BILL ANALYSIS Ó
AB 6
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CONCURRENCE IN SENATE AMENDMENTS
AB 6 (Fuentes)
As Amended August 30, 2011
Majority vote
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|ASSEMBLY: |49-27|(June 1, 2011) |SENATE: |26-11|(August 31, |
| | | | | |2011) |
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Original Committee Reference: HUM. S.
SUMMARY : Streamlines a number of issues related to the
administration of CalFresh (formerly known as the Food Stamp
Program) and California Work Opportunity and Responsibility to
Kids program (CalWORKs) and improves nutritional outcomes.
Specifically, this bill :
1)Requires counties to convert from a quarterly to a semi-annual
reporting system (SAR) for CalWORKs and CalFresh no later than
October 1, 2013, as specified.
2)Eliminates the Statewide Finger Imaging System (SFIS) for
CalFresh participants.
3)Requires the Department of Social Services (DSS) and the
Department of Community Services and Development (CSD) to
design, implement and maintain a "Heat and Eat" program by
January 1, 2013, as specified.
The Senate amendments:
1)Eliminate the SFIS eligibility requirement for CalFresh
participants but maintains it for CalWORKs recipients.
2)Specify the allocation of the administrative savings in
regards to how the SAR conversion will be funded.
3)Provide timelines to give counties flexibility for
implementing SAR. All counties must implement SAR by October
1, 2013.
4)Require that the Income Reporting Threshold (IRT) for
recipients of CalWORKs to be 55% of the monthly income for a
family of three at the federal poverty level, plus the amount
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of income last used to calculate the recipient's monthly
benefits, as specified.
5)Outline implementation details for the Heat and Eat program.
6)Make various program name updates throughout the bill's
provisions from the Food Stamp Program to CalFresh or
Supplemental Nutrition Assistance Program, where appropriate.
7)Make technical changes.
AS PASSED BY THE ASSEMBLY, this bill eliminated the SFIS
eligibility requirement for both CalFresh and CalWORKs, and did
not contain an IRT.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
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
ongoing General
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.
COMMENTS :
Rationale . The current complexity of the CalFresh program is
hurting participation. United States Department of Agriculture
(USDA) studies show that only 50% of eligible Californians
receive CalFresh benefits. Among working families, California
is last in the nation, reaching less than one-third (31%) of the
eligible families. This bill is designed to improve
participation and create efficiencies in the program by
continuing the practice of aligning eligibility requirements for
both the CalWORKs and CalFresh programs.
Federal denial of CalFresh quarterly reporting waiver . The
current federal waiver which allows California to align the
reporting requirements for CalWORKs and CalFresh cases expired
at the end of March this year. The federal government over the
last two years has demanded that California move their CalFresh
program to the SAR schedule contained in this bill. Absent that
change, the two programs will be separated and CalWORKs will
maintain the current modified quarterly reporting requirements
(with a requirement to report certain changes in family income)
and CalFresh recipients will revert to a straight quarterly
reporting system (where changes in income are not reported
during the interim months). This bifurcation means that
families who receive both benefits, essentially all CalWORKs
recipients, will need to navigate a system that requires them to
report changes in their circumstances one way for CalWORKs and a
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different way for CalFresh. This would create significant
confusion for both the recipients and the eligibility workers
and would likely result in an increase in the state's CalFresh
error rate, which could bring with it financial penalties for
the state.
Since the implementation of the CalWORKs program in 1998, the
state has worked consistently to align the requirements of the
two programs, both for administrative ease for the eligibility
worker and to provide simplification for recipients who are
eligible for multiple programs. Failing to pass this
legislation that allows the state to move both programs to a SAR
schedule, the state will need to begin bifurcating the programs
and reversing the policy direction of the last 13 years.
In the most recent letter to the administration, the USDA has
allowed the state to extend their waiver until September 30,
2011, in order to give the Legislature enough time to pass this
bill and for the governor to sign the bill.
Why the old DSS SFIS "savings" estimate does not hold up . For
many years DSS has defended the $15 million annual state
investment in SFIS by suggesting the system "saved" over $60
million in fraudulent welfare payments. This estimate is based
on a Los Angeles county study of their General Relief program.
Since that time, both the State Auditor and the USDA have
questioned the validity of that original study. In their audit
of the DSS' finger imaging system, the State Auditor noted:
In its eagerness to implement SFIS, Social Services
based its estimates of the savings that SFIS would
produce on an evaluation of Los Angeles County's
fingerprint imaging system, rather than conducting its
own statewide study. We have concerns that the
methods Los Angeles County used to develop its savings
estimate do not allow for the results to be
extrapolated statewide. Further, Social Services' use
of this data assumes that conditions in Los Angeles
County hold true in other counties. Similar concerns
were expressed by the United States Department of
Agriculture as early as 1998.
Beyond the flawed nature of the initial study, it is important
to note that the nation reformed welfare in the time since the
study was conducted. Since 1998, under CalWORKs, recipients are
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required to participate in work activities as a condition of
receiving a CalWORKs grant. Because of these requirements, it
becomes difficult for a person to commit multi-county duplicate
aid fraud because they would need to work or participate twice
as many hours to meet the requirements for each grant. In
addition, EBT cards have replaced paper stamps in the CalFresh
program and paper checks in CalWORKs therefore it makes
duplicate aid fraud less lucrative for people who could
previously sell or trade their food stamps.
Finally, SFIS is not the only fraud protection system in place
in both programs. With the advance of technology, the state has
been able to develop a myriad of automated matching programs
that detect attempted fraud. There are many data matches in the
program which allow counties to check the information provided
by applicants. Among others, CalWORKs, CalFresh and MediCal
data is double-checked against data from the Franchise Tax
Board, Social Security Administration, Prison and Death Records,
Employment Development, records already in the Medical
Eligibility Determination System (MEDS), and an Income and
Eligibility Verification System (IEVs). Therefore, the
integrity of the programs remains protected even if the finger
imaging requirement is removed.
USDA opinion . In a letter provided to former Assemblymember
John Laird, on a similar bill dealing with SAR (AB 2844 (Laird)
of 2008), the USDA strongly encouraged the state to move to a
SAR process. According to USDA findings from other states, SAR
should have numerous positive impacts for California, such as:
1)Improving the state's food stamps error rate by limiting the
number of changes that would need to be reported by food
stamps participants.
2)Significantly reducing county administrative workload due to
less frequent certifications and interviews, fewer
reapplications following closures, and fewer periodic report
forms to process.
3)Providing greater access to food stamps for eligible families
because there would be fewer terminations due to incomplete
recertifications, less frequent recertification reviews, and
more time to provide case managements and other services
designed to assist clients.
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4)Increasing the number of families that receive food stamps
based on the study of four states that saw an increase in
participation once they adopted semi-annual reporting. The
USDA also notes that there is no known correlation between
simplified reporting and an increase in fraud.
Quarterly reporting grant impacts . With the change from a
monthly reporting system to quarterly reporting for CalWORKs and
Food Stamps, the prior administration estimated that there would
be a significant cost associated with families continuing to
receive grants for two months for which they are no longer
entitled. However, once the system was implemented, the actual
data on grant payments showed that this concern was unfounded.
Given the state's experience with the move from monthly to
quarterly reporting, there is no evidence to suggest that a move
from quarterly to SAR would have a significant cost impact on
CalWORKs grants. While the fiscal section of this analysis
acknowledges DSS' assumption that there will be a grant cost in
the CalWORKs program, it may be that those costs are not borne
out once SAR is implemented.
USDA study . The USDA recently released a study that concluded
that fingerprinting is a statistically significant barrier for
individuals who may otherwise apply for food stamps.
Urban Institute study . In March 2007, the Urban Institute
released a study examining a total of 25 specific policies
thought to affect food stamp program participation. The
Institute found strong evidence demonstrating the use of
fingerprinting reduces willingness to participate in the food
stamps program.
School meals program . School meal programs are also
underutilized. Only half of income eligible students receive
lunch at school, and 18% receive school breakfasts. Some
low-income children with incomes between 133% and 185% of the
federal poverty level, currently ineligible for food stamps, may
not receive school meals because their families cannot afford
the $0.40 required for a reduced price lunch and $0.30 for
breakfast. The children in new food stamps households would be
eligible for free school meals.
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Additional federal Child Welfare Services funds . The federal
government awards funding to states through the Promoting Safe
and Stable Families (PSSF) program that can be used in the Child
Welfare Services program for efforts to reduce the incidences of
child abuse and neglect, and to promote stability and permanency
for at-risk children within families. The federal government
sets a capped amount for funding and then awards those funds to
states and territories based upon the number of children in each
state who are receiving food stamps. Despite serving over 25%
of the national child welfare caseload, California receives less
than 15% of the federal PSSF funds because of the low food
stamps participation rate. To the extent this legislation
increases food stamps participation among families with
children, California's share of the PSSF funding should
increase.
Positive fiscal effect of food stamp benefits . According to
Moody's Investor Services, an independent provider of credit
ratings and financial services research, CalFresh benefits have
the highest economic multiplier effect out of all government
programs or fiscal policy tools that stimulate the economy.
Moody's finds that for every CalFresh dollar spent, $1.74 is
generated in economic activity. (The USDA finds this amount to
be $1.84). Additionally, these benefits generate sales tax
revenue for county and the state coffers. To the extent that
this bill increases CalFresh participation, the state could
expect to receive additional state General Fund revenues due to
increased taxable purchases by recipients. This is possible
because studies show that low-income families such as CalFresh
recipients spend approximately 45% of their income on taxable
goods. By providing these families with CalFresh benefits, 45%
of the money previously used by the family to purchase food
would now be used for purchasing taxable goods.
Related legislation . The SAR and SFIS portions of this
legislation have appeared in the budget and in various bills
over the years. Those bills include:
1)AB 1642 (Beall) 2010 - held in Assembly Appropriations
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2)AB 1057(Beall) 2009 - held in Assembly Appropriations
3)AB 2844 (Laird) 2008 - vetoed
4)AB 1382 (Leno) 2007 - vetoed
5)AB 3029 (Laird) 2006 - died at desk
6)AB 696 (Chu) 2005 - vetoed
7)AB 2013 (Steinberg and Lieber) 2004 - died in the Senate
without hearing
Analysis Prepared by : Frances Chacon / HUM. S. / (916)
319-2089 FN:
0002318