BILL ANALYSIS SENATE HUMAN SERVICES COMMITTEE Senator Elaine K. Alquist, Chair BILL NO: AB 433 A AUTHOR: Beall B VERSION: June 1, 2007 HEARING DATE: June 26, 2007 4 FISCAL: Appropriations 3 3 CONSULTANT: Flores SUBJECT Food stamps; categorical eligibility; program name SUMMARY Requires the State Department of Social Services (DSS) to propose a new name for the food stamp program and to establish categorical eligibility for food stamp benefits for Medi-Cal recipients who are eligible for services funded by the Temporary Assistance for Needy Families (TANF) block grant. ABSTRACT Current federal law 1)Establishes the food stamp program, administered by state and local agencies to provide federally funded food assistance benefits to eligible households. 2)Establishes the TANF block grant, to distribute federal funds to states to assist low-income families for specified purposes, including the care of children in their own homes and the end of dependency of needy parents on government benefits through job preparation, Continued--- STAFF ANALYSIS OF ASSEMBLY BILL 433 (Beall) Page 2 work and marriage. 3)Requires states to contribute designated amounts of funds, known as Maintenance of Effort (MOE), as a condition of receiving their full allocation of federal TANF funds. 4)Provides that households receiving or authorized to receive aid or services from a program funded by TANF or state MOE dollars may be determined by states to be categorically eligible for food stamp benefits. Current state law 1)Provides for the Medi-Cal program, administered by the State Department of Health Services (after July 1, 2007, the State Department of Health Care Services), under which comprehensive health benefits are provided to low-income families; pregnant women; elderly, blind or disabled persons; as well as to recipients of public assistance. 2)Requires DSS to establish a program of categorical eligibility for food stamps for persons receiving county general relief cash aid. This bill : 1)Makes legislative findings about the danger of poor nutrition for children, the underutilization of food programs, the value of food stamps to local economies, the availability of federal mechanisms to improve participation, and the need to create a name for the food stamp program which better promotes its health and nutrition goals. 2)Requires DSS in consultation with a diverse group of stakeholders to propose a new name for the food stamp program by July 1, 2008, reflecting one or more specified concepts including the fact that food stamps are no longer delivered by stamps. 3)Requires DSS to establish a program of categorical eligibility for food stamp benefits for persons receiving services under the Medi-Cal program when they are receiving or are eligible to receive specified benefits or services funded by the TANF block grant. The bill STAFF ANALYSIS OF ASSEMBLY BILL 433 (Beall) Page 3 does not specify these benefits or services and leaves that determination to DSS. 4)Provides that the program shall include only those households eligible for benefits greater than the minimum federal food stamp benefit. 5)Provides that DSS shall implement the categorical eligibility program only with appropriate federal authorization without loss of federal financial participation, shall be established no later than July 1, 2008, and shall be fully implemented as to new applicants as of January 1, 2009. 6)Requires that after January 1, 2009, counties make reasonable efforts to review existing Medi-Cal cases to identify individuals who could benefit from the program of categorical eligibility. FISCAL IMPACT According to the Assembly Appropriations Committee, the bill would result in administrative costs of up to $20 million annually, ($10 million federal, $7 million state General Fund, and $3 million county funds). Californians could receive almost $200 million in federal food stamp benefits, over $30 million dollars in additional federal funding for free school lunches and breakfasts, and several million dollars in increased federal child welfare services funds. In addition, the Assembly analysis notes that the state could expect to receive additional state revenues due to increased sales tax. By providing these families with food stamps, 45 percent of the money previously used by the family to purchase food would now be used for taxable goods. Based on this assumption, the state could expect to receive up to $5 million in additional sales tax revenue. BACKGROUND AND DISCUSSION This bill seeks to simplify the process and avoid barriers to participation of low-income families and children in the federal food stamp program. It also seeks to update the name of the food stamp program to reflect more accurately STAFF ANALYSIS OF ASSEMBLY BILL 433 (Beall) Page 4 its current function and purpose. Food insecurity in California A 2005 UCLA Center for Health Policy Research study found that food insecurity affects more than 2.9 million California adults in low-income households (incomes less than 200 percent of the federal poverty level). The study was based on the 2003 California Health Interview Survey and also found that food insecurity has increased significantly since the last survey was taken in 2001. Food insecurity is defined as lack of assured access to enough food for an active healthy life through socially acceptable means. The study also found that 10.3 percent of adults in low-income households experienced hunger. California is last among states According to the U.S. Department of Agriculture (USDA), California's rate of participation in the food stamp program is the worst in the country. Only 34 percent of eligible working poor Californians received food stamps in 2004, as compared to the nationwide average of 51percent. In addition, some states had rates has high as 78 percent (Tennessee) and 76 percent (Oregon). California had the lowest rate among all the states. The federal "categorical eligibility" option Federal law gives states options to improve access to nutrition assistance. Families authorized to receive any benefit or service funded by the federal TANF block grant can be deemed "categorically eligible" for food stamps and do not need to make a separate application and meet additional eligibility or paperwork requirements. While categorical eligibility based upon receipt of cash aid was long a feature of federal policy, in 1999 the USDA issued guidance under the 1996 welfare reform law and expanded the scope of the option to include receipt or eligibility for services as well as cash. 7 C.F.R. 273.2(j)(2). In addition, once eligible for food stamps, the federal Child Nutrition and WIC Reauthorization Act of 2004 provides that children are automatically certified to receive free school meals. 42 U.S.C. 1758(b)(2)(C)(i). The bill envisions that Medi-Cal families currently not receiving food stamps would be given access to a TANF-funded service (such as a brochure describing STAFF ANALYSIS OF ASSEMBLY BILL 433 (Beall) Page 5 available job services). This would trigger categorical eligibility for food stamps, without the need to meet certain eligibility conditions which are applied to food stamps but not Medi-Cal, such as the $2,000 assets limit. The amount of benefits for which the household would be eligible would depend on its income, however. The bill only includes within its scope households eligible for benefits equal or greater than the minimum food stamp benefit ($10). Thus, families who may qualify for Medi-Cal but have incomes higher than the food stamp eligibility threshold (130 percent of poverty) would not become categorically eligible for food stamps under the bill. The bill does not specify which service would trigger categorical eligibility and instead leaves this up to DSS to determine. The author's office advises that it is meeting with DSS and discussing various options. Approximately 37 states have used the categorical eligibility option in some manner. According to the author's office, the method proposed in this bill is similar to that adopted in Michigan, which makes any Medicaid case containing a child or pregnant woman eligible for Employment Support Services. Since these services are supported with TANF and MOE funds, the families are categorically eligible for food stamps. The State of Washington uses a similar approach. Pennsylvania links food stamps to TANF-funded child care. Phase-in of categorical eligibility The categorical eligibility provision of AB 433 takes effect on July 1, 2008, with implementation to cover all new applicants by January 1, 2009. Thereafter, counties are required to make "reasonable efforts" to review existing Medi-Cal cases to identify individuals who could benefit from categorical eligibility. Proposed repeal of federal categorical eligibility option In its past three budget proposals, the Bush Administration has sought to eliminate the use of categorical eligibility. The proposal has been repeatedly rejected. The House of Representatives version of the Deficit Reduction Act of 2005 at one time also contained the repeal, but that was dropped in negotiations and was not part of the final bill. While the President has renewed the proposal in his fiscal year 2008 budget, there are few indications that it will STAFF ANALYSIS OF ASSEMBLY BILL 433 (Beall) Page 6 face a different fate this year. Food stamp name change AB 433 requires DSS to rename the food stamp program in consultation with a stakeholder group. As stated in the bill's legislative findings, the program has evolved significantly over the past several decades. Benefits have not been provided as "stamps" since the 1940s, and now are delivered through electronic transfer. There is increasing interest in using the program to promote healthier food purchases to reduce the incidence of obesity. Proponents assert that the continued identification of it as a "welfare" rather than a "food and nutrition" program plays a role in its low participation rate. The food and nutrition service of USDA itself has been soliciting public comments on a name change since 2004. The farm bill currently being debated in Congress proposes the new name as secure supplemental nutrition assistance program (SNAP). While the matter is being considered at the national level, states are able to name their programs in state law (as California does with CalWORKs and Medi-Cal), and this may assist the determination ultimately made by USDA. Prior legislation The categorical eligibility option was first contained in the original version of AB 696 (Chu), which passed the Assembly with that provision. That issue was deleted in the Senate Appropriations Committee, and the bill, in final form containing only a repeal of the fingerimaging requirement, was vetoed by the governor. Last year, categorical eligibility was contained in AB 2205 (Evans). The bill passed the Legislature and was vetoed by the governor. The veto message stated, "While I support efforts to increase participation in the Food Stamps program through improved outreach efforts and more streamlined administrative requirements ? [AB 2205] would expand eligibility for food stamps increasing state costs by tens of millions of dollars." Assembly votes Floor 47 - 32 Appropriations12 - 5 STAFF ANALYSIS OF ASSEMBLY BILL 433 (Beall) Page 7 Human Services 5 - 2 POSITIONS Support: California Food Policy Advocates (sponsor) California Catholic Conference California Commission on the Status of Women Western Center on Law and Poverty Oppose: None received. -- END --