AFDC and SSI do not duplicate food stamps because income from these programs is counted in determined eligibility and benefit levels for food stamps.

Even if part of AFDC and SSI benefits are considered food assistance, GAO has used the wrong measure. The Food Stamp Program assumes that 30 percent of net income will be spent on food. GAO incorrectly utilized a gross income figure in regard to AFDC and SSI.

Furthermore, it is incorrect to assume that 30 percent of AFDC benefits are available for food.

Most states set their AFDC benefit levels knowing full well what food stamp benefits are available. I know that in Vermont, we certainly would not provide payments in excess of what a family needs for food. And, when the maximum AFDC benefit levels in many states are considered ($120 a month for a family of four in Mississippi, $140 in Texas, and similar amounts in several other states), it is highly unlikely that families in these states would have any AFDC money left over for food after shelter, clothing, transportation and other necessities are paid for.

In summary, Mr. Chairman, I do not believe that GAO's testimony serves the Committee well. At the outset, GAO failed to mention that combined federal benefits to most of the low-income people in its sample were equal to less than 100 percent of the Thrifty Food Plan. In addition, GAO has seriously overstated the true value of the various benefit programs to low-income persons,

Clearly, GAO's analysis is not wholly accurate. Over half of the states pay combined AFDC and food stamp benefits of 75 percent of the poverty line or less. It is likely that few, if any, of America's poor are now receiving food assistance benefits in excess of their true needs.

Mr. President, every member of this Committee recognizes the need to eliminate waste in the Food Stamp Program and our responsibility to carefully scrutinize its costs for possible savings. But it is critically important that we have accurate and unbiased studies and data if this year's budget cuts in the Food Stamps program are to have their intended effects of reducing federal spending while ensuring that no deserving Americans go hungry.

STATEMENT OF HON. JOHN C. STENNIS, A U.S. SENATOR FROM MISSISSIPPI

Mr. Chairman and Members of the Committee, I greatly appreciate this opportunity to present this statement to you. I know that the question of what should be done with respect to the food stamp program is very difficult and has been the subject of intense consideration by this and other Committees. It involves both human and financial problems and considerations.

Let me say first and emphatically that it is entirely clear in my mind that it would be absolutely unwise and unfair to eliminate or cut the heart out of the food stamp program. However, there is general agreement in the Congress that it is necessary and essential that some action be taken to lower and put a limit on the cost of the program. The votes of the Senate on the Reconciliation Resolution and the First Concurrent Budget Resolution have made this clear.

It is useful to look at the facts. Food stamp benefits, which average about $40 per month per person, now go to one out of every ten Americans. These 22 million food stamp recipients are among the poorest people in America. More than half of the food stamp households had annual incomes of less than $3,600.

In the State of Mississippi an even higher percentage of the population is on the food stamp program. Five hundred thousand persons, or about 20 percent of all Mississippians, are on the food stamp rolls. This is a fact of life. It gives me no pride. In fact, I wish there were no Mississippians with incomes low enough to qualify for food stamps. The facts, however, are as I have outlined.

For these and other reasons, I emphasize that I have absolutely no desire to abolish or hamstring the food stamp program. Nutrition requirements and the painful human fact of hunger make it absolutely necessary that it be continued for the truly needy in some form. There is, as far as I know, no serious movement in the Congress to completely eliminate this program.

However, something must be done very soon to halt and control the spiraling cost of the food stamp program. When this program was commenced in fiscal year 1965, the cost was about $36.5 million. For fiscal year 1981 the cost is estimated at $10.3 billion; and, unless action is taken, the cost will reach $12.5 billion in fiscal year 1982.

As I have said, I support the continuance of a food stamp program in some form. However, I certainly do not-indeed, I cannot-support a program operated and administered as it is now and as it has been for the past few years. The history of the program is a seemingly unending spiraling of program costs.

One of the first steps that should be taken is to tighten up the regulations, and, if necessary, the law, so as to reduce the amount of abuse, waste, and fraud in the program. The reports that have been brought to my attention and conversations which I have had have convinced me that the program is so mismanaged, loosely administered, and poorly controlled that fraud and abuse are inevitable and, in fact, are widespread. The Agriculture Department itself estimates that 10 percent of the food stamp benefits are overissued, which is to say that people get that amount more than they are entitled to. It is high time that we make the necessary changes and take positive steps to bring this program under control.

Administrative and enforcement actions can be taken at the state and local levels to reduce fraud, abuse, and error. This should be done. The state and local officials should police the programs, investigate cases of fraud and waste, take aggressive actions to lower the rates of error, and otherwise prevent abuse of the program. I hope this will be done. If it is, it will have a very beneficial effect and will result in significant savings of the taxpayers' dollars.

In the earlier version of the program, recipients had to pay some of their own money in order to obtain food stamps of a larger value. In other words, recipients had to "buy" stamps at that time. Congress eliminated this purchase requirement in 1977. When this was done almost 3 million additional people were added to the food stamp rolls. Restoring the purchase requirement would reduce the number of persons participating in the food stamp program and save about $1.4 billion in 1982, according to an estimate by the Congressional Budget Office.

Consideration should also be given to lowering the maximum income limit for persons receiving benefits. Under existing law, people are eligible for food stamps if their income is at or below the federal poverty level of $7,450 per year for a family of four. Since recipients can deduct various amounts, such as an $85 standard monthly deduction, in computing their income, in actual practice the income limit is much higher. A family of four can have an income of up to $12,312 and still get food stamps under existing law. If the law was changed and all of the deductions were eliminated, the maximum income would revert to $7,450. This would eliminate some 2 million of the higher income recipients from the program and, according to the Congressional Budget Office, would save about $495 million a year.

Another provision which should be considered seriously is to require able-bodied recipients to perform work in exchange for their food stamp benefits. This program is known as "workfare." Many people, I am sure, would drop out of the program if forced to work in order to obtain the food stamps. I understand that the Agriculture Department has some fourteen "workfare" demonstration projects under way around the country and that early indications are that "workfare" leads to significant drops in the food stamp rolls, at least in some areas.

There are other changes which could be suggested, Mr. Chairman. I am sure they will be considered by this Committee. The important fact is that there is a strong, general interest in spending reductions and cut-backs in social programs, specifically including the food stamp program. I believe that spending for food stamps should be brought under control and significantly reduced. At the same time, I do not believe that there should be radical changes or excessive reductions in the program prompted by over-zealous reform.

The sad fact which cannot be escaped is that many people are now wholly or substantially dependent on food stamps and other welfare programs for minimum levels of sustenance and nutrition. These are mostly the very young and the very old. Most have few, if any, assets. These facts establish that the food stamp program is important-even essential-to large portions of the American population. However, the program cannot be allowed to operate in the manner and at the cost it does today. This is a runaway program. It is not limited to the needy. The cost must be brought under control. The time to start is now.

Hon. JESSE A. HELMS,

STATE OF ALASKA,
OFFICE OF THE GOVERNOR,
Juneau, March 20, 1981.

Chairman, Senate Committee on Agriculture, Nutrition, and Forestry, U.S. Senate, Dirksen Senate Office Building, Washington, D.C.

DEAR CHAIRMAN HELMS: With this letter I am submitting formal testimony detailing my Administration's concerns and recommendations regarding the Food Stamp Act of 1977. In my prior correspondence of February 17, 1980, I sought to make you aware of these concerns and the action we were taking to correct policy and

programmatic difficulties created by the Act and its attendant regulations. Indeed, the original purpose of the 1964 Act-that of ensuring adequate nutrition for the needy-has become so distorted by subsequent statutory and regulatory changes that actual needs have become secondary to the broad policy of providing more benefits to more clients within ever shorter time frames. In Alaska, these changes have worked to the disadvantage of the truly needy and have so overburdened program administration that it is becoming increasingly impossible to manage the program in an effective, equitable manner.

Several weeks ago, I petitioned Secretary Block for immediate review and modification of regulations and policies that would allow Alaska to operate the food stamp program more effectively. Members of our respective staffs have met, and I am most pleased with the positive tone emanating from these meetings. We will continue to work with the Administration, and in view of the very cooperative relations, I believe positive results will occur.

In addition to regulatory change, revisions to the Food Stamp Act are absolutely essential if Alaska and, indeed, all states are to operate an equitable program delivering necessary services to the needy with a minimum of administrative cost. The speed at which the Committee has moved to address these important issues precludes completing our discussions with the Administration prior to the time the hearings on the Food Stamp Act are concluded. We, therefore, feel it imperative that the Committee be aware of our position, and ask that this testimony be entered in the record so Alaska's concerns and recommendations are included as work on the legislation progresses.

I would be most happy to make the services of my aides available to Committee staff for any support and assistance that can be provided. Carole Burger, my Special Assistant for policy in this area, will be my contact on this issue. She will be in contact with your staff in the near future.

Sincerely,

Enclosure.

JAY S. HAMMOND, Governor.

STATEMENT OF HON. JAY S. HAMMOND, GOVERNOR OF ALASKA

The Food Stamp Program began in 1964 and initially had a two-fold purpose: to maintain farm prices and to distribute food in order to improve the nutritional levels of low income persons. The Alaska Legislature adopted the Food Stamp Program in 1968 for the purpose of providing this food supplement benefit to Alaska's indigents.

By 1977 the program had begun to change, both in character and in size. The Food Stamp Act of 1977 dramatically redirected program philosophy from a program originally designed to supplement and improve nutrition of low income persons to a primary emergency food distribution program. This change has crippled program administration, and in many cases works to the disadvantage of Alaska's truly needy.

Policy established by the Act and accompanying regulations are running headlong into conflict with two of my longstanding objectives of public assistance. They are: (1) to deliver financial, food and medical assistance to needy Alaskans, while at the same time not fostering an environment for unnecessary government dependence, and (2) to deliver needed services in an efficient, effective manner with minimal administrative cost. In the past two years, Alaska has seen the food stamp program triple in size while becoming increasingly impossible to manage in an effective, equitable manner. In Alaska, this program encourages seasonal influx on nonresidents, many of whom are young people who have become increasingly dependent on government aid programs as an alternative life style. The public has expressed outrage at seeing increasing numbers of idle, vacationing or adventuring youth include food stamps in their plans and receive them within hours, while working, but poor families wait weeks for benefits. Nevertheless we have been compelled to continually add more staff and resources to this program, in order to maintain those truly in need. The following table of information that presents the growth in the food stamp program from 1977 through 1980 illustrates the cumulative effect of statutory and regulatory changes.

The provisions of the food stamp program that most directly have contributed to the growth of the Alaskan program or have hampered administration of the program are:

1. The definition of a "household" as it applies to participation in the food stamp program.

2. The food stamp program entitlements to "expedited services" are so sweeping that they encompass more than 50 percent of all Alaskan food stamp applicants. 3. Food stamp eligibility rules continue to be different from those for the federal AFDC program requiring specialization of workers, additional training, and duplicated eligibility calculations for combined cases, and confusion by clients and staff. 4. Food stamp rules tie the State's hands in dealing with program abuse by recipients of benefits by not permitting mandatory payback or outright termination of the program benefits to individuals or families.

5. In the face of enormous caseload increases, federal rules continue to require a full-time outreach effort solely for the food stamp program. This precludes effective use of staff for such efforts as coordinating information services for all our State/ federal assistance programs.

6. Federal rules create serious inequities by failing to recognize the substantially higher food costs in rural Alaska as compared to urban Alaska. For seven years we have attempted to secure a separate coupon allotment standard for rural Alaskans to no avail.

7. Alaska has used a statewide network of fee agents to assist in bringing the program to rural villages which could not be served by regional or district offices. While recently approved in regulation, a legal base in statute would remove the possibilities of withdrawal of approval through the regulatory process.

8. Current requirements for applicants to pursue employment or training to make employment more likely are not effective.

9. Methods for levying fiscal penalties on states based on non-achievement of target error rates fail to recognize the realities under which the program must not operate in Alaska. We believe a quality control plan should be required, however sanctions should not be tied to specific error rate reductions based on certain national averages which are not cognizant of the unique Alaskan conditions.

In order to correct these deficiencies, my administration is proposing ten changes in the Food Stamp Act of 1977 in order to improve the program and make the delivery of food stamp benefits fair and equitable to all Alaskans, and to reduce potential abuse.

Currently 50 percent of the State's food stamp recipients are eligible to receive expedited service regardless of the degree to which they actually need to receive benefits quickly. We propose an amendment which emphasizes "need" under criteria established by the state rather than "need" determined by irrelevant and highly technical federal income requirements. This change would provide needed flexibility for States to determine families entitled to expedited service.

Because of the State's unique geography and economy, many Alaskans have little sustained income but significant resources and, as a result, proposals to base expedited services upon gross income are inadequate. A state standard will also permit consideration of the household's available resources.

Inequities exist because one standard food stamp allotment table must serve the entire state regardless of the vast cost of living differentials that exist within the state. The second proposed change to amend the Food Stamp Act specifically identifies this problem in Alaska and instructs the Secretary of Agriculture to consider significant variations in the cost of food within the state.

Surveys conducted by the Cooperative Extension Service of the University of Alaska have indicated that food costs in the regional centers of Bethel, Nome,

Dillingham, and Barrow have ranged from 144 percent to 180 percent of Anchorage prices. This variation among different areas of Alaska, now utterly ignored, must be addressed if the Food Stamp Program is to achieve its objective of providing a nutritionally adequate diet throughout the forty-ninth state.

The third proposed change would change the income consideration from one of a projected income to a retrospective budget that would consider actual income received rather than estimated future income. This would bring the Food Stamp Program more in line with the administration of other programs and the amendment specifically addresses the need for consistency between the food stamp and Aid to Families with Dependent Children budget procedures.

The Food Stamp Act of 1977 needs to be modified to provide statutory authorization for the use of fee agents in rural Alaska.

Alaska has long used fee agents to assist in bringing the program to villages which, because of their isolation and small size, cannot be served by regional or district offices of the State. Regulations of the Department of Agriculture did not sanction their use until November, 1980, over ten years after implementation of the Food Stamp Program in Alaska.

Uniformity in the eligibility standards of major federal assistance programs need to be developed. See Kirk, Intergovernmental Eligibility Simplification Project, State of Colorado (1980). The present disparities among assistance programs render the administration of each duplicative and unnecessarily burdensome. Those differences frequently result in unequal, and often confusing, treatment of individuals who seek assistance from more than one program.

We suggest a requirement that the Secretary of Agriculture work jointly with the Secretary of Health and Human Services to study a means whereby uniform standards of eligibility can be adopted among all welfare programs. Results of the study would be due June 1, 1982.

States should be authorized to reduce future food stamp benefits by amounts previously provided the client but to which he or she was not eligible. It would vest states with discretion to reasonably reduce future benefits if circumstances warrant. This change is necessary since the recovery of program losses is next to impossible. In Alaska, for example, less than 1 percent of the overall amount due is recovered in any given month.

To insure that able-bodied applicants pursue available employment, an amendment is proposed requiring fit persons to enroll in a job search training program in addition to existing requirements such as to register for work and accept work. A job search training program teaches individuals how to look for and apply for available jobs. The amendment would require enrollment in a job search training program if a program of that nature is accessible at no cost to the applicant. Another small change in the Act will permit the state to use food stamp outreach employees to include other programs in their activities thereby permitting more cost-effective use of these employees. Outreach staff may then be used in a comprehensive educational effort addressing all public assistance programs. Assuming Congress elects to retain the outreach effort, this would eliminate the present requirement that at least one worker focus solely on food stamps thus unrealistically ignoring the inseparable relationship of all assistance programs.

An amendment is required to eliminate the imposition of fiscal penalties upon states that have not reached target error levels but have made a good faith effort to take corrective action by entering into a quality control plan approved by the Department of Agriculture. These fiscal sanctions are counter-productive and fail to recognize the impact of both federal rules and client behavior on error rates. Fiscal sanctions create an adversary relationship between the federal government and the states at a time when a cooperative effort is needed to reduce errors. Because a high error rate will result in sanctions, there is an incentive to identify fewer errors. See GAO Rept. No. HRD-80-80 (July 18, 1980). A fiscal sanction should remain available where a quality control plan has not been developed or where the requirements of such a plan are not being satisfied. The amendment should not require the Secretary to approve a quality control plan that he finds unacceptable.

An amendment is proposed to encourage enforcement of existing limitations on household composition. Under existing laws individuals who live together can be considered as separate households or as a single unit. Mandatory verification of household composition would serve to inhibit program abuse.

[Subsequent to the hearing on April 2, 1981, Senator Helms asked Mr. Magee the following written questions. The questions and responses thereto follow:]