Odd food stamp policy story

The income cutoffs and benefit formula for the SNAP (food stamp) program are not as crazy as you sometimes read.

The AP's Matt Apuzzo today tells the sad story of Georgia resident Mark Milota, whose $25 increase in monthly unemployment benefits put him over the income cutoff for the SNAP program (food stamp benefits).

The Georgia Department of Human Resources explained in a letter to him last month that, because of the stimulus, he was ineligible for food stamps. He now makes $1,538 a month — $21 too much for a family of two to qualify.

"We have to pay him that $25 a week," said Brenda Brown, assistant commissioner at the Georgia Department of Labor. "And he doesn't have the option not to accept it."

Milota said he was told that, without the stimulus money, he would have received about $300 a month in food stamps.

The Consumerist picks up the "government shoots itself in foot" story line. The commenters are outraged and have a great suggestion:

The REAL problem here is that government programs like food stamps have "hard cutoffs". Instead, they should have "graduated reduction". The way this can work is that for every $3 over a certain amount, the program benefit is reduced by $1. If this were applied to Mark Milota's case, then for being over the level by $21, his food stamps would be reduced by only $7.

The funny thing is that this is how the SNAP benefit formula already works. The poorest participants get the maximum benefit. People close to the income cutoff generally get a smaller benefit.

The story about Mr. Milota seems odd. I wonder if Mr. Apuzzo got the details wrong or quoted Mr. Milota overstating the situation.

The income cutoff for a family of two is indeed $1517, so if Mr. Milota started with $1513 monthly, it makes sense that his extra $25 monthly would make him ineligible. But, I have trouble seeing how he could have lost $300 monthly in food stamp benefits in this situation.

The eligibility rules give Mr. Milota a maximum monthly benefit ($367 monthly) minus 30% of his net income after deductions. The deductions, subtracted from his income, include a standard deduction ($144), an excess shelter deduction (probably a couple hundred dollars and at most about $400, I think), and some other deductions that are typically smaller. Unless his is a very unusual case, with much higher deductions than that, he had several hundred dollars in net income. I would be surprised if the $25 in new unemployment benefits caused a net loss for Mr. Milota. If he did have a net loss, I'd be still more surprised if it were $300. It seems more likely that somebody looked up and misunderstood the rules, thinking that Mr. Milota would be eligible for the maximum benefit despite having monthly income substantially greater than the federal poverty standard.

I don't think that yet more complex stimulus package legislation, anticipating every obscure boundary case in food stamp eligibility rules, would have been wise policy making. The "government gone bad" story line seems misplaced here.

Thanks to Jack at Fork & Bottle for pointing me toward this story.

Update (6/23/2009): Corroborating the gist of this post, the Center on Budget and Policy Priorities estimates that only perhaps 1/3 of 1% of unemployment insurance recipients might have been disadvantaged by the stimulus benefits.