BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair SB 43 (Liu) Hearing Date: 5/26/2011 Amended: 4/25/2011 Consultant: Jolie Onodera Policy Vote: Human Services 7-0 _________________________________________________________________ ____ BILL SUMMARY: SB 43 would require those counties that elect to provide a CalFresh Employment and Training (CalFresh E&T) program to screen work registrants and defer (exempt) an individual from mandatory placement if he or she meets federal deferral criteria or resides in a federally determined work surplus area. This bill would also require those counties that elect to participate in the CalFresh E&T program, beginning October 1, 2012, to offer self-initiated workfare to registrants who are mandatorily placed in the program. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund Additional CalFresh benefits $10,700 annually per 25% of E&T Federal participants discontinued for failure to meet work requirements Additional CalFresh admin $1,100 annually ($385 GF) perFederal/General/ 25% of E&T participants discontinued Local for failure to meet work requirements CalFresh E&T regulationCost pressure on county E&T grants Federal changes _________________________________________________________________ ____ STAFF COMMENTS: SUSPENSE FILE. This bill makes changes to the administration of the CalFresh E&T program, including rules governing mandatory and voluntary placements into the program, as well as exemptions from work program requirements. The United States Department of Agriculture (USDA) provides annual funding for program administration of the Food Stamp Employment and Training program (to be designated as the CalFresh E&T program in California) to provide job training services for non-assistance food stamp (NAFS) applicants and SB 43 (Liu) Page 3 recipients. The CalFresh E&T program is administered by the counties and overseen by the Department of Social Services (DSS). There are currently 25 counties participating in the CalFresh E&T program, with approximately 915,000 work registrants reported and $94.5 million in total funding for Federal Fiscal Year (FFY) 2010. State regulations currently allow counties to defer specific populations of work registrants from mandatory participation in the CalFresh E&T program. Those who are deferred may voluntarily participate and are not subject to CalFresh sanctions (ineligibility for aid) for non-participation. For mandatory placements, failure to participate without documented good cause results in sanctions for one, three, and then six months. This bill would require counties to screen work registrants for CalFresh E&T program participation or deferral, and would require an individual to be deferred from mandatory placement if he or she satisfies federally mandated criteria or resides in a federally determined work surplus area. According to the U.S. Department of Labor, the qualifying rate for a Labor Surplus Area (LSA) classification is 20 percent above the national average unemployment rate. For FFY 2011, the qualifying rate is 9.1 percent or above during the previous two calendar years. California's unemployment rate has historically exceeded national trends, and nearly all counties in California currently qualify as a work surplus area. As a result, under the provisions of this bill nearly all CalFresh E&T program participants would be deferred from mandatory placement and would not be subject to CalFresh sanctions due to non-participation, resulting in significantly more recipients retaining eligibility for CalFresh benefits. Based on statewide data reported since 2008, the number of work registrants who are discontinued from receiving CalFresh benefits each month has been increasing, averaging 34,000 participants over the last six months of 2010, and 36,000 work registrants in December 2010. The number of work registrants attributable to CalFresh E&T counties is estimated to be approximately 65 percent of total work registrants, or 23,400 participants statewide. It is unknown how many work registrants are discontinued for failure to meet work requirements, as the reasons for discontinuance are not reported statewide, and can SB 43 (Liu) Page 4 include other causes such as failure to submit timely reports or moving out of state. It is estimated that every 25 percent of CalFresh E&T participants discontinued monthly due to failure to meet work requirements would impact approximately 5,850 individuals. Deferring mandatory placement during periods of high unemployment for these individuals could result in increased annual CalFresh benefits of $10.7 million statewide (average monthly CalFresh benefit of $153 per individual), with associated administration costs of $1.1 million ($0.4 million General Fund). The administrative costs would be offset to some degree by cost savings for re-certification costs that would have otherwise been incurred for sanctioned cases. Staff notes that research also indicates that every $1 in CalFresh benefits spent generates $1.73 in economic activity. This bill requires counties that elect to participate in the CalFresh E&T program to allow participants to meet work program requirements through self-initiated workfare (in addition to any other components the county offers). Self-initiated workfare is a public service placement in a public or private nonprofit agency that is initiated by the CalFresh recipient. Currently, only Riverside County offers self-initiated workfare as a CalFresh E&T program component. Effective October 1, 2012, counties opting to participate in the CalFresh E&T program could experience workload increases in order to develop a process for tracking and verifying an individual's self-initiated work. Workload increases for DSS to work with counties and develop new claiming procedures would be absorbable within existing resources. A county that elects to participate in the CalFresh E&T program would also be required to "demonstrate in its plan how it is effectively using CalFresh E&T funds for each of the components that the county offers", including but not limited to self-initiated workfare, work experience or training, education, job search, and the support services or client reimbursements needed to participate in these components, as allowed by federal law and guidance." This provision is vague, and suggests that participating counties would have to report to DSS on their activities in compliance with this section. To the extent that this requires additional work and changes to county programming, there could be cost pressure on CalFresh E&T funds to spend more SB 43 (Liu) Page 5 on administration. This bill states that counties shall have no duty to provide workers' compensation coverage for a CalFresh E&T participant who elects to participate in self-initiated workfare. DSS currently covers workers' compensation coverage costs for the CalFresh E&T program. To the extent increased workers' compensation coverage is required, this would result in increased DSS withholding of CalFresh E&T funds, and a commensurate reduction in CalFresh E&T funds allocated to the counties, placing further cost pressure on available CalFresh E&T funds. SB 1322 (Liu) 2010, which was substantially similar to this bill, was vetoed by the Governor with the following message: I am returning Senate Bill 1322 without my signature. While I support the state's Food Stamp Employment and Training program and the economic benefits that federal food stamps bring to California, I am troubled that this bill reduces county flexibility and instead requires that they offer self-initiated workfare. Self-initiated workfare weakens the "work-first" message of the program by allowing recipients to self-direct their own volunteer work. While I wholeheartedly support volunteer work in local communities, it does not build the skills and work experience that is the primary objective of this particular program.