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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