BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 1232 (Leno) - CalWORKs and CalFresh: eligibility
determinations
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|Version: April 19, 2016 |Policy Vote: HUMAN S. 4 - 0, |
| | JUD. 6 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 2, 2016 |Consultant: Jolie Onodera |
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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
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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
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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.
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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.
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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
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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
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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).
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