Benefits rollback bill would cost nearly $20 million in red tape, legislative analysts say

Two lines of cars wait for food assistance at the All People's Fresh Market in Columbus. Officials say covid-related food insecurity is growing in Ohio. Photo by Marty Schladen, Ohio Capital Journal.

A legislative proposal to restrict eligibility for social safety net programs like food stamps or Medicaid would cost nearly $20 million to implement, according to state policy analysts.

The Ohio Legislative Service Commission, a nonpartisan arm of the state legislature that evaluates policy proposals, estimated a plan to require photo identification on every Supplemental Nutrition Assistance Program card would cost about $15 million to implement and $930,000 annually to maintain.

Senate Bill 17 would end policies known as “categorical eligibility” and “simplified reporting” that lower income reporting burdens on SNAP recipients along with the bureaucratic burden on state government. The new, more onerous income reporting system would cost about $4.5 million to implement, according to the LSC.

The bill’s lead sponsor, Sen. Tim Schaffer, R-Lancaster, said the bill is a means to combat benefits fraud and ensure monies only go to the truly needy.

On Tuesday, food bank operators, the counties’ Ohio Department of Job and Family Services association director, anti-poverty advocates and others urged lawmakers against cutting the social safety net during a still-raging pandemic that has destabilized the economy and increased unemployment rates.

They said more paperwork requirements on top of an already cumbersome application process would cause needy families to slip through the cracks.

“The bill, as it’s currently presented, wants to spend tens of millions of dollars,” said Lisa Hamler-Fugitt, executive director of the Ohio Association of Foodbanks, to lawmakers.

“It does not provide one additional dime of food assistance.”

SB 17, if passed, would:

  • Impose asset tests on SNAP (often known as food stamps) recipients. They would not qualify for benefits if they have more than $2,250 in cash (a measurement that includes all value of a vehicle above $4,650). The program is currently available to people earning below 130% of the federal poverty line.
  • Impose a new work or education requirement to receive benefits through Medicaid, a federal and state-funded health insurance program that covers costs of care for people who are poor, elderly, disabled or pregnant.
  • Restrict exemptions to the Medicaid work requirement, including raising the minimum age to opt out to 65 from 55.
  • Switch from the current “simplified reporting” system (SNAP recipients need not report small weekly income changes so long as they don’t surpass the eligibility threshold) to “change reporting” (recipients must notify ODJFS of income changes, no matter how small, from things like overtime).
  • Eliminate “broad based categorical eligibility,” which automatically qualifies recipients of one benefit system like SNAP for others like Temporary Assistance for Needy Families.

Costs

The bulk of the costs under the bill stem from the $13.1 million needed for information technology to build a new system for a photo ID system on SNAP cards, plus $2 million to issue an estimated 500,000 cards, according to the LSC. The new system would cost $930,000 per year from there.

The state and federal government split the administrative costs of SNAP, while the federal government pays all the program benefits.

Eliminating categorical eligibility would incur a $2.8 million, one-time cost, according to LSC. Eliminating simplified reporting would cost about $1.5 million.

“In addition, these changes will likely pose significant administrative costs for county departments of job and family services, which are responsible for determining SNAP eligibility for applicants,” the analysis states.

In December, about 1.55 million Ohioans received an average $233 in monthly assistance via SNAP, according to ODJFS data, which comes out to about $7.50 per day.

Reactions

Organizations combatting hunger, homelessness and poverty in Ohio panned the proposal.

“Reducing access to SNAP and Medicaid will harm the health of low-income Ohioans and push even more into homelessness,” said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio, in written testimony.

“Ohio simply cannot afford the damage that would be caused by Senate Bill 17.”

Matt Habash, president of the Mid-Ohio Food Collective, said since the pandemic began, more than 56,000 families sought out meals from the collective for their first time.

“The changes to SNAP and Medicaid eligibility in Senate Bill 17 will — without question — increase food insecurity and force more Ohioans to turn to organizations such as ours for the most basic of needs —  food,” he said.

Other groups like the American Cancer Society and the American Heart Association submitted testimony against the bill, as did the Ohio Council of Churches, Equitas Health and more.

Fraud?

Fraud exists within the SNAP system, but there’s little evidence of it occurring at scale.

During the hearing, lead sponsor Sen. Tim Schaffer, R-Lancaster, cited a 2016 report from the Dayton Daily News about $17 million in fraud identified over five years in Butler County. Officials reportedly broke up a SNAP-cards-for-cash operation.

On a statewide level in 2017, ODJFS investigators identified 2,465 instances of fraud worth about $4.5 million — about .2% of the roughly $2.2 billion in benefits administered that year (the most recent with data available).

A 2015 investigation from the state auditor identified similar, limited instances of fraud within the SNAP program like benefits being claimed from dead recipients. The identified fraud amounted to less than 1 percent of administered benefits and less than the cost of the audit itself.

Several of the bill’s critics questioned why lawmakers are targeting fraud in SNAP or unemployment benefits as opposed to the Pandemic Unemployment Assistance program, a newly created federal program apparently bilked for hundreds of millions by criminal scammers.

The committee did not vote on the bill Wednesday.

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