BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 1232 (Leno) - CalWORKs and CalFresh: eligibility determinations ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 19, 2016 |Policy Vote: HUMAN S. 4 - 0, | | | JUD. 6 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 2, 2016 |Consultant: Jolie Onodera | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1232 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 obtain written authorization from an applicant or recipient prior to obtaining the credit report, and to provide the applicant or recipient with notice, as specified, prior to taking any adverse action, including a denial of CalFresh eligibility or CalWORKs benefits or services, against the applicant or recipient. Fiscal Impact: Notification requirements : Potentially significant increase in ongoing county eligibility worker costs (Local Funds/General Fund/Federal Funds*) for notification activities, some of which may exceed the requirements under SB 1232 (Leno) Page 1 of ? federal law. Pursuant to 15 U.S.C. 1681m, prior notification of adverse action is not required, but rather upon the adverse action being taken. Additionally, notice of adverse action under specified circumstances may be provided in writing, orally, or electronically. Notification to applicants prior to denial : Potentially major ongoing county eligibility worker costs (Local Funds/General Fund/Federal Funds*) to implement the process of notification to CalFresh and CalWORKs applicants prior to taking any adverse action, including a denial of eligibility. Based on the most recent 12 months of data available for 2015, over 745,000 applications for CalWORKs and CalFresh were denied. Assuming even a few minutes are required to issue a notice would cost in the low millions of dollars annually. Staff notes the noticing of applicants for whom no case file exists could potentially require much more time, if even possible, to accomplish. CalWORKs/CalFresh/CFAP benefits and administration : Potentially major increase in CalWORKs and CalFresh benefits (Federal Fund/General Fund/Local Funds*) to the extent the mandated authorization and notification requirements result in increases in program enrollment and eligibility. While prohibiting counties from requiring hard-copy documentation that is duplicative of information it will verify using the credit report is intended to streamline the eligibility process, to the extent a county must request other forms of verification or documentation due to the prohibition could alternatively delay the eligibility and enrollment process. Overpayments/underpayments : Unknown, potentially significant increases or decreases in county human services agency administrative workload to process, track, and follow-up on a greater or lesser number of benefits overpayments and/or underpayments resulting from the notification requirements of this measure. *CalWORKs program costs are funded with a combination of federal TANF, General Fund, and county funds. CalFresh benefits are funded with 100 percent federal funds. CalFresh administrative costs are funded with a combination of federal, state, and county funds. California Food Assistance Program (CFAP) costs are 100 percent General Fund. Background: Existing federal law establishes the Temporary Assistance for Needy Families (TANF) program to provide aid and welfare-to-work SB 1232 (Leno) Page 2 of ? 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.) Existing federal law establishes the Supplemental Nutrition Assistance Program (SNAP) to promote the general welfare, 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.) In California, federal SNAP benefits are provided through the CalFresh program to families and individuals meeting specified criteria. (WIC § 18900 et seq.) The determination of eligibility for the CalFresh and CalWORKs programs includes an assessment of the income and employment history of the applicant. While some county human services agencies require hard copy documentation to verify income that may include employment paystubs or tax returns, numerous county human service agencies have chosen to utilize electronic databases maintained by credit reporting agencies to provide online employment and wage verification to complete the eligibility assessment. As described in the Senate Human Services Committee analysis of this measure, "On August 12, 2014, the department [Department of Social Services] issued an All County Information Notice (#41-14) 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 Directors Letter 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. SB 1232 (Leno) Page 3 of ? Under the agreement, all 58 counties 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 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 verify 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." This bill seeks to simplify and add transparency to the process of verification of wages of applicants and recipients of CalWORKs and CalFresh. Proposed Law: 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 do all of the following: Obtain written authorization from an applicant or recipient prior to obtaining the credit report. Provide the applicant or recipient with the notice required by Section 615 of the Fair Credit Reporting Act (15 U.S.C. Sec. 1681m), indicating that the verification or eligibility determination was based, in whole or in part, upon the information contained in the consumer credit report. SB 1232 (Leno) Page 4 of ? Issue the notice in writing and in accordance with the standards established in federal law. Issue the notice before taking any adverse action, including a denial of CalFresh eligibility or CalWORKs benefits or services, against the applicant or recipient. This bill provides that the written authorization and notice required by this section may be provided by electronic means. This bill would prohibit a county human services agency that elects to use information contained in a consumer credit report from requiring the applicant or recipient to submit hard-copy documentation that is duplicative of the information contained in the credit report. This bill would clarify that county human service agencies are free to use other forms of verification and would allow the county to request additional documentation when the county establishes, in writing, that the information it received is questionable. This bill would state the legislative intent to support an increase in CalFresh benefits for low-income working families by simplifying and adding transparency to the verification of wages, and 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 agency. Prior Legislation: SB 672 (Leno) Chapter 568/2013 originally included a provision similar to the concept of this bill that was amended out of the bill prior to its enactment. Staff Comments: This bill mandates specified activities a county human services agency must complete during the process of eligibility assessment of both applicants and recipients of SB 1232 (Leno) Page 5 of ? CalWORKs and CalFresh, which will result in potentially significant increases in workload for county human services eligibility workers as described in the Fiscal Impact section of this analysis. Staff notes the notification requirements specified in this bill may exceed the provisions under federal law to the extent such notice is required for actions taken regarding eligibility for CalWORKs and CalFresh benefits, whether using information directly from credit reports or based on information from third parties. Under federal law, the FCRA outlines requirements for both users of information taken directly from consumer credit reports, as well as requirements for actions taken based on information obtained from third parties other than consumer reporting agencies: Duties of users taking adverse actions on basis of information contained in consumer reports. If any person takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report, the person shall: (1) Provide oral, written, or electronic notice of the adverse action to the consumer. (2) Provide to the consumer written or electronic disclosure of a numerical credit score, as defined, used by such person in taking any adverse action based in whole or in part on any information in a consumer report. (3) Provide to the consumer orally, in writing, or electronically the name, address, and telephone number of the consumer reporting agency that furnished the report to the person; and a statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the consumer the specific reasons why the adverse action was taken. (4) Provide to the consumer an oral, written, or electronic notice of the consumer's right to obtain a free copy of a consumer report on the consumer from the consumer reporting agency which notice shall include an indication of the 60-day period under that section for obtaining such a copy; and to dispute with a consumer reporting agency the accuracy or completeness of any information in a consumer report furnished by the agency. Adverse action based on information obtained from third parties other than consumer reporting agencies (1) Whenever credit for personal, family, or household purposes SB 1232 (Leno) Page 6 of ? involving a consumer is denied or the charge for such credit is increased either wholly or partly because of information obtained from a person other than a consumer reporting agency bearing upon the consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, the user of such information shall, within a reasonable period of time, upon the consumer's written request for the reasons for such adverse action received within sixty days after learning of such adverse action, disclose the nature of the information to the consumer. The user of such information shall clearly and accurately disclose to the consumer his right to make such written request at the time such adverse action is communicated to the consumer. (2) Duties of person taking certain actions based on information provided by affiliate: If a person takes an action with respect to a consumer, based in whole or in part on information in a credit report, the person shall notify the consumer of the action, as specified, and upon a written request from the consumer received within 60 days after transmittal of the notice required, disclose to the consumer the nature of the information upon which the action is based by not later than 30 days after receipt of the request. Recommended Amendments: To reduce the potential costs of this bill, staff recommends amendments to delete the references to "applicants" in the bill in paragraphs (2) and (4) of WIC § 11023(a). -- END --