How the Agriculture Department put the SNAP program on overdrive

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In doing economic analyses leading to changes in federal benefits, agencies are obligated to do them a certain way. During the pandemic, the Agriculture Department redid an index resulting in a big boost in the Supplemental Nutrition Assistance Program. The Government Accountability Office finds, USDA didn’t quite proceed properly. To get more on this,  Federal Drive with Tom Temin spoke with Kathryn Larin, GAO’s Director of Education, Workforce and Income Security.

Interview transcript:

Tom Temin
And let’s begin with the background here. This concerns calculating something called the Thrifty Food Plan. Tell us what that is and how it relates to the very famous SNAP [Supplemental Nutrition Assistance Program].

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Kathryn Larin
Yeah, the Thrifty Food Plan is a set of foods that can be purchased in a grocery store at a low cost. That’s really the simple definition, it should meet certain requirements. For example, the foods should provide the daily recommended amounts of energy and nutrients, they should include foods that are convenient and easy to prepare, and that are similar to how Americans normally eat.

Tom Temin
So it’s almost like a market basket, you might say.

Kathryn Larin
That’s exactly what it is. It’s a market basket at the lowest possible price point.

Tom Temin
And that price point then of that market basket becomes the basis for the SNAP, actual benefit, then.

Kathryn Larin
The maximum SNAP benefit is set by the Thrifty Food Plan.

Tom Temin
Let me ask you this, then: the gist of the report that I got was that in calculating that market basket, that TFP, as they call it, that activity itself gets the status of a project.

Kathryn Larin
Yeah, absolutely. USDA uses a very complex economic model to determine the TFP. And it is a lengthy and meticulous process that involves multiple decision points. So yeah, it is a project.

Tom Temin
So it’s not something they can just casually update from time to time. I mean, it sounds like a big deal and a big effort to do this. It’s almost econometric modeling it sounds like.

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Kathryn Larin
Yes, it is a very complex economic model that involves so many inputs in so many decisions.

Tom Temin
Because the leverage it has amounts to billions and billions then, correct?

Kathryn Larin
That’s really what’s key, is the impact of the TFP because it’s a SNAP kind of benefits. It has an impact on federal spending.

Tom Temin
Let me ask you this. Does the idea ever come up to do the TFP of this Thrifty Food Plan? Take two agriculture employees, send one to Dollar General, send one to Aldi’s, see what it costs? And they would have an answer in 10 minutes?

Kathryn Larin
No, it is so much more difficult than that, because they use a database of food prices, food prices that consumers actually face in grocery stores across the entire country, and availability of foods across the entire country. It’s not as simple as that; it is a very complex process.

Tom Temin
So the SNAP benefit a person receives them or a family receives is location dependent.

Kathryn Larin
The benefit is not location dependent. The SNAP benefit is the same for families throughout the country. But what I’m saying is that if you were to go into a Dollar General or into a local Aldi, you might find a certain set of prices that are not representative of what people face everywhere and the prices that USDA uses are more representative.

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Tom Temin
We are speaking with Kathryn Larin, and she’s director of education, workforce and income security issues at the GAO. And you found that in doing the new version of the Thrifty Food Plan, this project, the USDA didn’t really follow proper project management techniques. Tell us more.

Kathryn Larin
Yeah, USDA made a couple of key decisions early in the process. One was to accelerate the reevaluation. And this was really in response to the COVID-19 pandemic. And they had originally planned on issuing a new TFP in 2022. But they accelerated the process by six months. So they had to do it more quickly. The other thing that they decided was to allow the cost of the TFP to increase beyond inflation for the first time in 45 years.

Tom Temin
And why would they do that?

Kathryn Larin
Over time, a lot of questions have been raised about the Thrifty Food Plan and whether it is adequate to address food insecurity. And whether it aligns with the economic realities that families face today, for example, the amount of time they have to prepare food.

Tom Temin
Sure, this might be out of the scope of the study, but do they need congressional authority to be able to exceed inflation in coming up with the Thrifty Food Plan or can they do that at their discretion?

Kathryn Larin
They can do that at their discretion, the law provides certain criteria that they have to follow but cost neutrality was not one of those.

Tom Temin
And what was the result in terms of the cost of the program, of this calculation that was exceeding inflation?

Kathryn Larin
The reevaluation resulted in a 21% increase in the cost of the Thrifty Food Plan, and therefore a 21% increase in the maximum SNAP benefit.

Tom Temin
Yeah, so that was really a major outlay then from USDA that just came because of this calculation.

Kathryn Larin
Yes.

Tom Temin
Well, not following project management procedures, what did they miss doing? And what are your recommendations that they do now?

Kathryn Larin
So project management practices are foundational to quality control and project success. They help to mitigate risk, they help ensure that project goals are met. And by not following these practices, USDA failed to ensure that key quality assurance measures were followed.

Tom Temin
And so we don’t really know whether the Thrifty Food Plan is correct or not, then.

Kathryn Larin
Yeah, whether the outcome was correct or not correct was outside the scope of our review. But what we really looked at was, what was the process that they followed? Process matters. And did they follow processes that would ensure quality and mitigate risk?

Tom Temin
So even though you didn’t evaluate the quality of the outcome, the potential is there to either over calculate or under calculate if they don’t follow what they have assigned themselves as their proper project management techniques?

Kathryn Larin
Yeah, that’s exactly what I’m saying. Those techniques are there to ensure quality.

Tom Temin
So do you recommend that they redo the Thrifty Food Plan? I mean, since that happened, there’s been a lot of actual inflation.

Kathryn Larin
So the Thrifty Food Plan will continue to be adjusted for inflation and the farm bill provided for USDA to reevaluate every five years, so they will have to reevaluate the TFP before 2027. And we recommend that they follow our recommendations when they do that next reevaluation.

Tom Temin
What other recommendations did you have for them?

Kathryn Larin
Well, we found a couple of other issues with the way that they did the recalculation. One is that they didn’t do external peer review. So an important quality assurance process is to allow external parties to review the process, review the outcome, and provide comments and provide input. They didn’t collect some outside external input, but they didn’t really incorporate it into the calculation, and they didn’t have an external peer review.

Another recommendation is around the actual process of manipulating the model. Many of the methodological and policy decisions that were required to update the TFP in doing those, USDA didn’t follow standards for economic analysis. And by that what I mean is they didn’t document key decisions or the rationale behind those decisions. They didn’t conduct analyses of how certain decisions would affect the outcome, and they didn’t determine how it would affect the cost of the market basket. And they didn’t document those decisions.

Tom Temin
And did they generally agree with your recommendations?

Kathryn Larin
No, they didn’t agree or disagree with our recommendations. In other words, they agreed in principle, I guess they acknowledge the value of some of our recommendations, but they didn’t commit to taking any specific steps to address them. But we hope that when it comes time to conduct the next reevaluation that they do follow them, we really are laying out some very specific practical steps that USDA can take to ensure the integrity and transparency of the process.

Tom Temin
Kathryn Larin is director of education, workforce, and income security issues at GAO. Thanks so much for joining me.

Kathryn Larin
Thank you for having me.

 

 

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