Employment and Training Administration
Washington, D. C. 20210






April 12, 1999















Unemployment Insurance Service




The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 - Food Stamp Over Issuances

  1. Purpose. To inform the State unemployment compensation (UC) agencies that the U.S. Department of Agriculture (USDA) has determined that it is up to each individual State food stamp agency to determine whether food stamp over issuances must be intercepted from UC.

  2. References. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)(P.L. 104-193); the Food Stamp Act of 1977 (FSA), as amended by Section 844(a), PRWORA; and Unemployment Insurance Program Letter (UIPL) No. 37-96.

  3. Background. The PRWORA, enacted on August 22, 1996, and popularly known as the "welfare reform" bill, made a change to the FSA affecting the UC program. This change concerned the intercept of UC benefits to recover food stamp overissuances. In UIPL 37-96, we stated that the PROWRA amended "Section 13(b)(1) of the FSA to require that a State Food Stamp agency must now collect any overissuance of food stamp coupons . . . by withholding amounts from UC . . .". (Emphasis in original.) The UIPL also stated that the Secretary of Agriculture "may waive this requirement under certain conditions", and provided draft language for the State UC agencies to use in amending their laws to allow the intercept of UC to recover food stamp overissuances.

    Since UIPL 37-96 was issued, the USDA has determined that the intercept from UC may not be cost-effective for some States, and has authorized each State food stamp agency to make the determination of whether this collection method is cost-effective for its State to pursue. Thus, the USDA currently has no plans to mandate that State food stamp agencies use the intercept of UC to collect food stamp overissuances.

    States which have amended their UC laws to permit intercept of food stamp overissuances need not take any action. States which have not amended their UC laws to permit this intercept need to seek amendments only if the State food stamp agency determines that it is cost effective to perform the intercept.

  4. USDA Policy Paper. A policy paper consisting of a series of questions and answers concerning collection of overissuances of food stamps has been released by the USDA, Food Stamp Program, Food and Consumer Service (FCS). The policy paper, current as of January 29, 1998, is entitled "Cumulative PRWORA Q's and A's on Food Stamp Fraud, Dis-qualifications, and Recipient Claims" and can be found on the Internet at http://www.usda.gov/fcs/stamps/padqa.htm.

    Following are relevant excerpts from USDA policy paper:

    VIII. Section 844 - Collection of Overissuances - Questions Related to Collections via Offset of Unemployment Collection Benefits (UCB)(1)

    (1) In addition to the 35% retention rate for IHE [inadvertent household error] collections via UCB intercept, to what degree is this collection methodology affected by PRWORA? (Dec 1996)

    Collection via UCB for IPVs [intentional program violations] has been part of FCS regulations since 1990. PRWORA ex-panded it to include all claims (as it did for all other collection methods). As of now, there are no plans to mandate this collection method.

    (8) Does a State [Food Stamp] agency need to request a waiver if it decides that it is not cost effective to use the offset of UCB as a collection methodology? (July 1997)

    A State [Food Stamp] agency will not need a waiver if it decides not to implement this collection methodology. FCS is not mandating nationwide use of this collection method because, unlike FTROP [Federal tax refund offset] and recoupment, the procedure is State-specific and may not be cost effective to implement in some State agencies. Section 13(c)(3) of the amended Food Stamp Act of 1977 allows for this collection methodology to be utilized only through either a voluntary agreement or a court order. As such, FCS is leaving it up to each State agency to determine whether UCB collections are cost effective to implement and pursue.

    (9) Must a State amend State law to allow this type of collection? (July 1997)

    This concern stems from a November 7, 1996, Department of Labor Notice published in the Federal Register containing draft language for changes necessary in State UCB laws to accommodate UCB offsets for food stamp recipient claims. As noted in number (1) above, FCS is leaving it up to each individual State [Food Stamp] agency to determine whether this collection method is cost effective to pursue. If a State [Food Stamp] agency determines that UCB collections are cost effective and wishes to utilize this collection methodology, then the State [Food Stamp] agency should contact the Department of Labor if there are questions regarding the applicability of the November 7, 1996, Notice. Conversely, this Notice would not apply to those State agencies which will not be utilizing this collection method.

    (11) If the State food stamp agency does not wish to enter into an agreement with the State unemployment compensation agency to reimburse all costs incurred in intercept activities does this mean the activity does not need to be performed? (July 1997)

    Please refer to the answer to question (1) above. FCS does not plan to issue any specific guidance on the cost reim-bursement arrangements between State food stamp and State unemployment compensation agencies.

    (12) Must the UCB offset procedures follow section 13 of the amended Food Stamp Act of 1977 if these procedures are initiated by an agency which is different from the agency responsible for administering the Food Stamp Program? (July 1997)

    Any agency which is collecting food stamp debts must follow the guidelines found in section 13 of the amended Food Stamp Act of 1997 [sic].

    (14) Section 13(c)(3)(A) of the amended Food Stamp Act of 1977 states that a State agency may collect a claim by entering into an agreement with the individual. Does having language contained in the food stamp and unemployment com-pensation benefits applications indicating that a standard percentage of future UCB may be offset to apply to an existing food stamp claim suffice under this section of the Act? (July 1997)

    Unless there is a court order, the fact that an agreement is to be made implies that a household has the right to make a fully informed decision regarding whether to have the claim collected via the offset of UCB. Either by making this a condition of eligibility (by adding it to the application form) or even by having the household decide at the time of application whether to use this collection methodology to pay off a future claim does not afford the household the right to make a fully informed decision. As such, the proposal by the State agency does not meet the requirements of the Act.

  5. Action. State Administrators should provide information contained in this UIPL to appropriate staff.

  6. Inquiries. Please direct inquiries to the appropriate Regional Office.

1.  The USDA policy paper uses the term "Unemployment Collection Benefits" ("UCB") for UC.