BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HUMAN SERVICES
                               Senator McGuire, Chair
                                2015 - 2016  Regular 

          Bill No:              AB 2054
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          |Author:   |Thurmond                                              |
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          |Version:  |May 27, 2016           |Hearing    |June 28, 2016    |
          |          |                       |Date:      |                 |
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          |Urgency:  |No                     |Fiscal:    |Yes              |
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          |Consultant|Taryn Smith                                           |
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             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.)








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             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  









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               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:










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          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,  










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          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










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          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  









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          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  








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          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








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                 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), shall  design 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 agencies   other  
          than the California Health and Human Services Agency  to 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 appropriate   
           that  state 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 each  additional  agency  
          that is required to request or apply for that approval or  
          authorization so as to permit the  other  agency  or agencies  









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           sufficient time to complete the process.



            PRIOR VOTES
          
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          |Assembly Floor:                                            |80 - |
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          |Assembly Appropriations Committee:                         |20 - |
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          |Assembly Human Services Committee:                         |6 -  |
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            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









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               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 --