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Recent important administrative and legislative reforms make vehicle resource rules more compatible with modern economic realities. Under the rules as revised: (1) vehicles used for certain purposes remain exempt entirely; (2) vehicles in which the household has less than $1,500 in equity will be exempt as "inaccessible resources"; (3) some vehicles will remain subject to a fair market value test, with the excess over a certain amount counting against a household's allowable resource limit, but states now have significant options to apply more adequate value levels in place of the outdated $4,650 level; and (4) while some vehicles will be subject to an equity test as well as a fair market value test, the numbers so subject should shrink considerably under new regulations. The following is a summary of the latest regulations and legislation.

Inaccessible Resource Rule

On November 18, 2000, President Clinton announced new steps to further remove barriers facing working families in participating in the Food Stamp Program including by improving "inaccessible resource" rules to allow more households to own reliable vehicles and remain food stamp eligible.

The final rule published in the Federal Register by USDA on November 21, 2000 exclude from the vehicle resource limit all vehicles in which the food stamp household had less than a $1,500 worth of equity (fair market value minus outstanding loans). This regulation aims at addressing the reality of "ownership" for many low-income families: outstanding loan payments often exceed the dollars the "owner" would receive for selling the car on the market. The final rule improved upon the proposal made in February 2000, which would have set the inaccessible resource level for vehicles at $1,000. The higher level in the final rule reflects numerous comments from the advocacy community and state administrators. Based on the proposed rule, three states applied for and received waivers for interim implementation of the $1,000 inaccessible resource rule. Now, as established by the final rule states are mandated to implement the established $1,500 inaccessible resource rule for vehicles by January 20, 2001.

Revised Vehicle Tests

The final food stamp rule released November 21, 2000 maintains previous exemptions but also broadens the exclusion from the equity test for licensed vehicles. With respect to licensed vehicles:

• a vehicle will be completely excluded from the resource test if it is necessary to produce income, used as a home, necessary to transport a disabled household member, necessary to carry fuel for heating or water for home use, or is classified as an inaccessible resource (ie: likely to produce a return of no more than $1,500);
• a vehicle will be exempt from the equity test and require evaluation for fair market value of only one licensed vehicle not excluded under the previous paragraph for each adult household member regardless of use, and any unexcluded licensed vehicle a household member under age 18 drives to work, school or training, or to look for work. The state agency would count the fair market value in excess of $4,650 or the equity value.
• for any other vehicles the household possesses, the rule requires counting of the higher of the fair market value in excess of $4,650 or the equity value. 7 C.F.R. § 273.8(e)

State Options for Raising Vehicle Limits

The November 21, 2000 final food stamp regulation modifies the guidance on "categorical eligibility"("Cat-El") USDA released on July 14,1999, that allows states to extend eligibility to households receiving or certified to receive TANF-funded benefits whether or not they also receive TANF-funded cash assistance. Under the final rules the Food Stamp program will confer categorical eligibility to all households certified to receive TANF-funded benefits and services either (1) to further the first two purposes of TANF program that require grants be targeted toward "needy families"; or (2) to further TANF purposes three and four, as long as those services have income eligibility criteria set at 200 percent of the federal poverty level or lower. Until September 30, 2001 state agencies may continue to confer categorical eligibility for food stamp as outlined in the July 1999 guidance and need not ascertain the purpose of the TANF-funded program at issue. Currently, 34 states have implemented the expanded "categorical eligibility" option for the Food Stamp Program, based on the July 14, 1999, policy option permitting state administrators to apply their more lenient vehicle asset limits from TANF to food stamp households who are receiving or certified for some TANF-funded service. These states will have to re-evaluate their application of the categorical eligibility policy and comply with the policy modification in the final rule by September 30, 2001.

On October 28, 2000, President Clinton signed into law the Fiscal Year 2001 Agriculture Appropriations Bill, which makes it easier for low-income working families to own a reliable car and still qualify for food stamp benefits. The statutory change (commonly referred to as the "Hunger Relief Act" vehicle change) as well as the administrative improvements described above reflected a broad, bipartisan consensus that nutrition assistance and other supports are vital for families transitioning from cash assistance. The law gives states an option to use their more adequate TANF vehicle limits for the Food Stamp Program. By contrast with the "categorical eligibility" administrative option, food stamp households need not be receiving TANF-funded assistance to benefit from this option. This provision was included in the President's FY 2001 budget proposal and in the Kennedy-Specter/Walsh Hunger Relief Act (S. 1805, H.R. 3192). As enacted in the FY 2001 Agriculture Appropriations Act it will take effect July 1, 2001.

The option from the Agriculture Appropriations Bill is a bit more favorable to low-income families compared to the final rule regarding categorical eligibility from November 21, 2000. However, both significantly improve the accessibility of the Food Stamp Program for working families provided that states take advantage of these options.

Sources: USDA final rule published in the Federal Register November 21, 2000 and the Agriculture Appropriations Bill fiscal year 2001.