Advocate explains perils of basing food assistance on assets, not income
Melissa K. Smith, a senior policy analyst at the Michigan League for Human Services, testified before the Michigan House Families, Children and Seniors Committee about a bill that would remove people from the state’s food assistance programs based on assets rather than income.
In her testimony, Smith argued that such limits will discourage people from saving money and do little to reduce fraud:
Therefore, the Michigan League for Human Services is opposed to the implementation of a $5,000 asset limit for food assistance. If Michigan imposes any asset limits on food assistance, it would be going against the national trend of eliminating asset tests to help families get back on their feet during this economic downturn. Twenty-nine states do not have any asset limits for food assistance.
We certainly agree that food assistance benefits should only go to those who need them and that lottery winners should not receive benefits. However, there is no reason to paint such a broad stroke. Food assistance cases have been skyrocketing since the beginning of the recession. Michigan has led the nation in unemployment, years before employment declined in other states. In 2009, there were 10 unemployed people for every job opening. Even now, there are more than 4 unemployed people for every open job in Michigan…
We need to be prudent in the use of our tax dollars. Implementing an asset limit for food assistance will cost Michigan money. While the federal government funds 100 percent of the food assistance benefit, administrative costs of the food assistance program are shared with the state, approximately fifty-fifty. Caseworkers already manage an average of 900 cases each, and with more than 2 million people on food assistance in Michigan, the additional work of verifying assets seems unfathomable and could increase the workload of DHS caseworkers tenfold. Overburdened staff could also affect error rates and other important outcomes on which the state is audited. The more administrative hurdles we erect, the more the state will pay. Last time that Michigan made a major policy change to their food assistance program, a federal audit was triggered and Michigan was fined $65 million for not meeting program requirements.
The incidence of abuse in the food assistance program is minimal. DHS reports 5,000 prosecutions a year for fraud in ALL assistance programs; that is less than one in 500 participants—about the same odds as catching a ball at a Major League Baseball game. Nationwide, 50,178 of 33.5 million recipients were disqualified from the Food Stamp Program in 2009 for abuse, less than one-tenth of one percent.
This move to impose asset limits was sparked by reports that a man who had won the lottery was receiving food stamps. The MILHS supports an alternative bill that would require information sharing between the lottery and the Department of Human Services, which they say would “specifically address the problem at hand without subjecting everyone to unnecessary and punitive policies.”