Win-Win Solutions for Oklahoma Farmers and Needy Children
September 1, 2015
This article is the third in a multi-part series on “Reviving Rural Oklahoma.”
In the previous article in this series, which appeared in these pages in July, I discussed the untapped potential in Oklahoma high-value crops. But agricultural producers will only take the plunge into high-value crops if they know they can depend upon a local consumer base and a stable marketplace.
Fortunately, the means to provide the initial support for high-value crops already exists in programs controlled by state policymakers. There’s no need for the expenditure of any additional tax dollars. Oklahoma taxpayers are already sending nearly $100 million to programs which could more efficiently be serviced by in-state producers and processors—with both a savings to those programs and an improvement in the service to the beneficiaries.
These programs have the same defects as many federal “help” programs: they are largely disjointed and poorly coordinated. But if properly operated, they can provide a “risk premium” for farmers to invest in high-value crops.
Fresh produce (and, to a lesser degree, frozen produce) has its price discounted to reflect distance to the consumer for both transportation and damage issues in transportation. If Oklahoma state government agencies can help provide a ready and stable marketplace within the state, the net effect for Oklahoma growers is a price increase for their goods.
The state receives federal funds from multiple sources which are perfect for the process of providing support for Oklahoma’s farmers but which are being used ineffectively or not at all.
Farm to School
The most obvious is the USDA’s “Farm to School” grant program. Its stated purpose is to assist eligible entities in implementing farm-to-school programs that improve access to local foods in public schools.
Up to $5 million per year is available for implementing the program. According to the USDA, “support service grants are intended for state and local agencies, Indian tribal organizations, agricultural producers or groups of agricultural producers, and non-profit entities working with schools or school districts to further develop and provide broad-reaching support services to farm to school initiatives.”
How much opportunity exists in Oklahoma? Consider: Though 28 percent of Oklahoma school districts say they are participating in the program, only $4.5 million of the $40 million in school lunches served in 2011-2012 consisted of local produce.
The Oklahoma harvest season is not concurrent with the school year in general, though the movement to year-round school and those districts going to summer meal programs may start to eliminate that issue as an impediment to buying local fresh produce.
This is an issue easily solved by a more proactive approach by the Oklahoma State Department of Education. Coordination between districts and farmers/processors would be more efficiently done with the help of the OSDE while still allowing districts to have their own stand-alone programs in regards to what they buy and serve.
In fact, the program provides special funding for just that approach. According to USDA, “state agencies can use their State Administrative Expense (SAE) funds, both as initially allocated and when reallocated, and State Administrative Funds (SAF) for state-level coordination of farm to school activities. This guidance applies to the National School Lunch Program, School Breakfast Program, Special Milk Program, Child and Adult Care Food Program (CACFP), Summer Food Service Program (SFSP), Fresh Fruit and Vegetable Program, and Food Distribution Programs that provide USDA Foods to applicable programs.”
Moreover, grants can be used to acquire freezer technology which would extend the use of Oklahoma-grown produce throughout the school year. The Oklahoma Department of Corrections (ODOC) is a seemingly unlikely source to turn to for an example of the use of natural-gas-powered flash freezers. ODOC started a program in its northwest Oklahoma prison farm that both provides solutions and highlights problems for the schools. While the program was extremely successful in producing and processing high-quality fruits and vegetables grown on the prison farm, ODOC discovered that the cost of shipping the produce across the state to the various prison sites was not cost-effective.
Fortunately, this issue had already been considered by the USDA and a solution exists that can bring even more resources to bear for local producers and end users.
The USDA cooperates with the Department of Defense (DoD) in a program called “DoD Fresh.” According to USDA, DoD Fresh provides “easy ordering and funds tracking: Schools place orders via the web-based Fresh Fruit and Vegetable Order/Receipt System (FFAVORS). The prices listed in the FFAVORS catalog reflect the prices that schools will be billed for the product. FFAVORS tracks schools’ entitlement fund balances and total order costs. DoD manages vendor payment and reconciliation. States can change DoD Fresh allocations on a monthly basis, which allows them to utilize USDA Foods entitlement dollars more effectively. USDA does not impose a cap on the amount of entitlement dollars that a state can allocate to DoD purchases.”
Use EITC to Feed Children
There are other opportunities within existing federal programs that are managed at the state level.
For example, there is an opportunity for one of those rare win-win outcomes for needy Oklahoma children and the Oklahoma farm community. In fiscal year (FY) 2013, approximately $41 million in Earned Income Tax Credit (EITC) payments were partially used as a “maintenance of effort” (MOE) obligation for the Temporary Assistance for Needy Families (TANF) program. TANF is similar to food stamp programs but has a lower income requirement and also a housing and clothing allowance. Many states which could not expend the available TANF funds began using the EITC to send more support to these low-income individuals and families. As a tax preparer, I was aware of the Congressional Research Service study which reported that the “IRS estimates that in FY 2013, 22 percent to 26 percent of EITC payments—between $13.3 billion and $15.6 billion—were issued improperly.” Much of this “improperly” issued funding was outright fraud. Taxpayers and children are the victims of a program with little oversight that simply provides a lump sum—estimates were $4,053 per instance of fraud—of cash to individuals and families with absolutely no control of how recipients spent that money.
Even when the filing for EITC was legitimate, the use of those funds to provide for its intended use is questionable. Why not convert a large part of this fraud-ridden program back to TANF and ensure that those children are provided a proper diet while at the same time benefiting Oklahoma’s farm community?
Oklahoma Department of Human Services (DHS) case workers are already underpaid and overworked—but in this funding stream there is also assistance for them. I haven’t yet been able to verify from DHS what percentage of EITC was TANF maintenance of effort and what percentage was variable funding with a more open-ended use, but my experience in government finance suggests to me that the MOE will be somewhere around two-thirds of the $41 million. However, even if the total EITC funding was TANF funds, the flexibility in those funds would allow DHS to task and remunerate those case workers for delivery of vouchers to purchase Oklahoma-produced meat, milk, and fresh or frozen fruits and vegetables—as well as educate the clients on preparing the products.
The opportunity for fraud with vouchers that can only be used to purchase Oklahoma food products is limited, and the probability of these funds actually feeding needy citizens goes up dramatically. In fact, one could go a step further and allow individuals and their families to exchange those vouchers for meals provided by local food banks, churches, or school districts which provide dinner and/or summer meals using Oklahoma-produced meat, vegetables, and fruits.
All the ideas discussed in this article are within state officials’ control. While policymakers cannot remove the risk of Oklahoma’s weather, the state can provide a more stable market that also provides a higher return to the state’s farmers by having the state’s elected officials and agencies act in concert for the benefit of all Oklahomans.