Food Stamp Program

Under the Food Stamp Program, a household's net monthly income is one of several factors used to calculate the food stamp benefit. Net monthly income is determined by subtracting various approved deductions from a household's gross monthly income. One of these deductions is for shelter expenses that exceed 50 percent of a household's income after other allowable deductions have been taken. This deduction, known as the "excess shelter expenses deduction," includes rent, mortgage payments, utility bills, property taxes, and insurance. The deduction is designed to take into account the effect of higher-than-average shelter costs on a low-income household's ability to buy an adequate amount of food. The welfare reform act retained an existing cap on the amount of excess shelter expenses that can be deducted from income for households receiving food stamps without elderly or disabled members. As a result, some households will receive a smaller food stamp benefit. This report describes, for fiscal year 1995, the (1) characteristics of households whose food stamp benefits were limited because of the cap on their deduction for excess shelter expenses and (2) extent to which food stamp benefits would have been higher for those households if there had not been a cap.

GAO noted that: (1) in FY 1995, households whose food stamp benefits were limited because of the cap on the deduction for excess shelter expenses differed in several key respects from households not affected by this cap; (2) nearly all households affected by the cap had children, while only slightly more than half of households not affected by the cap had children; (3) moreover, households affected by the cap were more likely to: (a) be headed by asingle female; (b) have noncitizen members; (c) have earned income; and (d) live in urban areas; (4) affected households also typically had more household members and received more in food stamp benefits than those not affected by the cap; (5) households affected by the cap tended to be located in the Northeast and West, while households not affected by the cap tended to be located in the South; (6) in the absence of the cap on the excess shelter expenses deduction in FY 1995, the average monthly food stamp benefit for affected households would have been about 12 percent, or $31, higher; (7) total federal food stamp expenditures would have increased by 1.9 percent, for a total of $417 million in FY 1995; (8) the largest increase would have been for households in the Northeast, where average shelter costs are the highest; (9) nationwide, households in urban areas would have received larger increases than those in rural areas; and (10) households in New York and California would have received almost half of these additional benefits.