BILL ANALYSIS Ó SENATE COMMITTEE ON HUMAN SERVICES Senator McGuire, Chair 2015 - 2016 Regular Bill No: AB 2054 ----------------------------------------------------------------- |Author: |Thurmond | ----------------------------------------------------------------- |----------+-----------------------+-----------+-----------------| |Version: |May 27, 2016 |Hearing |June 28, 2016 | | | |Date: | | |----------+-----------------------+-----------+-----------------| |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Taryn Smith | |: | | ----------------------------------------------------------------- Subject: Nutrition assistance: Summer Electronic Benefits Transfer for Children SUMMARY This bill mandates the design and implementation of a Summer Electronic Benefits Transfer for Children (SEBTC) contingent upon federal authorization and funding. ABSTRACT Existing law: 1) Establishes under federal law the Supplemental Nutrition Assistance Program (SNAP) within the US Department of Agriculture (USDA) to promote the general welfare and to safeguard the health and wellbeing of the nation's population by raising the levels of nutrition among low-income households. It establishes SNAP eligibility requirements, including income that is at or below 130 percent of the federal poverty level and is a substantial limiting factor in permitting a recipient to obtain a more nutritious diet. (7 CFR 271.1; 7 CFR 273.9) 2) Establishes in California statute the CalFresh program to administer the provisions of federal SNAP benefits to families and individuals meeting specified criteria. (WIC 18900 et seq.) AB 2054 (Thurmond) PageB of? 3) Establishes in the Electronic Benefits Transfer (EBT) Act a system for the distribution and use of public assistance benefits, such as CalFresh, and requires EBT access to be provided through automated teller machines (ATMs), point-of-sale devices and other devices that accept EBT transactions. (WIC 10065 et seq.) 4) Establishes the National School Lunch Program, and program requirements for schools participating in the program. (42 United States Code 1751 et seq.) This bill: 1) Makes a number of Legislative findings and declarations related to poverty, food insecurity, and the "summer nutrition gap" experienced by many children. 2) Defines "Summer Electronic Benefits Transfer for Children" to mean a program, pilot, or demonstration project that provides nutrition assistance when school is out of session via EBT to households with children eligible for free and reduced price meals. 3) Requires the California Health and Human Services Agency, in conjunction with other agencies to design and implement the SEBTC to provide nutrition assistance benefits to eligible households, as specified. 4) Requires the Secretary of the California Health and Human Services Agency to notify the head of each appropriate state agency in a timely manner that the agency is required to request or apply for federal approval or authorization in order to carry out the requirements of this section, as specified. 5) Requires the SEBTC system to be compatible with the State's existing EBT system, comply with any federal laws and regulations governing SEBTC, and comply with any and AB 2054 (Thurmond) PageC of? all privacy and confidentiality procedures, as specified. 6) Requires each agency, as specified, to do the following: a. Request or apply for federal approval or authorization necessary to implement and operate SEBTC and support the request or application of any other state agency, if necessary. b. Request or apply for all available federal funding to assist the state in implementing and operating SEBTC and support the request or application of any other state agency, if necessary, to obtain all available federal funds for that purpose. 7) Specifies that the provision of SEBTC benefits to eligible households is contingent on federal funding for the SEBTC program. FISCAL IMPACT According to the Assembly Appropriations Committee, this bill may result in unknown costs that are likely in the hundreds of millions of dollars (Federal funds) to fund the benefit level provided to eligible households. The bill does not specify a benefit level but, if the monthly benefit was $45 per child (as proposed in the Federal budget), the annual cost to fund the benefit level would be approximately $918.5 million, based on an estimated caseload of 1.7 million eligible children. There would be additional unknown, but potentially significant costs for automation, design, implementation and operation of an SEBTC program. These costs would be a shared federal/state/county cost (50/35/15). BACKGROUND AND DISCUSSION Purpose of the bill: AB 2054 (Thurmond) PageD of? According to the author, two in five low-income households with children cannot consistently afford enough food. The author also states that children in at least 1.7 million California households live in food-insecure conditions and that summer is a particularly vulnerable time for low-income children. When school is out of session, these children lose access to many critical resources, including nutritious, affordable school meals, per the author. Summer EBT for Children (SEBTC) is a federally funded nutrition assistance program that allows participants to purchase groceries through SEBTC when school is out of session and school meals are not available. As shown by federal demonstration projects operating in eight other states and two tribal nations, SEBTC is a well-tested strategy to decrease hunger and improve nutrition, the author states. AB 2054 would prepare California to implement federally funded SEBTC. Specifically, the bill directs the California Health and Human Services Agency, and all other relevant state agencies, to (1) design a system to deliver SEBTC to eligible Californians and (2) pursue federal authorization and approval and all available federal funds to operate the system. The author states that while child hunger is a complex problem, SEBTC is one clear solution. By preparing California to implement SEBTC, AB 2054 will help to mitigate chronic hunger among low-income children, according to the author. Food insecurity Food security is defined as access by all members of the household at all times to enough food for an active, healthy life. Food insecure households are those in which the children or adults or both report limited access to food resulting in reduced quality or variety of diet (low food security), or reduced food intake or disrupted eating patterns (very low food security). According to a report issued by the USDA, 14 percent of American households were food insecure at least some time during 2014, AB 2054 (Thurmond) PageE of? including 5.6 percent with very low food security.<1> Another USDA report indicates that children living in a food insecure household face higher risks of health, psychosocial, and developmental problems compared to children in food secure households.<2> CalFresh CalFresh provides monthly benefits to assist low-income households in purchasing food or food products intended for human consumption. CalFresh benefits are 100 percent federally funded and national eligibility standards and benefit levels are established by the federal government. To participate in CalFresh, households must meet certain income-eligibility standards. The average monthly benefit for a CalFresh recipient in federal fiscal year 2015 was $126.83 per month, or $4.23 per day, according to the USDA. Households that receive or are eligible to receive cash assistance under CalWORKs or General Assistance and General Relief programs are categorically eligible for CalFresh. CalFresh currently serves approximately 4.4 million people, according to USDA data. Nonetheless, California's participation rate has been ranked last or near last in the country for years, prompting concerns from the USDA, stories in the state's newspapers and two Legislative hearings in 2014. Electronic Benefit Transfer (EBT) The EBT system automates the delivery, redemption, and reconciliation of public assistance benefits such as CalWORKs and CalFresh. EBT cards function like a bank-issued automated teller machine (ATM) card; the cardholder slides this card --------------------------- <1> http://www.ers.usda.gov/media/1896841/err194.pdf <2> http://www.ers.usda.gov/media/155368/eib56_1_.pdf AB 2054 (Thurmond) PageF of? through a point-of-sale device, or uses the card at an ATM. California EBT cards can be used at more than 15,000 businesses and over 54,000 ATMs in California. 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 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. National School Lunch Program The National School Lunch Program is a federally funded program that assists schools and other agencies in providing nutritious lunches to children for free or at a reduced price. In addition to financial assistance, the program provides donated commodity foods to help reduce lunch program costs. The USDA is responsible for overseeing the program nationally. In California, the program is administered by the California Department of Education (CDE), Nutrition Services Division. For children, the National School Lunch Program provides a nutritious meal that contains one-third of the recommended dietary allowance of necessary nutrients. For parents, the program offers a convenient method of providing a nutritionally balanced lunch at the lowest possible price. For schools, the program enhances children's learning abilities by contributing to their physical and mental well-being. Studies have shown that children whose nutritional needs are met have fewer attendance and discipline problems and are more attentive in class. Summer nutrition gap A study conducted by researchers at the USDA's Economic Research Service and the Congressional Research Service showed that food insecurity among households with school-age children is more AB 2054 (Thurmond) PageG of? prevalent during the summer months than during the school year. <3> According to the bill's sponsor, California Food Policy Advocates, almost 2 million of California's low-income children fell into the summer nutrition gap in 2014. This means about 80 percent of the children and youth who received federally funded free or reduced-price lunches during the school year missed out on such lunches during the summer. Summer EBT for Children (SEBTC) In 2011, the USDA initiated a SEBTC demonstration project to test the impact of providing additional resources to buy food during the summer months for low-income households with children when the children do not have access to school-based meal programs. This SETBC program uses SNAP and Women, Infants, and Children (WIC) EBT technology to provide children and their families with more resources to use at food stores during the summer months. Demonstration projects were launched in Michigan and Texas (using the WIC model) and in Connecticut, Missouri, and Oregon (using the SNAP model). Under the same project, each participating state provided benefits to 2,500 children in the summer of 2011. In 2012, all five states increased operations to reach 5,000 children within expanded areas of their states. Also in 2012, the SEBTC program was expanded to the Cherokee and Chickasaw Nations (using the WIC model) and to Nevada, Delaware and Washington (using the SNAP model). Evaluations of SEBTC pilots found that providing additional food benefits on debit cards to low-income families with school-aged children during the summer months can significantly reduce food insecurity and improve nutrition. Specifically, the pilots reduced very low food security among children, the most severe form of food insecurity, by one third. Studies also showed that --------------------------- <3> http://www.tandfonline.com/doi/abs/10.1080/10796120600879582?jour nalCode=cjcp20 AB 2054 (Thurmond) PageH of? these additional resources enabled families to eat significantly more fruits and vegetables and whole grains.<4> President's Budget proposal The President's Fiscal Year 2017 budget builds on the SEBTC program by investing $12 billion over 10 years to start up a nationwide, universal SEBTC program. Specifically, the proposal includes a $45 monthly benefit per child during the summer months for school-aged children eligible for free and reduced price meals through the National School Lunch Program. As proposed, the monthly benefit could be redeemed for food purchases at grocery stores and would be annually adjusted for inflation going forward. The program would be phased in over ten years with 10 percent of states participating by 2017, serving almost one million low-income children. By 2026, when all states are expected to participate, nearly 20 million children will receive SEBTC benefits.<5> Related legislation: AB 1542 (Ducheny, Chapter 270, Statutes of 1997) implemented federal welfare reform and established the CalWORKs program, and conformed to federal law in establishing the EBT Act. COMMENTS This bill proposes to provide a vehicle through which the state can pursue federal authority and funding to implement and operate SEBTC. While expansion of the current demonstration project has not been approved, this bill provides guidance to state agencies in anticipation of such funding becoming available. According to the sponsor, there are currently three potential opportunities for the federal government to authorize and fund SEBTC in California. --------------------------- <4> http://www.fns.usda.gov/ops/summer-electronic-benefit-transfer-ch ildren-sebtc Nationwide Summer EBT <5> http://www.fns.usda.gov/sites/default/files/ops/FY17SEBTCBudgetFa ctSheet.pdf AB 2054 (Thurmond) PageI of? The federal spending bill for FFY 2016 included an increase in funding for SEBTC demonstration projects. The bill did not limit SEBTC to communities where demonstration projects are already taking place. Future federal appropriations may create similar opportunities for California to establish SEBTC. The President's FFY 2017 budget includes a proposal to expand SEBTC nationwide and permanently, rolling the program out over a number of years. There is also a recurring opportunity for federal lawmakers to expand authority and funding for SEBTC via the Child Nutrition Reauthorization. If federal authority to expand SEBT passes, funding will likely be available to states on a competitive basis. AB 2054 will help ensure that California is able to maximize any federal SEBTC opportunities, and to do so in a timely way. Given the fact that this bill anticipates federal action, the bill lacks specificity regarding implementation. Therefore, future legislation may be necessary to provide guidance and authorization to the appropriate state agency and to county welfare offices. In the meantime, the following amendments are recommended in order to clarify mandates if and when the federal SEBTC program is authorized and funded: 10072.2. (a) (1) The California Health and Human Services Agency shall designate the appropriate state agency or agencies to, in conjunction with any other state agency described in paragraph (2), shalldesign and implement the Summer Electronic Benefits Transfer for Children (SEBTC) to provide nutrition assistance benefits to eligible households. (2) If federal law requires a state agency or agenciesother than the California Health and Human Services Agencyto obtain federal approval or authorization in order to carry out the requirements of this section, the Secretary of the California Health and Human Services Agency shall designate the appropriatethatstate agency which shall request or apply for the necessary federal approval or authorization. The Secretary of the California Health and Human Services Agency shall notify in a timely manner the appropriate head of eachadditionalagency that is required to request or apply for that approval or authorization so as to permit theotheragency or agencies AB 2054 (Thurmond) PageJ of? sufficient time to complete the process. PRIOR VOTES ----------------------------------------------------------------- |Assembly Floor: |80 - | | |0 | |-----------------------------------------------------------+-----| |Assembly Appropriations Committee: |20 - | | |0 | |-----------------------------------------------------------+-----| |Assembly Human Services Committee: |6 - | | |0 | ----------------------------------------------------------------- POSITIONS Support: California Food Policy Advocates (Sponsor) Alameda County Community Food Bank Asian Law Alliance CA4Health California Center for Public Health Advocacy California WIC Association (CWA) Children's Defense Fund Feeding America Food for People, Inc. Food for People, the Food Bank for Humboldt County Humboldt Food Policy Council Hunger Action Los Angeles Jewish Family Service of Los Angeles Locally Delicious, Inc. Orange County Food Access Coalition Orange County United Way Roots of Change St Anthony's Foundation The American Heart Association/American Stroke Association The California Alternative Payment Program Association The California Association of Food Banks The California Catholic Conference The California Children's Hospital Association The California State PTA AB 2054 (Thurmond) PageK of? The County Health Executives association of California The Food Bank of Contra Costa and Solano The National Association of Social Workers The Sacramento Hunger Coalition The Santa Clara County Board of Supervisors United Ways of California Western Center on Law and Poverty Oppose: None. -- END --