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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