UNITED STATES DEPARTMENT OF AGRICULTURE
Testimony of Eric M. Bost
Under Secretary, Food, Nutrition and Consumer Services
Before the House Committee on Agriculture
Subcommittee on Department Operations, Oversight, Nutrition and Forestry
June 27, 2001
Mr. Chairman and Representative Clayton, it is a pleasure to see both of you
again. I appreciate the opportunity to join you today to discuss the
reauthorization of the Food Stamp Program – to build on its history of success
to meet the demands of this new century.
Nearly four years ago, then-Governor George Bush appointed me Commissioner of
the Texas Department of Human Services, one of the Nation’s largest human
services agencies. With an organization of more than 15,000 employees and an
annual budget of $3.5 billion, I was responsible for administering State and
Federal programs that served more than 2 million needy, aged, or disabled Texans
each month. I took that position after more than twenty years of experience in
managing human services agencies across the country.
When President Bush and Secretary Veneman asked me to join the team at the
Department of Agriculture, I was extremely pleased to have the opportunity to
put my experience at the State and local levels to work in managing and
improving the Federal nutrition assistance programs. I particularly looked
forward to representing the Administration in the process of reauthorizing the
Food Stamp Program – the foundation of the Nation’s nutrition safety net –
as part of the Farm Bill. I believe that my knowledge and experience prepare me
well for this challenge. I look forward to working with this subcommittee as we
develop a reauthorization approach that both preserves those aspects of the
program that have served this country so well over the past decades, and makes
the changes needed for the program to function even more effectively and
efficiently into the future.
I would like to begin today with a brief review of the Food Stamp Program’s
current status, and then describe some of the changes in the program’s
performance and operational context that resulted from welfare reform, before
outlining my thoughts about aspects of the program that could be improved during
A History of Success
In my view, the Food Stamp Program stands as a testament to our country’s
compassion. For over 30 years, it has served as the first line of the nation’s
defense against hunger, a powerful tool to improve nutrition among low-income
people. Any discussion of food stamp reauthorization must start with recognition
of the strong evidence that the Food Stamp Program works to reduce hunger and
improve nutrition in America.
It touches the lives of millions of people who need a helping hand to put
food on the table. Unlike most other assistance programs, the Food Stamp Program
is available to nearly anyone with little income and few resources, serving
low-income families and individuals wherever they live with food-based benefits
that increase a household’s food expenditures, and its access to nutritious
Because food stamps are not targeted or restricted by age, disability status,
or family structure, recipients are a diverse group, representing a broad
cross-section of the nation's poor. In 1999, over half of all food stamp
recipients (51 percent) were children, 9 percent were elderly, and another 9
percent were disabled. Many recipients worked, and the majority of food stamp
households were not on Temporary Assistance for Needy Families (TANF). However,
most food stamp households had little income and few resources available to
them. Only 11 percent were above the poverty line, while 35 percent had incomes
at or below half the poverty line. About two-thirds of all households had no
countable assets. The program is clearly successful at targeting benefits to the
The Program responds to economic changes, expanding to meet increased need
when the economy is in recession and contracting when the economy is growing,
making sure that food gets to people who need it. Because benefits automatically
flow into communities, States, or regions of the country that face rising
unemployment or poverty, the program tends to soften some of the harsher effects
of an economic downturn.
However, over the last decade, food stamp participation rose more sharply
than expected during the relatively short and mild recession in the early 1990s
and then fell more sharply than expected after 1994 during the sustained period
of economic growth. In March 2001, the program served 17.3 million people, down
from 28 million at its peak in March 1994. In recent months, the participation
decline has slowed, and may have ended; over half of all States are now serving
more people than they did a year ago. It is important to note that as
participation has declined, program costs have also dropped considerably; annual
costs have declined by over $7 billion since fiscal year 1995.
The program delivers billions of dollars in benefits with a high degree of
integrity and accountability. The vast majority of program benefits go only to
households that need them. In 2000, about 6.5 percent of program benefits were
issued in excess of the correct amount; an additional 2.4 percent should have
been issued to recipients but were not. The combined overall payment error rate
of 8.9 percent represents the lowest rate of overall error in the program’s
history. We are doing well, but further improvement can be made.
In 2000, 98 percent of households that received food stamps were entitled to
some benefit. Problems tend to occur far more frequently in cases where an
eligible household is provided with the wrong amount of benefits. Difficulties
in determining the correct level of benefits stem from a number of factors: the
intricacy of program rules designed to target benefits precisely, the complex
circumstances of working families, and the need to anticipate the circumstances
of program participants.
When errors resulting in overpayments do occur, the Department works hard to
recoup these funds from those who receive them. In partnership with the States,
there are a variety of tools that support this effort, such as recoupment from
active benefits, voluntary repayments, referrals to collection agencies and
offsets of State and Federal payments. In fiscal year 2000, $223.8 million was
collected through these mechanisms. By far, the most successful tool is offset
of Federal payments, currently accomplished in partnership with the Department
of Treasury through the Treasury Offset Program. The Food and Nutrition Service
has been a leader among Federal agencies in this effort.
The period since the program was last reauthorized has seen a revolution in
the way that Food Stamp benefits are delivered. In 1996, Congress set a deadline
to have all food stamp benefits delivered through Electronic Benefits Transfer,
or EBT, by October 1, 2002. At that time, only about 15 percent of benefits were
delivered electronically. Today, 80 percent of all benefits are delivered
through EBT. Forty-three State agencies now operate EBT systems for the Food
Stamp Program and forty-one are statewide. The Department is aggressively
working with staff from the remaining State agencies to accomplish the goal of
converting to electronic delivery.
I am pleased to inform Congress that interoperability—the ability to redeem
EBT-based benefits across State lines—is a reality today among all but a few
States. The remaining few States are either using smart card systems that are
incompatible with on-line technology or are working to overcome the technical
and contractual issues that must be in place before interoperability can occur.
These issues are well understood by the States and the EBT industry. The
Department strongly supports the efforts underway to address them.
One of the benefits of the move to electronic benefit delivery is that it
provides new tools in the fight against food stamp trafficking; electronic
transaction data are systematically analyzed and used to identify violations,
and we continue to refine our use of the data. While the extent of trafficking
food stamps for cash is estimated to be less than 4 cents of every dollar
issued, we must continue to be vigilant and to improve our ability not just to
redress trafficking and other kinds of fraud, but to ensure that only eligible
stores participate in the program.
USDA focuses significant effort in this area. New stores are subject to an
on-site visit to assure that the store meets the eligibility criteria for
authorization. Owners and managers are provided orientation and training on the
use of food stamp benefits for eligible foods. And, stores are subject to
periodic revisits to assure that they continue to meet eligibility criteria. The
Department measures its success in this area by annually visiting a random
sample of participating stores and establishing a statistically-valid Store
Eligibility and Accuracy Rate (SEAR). The most recent SEAR results, for fiscal
year 2000, show our success: 98.5% of all participating stores were, in fact,
eligible to participate.
Ensuring effective stewardship of the taxpayer investment in this program is
one of the Department’s most important responsibilities. I know you will hear
from the Inspector General later in this hearing; I look forward to working
closely with him in the coming months to develop proactive strategies to ensure
that the Department prevents fraud and abuse before it occurs.
The Changing Environment Since Welfare Reform
As I have mentioned, much has changed since Congress last reauthorized the
Food Stamp Program. Increasing food security, ending hunger, and improving
nutrition among low-income families and individuals remain central to the
program’s mission. Yet the challenges facing the program today – and the
pace of change in the world in which it operates – are substantial.
Welfare reform transformed social policy for low-income families, replacing
an entitlement to cash assistance with a system that requires work in exchange
for time-limited assistance. The 1996 welfare reform law (i.e. the Personal
Responsibility and Work Opportunity Reconciliation Act of 1996) has been a great
success in moving people from dependency to self-sufficiency. Between January
1996 and June 2000, the welfare caseload fell by over 50 percent – the largest
welfare caseload decline in history and the lowest percentage of the population
on welfare since 1965. And significant numbers of those have left welfare for
In important ways, States have been the leaders of this revolutionary effort
and are responsible for its success. State governments made use of the
flexibility provided in the 1996 law to develop innovative efforts to
restructure their welfare programs to require work, time-limit assistance,
improve child support enforcement, or encourage parental responsibility.
The Food Stamp Program has also contributed to the success of welfare reform
by supporting the transition from welfare to work. The reasons are easy to
understand—if you are worried about your family’s next meal, it is hard to
focus on your future. For many households, food stamps can mean the difference
between living in poverty and moving beyond it. And for many, it has. Welfare
rolls, and the proportion of food stamp households on welfare, have fallen
sharply, while the percentage of food stamp households with earnings has grown.
Today, there are as many working families as there are welfare families on food
stamps – roughly a quarter of all participating households. Now, more than
ever, the Food Stamp Program plays a critical role in easing the transition from
welfare to work.
Food stamp participation has fallen dramatically. As I mentioned earlier, the
Food Stamp Program served 17.3 million people as of March 2001, nearly 11
million fewer than at its peak in March 1994. Part of the decline is explained
by a strong economy, the success of welfare reform in moving people into jobs,
and restrictions on legal immigrants and unemployed adults. But other factors
may also be at work. The percentage of people eligible for food stamps who
actually participated fell 11 points between 1994 and 1998. In 1998, about 59
percent of those eligible for benefits received them, roughly the same level
seen in the late 1980’s. Working poor families and elderly people continue to
participate at rates well below the national average.
Concerns have grown that the program’s administrative burden and complexity
are hampering its performance in the post-welfare reform environment. There is
growing recognition that the complexity of program requirements – often the
result of desires to target benefits more precisely – may cause error and
deter participation among people eligible for benefits. For example, households
are required to provide detailed documentation of expenses for shelter,
dependent care, medical expenses, and child support. Similarly, the law requires
that most unemployed adults without children should only receive food stamps for
a limited time and most legal immigrants should not receive food stamps at all.
However meritorious the intent of this policy, provisions of this kind require
applicants to provide additional information, introduce new rules for
caseworkers to follow, and impose costly and potentially error-prone tracking
requirements on State agencies.
These burdens are particularly significant for the working families that
comprise an increasing portion of the Food Stamp caseload. Caseworkers are often
expected to anticipate changes in their income and expenses – a difficult and
error-prone task, especially for working poor households whose incomes fluctuate
– and households are expected to report changes in their circumstances to
ensure that each month’s benefit reflects their current need. Such burdensome
requirements may discourage working families from participating in the program.
They also make the job of State agencies, that must serve these working families
effectively while delivering benefits accurately, significantly more difficult.
Finally, there is growing awareness that we need to reform the quality
control system to ensure that it more effectively encourages payment accuracy
without discouraging States from achieving other important program objectives.
The existing quality control system provides timely and accurate data on State
performance in issuing the correct amount of benefits, as well as other valuable
program information. Establishing sanctions against any State with a higher than
average error rate is a source of serious and continuing friction with States.
Sanctioning approximately half of the States each year does not contribute
effectively to productive partnerships that can achieve the program’s
objectives. In addition, there is growing concern that the system discourages
states from achieving other desired program outcomes; such as program access. My
view is that every person eligible to receive food stamps should have full and
easy access, while maintaining integrity in the program. We need to re-examine
how the Food Stamp Program recognizes and supports its multiple program goals.
Food Stamp Reauthorization: A Framework for the Future
The Administration considers the Nation’s nutrition assistance programs a
critical source of food for low-income adults and children. It strongly supports
reauthorization of the Food Stamp Program, as well as the other important
nutrition programs – The Emergency Food Assistance Program (TEFAP), the Food
Distribution Program on Indian Reservations (FDPIR), and the Commodity
Supplemental Food Program (CSFP) – that are important components of the Farm
You have asked me to focus today on the Administration’s proposal for
reauthorization of the Food Stamp Program. As you know, my tenure in this
position has just begun, and we are just starting a process to develop our
reauthorization proposals. I am eager to work with Congress as these proposals
are developed to make program improvements that will address the challenges, and
the changing policy environment, that I have described. Today, I would like to
identify and describe some general areas of interest that we expect to explore
in developing the Administration’s proposal:
- Supporting Work: Food stamps can serve as a critical support for the
transition to work and self-sufficiency. But working families often have
circumstances that make complying with the program’s procedural
requirements more difficult. We need to explore changes to make the program
work better for working families, facilitating their access to the benefits
they need while minimizing burdens for State agencies.
- Simplifying Program Rules: There is broad agreement that the program has
grown too complicated. The consequences of this complexity for State and
local program operators and, more importantly, for the low-income people the
program serves, are serious. We must find ways to reduce burdens on
applicants and participants, and to reduce administrative complexity for
- Maintaining the Nutrition Safety Net: The national eligibility and benefit
rules of the Food Stamp Program form a safety net across all States. As
States continue to explore innovative welfare policies, food stamps must be
available to provide a steady base that serves the basic nutrition needs of
low-income households wherever they live. We need to preserve the program’s
national structure. At the same time, we should consider whether program
changes, including increased administrative flexibility, could help to
ensure that all those at risk of hunger have access to the benefits they
need. We also need to improve the program’s effectiveness in promoting
healthy diets for the people it serves.
- Improving Accountability: As you know, prudent stewardship of Federal
resources is a fundamental responsibility, and is critical to continued
public confidence in this important program. We need to remain vigilant in
the fight against error, fraud and abuse, and consider improvements that can
help to ensure that the taxpayer investment in the program is used as
effectively as possible.
The Food Stamp Program’s mission – to end hunger and improve nutrition
– remains as vital today as at the program’s beginnings. I am pleased to
join the discussion we begin today to preserve the elements of the program that
have contributed to its history of success, and to strengthen and improve it to
meet the challenges of a new century.
Mr. Chairman, that concludes my remarks. I would be pleased to answer any
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