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The Department proposes to standardize the methodology to calculate State heating and cooling standard utility allowances (HCSUA), used in determining a SNAP applicant household’s shelter expenses as part of the certification process.

Statement of Need:

For States that choose to use an HCSUA as opposed to actual utility costs, the Department proposes to standardize HCSUA levels based on low income household’s utility costs in the State. This would provide for a consistent approach nationally for determining HCSUA levels by eliminating the variation in HCSUA methodologies that currently exists from State to State. Furthermore, it would allow for closer alignment with actual out of pocket utility expenses for low income households.

Summary of the Legal Basis:

The Food and Nutrition Act of 2008, Section 5(e)(6)(C) gives the Secretary the authority to promulgate regulations defining the circumstances under which states may use standard utility allowances.

Alternatives:

(1) No change to current regulations retain existing SUA flexibility;

(2) Standardize HCSUAs at the 80th percentile of expenditures but make no other changes to current SUA policy;

(3) Have USDA establish Limited Utility Allowance (LUAs) and Standard Utility Allowance (SUAs) for each State each year (as an alternative to the caps on the LUA and SUA values in the proposal).

Anticipated Costs and Benefits:

The Department has estimated the total reduction in Federal SNAP spending associated with the proposed rule to be approximately $4.5 billion over the five years 2021-2025. This represents a reduction in Federal transfers (SNAP benefits).  

The Department estimates that approximately 16 percent of households will see an increase in their monthly SNAP allotment and another 19 percent will see a decrease in their monthly SNAP allotment.  A very small number of households are estimated to lose eligibility for SNAP (less than 8,000 households).  The rule is also expected to result in a small reduction in administrative burden for State SNAP agencies, about $14,000 annually. 

 The proposed action offers a consistent national approach for determining HCSUA levels. By removing the variations in methodologies from State to State, this rule would create a more equitable system. It would also ensure that these standards are aligned more closely with actual out of pocket utility expenses for low income households.

Risks:

Without the modernization proposed in this rule, the program runs the risk of continuing to rely on out-of-date information and inconsistent methodologies for SUAs from state to state, perpetuating inequities in benefit levels among households that may face similar circumstances but live in different states. This reform would reduce these risks substantially.