BILL ANALYSIS Ó AJR 35 Page 1 Date of Hearing: May 18, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AJR 35 (Brown) - As Introduced March 17, 2016 ----------------------------------------------------------------- |Policy |Human Services |Vote:|6 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This measure requests the federal government to change its policy in order to allow California to equitably end the Supplemental Nutrition Assistance Program (SNAP) cash-out policy, administered through the SSI/SSP programs, in such a way as to maximize benefits and participation while at the same time mitigating or eliminating harm to low income families and approximately 60,000 medically needy children who would otherwise lose benefits. FISCAL EFFECT: AJR 35 Page 2 1)Ongoing costs of approximately $135 million (federal funds) for increased CalFresh benefits to the approximately one million individuals who would become eligible for CalFresh benefits by the elimination of the cash-out policy. 2)Unknown potential savings to the State due to a reduction in SSP benefits to 1.3 million SSI/SSP recipients. 3)Unknown costs/savings (federal funds) associated with the approximately 300,000 SSI/SSP recipients in mixed households where there would be a simultaneous gain in eligibility and potential loss of CalFresh benefits within the household due to the loss of the SSI/SSP income disregard. COMMENTS: 1)Purpose. According to the author, "The Federal 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. 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." AJR 35 Page 3 2)Background. California's cash-out policy started in 1974 when the federal government began the combined SSI/SSP program. At that time, states were allowed to increase their SSP instead of administering food stamps to SSI/SSP recipients. California opted for the "cash-out" policy which 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. However, this tradeoff also prevented SSI/SSP recipients in California from being eligible for SNAP. California remains the only state with a cash-out policy still in place. Over time, the criteria for maintaining the cash-out program have changed. Instead of the inclusion of a discrete, or "extra" $10 for food purchases in the SSP, California's cash-out policy is now based on the state's implementation of federal cost-of-living adjustments (COLA) to the federal SSI benefit. Passing through the federal COLA to SSI/SSP recipients in California 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. 3)Tradeoffs. Today, 1.3 million SSI/SSP recipients in California are ineligible for SNAP (CalFresh) due to the cash-out policy. About 80% of these SSI/SSP recipients in California (primarily live-alone seniors) would, on average, be eligible for more CalFresh benefits than the $10 monthly bump they receive in SSP. They would see a net benefit from California's elimination of the cash-out policy because they stand to gain higher levels of food assistance by becoming eligible for CalFresh. AJR 35 Page 4 However, at the same time, maintaining the cash-out policy has direct benefits for families where only one person or a portion of the household receives SSI/SSP (usually a disabled adult or child, or elderly household member) but the rest of the family is eligible for CalFresh or other benefits. This is because in these "mixed" households the SSI/SSP income is not counted when determining the household's CalFresh eligibility and level of benefits. These households could see their nutrition assistance reduced or eliminated if the SSI/SSP income is now counted for purposes of determining 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. 4)Past Efforts. In the early 1990's, USDA rejected two separate proposals from California to end cash-out without taking benefits sway from "mixed-status" households - i.e. households in which some members receive SSI/SSP and some do not. USDA raised both policy and legal questions regarding the suggested approaches. This resolution 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 avoids harm to families that would lose benefits from should the cash-out policy end. AJR 35 Page 5 Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081