BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 672 (Leno) - CalFresh: eligibility guidelines.
Amended: April 11, 2013 Policy Vote: Human Services 6-0
Urgency: No Mandate: Yes
Hearing Date: May 23, 2013 Consultant: Jolie Onodera
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: SB 672 would require the Department of Social
Services (DSS) to issue guidance specifying the process of
verification of earned income and dependent care expenses to be
used to determine eligibility and benefit level for CalFresh, as
specified. This bill would also require counties utilizing an
electronic database for verification purposes to follow specific
procedures and notification requirements for applicants and
recipients.
Fiscal Impact (as approved on May 23, 2013):
One-time, minor increased workload to the DSS to issue
guidance to counties. Potential additional costs of about
$150,000 (General Fund) to the extent the development and
adoption of revised regulations are required to implement
the provisions of this bill.
Potential near-term state-reimbursable costs to county
agencies for costs associated with implementation of the
revised eligibility process of verification of dependent
care expenses. Potential administrative cost savings in
future years to the extent the provisions of this bill
result in administrative efficiencies.
Streamlining the application process could increase
participation and benefit levels for low-income families,
significantly increasing the amount of CalFresh (Federal)
benefits received, potentially in the hundreds of thousands
to millions of dollars. For example, if 500 households
claimed the dependent care deduction and experienced a
benefit increase of $118 per month, benefits would increase
by over $700,000 annually. Increased administration
(Federal/General Fund) costs for newly eligible (not
existing) cases would be offset in minor part by increased
sales tax revenue on the sales of taxable goods.
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Background: Approximately 1.9 million households in the state
receive CalFresh, California's name for the national
Supplemental Nutrition Assistance Program
(SNAP), which provides benefits to low-income households to
alleviate hunger and to improve nutrition and health by helping
individuals meet their nutritional needs. The state also
provides benefits through the California Food Assistance Program
(CFAP) to about 47,000 eligible legal immigrants who are not
eligible for federal nutrition assistance.
The CalFresh application process includes completing and filing
an application, being interviewed, and providing information
subject to verification, such as earned income and dependent
care expenses in order to determine eligibility and benefit
level. County human services departments are required to act
promptly on all applications and provide CalFresh benefits
retroactive to the month of application to those households that
have completed the application process and have been determined
eligible.
Federal laws and regulations provide states the flexibility to
define the scope of allowable expenses for the dependent care
deduction. This bill proposes to simplify the process of
verification of dependent care expenses and earned income to
enable more applicants and recipients of CalFresh to receive the
increased monthly benefits for which they are eligible.
Proposed Law: This bill requires DSS to issue guidance to
simplify the verification of earned income and dependent care
for purposes of verifying deductions necessary to determine
eligibility or benefit level of CalFresh, to the extent
permitted by federal law. The guidance shall require all of the
following:
Provides that dependent care expenses shall be considered
verified upon receipt of a statement of monthly expenses
that includes 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.
Provides that if a county uses an electronic database for
earned income verification to determine eligibility, the
county shall do both of the following:
o Use the electronic data base to verify income
instead of requiring paper verification at time of
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application or reapplication for benefits;
o 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.
o Requires the notice to be provided when the
information in the database is used to determine
eligibility or benefit level or to verify income at any
time.
Related Legislation: AB 1970 (Skinner) 2011 would have required
county human services departments to maximize the use of
electronic means to verify applicant and recipient information.
This bill was held on the Suspense File of this committee.
Staff Comments: It is estimated that DSS would incur a minor
workload increase to issue the mandated guidance. To the extent
the development and issuance of revised regulations related to
the notification and verification processes for earned income
and dependent care expenses is required, the DSS would incur
additional workload.
By mandating the DSS issue guidance that could potentially
impose new duties on county human services agencies that
administer CalFresh, this bill could result in one-time or
near-term state-reimbursable costs for any training and
associated costs to implement the revised procedures. However,
once fully implemented, to the extent the provisions of this
bill serve to simplify and streamline the application and
verification process, county human services departments could
experience long-term cost savings due to increased
administrative efficiencies. While this bill could reduce
workload and county administrative costs, the state would only
achieve actual savings to the extent a county's single
allocation is reduced. Given the numerous and substantial
reductions sustained by county human services departments in
recent years, it is unknown at this time if this would occur.
As currently drafted, this bill provides that "if a county uses
an electronic database for earned income verification to
determine eligibility, a county shall do both of the following:"
In the absence of a reference to the specific type of
"electronic database" intended to be regulated (in this case,
The Work Number, a for-profit, third party resource that
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counties are authorized but not required to use), the bill could
potentially create a state-reimbursable mandate on county human
services departments, as counties utilize the Income and
Eligibility Verification System (IEVS), also an electronic
database, by reviewing and comparing this data to case record
information and by verifying the applicability of the matched
data. Similar to the revised procedures for verification of
dependent care expenses, the counties could incur one-time costs
to implement the revised verification procedures, and could
incur additional ongoing costs of an unknown amount associated
with the notification requirements outlined in this bill. At the
time of this analysis, it was undetermined if automation changes
would be required to implement the revised verification and
notification processes. To the extent such changes are required,
additional costs (General Fund) would be incurred.
Under existing law, CalFresh households are eligible to deduct
the full amount of eligible dependent care costs incurred,
resulting in higher benefits for program recipients and newly
eligibly cases. According to the Center on Budget and Policy
Priorities report, The Food Stamp Dependent Care Deduction: Help
for Families with Child Care Costs (2010), the percentage of
single-adult working households with young children claiming the
dependent care deduction in 2008 was only 37 percent nationally
(the figure for California was 10 percent, but based on a sample
of fewer than 40 households).
To the extent the provisions of this bill increase the number of
applicants and recipients who utilize the dependent care and
earned income deductions, substantial increases in federal
CalFresh (100 percent Federal) benefits (and a related, but much
smaller increase in CFAP (100 percent General Fund) benefits)
could be received. Additional administrative costs for newly
eligible cases would be offset in part by an increase in sales
tax revenue, as studies have shown that low-income families
spend a significant portion of their money on food, and
increasing CalFresh access would allow them to spend that money
on taxable items.
Recommended Amendments: In order to clarify that "electronic
database" refers to private third-party entities, and does not
impact the counties' utilization of IEVS, staff recommends an
amendment to specify private third-party vendors (such as The
Work Number) that operate electronic employment and wage
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database systems, to remove the potential state-reimbursable
mandate.
Federal regulations provide that a 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.
Although a state may establish its own standards for the use of
verification, at a minimum, federal regulations require that all
questionable factors are verified and that such standards do not
allow for inadvertent discrimination.
To ensure the provisions of this bill provide enough flexibility
to meet this federal standard, the author may wish to consider
an amendment clarifying that notwithstanding the verification
procedures mandated within the bill's provisions, nothing
precludes the verification of any questionable factors.
Committee amendments:
Clarify the dependent care expense verification process
to ensure compliance with federal law.
Remove the mandated database process provisions from the
bill.