Low-income Michiganians face food assistance cut in November

 Full report in PDF

In Michigan, 1.8 million low-income people will see their food assistance cut when a temporary boost to the Supplemental Nutrition Assistance Program (or SNAP, formerly known as food stamps) expires Nov. 1, new data from the U.S. Department of Agriculture show.1 SNAP benefits will average less than $1.40 per person per meal after the cut.

The cut will affect more than 47 million Americans, including 22 million children, who receive SNAP, known as the Food Assistance Program in Michigan. For a family of three, that cut will amount to $29 a month. That’s a serious loss given SNAP’s already low benefit levels and the very low incomes of SNAP participants — more than 80% of SNAP households live in poverty.

In Michigan, the benefit cut through October 2014 will total $183 million, slowing economic growth by reducing overall consumption. Nationally, the cut will total roughly $5 billion in federal fiscal year 2014 and an additional $6 billion across fiscal years 2015 and 2016.

Despite continuing high poverty and unemployment, Michigan has cut programs aimed at helping families through hard times. Lifetime limits on cash assistance and an asset test on food assistance have resulted in lower caseloads while a reduction in the Michigan Earned Income Tax Credit means working families are having a more difficult time making ends meet. Michigan also shortened its traditional period of unemployment from 26 weeks to 20 weeks yet the state’s June unemployment rate of 8.7% remains above the national rate of 7.6%. Michigan’s poverty rate of 17.5% is also above the national average.

Benefit Increase Designed to Boost Economy and Ease Hardship

Congress enacted the benefit increase as part of the 2009 Recovery Act to deliver high “bang-for-the-buck” economic stimulus and ease hardship. The Recovery Act boosted SNAP’s maximum monthly benefits by 13.6% beginning in April 2009. It provided that SNAP benefit levels would continue at the new, higher amount until SNAP’s regular annual inflation adjustments to the maximum benefit exceeded the Recovery Act amount. But Congress has since voted to accelerate the sunset of the benefit increase to Oct. 31 of this year.

The scheduled benefit cuts are especially painful in light of the inadequacy of existing benefit levels. In a report issued by the Institute of Medicine and the National Research Council, nutrition experts identified several shortcomings with the current SNAP benefit allotment and recommended evaluating ways of changing the benefit calculation to better ensure that households have enough resources to purchase an adequate diet.2

Benefit Cuts Will Increase Hardship

These cuts will likely cause hardship for many SNAP participants, who will include 22 million children in 2014 (10 million of whom live in “deep poverty,” with family incomes below half the poverty line) and 9 million people who are elderly or have a serious disability. In Michigan, 1.8 million participate in the program — that’s one in six residents.

USDA has found that the Recovery Act’s benefit boost reduced the number of households in which one or more persons had to skip meals or otherwise eat less because they lacked money — what USDA calls “very low food security” — by about 500,000 households in 2009.3 More recent research finds that boosting SNAP benefits during the summer for households with school-aged children who don’t have access to USDA’s summer food program cut very low food security among these households by nearly 20%.4

Given this research and the inadequacy of current benefit levels, we can reasonably assume that a reduction in SNAP benefit levels of this size will significantly increase the number of poor households that have difficulty affording adequate food this fall.

Evidence Doesn’t Support Argument for Cutting SNAP

The Obama Administration and some members of Congress have proposed delaying or cancelling the Nov. 1 cut, but Congress has taken no action on these proposals. Moreover, some in Congress have called for deep cuts in SNAP on top of the scheduled cut. The House of Representatives, which recently defeated legislation that would have cut $20 billion from SNAP — eliminating food assistance for nearly 2 million people — could reconsider these or even deeper cuts in the coming weeks.

Supporters of large SNAP cuts claim that because SNAP enrollment hasn’t declined in tandem with the unemployment rate over the past few years, the program’s enrollment growth in recent years is largely unrelated to the poor economy. In reality, however, the recent reductions in the unemployment rate overstate the improvements in the labor market, as Federal Reserve chair Ben Bernanke has observed.5 The proportion of the adult population with a job — the employment rate — has barely improved since the recession bottomed out.

In addition, the number of unemployed workers not receiving unemployment benefits — the group of the unemployed most likely to qualify for SNAP because they have neither wages nor UI benefits — has continued to grow and is higher now than at the bottom of the recession. Also, the historical record shows that declines in poverty and SNAP enrollment typically lag behind declines in the unemployment rate following recessions.

Endnotes

1 For more detail on the scheduled cut, see Stacy Dean and Dorothy Rosenbaum, “SNAP Benefits Will Be Cut for All Participants in November 2013, Center on Budget and Policy Priorities, Aug. 1, 2013, http://www.cbpp.org/cms/index.cfm?fa=view&id=3899.

2 Institute of Medicine and National Research Council, Supplemental Nutrition Assistance Program: Examining the Evidence to Define Benefit Adequacy, The National Academy Press, 2013, http://www.iom.edu/Reports/2013/Supplemental-Nutrition-Assistance-Program-Examining-the-Evidence-to-Define-Benefit-Adequacy.aspx.

3 Mark Nord and Mark Prell, “Food Security of SNAP Recipients Improved Following the 2009 Stimulus Package,” Amber Waves, 9(2), June 2011, p. 6, http://www.ers.usda.gov/media/227714/foodsecuritysnap_1_.pdf

4 Evaluation of the Impact of Enhancement Demonstrations on Participation in the Summer Food Service Program (SFSP): FY 2011; FNS, USDA, November 2012, http://www.fns.usda.gov/ora/menu/Published/CNP/FILES/SEBTC_Year1Findings.pdf.

5 “Bernanke Talks: A Conversation at the NBER,” Real Time Economics, Wall Street Journal, July 11, 2013, http://blogs.wsj.com/economics/2013/07/11/bernanke-talks-a-conversation-at-the-nber/.

Strange bedfellows abound on Prop 5

Gov. Rick Snyder, the Michigan Chamber of Commerce, the Michigan Manufacturers Association and others voiced their opposition to Proposal 5 (the so-called supermajority proposal) at a press conference today.

They join the League and a long list of other strange bedfellows that are urging a No vote on Proposal 5.

Why are all these organizations that don’t normally work together coming together to say No to Proposal 5? Because Proposal 5 is bad public policy that will give a minority of just 13 senators the ability to stop the will of the majority on proposals increasing the state’s tax base. (more…)

Worst in the Midwest

For nearly two years, we’ve been blogging about the various policies governing Michigan’s Unemployment Insurance system and their effects on the unemployed workers who need the benefits as they look for work.

Some of the blog entries have focused on federal legislation, such as the game of chicken that Congress played more than once by renewing benefit extensions at the last minute before expiration. Others, however, have been about ill-advised decisions by the Michigan Legislature during the past year: 1) cutting the maximum number of state-funded UI weeks from 26 to 20, and 2) letting $139 million in federal dollars for the state UI trust fund float by rather than make modernizations that would expand UI eligibility to cover more workers. (more…)

Fixing the workers’ safety net

Last week marked the culmination of the Michigan Legislature’s ongoing decision to do nothing and leave $138.7 million in federal funds on the table. That money was to be used to shore up Michigan’s Unemployment Insurance trust fund.

As the League discussed in a recent blog, the state had three years to make certain modernizations to its program to become eligible for the funds. Although the House passed legislation enabling these modernizations in 2009, neither the current House nor Senate took up a similar bill sponsored by Rep. Jim Ananich, D-Flint, before last week’s deadline. (more…)

Beyond the headlines of the tax deal

Whether you love it or hate it, the new tax cut deal reached in Washington does offer some important benefits for low- and moderate-income families in Michigan.

While the debate has raged over tax breaks for the very rich, perhaps lost in the headlines is the inclusion of tax credits for families that were originally enhanced by the American Recovery and Reinvestment Act  of 2009 (also known as the stimulus package).

These credits, originally passed as one-year credits, target people who do important work for low pay, such as nursing home workers, child care workers, janitors and waitresses. As part of the newly inked deal, expansions in the Child Tax Credit and the Earned Income Tax Credit will be extended for two years.

The Child Tax Credit lowered the minimum income amount ($3,000 in tax year 2009 as opposed to $8,500 in tax year 2010) and made other changes. 

Here’s why this is so critical: If the Child Tax Credit had been allowed to expire, it would mean a $1,432.50 tax increase for a single working mom of two in Michigan who is earning minimum wage.  Under the deal, that family will receive a credit of $1,770 (rather than $337.50). That’s a critical boost for those families struggling to make it. That’s also money that is most likely to be spent and spent quickly, giving a needed jolt to the local economy.

The policy group Citizens for Tax Justice (CTJ) estimates that extending the Child Tax Credit expansions will help families of 514,000 children in Michigan.

Likewise, expansions in the Earned Income Tax Credit will help families of a half-million children in Michigan, CTJ estimates. Those changes provided a larger credit for families with three or more children ($629 more than families with two children). The Recovery Act also addressed a “marriage penalty” and allowed a married couple to claim the EITC with incomes $5,000 higher than single taxpayers, rather than $3,000.

In addition, the deal extends tax credits offering help for families struggling to cover the costs of higher education. Of course, there’s also a vital part of the compromise that is extremely important to Michigan and that is the extension through 2011 for emergency unemployment benefits.

With tens of thousands in Michigan losing their benefits each month, it’s important to our state to get that income restored for families as breadwinners look for jobs in a very tough market.

Congress has chance to help Michigan families

Congress is returning from its Labor Day break this week with a number of key issues before it. In the coming days, Congress will make decisions on tax credits, child nutrition and cash assistance for needy families—votes that will directly impact families in Michigan.

In the midst of mid-term elections, the issue of which tax credits should be extended is receiving a great deal of attention. There are two tax credits directed at low- and middle-income families that were expanded under the Recovery Act to provide further tax relief.

Without action by Congress to extend these tax credits, many families in Michigan will receive smaller refunds during these difficult economic times.

Twenty-five organizations here in Michigan have called on our congressional delegation to extend the Recovery Act changes to the Earned Income Tax Credit and the Child Tax Credit. Making these credits permanent will encourage work and will help low- and middle-income families.

The U.S. House is also facing a vote on Child Nutrition Reauthorization.   A bill pending before the House includes many important improvements to food programs for our children. These programs are a critical part of the safety net and provide vital resources to address child hunger.

A letter sent by 15 Michigan children’s advocates organizations calls on House members to support the House version of the Child Nutrition Reauthorization. The ill-advised Senate version funds the Child Nutrition Reauthorization with a future cut in Supplemental Nutrition Assistance Program (SNAP) benefits to low-income households. Raiding one food assistance program to fund another is not acceptable.

The Temporary Assistance to Needy Families (TANF) Emergency Fund was created in 2009 as part of the Recovery Act. It has provided additional support to families here in Michigan during these challenging economic times. The fund, and its benefits, will expire at the end of September without action by Congress.

Understanding the ongoing need for the TANF Emergency Fund here in Michigan, 44 organizations have called on our Senators and our House members to extend this fund and its critically important benefits.

In the coming month, in particular, we will be looking to the Michigan Congressional Delegation to support policy and programs that will continue to assist Michigan families and will also help local and state economies.

– Karen Holcomb-Merrill

It’s only a start

We can celebrate. Yesterday, the U.S. Senate voted to override a filibuster blocking a bill that continues making Emergency Unemployment Compensation available for workers who have exhausted their Unemployment Insurance (UI) but have still not found a job. This vote will prevent more than 130,000 Michigan workers from prematurely losing their UI benefits.

However, the vote does not restore the Federal Additional Compensation (FAC) that added $25 per week to the UI benefits for Michigan workers. This additional money has helped unemployed families fill their gas tanks, pay their utilities and buy household necessities, and by the end of May 2010 added $669 million to Michigan’s economy.

Michigan’s average UI benefit during this past April would normally have been $301 per week, but with the FAC it was $326 per week. The maximum weekly benefit in Michigan has been $387 as opposed to $362 without the additional compensation.

The vote also does not include the Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy for health insurance for laid-off workers. This assistance helped roughly 83,000 Michigan households between the beginning of 2009 and the first few months of 2010.

Without the subsidy, many unemployed workers will see steep increases in their health insurance costs.

Two sources of federal aid to states to help with public assistance costs have also not been extended yet. One is the enhanced Federal Medical Assistance Percentages, which provided additional match dollars to help states pay for their Medicaid programs. The other is the Temporary Assistance for Needy Families (TANF) Emergency Fund, which provides federal dollars to temporarily subsidize jobs for people who are leaving (or are in danger of having to seek) public cash assistance. According to the Center for Law and Social Policy, this program could create nearly 200,000 jobs nationally by September, at which time it will expire at the end of September if Congress does not renew its funding.

So, we can uncork the champagne and celebrate the fact that Congress finally voted to allow long-term unemployed workers to continue receiving unemployment insurance benefits. But Congress still needs to continue the COBRA subsidy, the enhanced federal Medicaid match, and the job creation subsidies. And it would be nice if our unemployed workers could have that extra $25 per week of help as they look for other employment.

– Peter Ruark

Ouch! Survey results pinch

A recently released survey of local Michigan officials has a depressing finding: Only 1 percent of local officials think the American Recovery and Reinvestment Act has helped improve local economic conditions “very much.” Two out of every three say it has not helped at all to date, and more than half predict it won’t help at all over the long term.

Ouch! That’s a blow for those of us who have been advocating for extending vital features of the ARRA. (Those include extending the enhanced federal Medicaid match that will offer more than $500 million for next year’s state budget, Earned Income Tax Credit expansions, Child Tax Credit to benefit working poor families of nearly 600,000 kids in Michigan and 99 weeks of unemployment benefits for the state’s long-term unemployed.)

ARRA has poured critical dollars into our state at a critical time. Few of those dollars, however, went directly to local governments, a fact pointed out by the Michigan Municipal League in a well-publicized letter to Vice President Biden last year. Local governments struggle with the double whammy of sharply reduced revenue sharing from the state and declining property values, causing layoffs of public safety workers and other hardships.

But the Recovery Act money has flowed to many people in the communities: the unemployed, households on food assistance, those on Social Security and taxpayers. It is credited with saving an estimated 12,000 jobs in Michigan, most of them in education.  That help doesn’t go into a black hole — those are dollars that are quickly circulated in local economies.

The survey of more than 1,000 local officials was completed last fall. Perhaps, with time, more will see the benefit to their communities in projects such as weatherization.

Without doubt, the ARRA has paid off for local communities, even as tough times continue. What’s hard to imagine is how much worse it would be without the Recovery Act.

Michigan needed the Recovery Act in 2009. It needs it now – it’s important that Congress votes to extend the enhanced Medicaid match, EITC expansions, unemployment benefits and the Child Tax credit.

– Judy Putnam

House reports healthier budget

On Tuesday the House Appropriations Committee reported its recommended budget for the Department of Community Health to the full House. While the recommendation isn’t great, it is far superior to that passed by the Senate.

The House budget is about $103 million in general fund more than the Senate and avoids many of the most onerous cuts in the Senate-passed budget including: a cut of $57.5 million to non-Medicaid mental health funding (House reduction is $3.8 million); the elimination of some caretaker relatives and 19- and 20-year-olds from Medicaid; a 4 percent additional rate reduction to some physicians; and more cuts to the Healthy Michigan Fund, to name a few.

It will be a major challenge to maintain the House level of funding in view of the Revenue Estimating Conference that identified a $244 million revenue shortfall for the current year and about a $1 billion shortfall for FY2011.

Will policymakers find the courage to step forward and recommend revenue solutions to these problems rather than continuing their “cuts-only” approach?

I keep wondering: Do the facts really matter? A recent report by the Senate Fiscal Agency once again documents that Michigan is not a high-tax state. Will that fact matter to the Senate leadership? Or, will leaders continue to balance the budget on the backs of Michigan’s low-income families, children, elderly and disabled?

The cuts in Medicaid eligibility recommended by the Senate will not be possible under federal health reform maintenance of effort provisions, and with this knowledge, the House rejected the Senate proposal. This is good news for the “optional groups” whose Medicaid coverage was recommended for elimination. A report recently released by the League documents that the state has made little, if any, progress in adequately funding the Medicaid program over the last six years.

Without the federal recovery funds, and the corresponding maintenance of effort on eligibility over the last three years, it is difficult to say what the Medicaid program would look like today.

As it is, the state has enrolled about 420,000 more Medicaid-only recipients (those not receiving any cash assistance) since FY2005 and now, fortunately, can’t reduce eligibility without the loss of federal funds.

It is stunning to note the growth in the number of individuals who qualify only for Medicaid – - they receive no cash assistance. From fiscal years 2000 to 2009, that number nearly doubled, increasing from 652,000 to 1.2 million, as unemployment grew relentlessly and employer-sponsored coverage declined or became unaffordable. The number of Medicaid-only enrollees as of April 2010 is 1.4 million.

It is good news that both the Senate and House restored dental and podiatric services for adult Medicaid recipients; however, they could become targets to balance the budget given the new revenue projections.  Elimination of these services makes no fiscal or public policy sense particularly with the high incidence of diabetes in this state and the importance of these services in managing this disease.  Will that fact matter?

There is nothing wrong with raising the revenues to pay for the services Michigan residents want and need.  It does, however, take leadership and courage.

– Jan Hudson

Working poor tax cuts should be part of debate

Congress will be debating soon whether to extend the controversial tax cut packages passed in 2001 and 2003.

These tax cuts are widely blamed for the deficit that President Obama inherited when he took office last year and are seen as one of the principal causes of the current deficit. Equally controversial to the hole in the federal budget they created was the fact that most of the tax cuts were aimed at affluent Americans.

One provision in this package, however, has benefited many families who are lower on the income scale: the provision making the child tax credit partially refundable to families making over $10,000 (meaning that these families can receive a partial credit even if the credit amount exceeds the amount they owe in tax).

The child tax credit, which gives families a $1,000 credit per child up to two children and a partial credit for additional children, has seen two other improvements since then. The first improvement was in 2008, when the income eligibility threshold was lowered to $8,500 for that tax year. Then, in 2009, the Recovery Act lowered the threshold to $3,000, making the credit available to many very poor families who would have otherwise been ineligible.

As a result of the 2009 change, a family with two children is now able to receive the full credit when its earnings reach $16,333 (as opposed to $21,993 in 2008 and $23,333 in 2001).

A report by the Center on Budget and Policy Priorities estimates that families of 584,000 children in Michigan would lose all or part of their child tax credit if Congress renews the Bush tax cuts without extending the 2001 and 2009 child tax credit improvements. Nationally, families with incomes above $10,000 would bear 80 percent of the tax credit losses.

It would be unfair to extend tax credits for the wealthy without also extending one that benefits the poor. Not only that, it would be irrational in light of the current economic situation. Like the earned income tax credit, the child tax credit given to low-income working families tends to get spent in local businesses and thus act as a stimulus to local economies. The child tax credit expansion was included in the Recovery Act because it is one of the fastest ways to get additional money flowing through communities, helping to save and create jobs.

Fortunately, the 2001 and 2009 improvements to the child tax credit are in the budget set out by President Obama and in legislation introduced by Senate Finance Committee chairman Max Baucus. However, as we have painfully seen many times in recent years, the sausage-making that goes on as a bill winds its way through committees, debates, floor votes, and conferencing can often result in certain elements of the bill getting dropped.

We need to make sure Congress does not short-change low-income workers as it passes its budgets for the upcoming fiscal year, and the Michigan League for Human Services will keep you informed if any mischief occurs with this credit.

– Peter Ruark

Next Page »