BILL ANALYSIS Ó AJR 35 Page 1 Date of Hearing: April 26, 2016 ASSEMBLY COMMITTEE ON HUMAN SERVICES Susan Bonilla, Chair AJR 35 (Brown) - As Introduced March 17, 2016 SUBJECT: Supplemental Nutrition Assistance Program: cash-out policy SUMMARY: Memorializes the California Legislature's request to the federal government to enable California to end the Supplemental Nutrition Assistance Program (SNAP) cash-out policy in such a way as to maximize benefits and participation while at the same time mitigating or eliminating harm for those households that would currently be detrimentally impacted by ending the policy. Specifically, this bill: 1)Makes a number of declarations, including: a) The federal SNAP, formerly known as the Food Stamp Program, offers nutrition to millions of eligible, low-income individuals and families, and yet, many low-income seniors and people with disabilities in California cannot receive SNAP benefits; AJR 35 Page 2 b) CalFresh, California's SNAP program, provides monthly benefits to millions of eligible low-income Californians through an electronic benefit transfer (EBT) card that can be used to purchase food; c) SNAP benefits are provided on a sliding scale based on income, household size, and certain household expenses; d) The federal Supplemental Security Income (SSI) program provides income support to the elderly, blind, or disabled who meet income and other eligibility criteria, and is supplemented by the State Supplementary Payment program (SSP); e) 1.3 million SSI/SSP recipients in California are ineligible for SNAP due to the cash-out policy; f) California's cash-out policy, established in 1974, allowed California to cash out SNAP benefits to SSI/SSP recipients by including the estimated values of SNAP benefits, approximately $10 per month in California at the time, within SSI/SSP benefits, thereby reducing administrative and other expenditures, and also preventing SSI/SSP recipients in California from being eligible for SNAP; g) California is the only state in which SSI/SSP recipients are ineligible for SNAP under the cash-out policy; h) California's SSI/SSP recipients currently live closer to, or below, the federal poverty level (FPL) than when the program began; AJR 35 Page 3 i) SSI/SSP benefits have risen and fallen over time, and the annual cost-of-living-adjustment (COLA) for SSI/SSP was repealed in the state in 2009; j) SSI/SSP recipients in California would, on average, be eligible for more CalFresh benefits than the $10 monthly amount; aa) Technology has advanced to a point where electronic benefits could be made available to an SSI/SSP recipient if the state developed a method of activating an EBT card by asking questions telephonically, or through other efficient means, to determine if the automatically calculated benefits are correct; bb) California's cash-out policy hurts many low-income seniors and people with disabilities and continuing this policy poses many significant risks to these individuals' health and well-being; and cc) California's cash-out policy benefits some mixed SSI/SSP households, where some members of the household receive SSI/SSP benefits and other members do not, resulting in greater CalFresh benefits overall, and California could provide mixed SSI/SSP households with alternative benefits to replace the reduced or eliminated CalFresh benefits resulting from an end to the cash-out policy. 2)Resolves that the California Legislature requests the federal government to change federal policy in order to allow California to equitably end the SNAP cash-out policy in a way that would maximize benefits for and participation of newly-eligible individuals while at the same time mitigating AJR 35 Page 4 or eliminating harm to low-income families and medically needy children who could be made ineligible for certain benefits under a program without a cash-out policy. 3)Resolves that the Chief Clerk of the Assembly transmit copies of the resolution in question to the President and Vice President of the United States, and the Speaker of the House of Representatives, the Majority Leader of the Senate, each Senator and Representative from California in the Congress of the United States, and the author. EXISTING LAW: 1)Establishes under federal law the Supplemental Nutrition Assistance Program (SNAP) pursuant to the Food Stamp Act of 1964 and establishes, in California statute, the CalFresh program to administer the provision of federal SNAP benefits to families and individuals meeting certain criteria, as specified. (WIC 18900 et seq.) 2)Establishes the Electronic Benefits Transfer (EBT) Act, and defines the EBT system as the program designed to provide benefits to those eligible to receive public assistance benefits such as CalWORKs and CalFresh. (WIC 10065 et seq.) 3)Establishes the State Supplementary Program for Aged, Blind and Disabled, which is intended to supplement SSI and provide persons whose need results from age, blindness or disability with assistance and services that help them meet basic needs and maintain or increase independence. (WIC 12000 et seq.) 4)Provides that eligibility requirements for SSP match federal SSI criteria, and requires a minimum level of SSP benefits to AJR 35 Page 5 be provided in order to maintain federal Medicaid funding, as specified. (WIC 12000 et seq.) 5)Prohibits an individual who receives SSI and/or SSP benefits as a resident of California from receiving food stamp benefits. (7 CFR § 273.20 (a)) 6)Disregards the income and resources of an SSI recipient living in a household from CalFresh eligibility and benefit determination for that household. (7 CFR § 273.20 (c)) FISCAL EFFECT: Unknown. COMMENTS: CalFresh: CalFresh benefits are funded entirely by the federal government through SNAP, and the United States Department of Agriculture (USDA) sets specific eligibility requirements for SNAP programs across the United States, including a gross and net income test, work requirements, and other documentation requirements. The maximum allowable gross income is typically 200% 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 income at or below 100% of the FPL. Other households must meet both gross and net monthly income tests. CalFresh is administered locally by county human services agencies, and the federal, state, and county governments share in the cost of administration of the program. Benefits are made available on a monthly basis for food purchase through an ATM-like EBT card. However, unlike other types of benefits that may be accessed through an EBT card, CalFresh benefits cannot be withdrawn in cash at point-of-sale terminals AJR 35 Page 6 or at ATM machines. CalFresh benefits can only be used to purchase food items to be prepared and consumed at home, as well as seeds and plants that can be grown at home and produce food. The average monthly benefit for a CalFresh recipient is $144.35 per month, or $4.81 per person per day. SSI/SSP: The SSI/SSP program provides a monthly cash benefit to needy aged, blind, and disabled individuals and couples to help them pay for basic living expenses, such as food, clothing and shelter. In order to be eligible for SSI/SSP, an individual must be 65 years of age or older, blind, or have disabilities (children who are blind or have disabilities can qualify), and must meet certain federal income and resource requirements. The SSI portion of the benefit is federally-funded and only provided through an approved application to the Social Security Administration (SSA), while the SSP portion is paid for with General Fund dollars, and a qualified SSI recipient is automatically qualified for SSP. The SSI portion of the grant is meant to provide an income floor for qualifying low-income individuals and couples. SSI/SSP grants are adjusted based on whether a recipient is aged, blind or disabled; the individual's or couple's living arrangement, a recipient's marital status, and a recipient's status as a minor. The current SSI/SSP maximum grant levels are $889.40 per month for an individual ($156.40 SSP) and $1,496 per month for couples ($396.20 SSP), which places individuals at 90% of poverty and couples at 112% of poverty based on federal guidelines. The estimated SSI/SSP caseload for 2016-17 is 1.31 million cases (including 1.51 million people), which are composed of 28% aged persons, 1% blind persons and 71% persons with disabilities. Over 81% of SSI/SSP cases are individual cases. The Social Security Administration applies an annual cost of living adjustment (COLA) to the SSI portion of the grant AJR 35 Page 7 pursuant to annual increases in the Consumer Price Index (CPI). This federal COLA is passed through to SSI/SSP recipients in California, which allows SSI/SSP grants to remain at the minimum level allowed under federal law for individuals and couples, thereby allowing the state to maintain its federal Medicaid funding. During the state's economic downturn, the SSI/SSP program was one of many safety net programs negatively impacted. The COLA California once applied to the SSP amount was made inoperative as part of the 2009-10 Budget Act. The Governor's 2016-17 Budget proposed in January includes a cost-of-living increase to the SSP beginning January 1, 2017, that is equal to the California Necessities Index (CNI), estimated to be 2.96%. This will have the effect of increasing SSI/SSP monthly grant amounts by $17 for individuals and $31 for couples. Cash-out policy: California's cash-out policy dates back to 1974. That year, the federal government began the combined SSI/SSP program and, among other things, authorized states to increase the amount of their SSP to include the value of the food stamp allotment in lieu of separately administering food stamps to SSI/SSP recipients, with the goal of lowering administrative costs. This meant that California increased its monthly SSP grant by $10. Today, California remains the only state with a cash-out policy. In "mixed" households that contain a disabled or elderly household member who receives SSI/SSP, the SSI/SSP income is disregarded when determining the household's CalFresh eligibility and level of benefits. This means that ending the cash-out policy could create "winners" and "losers": SSI/SSP recipients would stand to gain higher levels of food assistance by becoming eligible for CalFresh, while mixed households could see their nutrition assistance reduced or eliminated if the SSI/SSP income is now counted for purposes of determining AJR 35 Page 8 household CalFresh eligibility and benefit levels. Currently, according to the author, it is estimated that approximately 60,000 medically needy children in mixed households may be detrimentally impacted by ending the state's cash-out policy. Need for this bill: According to the author, "The Federal Supplemental Nutrition Assistance Program (SNAP), known as CalFresh in our state, supports millions of low-income Californians. Unfortunately, 1.3 million SSI/SSP recipients are ineligible for CalFresh benefits because of a policy known as 'cash-out.' This policy, which only impacts California, started in 1974 when the federal government began the combined federal-state SSI/SSP program. A $10 food-stamp benefit was traded for a $10 cash benefit due to the extreme administrative costs of delivering the $10 food stamp benefit. This policy made sense in the mid 1970's, but today, it is hurting our poor vulnerable populations because the $10 cash benefit has been decimated by decades of budget and fiscal changes. California's SSI/SSP recipients are living much closer to, or below, the federal poverty level than they were when the program began. While ending the program would solve this problem, doing so without a change to federal policy would reduce benefits for approximately 58,000 medically dependent children. A federal change would allow California to provide CalFresh benefits to SSI/SSP recipients and maintain the current benefits for medically dependent children." REGISTERED SUPPORT / OPPOSITION: Support Bay Area Community Services AJR 35 Page 9 California Alliance for Retired Americans California Association of Public Affairs (CAPA) Mercy Brown Bag Program Personal Assistance Services Council of Los Angeles County Resources for Independent Living San Francisco Senior Disability Action St. Mary's Center Opposition None on file. Analysis Prepared by:Daphne Hunt / HUM. S. / (916) 319-2089 AJR 35 Page 10