83. What is the correct amount of a food stamp overissuance?
Generally, the amount of a food stamp overissuance is the difference between the amount of food stamps the household actually received and the amount it should have received if no mistake had been made by either the food stamp office or the person. [MPP § 63-102(0)(1), (r)(2); 7 C.F.R. § 273.18 (a) (1).] For trafficked food stamps it is the amount trafficked. [7 C.F.R. § 273.18(a)(1)(ii); MPP § 63-801.33.]
At the Browns’ next recertification a year later, the food stamp office discovers the mistake. The office recalculates the Browns’ food stamps for the past 12 months, and discovers that they should have received only $50 per month. The amount of the overissuance is $360. ($80 actually received – $50 they should have received= $30 per month overissuance. $30 per month x 12 months = $360.)
There is one situation in which the amount of the overissuance is not simply the difference between the amount of food stamps the household actually received and the amount it should have received. If the household did not report a job or an increase in earnings when it was supposed to, then the household may end up paying back more in food stamps than they would have received. This is because if a household does not report earned income on time, they will not get the benefit of the 20% earned income deduction that is part of the normal food stamp calculation. Instead, the food stamp office will count all the income when calculating how much food stamps the household should have received. [See MPP § 63-801.312(c)(for household and agency error), 801.323 (for intentional program violations); 7 C.F.R. § 273.18(c)(1)(ii)(B).] Counting all of the income, without giving the 20% earned-income deduction, is a penalty for not reporting the income on time. In California, at least one court has held that, in calculating the amount of restitution owed following a criminal conviction for food stamp fraud, the earned-income deduction must be given. [See People v. Hudson, 113 Cal. App. 4th 924 (Cal. App. 2003).]
A bit of “back story” is warranted here: In California, in the past, a food stamp overissuance would not occur if the household submitted the monthly report form (CW7) late but before the extended filing deadline (the first of the next month). [ACIN I-62-89 (January 6, 1989) (application of federal court order in Saldivar v. McMahon).] This was because a 10-day prior notice required by MPP § 22-072 could not be sent on time before reducing benefits. However, as a result of the change to quarterly reporting, an overissuance is assessed when the QR7 is received by the extended filing date, but before a 10-day notice may be sent. [See ACL 03-18 (April 29, 2003), p.12; see also, MPP § 63-801.31(c); 801.312(c) (QR) and Handbook example.] However, the loss of the earned-income deduction does not occur unless the QR 7 is received after the “extended filing date” or the close of business on the first working day of the new QR quarter. [MPP §63-102(e) (5).]
So, in any event, how does this work out in practice? Consider this:
Example: Recipient Tracy Williams did not report her new job that paid $500 per month. She receives $400 per month in child support (which was reported) and her shelter costs are $350. There are three people in her household.
Here’s how the food stamp calculations break out:
|Benefits actually received||Overissuance (with penalty for not reporting income)||Overissuance (with no penalty if income reported on time)|
|Earned income deduction||-$0||-$0||-$100|
|Total countable income||= $400||= $900||= $800|
|Food stamp allotment||$378||$160||$198|
|Amount of the overissuance||$218
($378 – $160 = $218)
($378 – $198 = $180)
Bottom line: Tracy will have to pay back $38 per month ($218 – $180 = $38) more in food stamps than she would have if she had reported her job on time.
Here are some things to check on the demand letter to see if the calculation is correct:
- the reason for the overissuance, including whether the food stamp office thinks that the overissuance was due to an intentional program violation (IPV), an inadvertent household error or an agency (administrative) error, because this will make a difference in how much current food stamps can be reduced and what steps can be taken to collect.
- has the food stamp office included the correct amount of income (both earned and unearned) for each month of the overissuance? Some kinds of income are “excused,” i.e., they do not count. (For more information, see the section about the definition of income.)
- has the food stamp office has used the correct household size, and all the other deductions to which the household entitled — such as the correct excess shelter deduction or dependent care deduction?
- has the food stamp office used the correct months in calculating the overpayment? [MPP § 63-801.311, § 801.321.]
- has the food stamp office used the correct months in calculating the overissuance, and has it correctly counted the income backward or forward? (For more information, see the sections about prospective budgeting (quarterly reporting households), and applicable applicant budgeting rules.)
- should excess resources that are the cause of the overissuance have been excluded, or not counted because the household is categorically eligible? (For more information, see the sections about resource exclusions and those people who leave the CalWORKs program.)
- if anyone in the household is elderly or disabled, has the food stamp office mistakenly applied the gross income test to the household? Or placed a limit on the amount of the excess shelter deduction the household can receive? (For more information, see the sections about income limits and how deductions are applied.)
- has the food stamp office “expunged” (i.e., taken back) food stamp benefits because the household did not use the benefits on the EBT card for a year? If so, then the office must reduce the amount of any overissuance later by the amount of the food stamps that were expunged. [7 C.F.R. § 273.18(c)(1)(ii)(D), (g)(2)(ii)(c); MPP § 16-750.13.]
- for trafficking-related claims, the amount of the claim is the amount of the benefits that were trafficked. [7 C.F.R. § 273.18(a)(1)(ii); MPP § 63-801.33.] (See, generally, the sections about overissuances and fraud for more related information.)