BILL ANALYSIS Ó SENATE COMMITTEE ON HUMAN SERVICES Senator McGuire, Chair 2015 - 2016 Regular Bill No: SB 1232 ----------------------------------------------------------------- |Author: |Leno | ----------------------------------------------------------------- |----------+-----------------------+-----------+-----------------| |Version: |March 28 2016 |Hearing |March 29, 2016 | | | |Date: | | |----------+-----------------------+-----------+-----------------| |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Taryn Smith | |: | | ----------------------------------------------------------------- Subject: CalFresh: eligibility determinations SUMMARY This bill would require a county human services agency that uses information contained in a consumer credit report for the determination of CalFresh or CalWORKs eligibility or benefit level to provide the applicant or recipient with a specified notice indicating that the verification or eligibility determination was based upon the information contained in the consumer credit report. It would prohibit county human services agencies from requiring CalFresh or CalWORKs applicants or recipients to provide hard-copy documentation that is duplicative of the information obtained from the credit reporting agency. ABSTRACT Existing law: 1) Establishes in federal statute the Temporary Assistance for Needy Families (TANF) program to provide aid and welfare-to-work services to eligible families and, in California, provides that TANF funds for welfare-to-work services are administered through the California Work Opportunity and Responsibility to Kids (CalWORKs) program. (42 U.S.C. 601 et seq., WIC 11200 et seq.) 2) Establishes income, asset and real property limits used SB 1232 (Leno) PageB of? to determine eligibility for the program, including net income below the Maximum Aid Payment (MAP), based on family size and county of residence. (WIC 11450, 11150 et seq.) 3) Establishes a 48-month lifetime limit of CalWORKs benefits for eligible adults, including 24 months during which a recipient must meet federal work requirements in order to retain eligibility. (WIC 11454, 11322.85) 4) Specifies a weekly number of hours required of welfare-to-work participation for adults to remain eligible for CalWORKs benefits, including for those households with "unemployed parents." (WIC 11322.8) 5) 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 determined to be a substantial limiting factor in permitting a recipient to obtain a more nutritious diet (7 CFR 271.1; 7 CFR 273.9) 6) Establishes in California statute the CalFresh program to administer the provision of federal SNAP benefits to families and individuals meeting specified criteria. (WIC 18900 et seq.) 7) Establishes under federal law the Fair Consumer Reporting Act (FCRA), which provides procedures for accuracy and fairness of credit reporting. Among other things, FCRA mandates consumer notification of adverse action taken based on information contained in a consumer credit report and establishes rights for consumers to correct information that is reported incorrectly. (15 U.S.C. Sec. 1681 et seq.) This bill: 1) Establishes legislative intent to support an increase in CalFresh benefits for low-income working families by simplifying and adding transparency to the verification of SB 1232 (Leno) PageC of? wages. It also states Legislative intent to educate applicants and recipients of aid of their federal rights to receive a free report and to correct errors in a report issued by federally regulated consumer reporting agencies when the services of those agencies are used by the state or county to determine CalFresh or CalWORKs eligibility or benefit level. 2) Requires a county human services agency that uses information contained in a consumer credit report for the determination of CalFresh or CalWORKs eligibility or benefit level to do all of the following: a. Obtain written authorization from an applicant or recipient prior to obtaining the credit report. b. Provide the applicant or recipient with the notice required by Section 615 of the FCRA (U.S.C. Sec 1681(m)), indicating that the verification or eligibility determination was based, in whole or in part, upon the information contained in the consumer credit report. c. Issue the notice in writing an in accordance with the standards established in federal law. d. Issue the notice before taking any adverse action against the applicant or recipient. e. Make the information available to an applicant or recipient who requests a copy of his or her case file or appeals a negative action based in whole or in part on the information the county obtained from the consumer credit report. 3) Permits the written authorization and notice required to be provided by electronic means. 4) Prohibits a county human services agency that elects to use information contained in a consumer credit report for the determination of benefit level from requiring the applicant or recipient to submit hard-copy documentation that is duplicative of the information it will verify using the credit report. SB 1232 (Leno) PageD of? FISCAL IMPACT This bill has not yet been analyzed by fiscal committee. BACKGROUND AND DISCUSSION Purpose of the bill: According to the author, this bill will facilitate eligibility and enrollment in the CalFresh and CalWORKs programs by streamlining the application process. For these families, support programs like CalFresh and CalWORKs can help prevent the indignity of hunger in meeting basic needs. The author states that low-wage workers face significant barriers to participation in CalFresh program. Few have paid time off or reliable transportation to get to the county welfare department for the application process. By prohibiting county agencies that use electronic databases to administer the CalFresh and CalWORKs programs from requiring applicants to submit hard copy documentation that is duplicative of information obtained from the database, SB 1232 would reduce potential for multiple visits to the county offices, according to the author. SB 1232 also will require notice to these applicants and recipients about their federal right to receive free employment data reports and to correct inaccurate information in employment and income verification databases. Additionally, the bill will empower low-income Californians to correct errors in their consumer reports, the author states. The author also states that SB 1232 does not reinforce, require or encourage the use of a particular consumer credit reporting agency database. The bill does, however, establish that if such a database is used to evaluate an application for CalFresh or CalWORKs benefits, the applicant must also benefit from the information in the database and must be protected under federal consumer law. CalWORKs The CalWORKs program is funded with a mix of federal TANF money, state, and county funds. CalWORKs provides temporary cash assistance to meet basic family SB 1232 (Leno) PageE of? needs. It also provides education, employment and training programs. CDSS is the designated state agency responsible for program supervision at the state level. The counties are responsible for administering the caseloads at the local level. In order to be eligible for CalWORKs, families must meet income and asset tests of no more than $2,250 in savings ($3,250 where the assistance unit includes at least one member who is disabled or aged 60 or older), excluding education and retirement plans plus one car worth $9,500 or less or that was received as a gift or family transfer or donation. In addition, children must be deprived of parental support and care due to the incapacity, death or absence of apparent or unemployment of the principal wage-earner. Persons fleeing to avoid prosecution, custody or confinement after conviction of a felony are not eligible for CalWORKs. State law provides for a cumulative 48-month lifetime limit on cash aid for adults. During those 48 months, adults may receive a total of 24 months of Welfare-to-Work (WTW) services and activities. WTW activities include subsidized and unsubsidized employment, community service, adult basic education, job skills, training, mental health counseling, substance abuse treatment and other activities necessary to assist recipients in obtaining employment. Once the 24 months of WTW activities have been exhausted, adults must meet the stricter federal work participation requirements (20, 30, or 35 hours weekly, depending on family composition) unless they are exempt or receive an extension. Children of adults who exhaust the 48-month lifetime limit may continue to receive cash aid, if otherwise eligible, up to age 18. CalFresh CalFresh, California's version of the federal SNAP program provides monthly benefits to assist low-income households in purchasing food or food products intended for human consumption. CDSS administers CalFresh at the state level and California's 58 counties are responsible for administering the program at the local level. CalFresh benefits are 100% federally funded and national eligibility standards and benefit levels are established by the United States Congress. To participate in CalFresh, households must meet certain income-eligibility SB 1232 (Leno) PageF of? 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. CalFresh supplements family food budgets by providing an average of $300 a month per household. To qualify for SNAP benefits, some households must meet specified work requirements. SNAP requires all recipients, unless exempted by law, to register for work at the appropriate employment office; participate in an employment and training program, if assigned by a state or local administering agency; and accept an offer of suitable employment. SNAP beneficiaries do not have to work or participate in employment and training activities if they are under age 16 or over age 59, are physically or mentally unfit for employment, are caring for a child under the age of six (or 12, in some cases), already employed 30 hours a week, or, subject to and complying with work requirements for other programs, such as those required by CalWORKs, among other exemptions. Households who receive or are eligible to receive cash assistance under CalWORKSs or General Assistance/General Relief programs are categorically eligible for CalFresh. Poverty and Food Insecurity California has the highest poverty rate in the nation - just under one-quarter of residents are living at or below the federal poverty level (FPL), or $20,160 per year for a family of three, according to the national Supplemental Poverty Measure. One of California's most essential anti-poverty strategies is the CalWORKs program, which provided cash assistance to approximately 535,000 families in Fiscal Year 2014-15, including more than 1 million children. A grant to a family of three in a high-cost California county is $704 per month, or approximately 42 percent of the FPL. Nationally, the USDA reported an estimated 14 percent of American households were food insecure at least some time during the year in 2014, meaning they lacked access to enough food for an active, healthy life for all household members. During the SB 1232 (Leno) PageG of? last decade, and especially during the Great Recession, the number of families experiencing food insecurity has increased. Since the Great Recession, according to researchers at the USDA, inflation has kept the number of families who are not able to afford sufficient food at approximately the same rate, even with an increase in employment nationwide.<1> According to data from the California Health Interview Survey (CHIS), at least 4 million low-income Californians struggled with food insecurity during 2011-12. A research brief published in 2012 by UCLA's Center for Health Policy Research and the California Food Policy Advocates noted that in 2009, at the height the Recession, more than four in 10 Californian adults, roughly 3.8 million people, who were at or below 200 percent of the Federal Poverty Level suffered from food insecurity. Of those, more than one third - 1.4 million people - reported very low food security. This is defined as having to cut back on food. Nationally, about 5.7 percent of Americans suffered from very low food security. 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. In 2013, the year for which the most recent data is available, 66 percent of eligible Californians participated in SNAP. That year, California and Nevada tied for second-lowest participation rate in the country. Wyoming's participation rates were the lowest at 57 percent. That rate compares to a national average of 85 percent. Furthermore, just 52 percent of California's eligible working poor families received CalFresh benefits, the worst rate in the country, compared to a national average of 74 --------------------------- --------------------------- <1> Nord, Mark, et al, "Prevalence of U.S. Food Insecurity Is Related to Changes in Unemployment, Inflation, and the Price of Food," Economic Research Report No. (ERR-167) June 2014 SB 1232 (Leno) PageH of? SB 1232 (Leno) PageI of? percent.<2> Employment and Income Verification One of the measures for assessing eligibility for CalFresh and CalWORKs, is the income and employment history of the applicant. While some counties still require hard copy evidence of work histories (such as paystubs or tax forms), many counties have turned to electronic databases maintained by credit reporting agencies to complete the assessment. On August 12, 2014, the department issued an All County Information Notice (#41-14)<3> to advise county human services agencies of a 90-day pilot program from October 1, 2014 through December 31, 2014 during which participating counties could access data provided by a specified consumer credit reporting agency. The usage and efficacy of the credit reporting agency service would be evaluated to determine whether or not to pursue a long-term statewide agreement. On January 13, 2016, the department issued an All County Welfare Director Letter<4> to advise the counties of their option to participate in a statewide agreement with the same credit reporting agency to provide online employment and wage verification services. Under the agreement, all 58 counties in California can access information in the database from January 1, 2016 through September 30, 2017, at no cost to the counties. According to the department, 29 counties currently take --------------------------- <2> USDA, "Reaching Those in Need: Estimates of State Supplemental Nutrition Assistance Program Participation Rates in 2013," February 2016 <3> http://www.cdss.ca.gov/lettersnotices/EntRes/getinfo/acin/2014/I- 41_14.pdf <4> http://www.cdss.ca.gov/lettersnotices/EntRes/getinfo/coletters/AC WDL1_13_16.PDF SB 1232 (Leno) PageJ of? advantage of the agreement. The remaining 19 counties either contract directly with a credit reporting agency that provides employment and wage verification services or do not use one at all. The department reports that counties that use a credit reporting agency to verity employment and earnings do not require applicants to submit hard copies of documents to verify the same information. Those that don't use a credit reporting agency require applicants to submit hard copies of all documents While some counties are operating under the department's statewide agreement with a credit reporting agency, the department has not yet issued specific instructions on how the counties may use the credit reporting database. Those instructions are forthcoming and, while the instructions may include some of the provisions of this bill, it should not be presumed the All County Letter will cover all of the bill language. Additionally, the department's All county Letters are instructions for the counties, and those instructions are not codified or enforceable. It is not clear if the federal Fair Consumer Reporting Act requires such notice for applicants and recipients of CalFresh and CalWORKs benefits. According to the sponsor, past communication from the department regarding mandatory reports for adverse actions have been clear regarding the denial of employment or credit, but they do not address about denial of public benefits. Related legislation: SB 672 (Leno, Chapter 568, Statutes of 2013) included a provision similar to what is proposed in SB 1232. While SB 672 was enacted, the provision related to streamlining CalFresh enrollment was removed from the bill. POSITIONS Support: California Alternative Payment Program Association California Association of Food Banks California Food Policy Advocates Courage Campaign Feeding America San Diego SB 1232 (Leno) PageK of? Food Bank of Contra Costa and Solano National Consumer Law Center St. Anthony's Foundation Oppose: None received.