most extreme circumstances when EBT is impracticable and cannot be restored in a timely fashion, the Secretary will authorize an appropriate alternative delivery method.

Standard Deductions

October 1, 2002 through September 30, 2003

Sample Calculation

(48 States and DC)

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