Assessing the New Federalism Discussion Paper No. 01-05
Assessing the New Federalism is a multi-year Urban Institute project designed to analyze the devolution of responsibility for social programs from the federal government to the states. It focuses primarily on health care, income security, employment and training programs, and social services. Researchers monitor program changes and fiscal developments. Alan Weil is the project director. In collaboration with Child Trends, the project studies changes in family well-being. The project provides timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively.
Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia. Publications and database are available free of charge on the Urban Institute's Web site: http://www.urban.org.
The project has received funding from The Annie E. Casey Foundation, the W.K. Kellogg Foundation, The Robert Wood Johnson Foundation, The Henry J. Kaiser Family Foundation, The Ford Foundation, The David and Lucile Packard Foundation, The John D. and Catherine T. MacArthur Foundation, the Charles Stewart Mott Foundation, The McKnight Foundation, The Commonwealth Fund, the Stuart Foundation, the Weingart Foundation, The Fund for New Jersey, The Lynde and Harry Bradley Foundation, the Joyce Foundation, and The Rockefeller Foundation.
The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
Contents
Introduction
Data
Characteristics of Families That Left Food Stamps: 1999 and 1997
To What Extent Are Families That Left the FSP No Longer Eligible?
Who Can Get Benefits and How Much?
Participation Rates for Welfare Leavers
Why Did Families Say They Left the Food Stamp Program?
What Are the Characteristics of Families That Left?
Summary and Implications
Introduction
In the early stages of welfare reform, a variety of studies documented that many families that left welfare also left the Food Stamp Program (FSP) even though they were still eligible for benefits (see, for example, Zedlewski and Brauner, 1999, Wilde et al., 2000). State studies of welfare leavers also documented low rates of food stamp receipt among those that left the welfare program (see Acs and Loprest, 2000, for a recent summary of these studies).1
Some speculated that former welfare families' frequent departure from the Food Stamp Program could be a temporary phenomenon. The 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) represented a major shift in government welfare policy, and some confusion about continued eligibility for food stamps among low-income families was perhaps understandable. The advocacy community and some states began outreach programs to inform families that, even though they had left the Temporary Assistance for Needy Families (TANF) program, they could still be eligible for food stamps. Others argued that the historically low food stamp participation rates among working poor families could imply continued low participation among welfare leavers unless certain aspects of the program were changed. Families with jobs find it more difficult to stay attached to the program because continued eligibility requires (often frequent) recertification, and the program places strict limits on financial assets and the allowable fair market value of an automobile owned by the family.
This paper uses the National Survey of America's Families (NSAF) to examine whether food stamp participation changed among former welfare recipients between 1997, a year very early in the process of welfare reform, and 1999, a year representing a time when welfare reform had evolved more fully. While it may be premature to use this time period to determine whether outreach efforts in some states began paying off, it should at least reveal whether some of the initial behavior observed occurred as a result of significant confusion among low-income families as rules regarding welfare eligibility were changing dramatically. Each NSAF survey asked families whether they had participated in welfare and the Food Stamp Program during the previous two years and, if so, whether they were still participating in these programs. These data allow us to
compare families that said that they recently left one or both of these programs with those that stayed.
Our results show that the majority of families with children that left welfare also left the FSP between 1997 and 1999, mirroring the trend observed in the early stages of welfare reform between 1995 and 1997. Only a minority of families that left welfare reported incomes high enough that they clearly no longer qualified for food stamps benefits. Participation rates for very low-income families (below 50 percent of the
poverty level) that left welfare were particularly troubling—only half continued to receive food stamps. Our 1999 results also show a significant increase in the share of families that reported that they left the FSP because of administrative problems and a decline in the percentage that left because of employment compared with 1997. Finally,
we found that families that reported incomes below the poverty level and did not continue their food stamps were significantly more likely to own a car and to have moved in the previous 12 months than families that stayed in the program.
Our results lead to questions about whether food stamps currently provide an effective income support for families trying to move to self-sufficiency. Food stamps, along with the Earned Income Tax Credit (EITC), are "work supports" designed to help those with low-paying jobs support themselves and their families until they move up the economic ladder. Yet the majority of the working poor are not taking advantage of the significant income supplement offered through the Food Stamp Program. Legislation passed by Congress in October 2000, which allows states to increase the allowable fair market value of a car owned by an otherwise eligible family and new administrative options that allow states to reduce reporting requirements for food stamp recipients, may
help to alleviate participation barriers. It will be important to watch how these potential changes unfold in the states and whether participation rates increase as a result.
In this paper we first briefly describe the data used in this study and the characteristics of families who reported leaving the FSP in 1999 and 1997. Then we highlight the current earnings and estimated incomes of families that left the FSP by their welfare status and compare results for both years of data. The remainder of the paper focuses on FSP participation for families that left welfare. We report the reasons families gave for leaving the FSP and then compare the characteristics of families with incomes below the poverty level that left welfare and the FSP with those that left welfare but stayed on food stamps. The final section summarizes our results and discusses the implications for policy.
See the PDF for complete report.
1 The Economic Research Service has funded several state studies of food stamp leavers that should add to our understanding when results become available.
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Disclaimer: The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.
