| Nutrition Assistance For Puerto Rico |
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Since its inception in 1982, the program has been providing low-income families living in Puerto Rico with cash benefits used for food purchases. Although the methods of providing such benefits have changed over the years, its basic objective of helping low-income families meet their nutritional needs has remained constant. It has, however, been controversial throughout its existence, attracting both criticism and advocacy from Puerto Rico and the United States. HISTORY Background Food stamps have been issued in the United States since World War II, however the program did not include Puerto Rico until the early 1970s, when U.S. Public Laws 91-671 of January 11, 1971 and 93-86 November 1, 1974 partially extended the Food Stamp Program to U.S. territories. The Food Stamp program was later expanded to provide full coverage and benefits to Puerto Rico and other territories under Section 19 of the Food Stamp Act Of 1977 . OMB NAP assessment detail Section 1, Question 1.1 Shortly after the expansion, however, the Food Stamp Program in Puerto Rico was larger, in terms of both the percentage of the population participating and expenditures, than any of the programs operating in the 50 U.S. States, with 56% of the Puerto Rican population participating in the program.GAO 1978, Report No. CED-78-84FANRR-19-3, Chapter 11, pg. 286, par. 3 In total, it accounted for approximately 8 percent of the national program’s beneficiaries, and 8 percent of total federal expenditures. Program creation To address these issues, the 1981 Omnibus Budget Reconciliation Act (OBRA) eliminated Puerto Rico from the national Food Stamp program and created the Nutrition Assistance Program for Puerto Rico as a of $825 million. OMB NAP assessment detail Section 2, Question 2.6 FNS Newsroom: Fact Sheets The new block grant program differed significantly from the former Food Stamp program in three major aspects.GAO 1992, Report No. GAO/RCED-92-114 First, the new NAP program was designed to distribute the benefits through Physical Checks , assuring that the benefit would be payable only the beneficiary while at the same time reducing administrative costs, since the former physical Voucher s (''cupones'' in Spanish) were subject to storage and accountability problems, theft, counterfeiting and even trafficking. OMB NAP assessment detail , Section 1, Question 1.4FANRR-19-3, Chapter 11, pg. 286, par. 6 Second, the benefits would no longer be restricted as vouchers redeemable only for food, but would rather be provided in cash. The beneficiary could then elect to purchase a product or select services other than food.FANRR-19-3, Chapter 11, pg. 286, par. 7 Third, the overall assistance provided to Puerto Rico is limited to an annual block appropriation, requiring the Puerto Rican government to adjust its program management to allocate the funds.FANRR-19-3, Chapter 11, pg. 286, par. 8 Between 1982 and 1986, the U.S. Congress awarded $825 million annually in block grants for NAP program, and since then the appropriations have steadily increased by an estimated 3% to 4% to compensate for inflation.FANRR-19-3, Chapter 11, pg. 286, par. 9 It has surpassed $1 billion annually since the early 1990s, and increasing 30% from 1993 to 2002. Since fiscal year 2006, the appropriation has reached to over $1.5 billion annually. Over the years there has been a gradual decline in participation in the nutrition assistance programs. Participation in the previous Food Stamp program was estimated at 56%, more than 1.5 million island residents, before the creation of the block grant. OMB NAP assessment detail , Question 4.4 By 1994, participation in the NAP program had decreased to 1.3 million,FANRR-19-3, Chapter 11, pg. 287, par. 1 and by 2006 it had decreased to just over 1 million. Given that the Puerto Rican population has steadily increased throughout those periods, the percentage of the population participating in the nutrition assistance program has significantly declined. Since its creation, the program has received much criticism both within and outside Puerto Rico. Critics argue that, since the program provides non-taxable income without any employment requirements, recipients receive free money without incentives for work, which hinders the economic output and development of the island.''Trouble on Welfare Island'', The Economist , May 25, 2005Report No. GAO-06-541, Chapter 3, pg. 70, par. 3 This fact is more worrisome when considering that Puerto Rico’s employment participation and unemployment rates have been consistently inferior to U.S. national levels,Report No. GAO-06-541, Chapter 3, pg. 69, Figure 22 while the average aid provided in Puerto Rico has exceeded the U.S. national average ($94 versus $74.79, respectively; 2001 estimate). Because of this, some have gone as far as naming Puerto Rico the “welfare island”. However, proponents of the program argue that Puerto Rico’s social condition is in far worse shape than any of the 50 U.S. States.Report No. GAO-06-541, Chapter 3, pg. 48, par. 1-3 Approximately half of the island’s population lives below the U.S. Federal poverty guidelines,2000 U.S. Census Welcome to Puerto Rico: Economy and many have difficulties in meeting their nutritional needs due to increasing inflation and economic stagnation in the island. Furthermore, the relation between the NAP program’s benefits and the low employment participation and high unemployment rates has not been studied, and there is no consensus on their actual causes.Report No. GAO-06-541, Chapter 3, pg. 70, par. 1 PROGRAM ADMINISTRATION The Food and Nutrition Service (FNS), a component of the USDA, provides the funds to Puerto Rico Government’s Department Of The Family to operate the program through an annual Block Grant , which covers the full cost of the benefits to participants, as well as fifty percent (50%) of the costs required to administer the program (the remaining 50% must be provided by the Puerto Rico government).OMB A-133 Comp. Suppl., pg. 4-10.566-1, par. 2 Code Of Federal Regulations , Title 7, section 285.2(a) As a condition of receiving the grant, the P.R. Department of the Family must submit an annual plan of operation to the FNS, which describes how it will provide the nutrition assistance to qualifying persons. This includes identifying the island population which is eligible for the NAP benefits (i.e., family income limits, family status limits, etc.), establishing the process in which individual participants are selected, and the process of determining the benefit amount for each participant.OMB A-133 Comp. Suppl., pg. 4-10.566-1, par. 3 The plan of operation is reviewed and approved by the FNS before funds are disbursed. Although federal regulations require Puerto Rico to pay the benefits during the year for which the annual block grant was awarded, since 2002, the federal government allows Puerto Rico to use 2% of an annual surplus for benefits in future years.OMB A-133 Comp. Suppl., pg. 4-10.566-4, Sec. H: Per. of Avail., par. 2 The FNS also requires the Puerto Rican government to submit financial and performance reports on a regular basis, including quarterly Federal Cash Transactions Reports, quarterly and annual Financial Status Reports, and monthly Program Participation and Benefits Reports.OMB A-133 Comp. Suppl., pg. 4-10.566-4, Sec. L: Reporting OMB NAP assessment detail , Sec. 3, Question 3.BF2 These reports provide details on the program’s obligations and actual expenditures, and help the FNS monitor the use of program funds and reconcile the program’s budget with actual expenditures. OMB NAP assessment detail , Question 3.BF1 Management assessment In a collaborative effort by the United States Office of Management and Budget (OMB) and various other Federal agencies, the NAP program was recently Assessed and given a 44% and 40% score (out of a possible 100%) in its Program Management and Program Results/Accountability performance indicators, respectively, stating that "the program's financial management practices need improvement." OMB NAP assessment summary The assessment revealed that the Puerto Rico government has not established short-term goals, objectives, and targets to evaluate the program’s performance and results, that the program’s oversight has been lax in previous years, and that the program’s impact and results in Puerto Rico’s society have not been evaluated in recent years. OMB NAP assessment detail ; Questions 3.1, 3.7, and 4.5 The financial management and oversight concerns were later emphasized when, on March 15, 2007, a U.S. investigative task force uncovered a $30 million fraud scheme involving 31 participants, including retailers and beneficiaries, who were withdrawing the funds as cash from the benefits designated exclusively for food purchases, and charging the customers a 20% to 25% fee for the transaction.''$30 Million Fraud Scheme in Puerto Rico'', U.S. Dept. of Justice The Puerto Rico government’s Departments of Family, Education, and Health have since combined efforts to create a 5-year strategic plan to improve the program’s long-term performance and financial management. OMB NAP assessment detail , Question 2.8 The Family Department has recently implemented a quality control-like program titled Measure of Efforts and Results System, which evaluates the quality and promptitude of services while reviewing various eligibility elements, to improve customer services and program management. OMB NAP assessment detail , Questions 3.1, 3.2, 3.4 and 3.7 The Department has also agreed to switch from a biennial audit to an annual Single Audit , and subject the program to periodic audits by its Administration for Socio-Economic Development, to detect and correct problems more quickly. Furthermore, the USDA’s Office of Inspector General (OIG) has performed regular audits to assure compliance and identify areas for improvement. Regardless of deficiencies, the federal government’s assessment revealed that the current NAP program is actually an improvement over the former Food Stamp program provided in Puerto Rico. In its 2005 assessment report, it concluded: PROGRAM BENEFITS Under the NAP, participating families receive monthly cash benefits to supplement their incomes which must be used to purchase foods for preparation and consumption at home.OMB A-133 Comp. Suppl., pg. 4-10.566-1, par. 4 The amount of a family’s monthly benefit payment depends on that family’s specific characteristics and financial circumstances, as well as the overall amount of program funds available for distribution, however the latest statistics show that benefits average $103 each month (2003, see table right).Report No. GAO-06-541, Appendix VII, pg. 176, Table 31: Comparison of the Food Stamp and Nutrition Assistance Programs It is the Puerto Rican government’s responsibility to establish the eligibility requirements and benefit levels for participation in the program. The benefits are revised annually every October 1st to consider the nutritional needs of Puerto Rico’s impoverished population, analyze the impact of inflation in Puerto Rico, and plan the distribution of available funds accordingly. In order to qualify, potential beneficiaries must meet several conditions, listed as follows: Benefits Report , GovBenefits.gov
The Puerto Rico Department of the Family currently distributes the benefits to each participating family through a Debit Card , which replaced the physical checks since the early 2000s. The monthly benefit is deposited through an electronic benefit transfer (EBT) system into a government-designated personal bank account, which can be accessed at any time with the debit card to withdraw cash or to make food purchases from authorized retailers.OMB A-133 Comp. Suppl., pg. 4-10.566-1, par. 4-5 Since September 2001, 75% of each family’s monthly benefit has been designated exclusively for making direct food and grocery purchases, while the remaining 25% can be withdrawn as a cash benefit. OMB NAP assessment detail , Questions 3.2, 3.4 and 3.7 The EBT debit card system has proven to be effective, improving the program’s payment accuracy rate to 96.4% in 2003, 4 years ahead of its 2007 goal of 95% accuracy. OMB NAP assessment detail , Questions 4.3 NOTES REFERENCES Primary sources
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