BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 6 (Fuentes)
Hearing Date: 08/25/2011 Amended: 04/12/2011
Consultant: Jolie Onodera Policy Vote: Human Services 4-0
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BILL SUMMARY: AB 6 changes policies related to the
administration of the CalWORKs and CalFresh programs.
Specifically, this bill:
1) Requires counties to convert from a quarterly to a
semi-annual reporting (SAR) system for the CalWORKs and
CalFresh programs no later than January 1, 2013;
2) Eliminates the Statewide Fingerprint Imaging System
(SFIS) requirement for CalWORKs and CalFresh;
3) Creates a "Heat and Eat" program jointly with the
Department of Social Services (DSS) and the Department of
Community Services Development (CSD) by January 1, 2013.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Conversion to SAR*
Automation $19,000 ($14,000 TANF/GF)
one-timeFed/TANF/GF
Limited-term staffing$2,700 ($700 GF) over four years Fed/General
CalWORKs grants $0 ($375) $12,900 TANF/GF
CFAP grants $0 $650 $2,000 General
Potential admin savings** $0 ($8,700)
($33,100)General
Elimination of SFIS - CalFresh
Automation $1,600 $3,200 $3,200 TANF/GF
CalFresh administration$1,600 $6,300 $6,000 General
CFAP grants $400 $1,500 $3,000 General
"Heat and Eat" Program
CSD programming $500 to $1,000 one-time, $120
ongoingGeneral
HEAP benefit Unknown; up to $3,000 annually Federal
CalFresh admin $0 $0
$500General
CFAP grants $0 $1,200 $2,800 General
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Increased CalFresh benefits Potentially in excess of $775,000
annually Federal
Total annual cost $4,700 $26,900
$30,800TANF/GF
Admin savings to fund SAR* $0 ($8,700)
($15,100) TANF/GF
Potential tax revenue ($675) ($7,100) ($15,800) General
*Conversion to SAR will preclude the State from incurring
one-time upfront costs to implement federal pure quarterly
reporting of $5 million and ongoing costs of $13 million General
Fund annually.
**Savings may be taken in the Budget Act up to the amount
necessary to fund the net General Fund costs of the SAR
provisions. Additional savings in excess of this amount to be
based on data developed in consultation with the CWDA.
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
This bill would require the DSS to replace the current quarterly
reporting system for the CalWORKs and CalFresh programs with a
semi-annual reporting system (SAR) to be operative July 1, 2012,
and to be implemented no later than January 1, 2013.
One-time automation costs of approximately $19 million ($14
million TANF/GF) will be required to implement the conversion to
SAR. In addition, DSS indicates limited-term staffing at a cost
of $2.7 million ($0.7 million GF) will be required to in order
to complete the work necessary. DSS notes, however, that even if
additional staff is secured upon enactment of the bill, the DSS
will likely be unable to meet the implementation timeframes
specified in the bill.
This bill provides for an income reporting threshold (IRT) for
CalWORKs recipients to be the lesser of the amount likely to
render the recipient ineligible for CalFresh or CalWORKs
benefits. As this IRT is nearly equivalent to the existing
CalWORKs exit limit (approximately $1,388 for a family unit of
three), recipients with increased income that remain below the
IRT could potentially receive a larger grant for an extended
period of time under SAR due to reporting every six months as
opposed to every three months as currently required under
quarterly reporting. Increased CalWORKs grant costs are
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estimated for cases that would otherwise have been ineligible
due to noncompliant reporting, excess unearned income, other
discontinuance factors, and delayed reporting of increased
earnings due to the extended reporting period under SAR.
Overall, these factors are estimated to result in increased
CalWORKs grant costs of nearly $9 million in 2012-13 and $44
million annually ongoing. Implementing a lower IRT would have
the effect of reducing the magnitude of the grant impact by
requiring recipients to report changes in income at a lower
threshold, thereby reducing the length of time on aid at a
higher grant level. The conversion to SAR will have a similar
effect on CalFresh and California Food Assistance Program (CFAP)
grants, and is estimated to result in increased CalFresh
benefits of $310 million and CFAP benefits of $2.7 million GF
annually.
By reducing the reporting requirement from four periods to two
periods will result in a significant reduction in county
administrative workload. The estimated CalWORKs and CalFresh
administrative savings associated with the conversion from
quarterly reporting to SAR is $34.6 million ($22.5 million
TANF/GF) in 2012-13 and $70.5 million ($45.5 million TANF/GF)
annually thereafter. Staff notes this bill provides that no
savings determined by the DSS shall be assumed until actual
savings related to the change to SAR are realized based on data
developed in consultation with the CWDA. The bill requires the
DSS, in consultation with the CWDA, to report to the relevant
policy and fiscal committees of the Legislature in April 2013
regarding the effects upon the program efficiency of
implementation of SAR. The report is to be based on data
collected by CWDA and select counties, and the DSS and CWDA are
to determine the data collection needs required to assess the
effects of SAR. As a result, the amount and timing of savings to
be realized is unknown at this time.
The USDA Food and Nutrition Service (FNS) approved DSS' waiver
request for six months through September 30, 2011, to continue
to administer CalFresh using a quarterly reporting/prospective
budgeting system. In the absence of a demonstrated commitment
towards simplified reporting, however, the State will be
required to convert to pure quarterly reporting for the CalFresh
program. DSS estimates that conversion to SAR will preclude the
State from incurring one-time upfront costs to implement federal
pure quarterly reporting of $5 million GF and ongoing
administrative costs of $13 million GF annually.
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This bill eliminates the SFIS requirements for applicants and
recipients of the CalWORKs and CalFresh programs. One-time
decommissioning costs of $9 million ($5.6 million GF) will be
incurred to dismantle the finger imaging system statewide.
Subsequently, annual costs of $12 million ($7.4 million TANF/GF)
for operation of the system would no longer be incurred.
As a result of the elimination of SFIS effective January 2012, a
gradual increase in CalWORKs, CalFresh, and CFAP caseloads is
anticipated due to the absence of the deterrent effect on
potential duplicate aid fraud. Utilizing data from an analysis
of Los Angeles County's Automated Fingerprint Imaging system,
DSS estimates increased grant and administrative costs of $9.3
million in 2011-12, $60.7 million in 2012-13, and $74 million
TANF/GF annually ongoing across all programs. Further, based on
a 2007 Urban Institute Study on the effects of state policies
upon SNAP participation, the impact of biometric technology was
reported to deter SNAP participation between one and 4.3 percent
across various populations. Assuming a three percent increase in
the CalFresh caseload would result in increased federal benefits
of $195 million annually.
This bill also creates a "Heat and Eat" program that requires
the DSS in conjunction with the CSD to design, implement, and
maintain a utility assistance initiative under which DSS would
be required to grant applicants and recipients of CalFresh
benefits a nominal Low-Income Home Energy Assistance Program
(LIHEAP) benefit. As the intent of the new program is to provide
this benefit to eligible CalFresh recipients, staff recommends
an amendment to delete or clarify the reference to applicants,
as inclusion of all applicants to CalFresh would greatly expand
the eligible population and program costs.
Providing a nominal LIHEAP benefit will allow households to
automatically claim the standard utility allowance (SUA) under
CalFresh/CFAP eligibility, potentially resulting in increased
benefits to those who do not already claim the SUA and/or
receive the maximum CalFresh benefit. To the extent there is
reduced workload associated with alleviating the need to verify
eligibility for the SUA, there could potentially be county
administrative savings associated with this proposal.
The impact to Electronic Benefit Transfer (EBT) costs associated
with processing the LIHEAP benefit for existing cases that
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currently receive CalFresh is estimated to be absorbable.
However, the CSD has indicated it would incur significant costs
of up to $1 million GF in the first year of implementation to
create a new reporting infrastructure between CSD and DSS. The
LIHEAP benefit would be credited directly to the clients' EBT
cards, and DSS would be required to send CSD data on how many
recipients expended the LIHEAP benefit. CSD also indicates that
in the absence of a LIHEAP benefit amount specified in the bill,
the nominal benefit could increase significantly, potentially up
to $3 million from the LIHEAP grant in the first year, with
additional growth in future years.
Up to five percent of the federal LIHEAP grant may be withheld
for administration, however, CSD already meets this expenditure
threshold under its current administrative activities. As a
result, ongoing annual costs to CSD associated with maintenance
and operation of the system of $120,000 would be charged against
the General Fund.
Creation of the Heat and Eat program is estimated to result in a
$62 increase in CalFresh benefits for approximately 300,000
current households who may benefit from the SUA and are not
already receiving the maximum benefit. Additional households
will also become newly eligible for CalFresh as a result the
ability to claim the SUA. In total, increased CalFresh benefits
of $275 million annually ongoing are estimated as a result of
the implementation of this new program.
The three major provisions of this bill would result in a
significant increase in CalFresh benefits, potentially in excess
of $775 million annually to the State. Additional federal
CalFresh benefits received will likely result in increased sales
tax revenue, resulting in an economic benefit potentially in
excess of $17 million annually.
To the extent the provisions of this bill result in additional
families accessing CalFresh benefits could also have the effect
of additional federal Promoting Safe and Stable Families (PSSF)
grant funds to the state for child welfare services program
efforts to promote stability and permanency for at-risk children
within families. As funding is based on the number of children
receiving SNAP benefits as a proportion of the nationwide total,
increased participation in CalFresh could result in an increase
over the $34.5 million in federal PSSF grant funds currently
received.
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Prior Legislation. Several bills establishing semiannual
reporting and elimination of the finger imaging requirement have
been proposed in the past. AB 1642 (Beall) 2010 and AB 1057
(Beall) 2009 were both held in the Assembly Committee on
Appropriations. AB 2844 (Laird) 2008 and AB 1382 (Leno) 2007
were both vetoed by the Governor with the following messages:
I am returning Assembly Bill 2844 without my signature. This
bill would require significant state General Fund expenditures
when our state's fiscal situation remains uncertain. Due to the
immediate cost of implementing the provisions of this bill and
our budget crisis, I am unable to support this bill.
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. For these reasons, I am returning AB 1382 without my
signature.
The author's proposed amendments would do the following:
Retain fingerprint imaging for the CalWORKs program,
thereby removing potential increased CalWORKs grant costs
of up to $65 million annually;
Lower the income reporting threshold under SAR to 55
percent of the federal poverty level for a family of three,
thereby substantially reducing increased ongoing CalWORKs
grant costs;
Specify that administrative savings that may be
reflected in the budget due to the implementation of SAR
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shall not exceed the amount necessary to fund the net
General Fund costs of the SAR provisions of the bill.
Possible additional savings in excess of this amount may
only be reflected to the extent that they are based on
actual savings related to the change to SAR calculated
based on data developed in consultation with CWDA;
Remove the provision of the bill allowing counties to
implement SAR on a staggered basis, and would extend the
operative date to April 1, 2013, with full implementation
no later than October 1, 2013; and,
Make various technical changes.
The substantial amendments will result in net costs of
approximately $4 million General Fund in 2011-12. Due to the
delayed implementation of SAR, a reduced level of administrative
savings and economic benefit from the receipt of federal
CalFresh benefits will be realized in the second year, resulting
in a net cost of approximately $11 million 2012-13. As all
counties convert to SAR in 2013-14, additional administrative
savings and sales tax revenues will be realized to offset the
$30.8 million in General Fund costs.
Once fully implemented statewide, ongoing costs of $35.8 million
would be offset by $20.1 million in SAR administrative savings
and increased tax revenues of $17.5 million (assuming receipt of
federal benefits in excess of $775 million per year).