BILL ANALYSIS Ó SENATE HUMAN SERVICES COMMITTEE Senator Leland Y. Yee, Chair BILL NO: SB 672 S AUTHOR: Leno B VERSION: February 22, 2013 HEARING DATE: April 9, 2013 6 FISCAL: Yes 7 2 CONSULTANT: Tepring Piquado SUBJECT CalFresh: eligibility guidelines SUMMARY This bill requires the Department of Social Services (DSS) to issue guidance to simplify the verification of earned income and child care expenses necessary for determining CalFresh eligibility, as specified. This bill would impose a state-mandated local program. ABSTRACT Existing Law : 1) Establishes the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, benefits. (7 U.S.C. 2011 et seq.) 2) Provides that any household with gross income below 130 percent of the poverty guidelines is eligible for the SNAP program. (7 U.S.C. 2014 (c)) 3) Provides that any household with net income below 100 percent of the federal poverty line is eligible for the SNAP program. (7 CFR 273.9(a)(2)) 4) Provides that households which contain an elderly Continued--- STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 2 or disabled member shall meet the net income eligibility standards for the SNAP Program. Households which do not contain an elderly or disabled member shall meet both the net income eligibility standards and the gross income eligibility standards for the Food Stamp Program. Households which are categorically eligible as defined in 273.2(j)(2) or 273.2(j)(4) do not have to meet either the gross or net income eligibility standards. (7 CFR 273.9) 5) Provides that the State agency shall verify, prior to certification of the household, all other factors of eligibility which the State agency determines are questionable and affect the household's eligibility and benefit level. (7 CFR 273.2(f)(2)) 6) Provides that the State agency may establish its own standards for the use of verification, provided that, at a minimum, all questionable factors are verified and that such standards do not allow for inadvertent discrimination. (7 CFR 273.2 (f)(3)(i)) 7) Provides that in carrying out the supplemental nutrition assistance program, a State agency shall not be required to use an income and eligibility or an immigration status verification system established under section 1137 of the Social Security Act. (42 U.S.C. 1320b-7; 7 U.S.C. 2020p) 8) Provides that if the State agency chooses to use the Income and Eligibility Verification System (IEVS), it must notify all applicants for food stamp benefits at the time of application and at each recertification through a written statement on or provided with the application form that information available through IEVS will be requested, used and may be verified through collateral contact when discrepancies are found, and that such information may affect the household's eligibility and level of benefits. (7 CFR 273.2 (b)(2)) 9) Provides that if any adverse action is taken with respect to any consumer that is based in whole or in STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 3 part on any information contained in a consumer report - the name, address, and telephone number of the consumer reporting agency (including a toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis) that furnished the report to the person must be provided to the consumer orally, in writing, or electronically. (15 U.S.C. 1681m (a)(3)(A)) 10) Provides that a household shall be entitled to a dependent care (child care) deduction for the actual cost of payments necessary for the care of a dependent child if the care enables a household member to accept or continue employment, or training or education that is preparatory for employment. (7 U.S.C. 2014(e)(3)(A)) Existing State Law: 1) Allocates federal Supplemental Nutrition Assistance Program (SNAP) funds for low-income families through the CalFresh program. Under this program, each county provides assistance through SNAP funds. (WIC 18900) 2) Provides that the eligibility of households shall be determined to the extent permitted by federal law. (WIC 18901) 3) Provides that gross non-exempt income shall be verified for all households prior to certification. However, where all attempts to verify the income have been unsuccessful because the person or organization providing the income has failed to cooperate with the household and the County Welfare Department (CWD) and all other sources of verification are unavailable, the CWD shall determine an amount to be used for certification purposes based on the best available information. Best available information may include an applicant's affidavit. (MPP 63-300.5 (e)) This bill: 1) States that it is the intent of the legislature to support an increase in CalFresh benefits up to 200% of STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 4 the federal poverty line and to simplify the verification of earned income and dependent care expenses. 2) Requires that DSS issue guidance to clarify that dependent care expenses be considered verified with a monthly statement by the applicant or recipient of aid with the federal taxpayer identification number of the dependent care provider or other form of verification allowed by federal law instead of verification with a receipt from the care provider. 3) Requires DSS to issue guidance to require that wages received in cash be considered verified upon receipt of the statement by the applicant or recipient of aid. 4) Require DSS to issue guidance to include that if a county uses an electronic database for earned income verification to determine eligibility, the county shall: a. Use the electronic data base to verify income instead of requiring paper verification at time of application or reapplication for benefits; and b. Inform applicants and recipients of their right to request a copy of their electronic employment and wage data maintained in the database to correct errors in the database. 5) Imposes a state-mandated local program by requiring DSS to issue guidance which imposes new duties on counties that administer CalFresh. FISCAL IMPACT This bill has not yet been analyzed by a fiscal committee. BACKGROUND AND DISCUSSION Purpose of the bill According to the author, SB 672 calls for the state to maximize eligibility and enrollment in CalFresh among STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 5 California's working families by requiring counties and Administering Agencies to use existing employment databases to assist and simplify the eligibility process for CalFresh applicants, reducing the burden for CalFresh applicants to report cash earnings, and simplifying the process to report childcare expenses for working families. The author also states that this bill ensures that applicants and recipients are informed of their rights to request and correct information in the databases, when possible. CalFresh Benefits Approximately 3 million low-income Californians receive CalFresh benefits intended to improve the health and well-being of individuals by providing a means to meet their nutritional needs. The goal of the federal SNAP Program, administered by the United States Department of Agriculture (USDA), is "to alleviate hunger and malnutrition ? by increasing food purchasing power for all eligible households who apply for participation". The average amount of CalFresh benefits received per household is about $200 per month per adult. While the federal government pays 100 percent of SNAP/CalFresh program benefits to recipients, the federal and state governments share administrative costs. California, however, has had historically low participation rates in the program. The state ranked last in 2010 among states in use of benefits by eligible residents, and last in use of benefits among eligible working poor families, according to the USDA. 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 with providing enough food for all household members due to a lack of resources. Nearly 7 million Americans, or 6 percent of the country, experienced a severe level 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. STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 6 Applying and Verifying The CalFresh application process includes completing and filing an application, being interviewed, and having certain information verified. The County Welfare Department is required to act promptly on all applications and provides federally funded food stamp benefits retroactive to the month of application to those households that have completed the application process and have been determined eligible. This bill would simplify the process of applying and receiving CalFresh benefits by establishing that child care deductions will be considered verified when the applicant or recipients of aid self-certifies the monthly expenses and when the counties use electronic databases and/or 3rd party reports to verify income. Eligibility According to DSS, CalFresh households, except those containing an aged or disabled member or where all members receive cash assistance, are subject to gross and net income determination tests. Gross income is defined as all non-excludable income from any source. The maximum gross income allowed before any deductions are considered is 130 percent of the federal poverty line (FPL) or 165 percent of the FPL if the household has an elderly or disabled person who qualifies to be a separate household. If the household passes the gross income test, then the net income test is computed. After all deductions are assessed, the resultant amount cannot exceed 100 percent of the FPL. Childcare Deduction One expense that a household may deduct from gross income is dependent child care costs. A household shall be entitled to a dependent care deduction for the actual cost of payments necessary for the care of a dependent if the care enables a household member to accept or continue employment, or training or education that is preparatory STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 7 for employment. Other States Federal laws and regulations give states the flexibility to define the scope of allowable expenses for the dependent care deduction. Illinois and Massachusetts accept a beneficiary's statement of the amount paid for dependent care. In Maryland, Minnesota, Missouri and New Hampshire dependent care does not have to be verified unless it is determined to be questionable. In California, DSS does not define acceptable forms of verification of child care expenses. Electronic Income Verification Databases Third-party sources of employment information, such as National Directory of New Hire listing (NDNH) and Income and Eligibility Verification System (IEVS), may be accessed when additional employment verification is necessary. The Work Number is a for-profit 3rd party resource that can be used by counties to verify employment and income. Counties are permitted to use the information obtained from this source in the same manner as they would use information provided by the employer. Therefore, no further verification of employment is necessary. Income and Eligibility Verification System The Income and Eligibility Verification System (IEVS) was established by Congress under the 1984 Deficit Reduction Act to reduce errors in determining eligibility and benefit levels. The implementing regulations require State agencies to compare income reported by program applicants and recipients with income from several sources including Internal Revenue Service data, Social Security Administration Data, State quarterly wage reports and unemployment insurance benefits. In California, county welfare departments use this electronic database to determine eligibility and the appropriate level of benefits by reviewing and comparing it to case record information, and by verifying the applicability of the matched data. The information obtained through IEVS is used, to the extent possible, in the determination of eligibility. STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 8 New Employee Registry - California's New Hire Reporting Program All California employers must report all new employees or those rehired within the previous last 20 days. The New Employee Registry database can be used to provide information on new or reinstated employment of applicants or recipients of CalFresh. Matches are based on the Social Security Number for the month of reported employment. The Work Number The Work Number is a user-paid employment and income verification database created by TALX Corporation. TALX was acquired by Equifax Inc. in February 2007. The Equifax credit reporting agency, with the aid of thousands of human resource departments around the country, has assembled The Work Number database. It has been called the most powerful and thorough private database of Americans' personal information ever created, containing 190 million employment and salary records covering more than one-third of U.S. adults. Of the more 50,000 entities that use the service to verify income are 6,000 social service agencies in all 50 states. An All Counties Letter (02-22) from June 2002 specified that counties are permitted to use The Work Number database for employment verification in the same manner as they would use information provided by the employer. Counties may also use The Work Number database when required to contact an employer for other income determinations, such as verification of the regularity of receipt, the gross or net amount, whether the income is excluded or exempt, or when the county is unable to determine year-to-date information, or the recipient is unable to provide the necessary verification. However, DSS directs that The Work Number should only be used as a secondary source of verification and that counties should first contact the recipient or applicant to request additional information or records. Related Legislation AB 1970 (Skinner) 2011, would have required county human services departments to maximize use of electronic means of verifying applicant and recipient information. The bill was held on the Suspense File of Senate Appropriations in STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 9 August 2012. Comments 1)Germane to this bill is increasing utilization of CalFresh benefits by simplifying verification of child care costs and wages. Staff recommends amending the intent language to reflect the author's purpose. SECTION 1. It is the intent of the Legislature to support an increase in CalFresh benefits for low-income working families by using state options, including the option provided in Section 273.2 of Title 7 of the Code of Federal Regulations, to increase eligibility for familieswith earnings and income of up to 200 percent of the federal poverty line and toby simplify ing the verification of dependent care and wages. It is also the intent of the legislature to educate applicants and recipients of aid under this chapter of their rights to receive a report and to correct errors in a report issued by federally regulated reporting agencies when the services of those agencies are purchased by the State of California or a County Human Services Agency to determine eligibility or benefit level for CalFresh. 2)The Manual of Policies and Procedures does provide counties the ability to accept self-certification under penalty of perjury as proof of income included in an applicant's affidavit. Staff suggests removing this language from the bill, as follows:(b) Cash payment of wages shall be considered verified upon receipt of a statement by the employee.3)The intent of the bill is to have the county notify applicants and recipients of aid when an electronic database or private vendor report is used to verify income or employment information. DSS currently notifies individuals when IEVS is used. Notification is not required to be provided when counties use other STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 10 electronic databases such as The Work Number database, although The Work Number database does provide consumers with a free annual Employment Data Report in accordance with the Federal Credit Reporting Act. Other databases that counties may use, however, are not required to comply with the Federal Credit Reporting act. Because of this conflicting language in law, staff recommends the following amendment: SEC. 2. Section 18901.1 is added to the Welfare and Institutions Code, to read: 18901.1. (2) Inform applicants and recipients of their right, if any , to request a copy of their electronic employment and wage data maintained in the database and to correct errors in the database. This notice shall be provided when the information in the database is used to determine eligibility or benefit level or to verify income at any time. POSITIONS Support: Western Center on Law & Poverty (Co-sponsor) San Francisco Living Wage Coalition (Co-sponsor) Alameda County Community Food Bank Asian Law Alliance California Alliance for Retired Americans California Association of Food Banks California Catholic Conference California Food Policy Advocates California National Organization for Women (California NOW) Coalition of California Welfare Rights Organization, Inc. San Diego Hunger Coalition Mayor of San Francisco, Edwin M. Lee Oppose:None received -- END -- STAFF ANALYSIS OF SENATE BILL 672 (Leno) Page 11