BILL ANALYSIS Ó
SB 1391
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Date of Hearing: June 26, 2012
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Jim Beall Jr., Chair
SB 1391 (Liu) - As Amended: June 15, 2012
SENATE VOTE : 32-6
SUBJECT : CalFresh Benefits: Over issuance
SUMMARY : This measure would amend the Welfare and Institutions
Code to institute a new process for the collection of CalFresh
over issuances. Specifically, this bill :
1)Make a Legislative finding and declaration that the CalFresh
program shall be administered fairly to provide all applicants
and recipients timely services with due consideration of their
need.
2)States the intent of the Legislature to reduce the cost of
CalFresh administration through a cost-effective structure to
address overpayments and to protect the rights of applicants.
3)Further states the intent of the Legislature that this measure
shall not overturn or otherwise eliminate any existing right
or protection to which an applicant or recipient is entitled
under existing state laws.
4)Establishes a new section in the Welfare and Institutions Code
to require the collection of CalFresh monetary overpayment
threshold amounts in cases relating to administrative error,
household recipient error, or intentional fraud.
5)Establishes a $125 or greater collection threshold in
accordance with federal law when the over issuance was caused
by administrative error, and allows DSS to establish a higher
threshold if necessary, as specified.
6)Requires CalFresh monthly benefits for active recipients to be
reduced for over issuances as follows:
a) For over issuances caused by administrative error,
monthly benefits shall be reduced by no more than 5%t or
$10, whichever is greater;
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b) For over issuances caused by household error, monthly
benefits shall be reduced by no more than 10% or $10,
whichever is greater; and
c) For over issuances caused by household error, monthly
benefits shall be reduced by no more than 20% or $20,
whichever is greater;
7)Requires the collection of over issuances for former CalFresh
benefit recipients as follows:
a) For over issuances caused by administrative error
totaling $125 or less, collection of the over issuance
shall not be attempted;
b) For over issuances caused by household error totaling
$35 or less, collection of the over issuance shall not be
attempted; and
c) Over issuances caused by intentional fraud, shall be
collected in accordance with federal law.
8)Restricts the reduction or recovery of over issued CalFresh
benefits, unless the household has been properly notified of
the over issuance, as specified.
EXISTING LAW
1)Establishes in state government the CalFresh program to
administer federal SNAP benefits to eligible low-income
families to improve the health and well-being of qualified
households and individuals by providing them a means to meet
their nutritional needs.
2)Establishes in state and federal law the process by which the
over payment of benefit assistance payments shall be
identified and collected from the benefit recipient.
3)Under the general Aid and Medical Assistance Provisions of the
Welfare and Institutions Code, requires that any overpayment
of public assistance to an eligible recipient shall be
collected as follows:
a) Where the overpayment was caused by agency error, grant
payments shall be reduced by 5% of the maximum aid payment;
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or
b) Where the overpayment was caused by any other reason,
grant payments shall be reduced by 10% of the maximum aid
payment.
4)Under federal law, establishes three types of overpayments and
the amounts states may retain in the collection of
overpayments:
a) Intentional Program Violation, which is defined as
intentional fraud on behalf of the beneficiary. States may
retain 35% of what they collect for this type of claim;
b) Inadvertent household error, which is defined as an
overpayment made as a result of an unintentional error made
by the beneficiary. States may retain 20% of what they
collect for this type of claim; or
c) Agency error, which is defined as an overpayment caused
by a mistake made on the part of the state or local agency.
States are not allowed to retain any amount of what they
may recover for this type of claim.
5)Under federal law, allows states the authority to establish
processes to provide for the efficient and effective
collection of SNAP overpayments, which must be approved by the
United States Department of Agriculture (USDA).
FISCAL EFFECT : Unknown
COMMENTS :
Need for the bill
According to the author, this measure is needed to align
California with other states in setting the threshold for
collecting administrative errors at $125, as many states already
have done. It would relieve counties of the time and expense
required to pursue collections from clients who have relatively
small amounts of overpayments. In this fiscal climate, it is
important to find efficiencies in government. Relieving
counties and the state of the obligation to collect small
amounts of accidentally over issued funds, which must be fully
returned to the federal government is a prudent move.
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According to the Western Center on Law and Poverty, sponsors of
this measure, over issuances and the collection of over
issuances can cause hardship and confusion among CalFresh
recipients, families that have recently transitioned off of the
CalFresh program, and within the general community. By
preventing confusion among recipients who receive a request for
payment of an over issuance caused by administrative error, SB
1391 will improve the perception of the program.
Further, according to the California State Association of
Counties and the County Welfare Directors Association, raising
the threshold for recovering CalFresh over issuances to $125
will allow our eligibility workers to focus on the more
egregious instances while also providing more time for caseload
work.
Development of federal SNAP Over Issuance Regulations and
Guidance
According to the United States Department of Agriculture, the
federal SNAP is the foundation for America's national nutrition
safety net and the first line of the nation's defense against
hunger. It provides grants to states to administer and
distribute grants to low-income families in need of important
nutritional assistance. In many cases, it is the only funding
resource low-income parents living at or below the federal
poverty line have to provide nutritional meals for themselves
and their children. Without this important social service, many
families would become malnourished and struggle to meet their
basic day-to-day needs.
This measure is primarily a federal compliance measure that
seeks to establish specific collections requirements for
CalFresh overpayments in accordance with the federal SNAP.
Whereas existing state law provides general collection
requirements for the over issuance of services or funds rendered
for public assistance, which applies to the CalFresh program,
state law is silent in regards to specific federal law and
guidance on the collection of SNAP overpayments.
With the adoption of regulations in 2000, and subsequent SNAP
guidance from the USDA, there has been clearer direction as to
how and at what levels the state and county welfare agencies
should pursue CalFresh benefit over issuances and under what
conditions. Rather than continue to require the state and CWAs
to blindly pursue over issuances regardless of the amount or the
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cause, providing for a clearer standard, which is aligned with
federal law that has been in existence for more than ten years
is more than appropriate.
Fraud concerns
According to the Los Angeles County District Attorney's Office,
this legislation could result in an increase in fraud as it
would be arguably more difficult to cut people off who abuse the
program. However, this measure does not seek to change nor
reduce the authority that DSS or county welfare agencies (CWA)
have under state or federal law to pursue intentional CalFresh
recipient fraud.
This measure only deals with administrative errors committed on
behalf of DSS or the local CWAs. It does not seek to address
nor amend the federal standards by which over issuances made as
a result of an inadvertent household error or intentional fraud.
Inadvertent Household Error
Should the committee choose to pass this measure, it should
consider whether it may want to add via amendments a $125
monetary threshold for the collection of over issued benefits
resulting from household error.
Under current law, any over payment made as a result of
inadvertent household error is required to be collected by the
CWA, regardless of amount. There is merit in determining a
cost-effective amount to collect overpayments due to household
error for several reasons:
1)Household error overpayments comprise a small portion of the
overall number of CalFresh overpayments, with administrative
error being more than twice as common. Of the $24 million
collected from CalFresh recipients for over issuances in the
third quarter of the 2011 fiscal year, 21% were caused by
household error. Further, according to a report by the USDA
Food and Nutrition Services Office of Analysis, Nutrition and
Evaluation, more than half of over payments were less than $10
per month. When these two estimates are taken into
consideration together, it is not unreasonable to determine
that household error claims represent negligible overpayment
amounts.
2)It is costly to both the county and a struggling family to
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undergo the collection and repayment of CalFresh household
error overpayments, especially when the overpayment being
collected is negligible. It would likely cost a county more
than $10 to pursue a monthly CalFresh overpayment of $10. It
is also not unreasonable to expect a family to undergo shame,
anxiety and greater economic stress when it is found that due
to their error they will have to not only repay the
overpayment but also have their future payments reduced.
3)Even with a minimal overpayment, a family living below the
federal poverty line is likely to remain poor even when
overpaid. Under federal poverty level criteria, a family of 2
would have an annual gross (pre-tax) earned income of just
over $15,000. Should there not be a reasonable set limit on
collectible overpayments made as a result of household error,
especially when the average household size of CalFresh
recipients is 2.5?
REGISTERED SUPPORT / OPPOSITION :
Support
Alameda County Community Food Bank
American Federation of State, County and Municipal Employees
(AFSCME), AFL-CIO
California Association of Food Banks
California Catholic Conference, Inc.
California Family Resource Association (CFRA)
California Food Policy Advocates (CFPA)
California Hunger Action Coalition (CHAC)
California Partnership to End Domestic violence (The
Partnership)
California State Association of Counties (CSAC)
Coalition of California Welfare Rights Organizations, Inc.
County Welfare Directors Association (CWDA)
Feeding America San Diego
Hunger Advocacy Network
Jewish Family Service of San Diego (JFS)
National Association of Social Workers
San Francisco Food Security Task Force
St Anthony Foundation in San Francisco
The Hand Up Youth Food Pantry Student Advisory Board
The San Diego Hunger Coalition
Western Center on Law and Poverty
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Opposition
Los Angeles County District Attorney's Office
Analysis Prepared by : Chris Reefe / HUM. S. / (916) 319-2089