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VA: Food stamps a ‘sweet’ deal for recipients, but critics sour on costs, fraud

By   /   August 23, 2012  /   News  /   2 Comments

By Kenric Ward | Watchdog.org Virginia Bureau

FREDERICKSBURG — Food-stamp use is at a record high, and Virginia is seeking to expand it by urging farmers markets to accept EBT cards.

Though EBT cards aren’t supposed to be used to purchase hot prepared food, that doesn’t stop some vendors.

But that type of directive blew up in Massachusetts, when a maker of whoopie pies refused, saying her fat-laden treat wasn’t an appropriate food-stamp purchase.

Andrea Taber, of Walpole, Mass., rebuffed the Braintree market’s request for all its vendors to take federally funded nutrition benefits for her sticky treats. She told the Boston Herald that welfare payments for essential foodstuffs are fine, but she doesn’t think taxes should pay for fattening desserts.

Virginia, meantime, is pressing forward with plans to use $92,000 in federal money — part of a $4 million national campaign — to hook up farmers markets not currently using EBT — electronic benefit transfer — machines.

“This program will help to ensure that our farmers markets are open and welcoming to all citizens of the Commonwealth,” Matthew J. Lohr, commissioner of the Virginia Department of Agriculture and Consumer Services, said in a statement.

But the state Department of Social Services told Watchdog.org Virginia Bureau the EBT processors, for which the state will pay $1,000 apiece and will spend $45 a month to maintain, do not distinguish legitimate food purchases from other transactions.

“It’s up to the market and customer to determine they’re purchasing qualified food products,” said Tom Steinhauser, director of the division of benefit programs for DSS. The same vague rules apply to a host of food-stamp transactions.

Virginians made $1.3 billion in food-stamp purchases last year, the first time the state topped the billion-dollar mark. Steinhauser said the state caseload has increased a whopping 90 percent since 2007, with 919,909 people now receiving food stamps, officially called the Supplemental Nutrition Assistance Program.

A new national report reveals a lack of transparency and accountability in the $80 billion-a-year program that is used to purvey junk food, soda and other non-nutritional items.

The California-based consumer advocacy group, Eat Drink Politics, found:

  • Costs for food-stamp expenditures account for three-quarters of the entire U.S. Farm Bill.
  • Spending via food stamps has risen $30 billion in the past four years. A record 45 million Americans now receive food stamps.
  • Congress does not require data collection on SNAP product purchases. Neither the U.S. Department of Agriculture nor the states will divulge how much money individual retailers make from SNAP.

Anecdotal evidence points to big chains and small bodegas reaping cash from food stamps.

“In one year, nine Walmart supercenters in Massachusetts rang up more than $33 million in SNAP sales — more than four times the SNAP money spent at farmers markets nationwide,” the Eat Drink Politics study found.

Banks cash in, too. Eat Drink Politics reported that New York paid J.P. Morgan Chase $126.3 million to provide EBT services over seven years, said Michele Simon, director of the Oakland, Calif.-based group.

Watchdog.org Virginia Bureau found that the Old Dominion’s contract with Affiliated Computer Services, recently acquired by Xerox Corp., pays the company $3 million over five years.

That $3 million is part of some $187 million Virginia taxpayers spent to cover the state’s administrative expenses for SNAP last year. Nationally, the program’s administrative overhead totaled $6.5 billion.

Simon says SNAP’s bureaucratic overhead, combined with a lack of public accountability, should turn taxpayers’ stomachs.

“We want specific product data, like how much is spent on Coke versus carrots, but that data is not collected (by the public sector). Obviously Walmart has it, but they’re not required to report it.”

In lieu of transparency, the range of food-stamp expenditures can only be roughly extrapolated.

Citing what she calls “back alley data,” Simon relates estimates that $4 billion of SNAP money is spent annually on soft drinks alone.

With roughly half of the nation’s food-stamp recipients younger than 18, health experts wonder if the program’s loose dietary guidelines could be setting the table for more obesity.

“When the food-stamp program was established in 1964, obesity affected only a small percentage of the U.S. population,” said Dr. Susan Blumenthal, a clinical professor at Georgetown and Tufts schools of medicine.

“Today, with 68 percent of Americans overweight, obesity is fueling a tsunami of chronic diseases that undermines our country’s health, economy and national security.”

Others worry about black-market sales of EBT cards, where the ill-gotten proceeds go toward buying cigarettes, liquor and other non-food stamp items.

Steinhauser could not comment on successful prosecutions of fraud in Virginia — at least not yet.

“We have fraud investigators, and we’re starting a pilot project to look at people who have had multiple card issuances over a short period,” he said.

The U.S. Department of Agriculture’s Food and Nutrition Services division is tasked with prosecuting retailers for fraud, he said.

“We’re starting to look at the clients to look for patterns,” Steinhauser said.

FNS spokeswoman Regan Hopper told Watchdog.org Virginia Bureau that 17 stores in Virginia were sanctioned for violations ranging from trafficking in EBT cards to selling non-food items last year. The 13 retailers implicated in trafficking — defined as exchanging SNAP benefits for cash — were permanently barred from the program, she said.

In the first three quarters of this fiscal year, 14 more retailers were cited for trafficking and nine for lesser violations, Hopper said.

“We do not tolerate fraud and continuously look for ways to strengthen the integrity of the program,” said Hopper, who could not immediately name the offending retailers. Virginia has 5,979 authorized SNAP retailers.

The USDA Inspector General’s Office — which handles criminal cases involving retailers — did not list any convictions in Virginia in fiscal 2011.

While some states have sought federal waivers to set their own standards for food-stamp purchases, Virginia has not.

Efforts to tighten the program nationally — or at least provide more transparency in its operations — have fallen short, and the USDA has granted no waivers.

“To date, no bills have made it through the legislative process, thanks to heavy pushback from the food industry,” the Eat Drink Politics study reports.

Last year, Yum! Brands, owner of KFC, Taco Bell and Pizza Hut, lobbied to expand SNAP for fast food, but the company retreated after public outcry and a cool reception from the USDA, Bloomberg News reported.

Simon says that was a rare setback for the food industry.

“With ‘anti-hunger groups’ marching in lockstep with the food industry, it distracts from the harder conversation about improving the program,” she told Watchdog.org Virginia Bureau.

While her organization opposes cutting SNAP benefits, Simon said the public sector must do a better job of collecting specific data.

She also called on “anti-hunger groups” to “eliminate or disclose potential conflicts of interest when taking a public position regarding SNAP policy.”

But back at the Braintree farmers market, one welfare advocate said the dust-up over EBT cards and whoopie pies could stigmatize the poor.

“I don’t want people who are victimized enough to feel they can’t go to a place like this and be ostracized,” John Drew of Action for Boston Community Development told the Herald. “The more you tell people they can’t do things, the more they feel bad about themselves.”

Simon countered:

“I am all for making farmers markets more accessible to SNAP participants,” she said. “But at the same time the federal government should stop allowing food stamps for the purchase of junk food and sugary beverages that in many cases is keeping people from shopping at farmers markets in the first place.”

Contact Kenric Ward at [email protected]


Kenric Ward was a former San Antonio-based reporter for Watchdog.org.

  • DarylLloydDavis

    It’s immoral not to better supervise the food stamps program. Those defrauding the system–including those who have yet more children while on the program–ought to be cut loose and fined.

    Morality requires judgment, not just magnanimity:


  • ny4ever7

    And the Obama camp wants to keep the momentum going; it’s more vote for him and less money for us.