IN: State Accused of Cutting Aid to Food Stamp Users

For at least a decade, potentially thousands of Indiana's neediest adults have seen some of their state aid payments slashed simply because they receive food stamps — a practice that advocates and legal experts say is a clear violation of federal law.

The policy has affected people with developmental disabilities who need financial help to live independently and who receive additional assistance to buy groceries. The issue apparently went unnoticed for years until this month, when the father of a severely autistic Indianapolis man challenged it in court.

"I've never heard of a state being confused about this before. The law is unambiguous," said Stacy Dean, director of food stamp policy for the Center on Budget and Policy Priorities in Washington.

Under the current system, when the federal government raises food stamp amounts, Indiana officials reduce grocery allowances so a person's total food benefits do not exceed $200 a month.

But since 1964, federal law has barred states from counting food stamps as income or using them to reduce any other public benefits.

"It's clear as could be," said Dennis Frick, an attorney with Indiana Legal Services' Senior Law Project. "I think they got caught."

Both the Department of Agriculture, which administers food stamps, and federal Medicaid officials say they are reviewing the issue. Gov. Mitch Daniels said "it's worth having a look" at the practice in light of the lawsuit filed by the autistic man and his father.

Marcus Barlow, a spokesman for the Indiana Family and Social Services Administration, said agency attorneys do not believe federal law was broken when officials balanced food stamp payments against a state-run supplemental aid program.

Barlow said Indiana has counted food stamps as a "benefit," not as income, as opponents contend, since at least 2000.

"Receiving a benefit reduces their need," Barlow said. "If your need has been reduced, then you should reduce the supplemental program."

The state's philosophy is to use federal dollars first so that the state can stretch its own money, Barlow said.

"We stand behind our practice because we have a finite set of resources, and we have to make sure those resources are going to the most needy," he said.

But legal experts say courts have consistently upheld the law that says other assistance cannot be reduced because someone is receiving food stamps.

Welfare officials in other states said they were surprised Indiana would even try to count food stamps against other benefits.

"Frankly, we're shocked that anyone does," said Brad Deen, a spokesman for the North Carolina Department of Health and Human Services.

Indiana's practice may have gone unnoticed by federal officials because the state's policy did not directly affect food stamp payments.

"When the law is misapplied, it usually is inside the food stamp program, not outside," said Ellen Vollinger, legal director for the Food Research and Action Center in Washington.

The practice is just the latest indictment of how Indiana handles services for its most vulnerable residents.

The federal government levied a $1.2 million penalty last month against the state's social service agency for miscalculating food stamp benefits.

The state also drew criticism from the Department of Agriculture in recent years for not processing food stamps in a timely manner as part of a project to privatize some welfare payment processing. That plan caused countless complaints that ultimately led the state in October to scrap a $1.3 billion contract with IBM in favor of a public-private hybrid system.

In another troubled project, the state tried to reduce payments made to foster parents by shifting many special-needs children into lower-paying categories — a move that outraged advocates.

In the most recent case, the American Civil Liberties Union filed a lawsuit on behalf of Michael Dick, 26, who cannot speak and functions at the level of a 6-year-old.

Dick is enrolled in state programs that provide money to help the developmentally disabled live on their own, including buying groceries.

"You can't use food stamps when you're calculating an entitlement program, but this is a state-run supplemental program," Barlow said.

Michael Dick's father, Steven, said it's time for the state to follow the federal rules.

Steven Dick, an attorney, said his son's only income is a monthly $674 Social Security disability check. Michael lives in a small rented home with another disabled man and pays $350 a month in rent, not including utilities.

He said his son requires a 24-hour caretaker to help him bathe, dress or go anywhere.

"He's a happy child, but he functions as though he's a child," he said.

When his food stamp benefits were raised to as much as $99 a month, Michael Dick's grocery allowance was reduced from $139 to as low as $101.

Steven Dick said he and his son appealed the decision and lost, then decided to sue. The lawsuit was filed July 9 in Marion County Superior Court.

The $200 cap set by the state is arbitrary and has not been adjusted in at least six years, the lawsuit said.

"And $200 a month a decade ago bought a hell of a lot more groceries than it does today," Steven Dick said.

The number of people affected by the policy is not clear.

The lawsuit seeks class-action status for people enrolled in Indiana's Developmental Disabilities Medicaid Waiver Program and estimates thousands of people could be affected. The website of the state's social services agency says about 6,700 people were enrolled in that program as of May.

But Barlow said only about 440 people in that program receive the additional assistance involved, and not all of those get a food allowance.

Regardless of the number, Dick said, the state policy hurts those who often lack recourse.

"The problem this class of people face is they're in a position of either take it or do without as far as the state is concerned, and 90 percent of them don't have the wherewithal to fight the system," Steven Dick said. "They have no way of fighting for what should be a right for them."

This article was published by the Indianapolis Business Journal on July 20, 2010, and is an Associated Press piece.