Summary of Senate Farm Bill 2012

Farm Bill 2012: Senate Passes 2012 Farm Bill 

June 29, 2012 

On June 21, 2012, the Senate passed the Agriculture Reform, Food and Jobs Act of 2012, S. 3240, otherwise known as the Farm Bill, with a vote of 64-35. The Farm Bill authorizes programs on a five-year cycle and was last completed in 2008 (P.L. 110-246). The 2012 Farm Bill will be in effect from 2013 to 2017 and reauthorizes most federal nutrition programs as well as crop and commodity programs. Title IV addresses federal nutrition programs, including the Supplemental Nutrition Assistance Program (SNAP). The Farm Bill reauthorization that passed the Senate contained several policy changes.

The Senate Farm Bill includes $23.6 billion in cuts over the next ten years; $4.5 billion of these cuts come from nutrition programs, while the rest come from farm and conservation programs. The $4.5 billion in nutrition cuts come from changes to SNAP, through modifying the “heat and eat” categorical eligibility with the Low Income Home Energy Assistance Program (LIHEAP) and altering eligibility and some administrative processes for SNAP.  A variety of smaller nutrition programs and initiatives such as Community Food Projects, Emergency Food Assistance and farm-to-school receive additional funding and support for grants, demonstration projects and the promotion of healthy foods.  On March 29, 2012 the House passed a budget resolution that proposed $33 billion in cuts to SNAP.  The Senate will not be considering a budget resolution this year. The House Agriculture Committee is expected to begin marking up their version of the Farm Bill on July 11, 2012. 

NCSL sent a letter, signed by Senator Tom Hansen from South Dakota and Representative Barbara Ballard of Kansas, to the entire Senate during the amendment process praising the bipartisan effort and urging members to oppose three amendments that would eliminate or limit state flexibility to use categorical eligibility for SNAP and end state bonuses for performance.  This letter can be found here: http://www.ncsl.org/issues-research/human-services/letter-to-senate-on-amendments-to-2012-senate-farm.aspx.  NCSL was also successful during the committee mark up in preventing the introduction or passage of amendments similar to the ones defeated on the floor.  To read the letter to the Senate Agriculture committee signed by Senator Hansen and Representative Ballard, click here: http://www.ncsl.org/issues-research/human-services/ncsl-letter-on-the-senate-farm-bill-2012.aspx.

Supplemental Nutrition Assistance Program (SNAP)

Policy changes within the SNAP reauthorization include modifying the “heat and eat” categorical eligibility with the Low Income Home Energy Assistance Program (LIHEAP); making lottery and gambling winners ineligible for SNAP; changing requirements for retailers who can accept SNAP electronic benefit transfers (EBT); targeting fraud; and delineating state uses of performance bonuses to reinvestment in SNAP administration. These specific provisions are detailed below.

Eligiblity Changes for Beneficiaries

“Heat and eat” is an option states can use to make recipients of the Low Income Home Energy Assistance Program (LIHEAP) categorically eligible for SNAP. The Senate Farm Bill changes the current option by requiring at least $10 per year in LIHEAP assistance in order to qualify for the Standard Utility Allowance (SUA) in the SNAP benefit determination process.  The $10 in LIHEAP is a minimum amount of benefits necessary to qualify, and the Secretary of Agriculture (hereafter referred to as the Secretary) can raise this minimum in the future. This trigger takes effect on October 1, 2013. States have an option to delay implementation by 180 days for current beneficiaries of the program.

The bill tightens eligibility requirements for students and would ban “significant” lottery and gambling winners from being eligible for SNAP. In order to qualify for SNAP, a student would have to be part of a career or technical program (as defined by the Perkins Act of 2006, P.L. 109-270) that is completed in four years or less or is limited to basic adult education, remedial courses, English as a second language, or literacy. The bill explicitly ends SNAP benefits for households who have a member which receives substantial gambling or lottery winnings. “Substantial” winnings would be determined by the Secretary, and SNAP benefits end upon receipt of the winnings. Additionally, the legislation requires, “to the maximum extent practicable”, that state agencies administering SNAP establish agreements with state lottery/gaming agencies as well as organizations that sponsor multistate lotteries to determine if SNAP participants are the recipients of substantial lottery winnings.

Restaurant Meals Option for States

The legislation requires state agencies to limit the use of SNAP benefits for prepared foods to qualified individuals (homeless, elderly and disabled) only in geographic areas where the state can demonstrate that these individuals are underserved. The state must limit participating institutions and retailers to those in the defined geographic area and meet any other conditions specified by the Secretary. Agencies using this option would have to submit an annual report on the number of individuals using this option and analyze whether this program option is meeting the established need.

Proposed Changes for Retailers who Accept SNAP EBT

The Farm Bill changes the definition of a “retail food store” to require stores to offer at least three categories of perishable food, as opposed to the current definition, which requires two categories. Categories include: meat/poultry/fish, bread/cereals, vegetables/fruit, and dairy products. Additionally, retailers are responsible for 100 percent of the costs of implementing an Electronic Benefit Transfer (EBT) system in order to accept SNAP payments. This requirement to pay for all the set-up costs of the EBT system coincides with the proposed termination of the manual voucher (stamp) system, except in extenuating circumstances when EBT cannot be used (natural disasters, etc.). Additionally, retailers will need to “provide for and maintain” a unique identification number. This requirement is intended to assist the U.S. Department of Agriculture (USDA) in fraud prevention, investigation, and prosecution.

There are new proposed qualification requirements for retailers applying or being reauthorized to accept SNAP EBT transactions. Retail food stores are required to have 55 percent or higher in sales for SNAP accepted items. The only exception is if the Secretary determines that participation of the retailer applying is required for “effective and efficient operation” of SNAP. Previous law states that SNAP benefits cannot be used to purchase alcohol, cigarettes, toiletries, paper products, gasoline, and hot food (in most cases, with the exception of restaurant meals option that serves certain homeless, elderly and disabled individuals), and this legislation would not modify these restrictions.

Fraud and Abuse Prevention, Investigation and Prosecution, Quality Control and Performance Bonuses

The Farm Bill provides new authority to states to decline to issue an EBT benefit card to households with excessive lost cards. It also dedicates $18.5 million a year to the USDA to combat retailer and recipient trafficking of SNAP.

The Secretary determines what an “excessive amount “ of requests would be and, once households reach this limit, the state could be required to decline providing a replacement card, unless the recipient provides an explanation for the loss of card. The legislation provides a process for states and the head of household to go through in order for a card to be reissued. It also provides that vulnerable populations, such as the homeless, persons with disabilities, and crime victims, are protected since they are more likely to lose their EBT card and are not intentionally committing fraud. A state declining to issue a new EBT card would not change the eligibility of the household for SNAP benefits.

The USDA may use the $18.5 million to supplement current activities looking at payment accuracy and retailer and recipient integrity activities. The unique identification number retailers are required to maintain is part of this effort, as mentioned above.

There are new changes to Quality Control that could increase administrative costs to the states, increase the workload for agencies that are handling a record number of applicants, and increase the possibility of fiscal sanctions to states who do not meet the error rate.  For the first time, the tolerance level will be set explicitly by Congress and reduces the tolerance in payment rules, which is currently set by regulations at $50 by the USDA.  Any $25 error or greater is counted towards the error rate which could potentially push a state over the sanction threshold.  USDA set the $50 threshold because of the increased administrative burden on the states caused by the rise in caseloads.  State agency officials are concerned that this will lead to a greater number of states having to pay penalties due to exceeding the quality control national threshold.

The bill also sets requirements for the uses of performance bonus payments given to states due to high performance in lowering error rates. These bonuses must be used on investments in technology, administrative improvements or actions to prevent fraud, waste or abuse of the SNAP program.

 Demonstration Projects for New EBT Technologies

This provision takes steps to implement two new EBT technologies through two separate demonstration projects. One pilot tests mobile transactions, allowing retailers to redeem SNAP EBT through means other than wired point of sale devices. The other pilot allows the use of SNAP EBT for online transactions (for example, grocery delivery services). In both cases, SNAP benefits can only be used for the food itself, not delivery or packaging and the cost must correlate with the cost of the same item in an already established retailer. In both cases the pilot demonstrations on the technologies’ feasibility must be conducted by summer 2015 and reports submitted to Congress by the beginning of 2016.

Other Nutrition Program Changes

Community Food Projects, Emergency Food Assistance, and Commodity Supplemental Food Program

The Senate’s Farm Bill funds the Secretary’s Community Food Projects grants up to $5 million a year beginning in 2013 out of un-appropriated Treasury funds. It increases the baseline of Emergency Food Assistance from $10 million to $260 million for 2012 and will continue to increase the baseline with the cost of the thrifty food plan. This provision also increases funding by $28 million in 2013, $24 million in 2014, $20 million in 2015, $18 million in 2016, and $10 million for each subsequent year. Benefits from the Commodity Supplemental Food Program will only be available to low-income people over the age of 60. Current recipients who are not over 60 will be grandfathered into the program.

Healthy Food Financing Initiative

The bill appropriates $125 million to the USDA to support healthy food initiatives in underserved communities. The initiative provides loans and grants to healthy food retailers facing high costs and barriers to entry in underserved areas. 

Pulse Crop Purchases for School Meals

The Senate Farm Bill authorizes $10 million for the Secretary to purchase pulse crops (defined as dry beans, dry peas, lentils and chickpeas) for use in the school lunch and school breakfast programs. The purpose of this provision is to raise awareness of pulse crops as recommended by the most recent Dietary Guidelines for Americans.

Dietary Guidelines for Pregnant Women and Young Children

The legislation contains a provision requiring USDA Secretaries to include national nutritional dietary guidelines and information for pregnant women and children up to the age of two, beginning no later than 2020 and continuing in each subsequent report.

Locally Produced Foods

The Farm Bill requires that the USDA conduct no fewer than five demonstration projects with school food authorities which purchase unprocessed and minimally processed locally grown foods. At least one demonstration project must take place in each of five designated geographical regions, with preference given to projects in states with demonstrated commitment to farm-to-school efforts and school districts with diverse population sizes and geographical locations.

To read the final Senate bill, click here: http://www.gpo.gov/fdsys/pkg/BILLS-112s3240es/pdf/BILLS-112s3240es.pdf

For further information, please contact either Sheri Steisel or Emily Wengrovius at fedhumserv-info@ncsl.org or NCSL’s Washington DC office at 202-624-5400.