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---



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            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  




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            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  




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          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  




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          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  




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          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




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          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.


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