BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  SB 1391|
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                                 THIRD READING


          Bill No:  SB 1391
          Author:   Liu (D)
          Amended:  5/25/12
          Vote:     21

           
           SENATE HUMAN SERVICES COMMITTEE  :  6-0, 4/10/12
          AYES:  Liu, Emmerson, Berryhill, Hancock, Wright, Yee
          NO VOTE RECORDED:  Strickland

           SENATE APPROPRIATIONS COMMITTEE  :  5-2, 5/24/12
          AYES:  Kehoe, Alquist, Lieu, Price, Steinberg
          NOES:  Walters, Dutton


           SUBJECT  :    CalFresh benefits:  overissuance

           SOURCE  :     Western Center on Law and Poverty


           DIGEST  :    This bill establishes procedures for recovering 
          CalFresh overissuances for both current and former 
          recipient households.  This bill would define minimum 
          thresholds for overissuance establishment and collection 
          caused by administrative error (AE), inadvertent household 
          error (IHE), intentional program violation (IPV) or fraud.  
          This bill would also authorize the Department of Social 
          Services (DSS) to establish a minimum cost-effective 
          threshold for collecting overissuances, as specified. 

           ANALYSIS  :    Existing law:

          1.Establishes the Cal Fresh program, which administers the 
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            provision of federal Supplemental Nutritional Assistance 
            Program benefits (formerly called food stamps) to 
            families and individuals meeting specified income and 
            other criteria.

          2.Establishes under state and federal law that when an 
            overissuance of benefits is made to a CalFresh 
            beneficiary, that overissuance must be collected.

          3.Establishes under state law a structure for collecting 
            such overissuances from beneficiaries of public social 
            services, including CalFresh, which includes the 
            withholding of five percent of benefits if the 
            overissuance was caused by agency error, and a 10 percent 
            withholding if the error was for any other reason. 

          4.Establishes a repayment structure for families who are 
            not current beneficiaries. 

          5.Establishes in federal law three categories of 
            overissuances:

             A.   Intentional program violation, which are deliberate 
               fraudulent mistakes.
             B.   Inadvertent Household Errors, which are 
               unintentional mistakes made by the recipient.
             C.   Administrative Errors, which are mistakes made by 
               the social services agency, either through processing 
               or other means.

          1.Requires in federal statute that states return 100 
            percent of collected overpayments to the federal USDA 
            when those overpayments are the result of administrative 
            error. States retain a percentage of the collections when 
            overissuances are the result of inadvertent household 
            error (20 percent) or intentional program violation (35 
            percent).

          2.Permits states, under federal law, to create a 
            cost-effective threshold for collecting overissuances of 
            Supplemental Nutritional Assistance Program.

          3.Establishes in federal law a threshold of $125 for states 
            to opt to neither establish or collect overissuances in 

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            the Supplemental Nutritional Assistance Program, as 
            specified.

          This bill:

          1.Provides that current and future CalFresh benefits shall 
            be reduced subject to adequate and timely notice, as 
            specified, and as follows:

             A.   For overissuances caused by IHE, IPV, or fraud - 
               monthly benefits shall not be reduced by more than 
               five percent of $10, whichever is greater, unless the 
               recipient elects a higher rate.

             B.   For overissuances caused by AE - monthly benefits 
               shall not be reduced by more than five percent or $10, 
               whichever is greater, unless the recipient elects a 
               higher rate. AE claims will only be recovered if 
               required by federal law or if the overissuance exceeds 
               $125 or the threshold established by DSS, whichever is 
               greater.

          1.For households no longer receiving CalFresh:

             A.   No overissuance caused by AE shall be established 
               or collected under $125 or the DSS-established 
               threshold, whichever is greater. 

             B.   Overissuances caused by IHE shall be collected if 
               $35 or greater.

             C.   Overissuances caused by IPV or fraud shall be 
               collected pursuant to federal law.

          1.Specifies that IHE and IPV allotment reduction rates 
            conform to current DSS practice.

           Background
           
           Cal Fresh  .  A November 2010 federal survey indicated that 
          nearly 15 percent of U.S. households experienced food 
          insecurity in 2008 and 2009, the highest number since food 
          security surveys were begun in 1995.  Food-insecure 
          households had difficulty at some time during the year 

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          providing enough food for all their members due to a lack 
          of resources.  Nearly 7 million Americans, or 6 percent of 
          the country, experienced a severe range of food insecurity 
          in which the food intake of some household members was 
          reduced and normal eating patterns were disrupted due to 
          limited resources. Ten percent of the country's families 
          with children experienced food insecurity at least once 
          annually during each of those years. 

          CalFresh, California's food stamp program, serves about 3.9 
          million people annually, a number that has grown by 
          approximately 1 million since 2009.  Benefits are funded by 
          the U.S. Department of Agriculture; however the federal 
          government, California and counties share the cost of 
          administering the program. 

          The state has had historically low participation rates in 
          the program, which have been the source of various studies 
          and bills.  The state ranked last in 2010 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.  

           Error claims  .  Of the $24 million collected from CalFresh 
          recipients for overissuances in the third quarter of the 
          2011 fiscal year, $10.6 million or 44 percent was 
          classified as administrative error, according to federal 
          data. All of that money was returned to the federal 
          government.  Of the $12.2 million collected from 
          overissuances classified as inadvertent household errors, 
          20 or 35 percent (depending on collection method), or a 
          minimum of $2.4 million, was retained by the state.  Of the 
          $1.4 million collected under the classification of 
          intentional program violation, 35 percent, or $473,000 was 
          retained by the state.

           Federal guidance  .  In 2000, the USDA's Food and Nutrition 
          Service issued rules and regulations for the establishment 
          and collection from food stamp recipients. In announcing a 
          departure from the previous federal claims threshold of 
          $35, the agency noted that $35 was "outdated" and did not 
          reflect actual collection costs to state agencies.  
          Instead, it established a $125 threshold for collecting 
          federal overissuances of food stamp benefits.  The Food and 

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          Nutrition Service also added a state option to create its 
          own cost effectiveness plan, which must be approved by the 
          federal agency. 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes   
          Local:  Yes

          According to the Senate Appropriations Committee:

           One-time costs of approximately $150,000 (General Fund) 
            to modify automation systems.

           Potential ongoing administrative cost savings due to 
            raising the overissuance recovery threshold, however, due 
            to county budget constraints, administrative savings may 
            be difficult to realize. Additionally, the conversion to 
            semi-annual reporting (SAR) may result in minimal 
            administrative impact due to increasing the overissuance 
            threshold. 

           Potentially significant DSS workload and staffing costs 
            to revise regulations and complete a cost-benefit 
            analysis to submit for federal approval.

           SUPPORT  :   (Verified  5/25/12)

          Western Center on Law and Poverty (source) 
          Alameda County Community Food Bank
          American Federation of State, County and Municipal 
          Employees 
          California Alliance of Child and Family Services
          California Association of Food Banks
          California Catholic Conference, Inc.
          California Family Resource Association
          California Food Policy Advocates
          Coalition of California Welfare Rights Organizations, Inc.
          Feeding America San Diego
          National Association of Social Workers
          San Francisco Board of Supervisors Food Security Task Force
          St. Anthony Foundation in San Francisco

           ARGUMENTS IN SUPPORT  :    The Western Center on Law and 
          Poverty states that this bill aligns California policy with 
          other states in setting the collection of CalFresh 

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          overissuances at $125, or greater while not altering 
          California's efforts to collect overissuances that result 
          from client errors or fraud.  "Many recipients who receive 
          administrative overpayments, and then are noticed that they 
          must repay them, experience shame and anxiety, as well as 
          uncertainty about the process. ?  By relieving county 
          administrators of the time required to pursue small 
          overpayments, they can more effectively use their time to 
          help eligible receive the timely, quality assistance."


          CTW:nl  5/25/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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