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Mayersville, Mississippi: A Study on Improving Access to Benefits and Services for Low-Income Families in the Rural South

Appendix B

Categorical Eligibility Provides Opportunity to Continue Food Stamps to Families Leaving Welfare for Work

The Food Stamp Act provides "categorical eligibility" to households in which all members receive either SSI or "benefits under a state program funded under Part A of Title IV of the Social Security Act" (i.e. the legislation establishing the TANF block grant). Households that are categorically eligible are not subject to the food stamp resource limit. In addition, in non-categorically eligible households, the Food Stamp Act excludes the resources of any "household member who receives (SSI or) benefits under a state program funded under Part A of Title IV." In effect, this means that the Food Stamp Program's vehicle resource limit does not apply to any car or truck owned by someone who receives benefits from a TANF-funded program.

Many states' welfare reform plans have either raised the limit on the value of vehicles that families receiving cash assistance may own or have eliminated restrictions on such vehicles altogether. Thus, as long as a family is receiving cash assistance, it can also receive food stamps, even if the car a parent drives to look for or commute to employment exceeds the Food Stamp Program's limits. Once these families left cash assistance, however, states have felt compelled to terminate their food stamps as well because the food stamp resource limits now applied to them. Terminating food stamps as well as cash assistance to these families could undercut states' efforts to make work more attractive than welfare.

A solution to this problem may be available from a new interpretation of the Food Stamp Act that USDA has been discussing with states for several months. Under this interpretation, TANF- or MOE-funded services other than cash assistance could still count as TANF "benefits" and thus make recipients categorically eligible for food stamps. Thus, if a state provides TANF-funded child care subsidies or TANF-funded case management services to a family for twelve months after the family leaves the cash assistance rolls, the state would treat that family as categorically eligible for food stamps. Even a service provided only to a parent would be sufficient to allow the state to treat that parent as a beneficiary of a TANF-funded "benefit" and thus exclude the value of that parent's car from the food stamp resource test.

It also is important to note that the service or other benefit need not be called "TANF." As long as it is supported with TANF block grant or MOE funds, a benefit can trigger categorical eligibility even if it is given a name that is distinct from TANF, such as "post-employment services." Thus, families that do not want to be associated with "TANF" or "welfare" could still be categorically eligible for food stamps based upon their receipt of non-welfare service that the state supports with its block grant.

The drafts of guidance on this issue that USDA has shared with states would give states broad discretion to decide which TANF- or MOE-funded benefits would confer an exemption from food stamp vehicle rules. States would send USDA a list of which benefits would entitle a family to food stamp categorical eligibility; USDA would not second-guess the composition of this list. For ease of administration, states presumably would want to focus on benefits for which they make specific eligibility determinations. A determination that the family is eligible for a particular service would be sufficient: the family would not be required to access a service on a particular month. In this way, just as someone can be a Medicaid beneficiary even if he or she does not actually visit a medical service provider in a given month, a state could determine that a family is receiving a TANF case management benefit as long as the family has been determined eligible without regard to how often the family actually contacts its case manager.

The policy is unlikely to be error-prone; indeed, it would eliminate some errors states currently experience when they fail to deny or terminate benefits to households whose resources exceed the program's limits. It is, of course, possible that eligibility workers may fail in some cases to recognize that a family is categorically eligible for food stamps. Such "negative case errors" are not included in the "payment error rate" from which USDA computes possible QC sanctions. Since categorical eligibility cannot make a household ineligible or affect the amount of benefits the household should receive, it cannot cause a "payment error."

This policy should give important new opportunities to states spending their TANF block grants or state MOE funds to provide post-assistance benefits to help families moving from welfare to work. By treating these families as categorically eligible for food stamps, states can protect them from the restrictive food stamp vehicle resource limits and further support them in their effort to establish themselves in the work force.

Source: David Super, General Counsel, Center on Budget and Policy Priorities, June 1999.