BILL ANALYSIS                                                                                                                                                                                                    Ó






                                  SENATE HUMAN
                               SERVICES COMMITTEE
                            Senator Carol Liu, Chair


          BILL NO:       AB 6                                        
          A
          AUTHOR:        Fuentes                                     
          B
          VERSION:       April 12, 2011
          HEARING DATE:  June 28, 2011                               
          6
          FISCAL:        Appropriations                              
                                                                     
          CONSULTANT:                                                
          Brown
                                        
                                     SUBJECT
                                         
                             CalWORKs and CalFresh

                                     SUMMARY  

          Streamlines a number of administrative functions within the 
          California Work Opportunity and Responsibility to Kids 
          (CalWORKs) and the CalFresh (formerly known as the food 
          stamp program) programs, including moving participants from 
          quarterly to semiannual reporting and discontinuing the 
          fingerprinting requirement for recipients.  It also creates 
          a new "Heat and Eat" program that provides energy 
          assistance benefits to CalFresh participants.
           
                                    ABSTRACT  

           Current law
              1)   Establishes the California Work Opportunity and 
               Responsibility to Kids (CalWORKs) program, which 
               requires each county to provide cash assistance and 
               services to needy families using federal Temporary 
               Assistance to Needy Families (TANF) block grants, as 
               well as state and county funds.

             2)   Establishes the CalFresh program to administer 
               California's allocation of federal funds under the 
               Supplemental Nutrition Assistance Program (SNAP), 
               formerly called food stamps.  Counties distribute 
                                                         Continued---



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               CalFresh benefits to eligible participants. 

             3)   Requires that the Department of Social Services 
               (DSS) and the Health and Welfare Data Center maintain 
               a statewide fingerprint imaging system to use as a 
               part of the application process under the CalWORKs and 
               CalFresh programs and requires applicants, as a 
               condition of eligibility, to submit their 
               fingerprints.

             4)   Requires counties to re-determine eligibility for 
               CalWORKs benefits and grant amounts on a quarterly 
               basis and to determine prospectively the grant amount 
               that a recipient is entitled to receive for each month 
               of the quarterly reporting period.

             5)   Directs DSS to use the CalWORKs quarterly reporting 
               system in its administration of CalFresh.

             6)   Requires that participants of both programs submit 
               quarterly reports in order to maintain their 
               eligibility.

             7)   Establishes that DSS is responsible for 
               administering CalFresh benefits and that the 
               Department of Community Services and Development is 
               responsible for administering the federal Low-Income 
               Energy Assistance Program block grant.

           This bill
              1)   Revises reporting requirements from quarterly to 
               semiannually for participants in the CalWORKs and 
               CalFresh programs, makes related adjustments in 
               language, and requires counties to transition 
               participants into the semiannual reporting system no 
               later than January 1, 2013.

             2)   Directs DSS, in consultation with the California 
               Welfare Directors Association, to report - in April 
               2013 to policy and fiscal committees of the 
               Legislature -- the effects of implementing semiannual 
               reporting requirements.

             3)   Deletes the requirement that CalWORKs and CalFresh 
               applicants provide fingerprints.




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             4)   Creates a "Heat and Eat" program jointly with the 
               DSS and the Department of Community Services and 
               Development, which automatically enrolls CalFresh 
               recipients in a Home Energy Assistance Program, funded 
               through the federal Low-Income Home Energy Assistance 
               Program block grant, and requires the program be 
               implemented by January 1, 2013.

             5)   Directs DSS to use the full standard utility 
               allowance in calculating CalFresh benefits, regardless 
               of whether the CalFresh participant is redeeming his 
               or her Home Energy Assistance Program benefit.

             6)   Codifies California's current income reporting 
               threshold requirements for both CalWORKs and CalFresh 
               participants.

                                  FISCAL IMPACT 

          Per the Assembly Appropriations Committee, first year costs 
          for the three program changes required by this bill would 
          be approximately $11 million ($8 million TANF/General 
          Fund).  By the second year, the remaining up-front 
          automation and training costs for the semiannual reporting 
          would be fully offset by one half year of administrative 
          savings for a net savings of $17 million ($16 million 
          TANF/General Fund).  The committee estimated that ongoing 
          savings and workload relief for counties would be 
          approximately $77 million annually ($51 million 
          TANF/General Fund).

          The committee also projects that these changes would result 
          in additional benefits to the state, including $850 million 
          in federal Supplemental Nutritional Assistance Program 
          (CalFresh) funding and $23 million in additional sales tax 
          revenue for the General Fund.
          Approximately $45 million dollars in additional federal 
          funding could come to the state to provide these children 
          with free school lunches and breakfasts.  Finally, several 
          million dollars in increased federal child welfare services 
          funds could be received by the state.

                            BACKGROUND AND DISCUSSION  





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          Author's statement
          The author notes that in difficult budget times, 
          opportunities to improve nutrition for low-income 
          Californians are rare: this bill will bring more federal 
          funds to the state while also reducing state fiscal 
          pressures.

          Existing law
          Federal law requires states to implement a system to 
          disburse federal benefits through the Temporary Assistance 
          to Needy Families program and the Supplemental Nutritional 
          Assistance Program block grants.  In California those 
          programs are implemented through the CalWORKs and CalFresh 
          programs.

          Federal law requires California to review recipient 
          eligibility and grant amounts.  State law requires 
          quarterly reviews of eligibility and prospective budgeting. 
           State law also specifies that counties may implement 
          staggered reporting cycles, establishes criteria for a 
          complete report, and defines steps to be taken when a 
          recipient fails to submit a complete report.

          Federal law directs states to establish a system to ensure 
          that no individual receives supplemental nutrition 
          assistance benefits more than once a month, but federal law 
          does not require recipients to be fingerprinted.  
          California law requires fingerprints be submitted as a 
          condition of the application.

          California participation is low
          Half of eligible Californians receive CalFresh, according 
          to reports by the United States Department of Agriculture.  
          The state ranked second to last in 2008 among states in use 
          of benefits by eligible residents, and California ranked 
          last in use of benefits among eligible working poor 
          families, according to the USDA.  USDA lists California 
          among traditionally poor performing states.  California's 
          low participation has been a concern of the federal 
          government, which provides 100 percent of the funding for 
          CalFresh benefits. 

          Fingerprinting and USDA concerns
          California is one of three states and one city that require 
          fingerprinting as a condition of eligibility.  By 




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          fingerprinting applicants, counties are able to determine 
          whether the same applicant receives duplicate benefits in 
          another county or under another name.

          A 2003 Bureau of State Audits report, Statewide Fingerprint 
          Imaging System:
          The State Must Weigh Factors Other Than Need and 
          Cost-Effectiveness When
          Determining Future Funding for the System, concluded that 
          the state "was remiss" in implementing the system before 
          determining the extent of duplicate aid fraud.  It noted 
          that other computer checks are in place to ensure that 
          duplication and other forms of fraud are identified.  It 
          said that in 1998, the USDA had expressed concern about the 
          ability of DSS to identify the extent of duplicate-aid 
          fraud throughout the state. 
               The primary benefits that the State derives from 
               continuing to use SFIS are the proven effectiveness 
               of fingerprint imaging technology to identify 
               duplicate fingerprints and its ability to identify 
               applicants who may travel from county to county 
               seeking duplicate aid.  On the other hand, most of 
               the matches that SFIS identified have turned out to 
               be administrative errors made by county staff, and 
               the level of detected duplicate-aid fraud has been 
               small.

          The USDA notes that states with finger imaging requirements 
          have an average 7 percent lower participation rate when 
          compared to similar states, and USDA is concerned enough 
          about the deterrent factor that it has prohibited other 
          states from requiring applicants to be fingerprinted.

          In a May 7, 2010 letter to the director of DSS, the 
          undersecretary of USDA's Food, Nutrition and Consumer 
          services branch emphasized the agency's serious concerns 
          that finger imaging requirements may be a barrier to 
          participation and encouraged DSS to "actively consider" 
          more cost-effective alternatives to finger imaging.  In a 
          letter to the author sent in May of 2011, the USDA Under 
          Secretary noted, "There are serious concerns that finger 
          imaging requirements may be a barrier to participation 
          among many of the hard to reach eligible populations who 
          wish to enroll in the program?  We must ensure that we are 
          not creating unnecessary barriers in the application 




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          process."  

          The counties also use a computerized Income and Eligibility 
          Verification System currently to detect other types of 
          fraud.  This system also is employed by the counties for 
          use in tracking fraud in their general assistance programs.
          
          Semiannual reporting
          California is the only state that continues to require 
          quarterly reporting; 47 other states, Guam, the U.S. Virgin 
          Islands and the District of Columbia have moved to 
          semiannual reporting.  For two years, the USDA has 
          requested that California move to a simplified reporting 
          system, citing concerns with low participation and a belief 
          that streamlining the reporting process would result in 
          better access for participants and improved program 
          administration and accuracy.

          USDA findings from other states indicate moving to 
          semiannual reporting would limit the number of changes that 
          need to be reported by CalFresh participants, thus 
          improving the state's reporting error rate.  Moving to 
          semiannual reporting should also measurably reduce county 
          administrative workload and provide greater access to 
          CalFresh because there would be fewer terminations due to 
          incomplete recertifications. 

          In September 2009, the USDA rejected a DSS request to 
          extend the current quarterly reporting waiver for an 
          additional four years.  Instead, USDA granted a six-month 
          extension to develop a plan for converting to a simplified 
          reporting system.  Upon submission of the plan in February 
          2010, DSS received an additional 12-month extension of the 
          current waiver during which time the state was supposed to 
          begin implementation. This bill is a necessary part of that 
          plan.  In March, the waiver extension expired, and DSS 
          requested a 38-month extension in order to implement 
          semiannual reporting.  The USDA refused this request, 
          granting a six-month extension - to September 30, 2011 - 
          and give DSS time to obtain necessary legislative authority 
          and to take other steps to implement semiannual reporting.
          This bill seeks to keep CalFresh and CalWORKs aligned by 
          moving CalWORKs recipients to a semiannual reporting system 
          as well.  DSS estimates approximately 40 percent of 
          CalFresh recipients also receive CalWORKs, and reporting 




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          for the two programs is currently done jointly.  Separating 
          the two functions could create additional workload, 
          inefficiency, and confusion among participants.

          The bill codifies California's current income reporting 
          threshold requirements for both CalWORKs and CalFresh 
          participants.

          Economic impact of CalFresh
          CalFresh benefits have the highest economic multiplier 
          effect of all government programs or fiscal policy tools 
          that stimulate the economy, according to Moody's Investor 
          Services, an independent financial services research firm.  
          Moody's projects that for every $1 spent from CalFresh 
          benefits, $1.74 is generated in economic activity. 
          Increased CalFresh participation would generate additional 
          General Fund revenues due to increased taxable purchases by 
          recipients.
          
          Heat and Eat
          Establishment of a Home Energy Assistance Program, funded 
          through existing federal block grant allocations from the 
          Low-Income Home Energy Assistance Program, would result in 
          additional utility benefits for needy families.  Enrollees 
          in the CalFresh program automatically would be enrolled 
          also in the energy assistance program. 

          This automatic enrollment would allow CalFresh applicants 
          to claim the standard utility allowance, simplifying 
          paperwork by not requiring applicants to submit a utility 
          bill for use in calculating benefits.  Many CalFresh 
          recipients lose benefits because they do not submit any 
          utility verification to use in benefit calculation.  Use of 
          the standard utility allowance would increase the amount of 
          federal CalFresh benefits to many participants.

          Arguments for
          The California Food Policy Advocates contend that 
          increasing participation levels to near 100 percent of 
          eligible households, as other states have done, could mean 
          an additional $4.9 billion in federal benefits for needy 
          Californians, with the potential to benefit all 
          Californians through the more than $8.7 billion in 
          associated economic activity.  Supporters also believe the 
          bill will lead to increased senior enrollment in CalFresh:  




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          research shows that CalFresh is underutilized among 
          seniors, and that higher participation in the program would 
          result in better nutrition for older Californians.

          Arguments against
          Los Angeles County opposes the bill unless amended, arguing 
          that elimination of the finger imaging system would remove 
          an important anti-fraud tool which increases public 
          confidence in the integrity of the welfare system and costs 
          37 cents per $100 of CalWORKs costs.  Maintaining the 
          fingerprint system is also critical, says the county, to 
          its cross check of General Assistance applicants against 
          CalWORKs and CalFresh cases.  The county is, however, 
          amenable to dropping the imaging requirement for 
          CalFresh-only cases, and does support the move to 
          semiannual reporting.

          

          Related legislation
          Attempts to establish semiannual reporting requirements and 
          eliminate the finger imaging requirement have appeared in 
          the budget and in various bills, including:
          
          AB 1642 (Beall) 2010 - held in Assembly Appropriations
          AB 1057(Beall) 2009 - held in Assembly Appropriations
          AB 2844 (Laird) 2008 - vetoed
          AB 1382 (Leno) 2007 - vetoed
          AB 3029 (Laird) 2006 - died at desk
          AB 696 (Chu) 2005 - vetoed
          AB 2013 (Steinberg/Lieber) 2004 - died in the Senate 
          without a hearing
          
          Assembly votes
          Floor               49 - 27
          Appropriations      11 - 6
          Human Services   4 - 2 


                                    POSITIONS  

          Support:       California Food Policy Advocates (sponsor)
                         Alameda County Community Food Bank
                         California Catholic Conference, Inc.
                         California Chamber of Commerce




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                         California Communities United Institute
                         California Farm Bureau Federation
                         California Grocers Association
                         California Hunger Action Coalition
                         California Immigrant Policy Center           
                                                            
                         California Pan-Ethnic Health Network
                         California Restaurant Association
                         California Retailers Association
                         City and County of San Francisco
                         City of Los Angeles
                         County Welfare Directors Association
                         Having Our Say Coalition
                         National Association of Social Workers, 
          California Chapter                                     San 
          Diego Food Bank
                         San Francisco Food Bank
                         Silicon Valley Community Foundation 
                         Western Center on Law and Poverty
                         Yolo County Board of Supervisors
                         1 individual

          Oppose:   California District Attorneys Association
                         Los Angeles County Board of Supervisors 
                    (unless amended)


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