BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
718 (Leno)
Hearing Date: 04/27/2009 Amended: As introduced
Consultant: Jacqueline Wong-HernandezPolicy Vote: Human
Services 3-1
_________________________________________________________________
____
BILL SUMMARY: SB 718 repeals the current requirement that all
adult members of a household applying for or receiving food
stamps be fingerprinted as a condition of eligibility. This bill
also maintains the fingerprinting requirement for adults
applying
for any type of cash aid, such as CalWORKs or general relief,
and requires the Department of Social Services and the Office of
Systems Integration to maintain the finger imaging system.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Eliminate fingerprinting (2,500)
(5,000) (5,000) General
requirement (Admin savings)
Increase in food stamp
Program costs (Admin cost) 5,250 10,500
10,500 General
_________________________________________________________________
____
STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
This bill is intended to remove a deterrent to participation in
the food stamp program. California has the lowest food stamp
participation rate in the nation with significantly less than 40
percent of eligible families using the benefit. California is
one of three states that requires fingerprinting for foods
stamp-only recipients.
Research by the Urban Institute in 2007 found requiring
fingerprinting of all adults in eligible families prevented four
or five percent of eligible working families from receiving this
federal aid. Requiring finger prints of food stamp applicants
was intended to reduce fraud in the program and particularly the
sale of stamps for cash by beneficiaries.
Food stamps are now provided through Electronic Benefit Transfer
(EBT) cards, which function much like debit cards, and amounts
are electronically deposited into "accounts" monthly, which make
resale of the benefit unlikely. Similarly, the federal program
now employs the IVES identification system, a sophisticated and
effective monitor for program eligibility. While it is difficult
to predict the additional expenses that could result if the
incidences of fraud were to increase, there are clear
administrative costs to the state incurred by an increase of
food stamps recipients.
Food stamp benefits are federally funded, but the administration
of the program is split between the federal government (50%),
the state (35%) and the counties (15%). Assuming a 5% increase
in food stamp usage, there would be a $10.5 million GF
Page 2
SB 718 (Leno)
administrative cost associated with the change. There are some
mitigating savings, but not enough to fully offset the increase.
Elimination of the finger imaging would save approximately $5
million in administrative costs.
A 5% increase in food stamp participation would also draw down
$125,000,000 in federal food benefits. Children in eligible
families would also automatically become eligible for
approximately $20,000,000 FF in school based breakfasts and
lunches.
To the extent that this bill increases food stamp participation,
the state could expect to receive additional state GF revenues
due to increased sales tax. Studies show that low income
families spend approximately 45 percent of their income on
taxable goods. By providing these families with food stamps, 45
percent of the money previously used by
the family to purchase food would likely be used for taxable
goods. Based on this assumption, if there is a 5% increase in
the food stamp caseload the state could expect to receive up to
$3 million in additional sales tax revenue.
Even presuming the administrative savings of $5,000,000 and an
increased sales tax revenue of $3,000,000, a 5% increase in food
stamp beneficiaries would have a net increase of $2,500,000 GF.
This bill is identical to AB 1382 (Leno, 2007), which was vetoed
by the Governor, with the following message:
I am returning Assembly Bill 1382 without my signature, as it
provides an
opportunity for increased fraud and abuse without guaranteeing
increased
participation in the program as intended by the legislation.
While I support efforts to increase participation in the food
stamp program,
including offering foods stamps to families leaving welfare to
work and
improving outreach and simplifying the application process, I
cannot support
this bill. The Statewide Fingerprint Imaging System (SFIS)
prevents fraud by
discouraging applicants from illegally obtaining duplicate
benefits. Our first
responsibility to taxpayers is to take necessary steps to
prevent fraud and
abuse in public programs, which is why I cannot support this
bills elimination
of the SFIS.