at the same major fast-food chain—for example, one in New York City and the other in Kansas City—would have different levels of deductions for the purpose of net income: net income would be lower and the SNAP benefit higher for the recipient in New York City than for the one in Kansas City. The second deduction for working SNAP recipients (and for those seeking work or students/trainees) is the dependent care deduction. Prior to the Farm Bill of 2008,9 the dependent care deduction was capped at $175 per month, but since 2008 it has not been capped. This means that actual costs of dependent care, such as the direct cost of care, transportation to and from care, copayments for subsidized care, unreimbursed payments for care, and fees for unused care, may be deducted in the net income calculation (CBPP, 2010). Because the cost of child care varies across states (NACCRRA, 2011), the amount of the dependent care deduction will vary accordingly.
The committee identified three additional implicit geographic cost-of-living adjustments in the benefit formula that can have an effect on the SNAP allotment. First, the elderly and disabled can deduct their monthly out-of-pocket medical expenses in excess of $35 from net income. Given that regional differences in medical spending are substantial (CBO, 2008; Fisher et al., 2009), this introduces geographic cost-of-living differences into the benefit formula. A second regionally focused deduction comes from the child support payment allowance. Pirog and colleagues (1998) document cross-state differences in child support awards, and this, too, may introduce geographic variation in SNAP benefits. The third adjustment works in the opposite direction from the others by reducing the size of the SNAP allotment. Income from other transfer programs, such as TANF, reduces the size of the SNAP benefit, and since the TANF benefit is set at the state level and tends to be higher in high-cost states, this has the effect of “taxing” the SNAP allotment in high-cost areas since it is set nationally at a fixed level for the lower 48 states.
Because most of the geographic differences in cost of living in the SNAP benefit formula are implicit rather than explicit, the question arises of whether making the adjustment more direct would facilitate definition of the benefit’s adequacy. For example, the evidence of regional differences in prices across the lower 48 states (recall that Alaska and Hawaii already have upward adjustments to benefits) suggests that in lieu of moving from the TFP to the Low-Cost Food Plan as the baseline for the maximum benefit, one could instead index the benefit for differences in the cost of living. That is, the indexed benefit for location i in time period t (Bit) would be the product of the price index (Pit) and the federal maximum benefit guarantee (G), or Bit = Pit × G. Normalizing the average price index to 1, Pit would be
9Food, Conservation, and Energy Act of 2008, Public Law 110-234 (May 22, 2008).