BILL ANALYSIS �
SB 672
Page 1
SENATE THIRD READING
SB 672 (Leno)
As Amended August 5, 2013
Majority vote
SENATE VOTE :33-6
HUMAN SERVICES 5-2 APPROPRIATIONS 12-5
-----------------------------------------------------------------
|Ayes:|Stone, Ammiano, Ian |Ayes:|Gatto, Bocanegra, |
| |Calderon, Garcia, Hall | |Bradford, |
| | | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Hall, |
| | | |Holden, Pan, Quirk, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Maienschein, Grove |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
| | | | |
-----------------------------------------------------------------
SUMMARY : Simplifies the process for reporting dependent care
expenses for purposes of calculating CalFresh benefits.
Specifically, this bill :
1)States the Legislature's intent to support an increase in
CalFresh benefits to low-income working families by
simplifying the verification of their dependent care expenses.
2)Requires the Department of Social Services (DSS) to issue
guidance to counties to simplify the verification of dependent
care expense deductions for purposes of determining a
household's eligibility for, or amount of, CalFresh benefits.
3)Requires the guidance from DSS to establish that dependent
care expenses shall be considered verified upon receipt of a
self-certified statement of monthly dependent care expenses
unless federal law or guidance requires additional
documentation.
4)Provides that a county agency may request additional
documentation to verify dependent care expenses if the
verification received is questionable.
SB 672
Page 2
5)Requires DSS to adopt regulations to implement the changes to
the process for considering dependent care expenses by January
1, 2015, and authorizes DSS to implement these changes by
all-county letters or similar instructions until January 1,
2015.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Costs associated with this legislation should be minor and
absorbable within existing resources. Self-certification of
dependent care expenses is already allowable under current
law.
2)To the extent this bill increases the number of applicants and
recipients who utilize the dependent care deductions,
increases in federal CalFresh (Federal Supplemental Nutrition
Assistance Program (SNAP) funds) benefits (and a related, but
much smaller increase in California Food Assistance Program
(General Fund (GF)) benefits) could be received. Additional
administrative costs for newly eligible cases would be offset
in part by an increase in sales tax revenue.
COMMENTS : By simplifying the verification of dependent care
expenses when determining a household's eligibility for CalFresh
or the household's authorized benefit level, this bill seeks to
ensure California's working poor families have access to
necessary nutrition benefits. With this bill, some households
may become newly eligible for CalFresh benefits because they
will be able to more easily factor their dependent care costs
into their income calculations, whereas other households might
see an increase in their CalFresh benefit amounts, provided that
they do not already receive the maximum CalFresh allotment.
Background : CalFresh benefits, which are entirely funded by the
federal government through SNAP, are made available to eligible
low-income families on a monthly basis for food purchases. The
United States Department of Agriculture (USDA) sets specific
eligibility requirements for SNAP programs across the United
States, including a gross and net income asset test, work
requirements, and other documentation requirements. The maximum
allowable gross income is 130% of the Federal Poverty Level
(FPL). Households with elderly or disabled members are not
subject to gross income criteria but must have a net monthly
SB 672
Page 3
income at or below 100% of the FPL. Other households must meet
both gross and net monthly income tests. Additionally,
resources, such as cash on hand, generally cannot exceed $2,000,
or $3,250 for households in which there is a household member
who has a disability or is 60 years of age or older. CalFresh
is administered locally by county welfare departments, and the
federal, state, and county governments share in the cost of
administration of the program. Based on recent data from DSS,
the average monthly CalFresh benefit per household is $334 ($153
per person or $5.10 per day), providing modest benefits to
around 1.9 million households in California. More than 60% of
CalFresh households include children.
Because the monthly CalFresh benefits provided to recipients are
funded with 100% federal dollars, increasing the distribution of
CalFresh benefits to eligible households results in a boost to
the local economy, which is especially important to low-income
areas. According to Moody's Analytics and the USDA, every
dollar of federal SNAP benefits spent results in $1.79 in
economic activity. Additionally, a 2012 policy brief released
by the National Poverty Center, titled "Extreme Poverty in the
United States, 1996 to 2011," found that SNAP benefits were
effective in reducing extreme poverty within that time period
and noted that expansion of SNAP programs could be particularly
beneficial in reducing extreme poverty in nonelderly households
with children.
CalFresh income and benefits calculations : When calculating a
CalFresh household's income, certain deductions are applied, the
amounts of which are prescribed in federal SNAP laws and are
sometimes adjusted based on the Consumer Price Index. These
include, for example, a standard deduction based on household
size, an earned income deduction, medical expense deductions for
households containing a disabled or elderly person, a utility
allowance, and a dependent care deduction for the actual costs
paid for by a member of the household, provided that the
dependent care is necessary for a member of the household to
obtain or maintain employment, or an education or training
program that will lead to employment. The earned income
deduction (20% of earnings to account for work-related expenses
and payroll taxes) and the dependent care deduction provide a
direct benefit to CalFresh households with working adults,
thereby supporting their continuation in, or return to, the
workforce.
SB 672
Page 4
The USDA's Thrifty Food Plan is the basis for the formula used
to calculate SNAP benefits levels. This plan is based on
estimates of the cost of providing low-cost, nutritious meals to
a household, factoring in the age of each household member. As
of June 2013, the estimated cost of food prepared at home for a
family of three with two parents, ages 19 to 50 years, and a
child between nine and 11 years of age is $497.30 ($16.57 per
day or $5.52 per meal for the entire household). While the
Thrifty Food Plan estimates are revised every year to keep pace
with changes in food prices, the anticipated costs of food under
the plan can still be prohibitive as families seek access to
sufficient amounts of healthier foods.
Once a household is deemed eligible for CalFresh based on
meeting citizenship, gross income and resource requirements, the
household's benefit level-or allotment-is calculated by
multiplying the household's adjusted net income by 30% (because
it is assumed a household will spend around 30% of its net
income on food) and subtracting that number from the maximum
monthly SNAP allotment. The current federally-established
maximum monthly SNAP allotment for a household of two is $367
($12.23 per day, per household), which increases to $526 per
month for a household of three ($17.53 per day, per household).
This means, for example, that a household of two with an
adjusted net monthly income of $1,000, after applicable
deductions are applied, would receive a CalFresh benefit of $67
($1,000 x .3 = $300, and $367-$300 = $67). While it is assumed
that this household of two will spend $367 per month on food
(the CalFresh allotment plus 30% of the adjusted net monthly
income), it does not fully factor in some other out-of-pocket
expenses a family may have (e.g., clothing and transportation).
Need for the bill : Existing federal law and guidance already
provide states with flexibility in how they verify certain
factors that influence a household's SNAP program eligibility or
benefit levels. Within this flexibility, states are allowed to
simplify their verification processes by permitting
self-certification of certain income deduction information from
applicants or recipients, such as out-of-pocket dependent care
costs. However, the author and supporters of this bill assert
that because the DSS Manual of Policies and Procedures allows
each county to choose to mandate verification of dependent care
expenses, there is inconsistency throughout the state in how the
SB 672
Page 5
verification requirements are applied. By standardizing a
simplified verification process in state law, this bill will
prevent counties from implementing requirements that are more
stringent than federal requirements.
Simplifying the process for determining dependent care
deductions will further streamline access to CalFresh benefits
for needy households in which adults are working to support
their families. Additionally, through increasing participation
in the CalFresh program and potentially increasing benefit
levels for current CalFresh recipients, more federal dollars
will flow into the state, thereby promoting economic growth and
improvement in local communities.
Analysis Prepared by : Myesha Jackson / HUM. S. / (916)
319-2089
FN: 0001881