BILL ANALYSIS Ó SB 1232 Page 1 Date of Hearing: June 28, 2016 ASSEMBLY COMMITTEE ON HUMAN SERVICES Susan Bonilla, Chair SB 1232 (Leno) - As Amended May 31, 2016 SENATE VOTE: 39-0 SUBJECT: CalWORKs and CalFresh: eligibility determinations SUMMARY: Requires counties that use information contained in consumer credit reports to determine eligibility or benefit amounts for CalWORKs or CalFresh to provide certain information to applicants and recipients, as specified, and prohibits counties from requiring applicants or recipients to submit hard-copy documentation that is duplicative of the information verified using the credit report. Specifically, this bill: 1)States 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 for and recipients of aid about their federal rights related to consumer credit reports, as specified. SB 1232 Page 2 2)Requires a county to do all of the following if that county's human services agency uses information from consumer credit reports to determine eligibility for, and benefit level of, CalFresh or CalWORKs assistance: a) Receive written authorization from an applicant or recipient before obtaining the credit report; b) Provide a recipient, in writing and in accordance with federal law as specified, if the county determines that recipient to be ineligible or have benefits or services reduced for CalFresh or CalWORKs, with a federally required notice, as specified, indicating that verification or eligibility determination was based in whole or in part upon the information contained in the consumer credit report; and c) 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 information the county obtained from the consumer credit report. 3)Specifies that the written authorization and notice required by this bill may be provided through electronic means. 4)Prohibits a county, if its county human services agency 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 verified using the credit report. SB 1232 Page 3 5)States that nothing in this bill shall preclude the use of other forms of verification or prohibit the county from requesting additional documentation when the county establishes, in writing, that the information it has already received is questionable. EXISTING LAW: 1)Establishes under federal law 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 CalWORKs program. (42 U.S.C. 601 et seq., WIC 11200 et seq.) 2)Establishes income, asset and real property limits used to determine eligibility for the program, including net income below the Maximum Aid Payment (MAP), based on family size and county of residence, which is around 40% of the Federal Poverty Level. (WIC 11150 to 11160, 11450 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)Requires all individuals over 16 years of age, unless they are otherwise exempt, to participate in welfare-to-work activities as a condition of eligibility for CalWORKs. (WIC 11320.3, 11322.6) 5)Establishes the number of weekly hours of welfare-to-work participation necessary to remain eligible for aid, including requirements for an unemployed parent in a two-parent assistance unit, as specified. (WIC 11322.8) SB 1232 Page 4 6)Establishes in federal law the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, to permit low-income households to obtain a more nutritious diet by increasing food purchasing power for all eligible households. (7 USC § 2011 et seq.) 7)Establishes, in state law, the CalFresh program to administer the provision of federal SNAP benefits to low-income families and individuals meeting specified criteria. (WIC 18900 et seq.) 8)Describes, in federal law, the duties of users taking adverse actions on the basis of information contained in consumer reports. (15 U.S.C. § 1681m, 615) FISCAL EFFECT: According to the Senate Appropriations Committee May 27, 2016, analysis, this bill may result in the following costs: 1)Notification requirements: Potential minor increase in ongoing county eligibility worker costs (Local Funds/General Fund/Federal Funds) for notification activities, as the Department of Social Services recently issued an all-county letter specifying county notification requirements relative to this issue. 2)CalWORKs/CalFresh/CFAP benefits and administration: Potential 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 SB 1232 Page 5 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. COMMENTS: CalWORKs: The CalWORKs program provides monthly income assistance and employment-related services aimed at moving children out of poverty and helping families meet basic needs. Federal funding for CalWORKs comes from the TANF block grant. The average 2016-17 monthly cash grant for a family of three on CalWORKs (one parent and two children) is $497.35, and the maximum monthly grant amount for a family of three, if the family has no other income and lives in a high-cost county, is $704. According to recent data from the California Department of Social Services (DSS), around 497,000 families rely on CalWORKs, including over one million children. Nearly 60% of cases include children under 6 years old. Maximum grant amounts in high-cost counties of $704 per month for a family of three, with no other income, means $23.46 per day, per family, or $7.82 per family member, per day to meet basic needs, including rent, clothing, utility bills, food, and anything else a family needs to ensure children can be cared for at home and safely remain with their families. This grant amount puts the annual household income at $8,448 per year, or 42% of poverty. Federal Poverty Guidelines for 2016 show that 100% of poverty for a family of three is $20,160 per year. CalFresh: CalFresh benefits are funded entirely by the federal government through the Supplemental Nutrition Assistance Program (SNAP), and the United States Department of Agriculture (USDA) sets specific eligibility requirements for SNAP programs across the United States, including a gross and net income test, work requirements, and other documentation requirements. The maximum SB 1232 Page 6 allowable gross income is typically 200% of the Federal Poverty Level (FPL). Households with elderly or disabled members are not subject to gross income criteria but must have a net monthly income at or below 100% of the FPL. Other households must meet both gross and net monthly income tests. CalFresh is administered locally by county human services agencies, and the federal, state, and county governments share in the cost of administration of the program. Benefits are made available on a monthly basis for food purchase through an ATM-like electronic benefits transfer (EBT) card. However, 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. The average monthly benefit for a CalFresh recipient is $144.35 per month, or $4.81 per person per day. Verification of income and employment using The Work Number: County welfare departments must obtain certain employment and income information from applicants for, and recipients of, CalFresh and CalWORKs. In some cases, government-administered databases and consumer reports can be used in this process, while other situations can still warrant the submission of hard-copy materials. In January of this year, DSS entered into an agreement through September 2017 with Equifax/TALX Corporation to provide an online employment and wage verification service called The Work Number (WN) through the department at no cost to participating counties. Counties can elect, but are not required, to participate. DSS reports that 30 counties are currently using WN, and another 9 are completing Memoranda of Understanding to participate. Across the 30 counties currently participating, in the month of SB 1232 Page 7 May, over 23,000 verifications were ordered. Need for this bill: According to the author: "This bill will facilitate eligibility and enrollment in the CalFresh and CalWORKs Program for California's families by streamlining the application process. According to the Public Policy Institute of California, 78% of poor families in California are working families. For these families, support programs like CalFresh and CalWORKs can help prevent the indignity of hunger in meeting basic needs. Low wage workers face significant barriers to participation in the CalFresh Program. Few have paid time off or reliable transportation to get to the county welfare department for the application process. [This bill] will prohibit 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. It also will require notice to recipients about their federal right to receive free employment data reports and to correct inaccurate information in employment and income verification databases. It also will empower low-income Californians to correct errors in their consumer reports." Recommended amendments: In order to clarify that certain provisions of this bill apply to applicants as well recipients and to make clear that counties must provide specified required information in the event of an adverse action only when the determination behind that action was based in whole or part from information contained in a credit report, committee staff recommends the following amendments beginning on line 12 of page 2 of the bill: SB 1232 Page 8 12 11023. (a)If a county human services agency elects to use 13 information contained in a consumer credit report for the 14 determination of CalFresh or CalWORKs eligibility or benefit 15 level, the county shall obtain written authorization from an applicant or recipient prior to obtaining the credit report.do all of the following:16(1)Obtain written authorization from an applicant or recipient17prior to obtaining the credit report.18(2)(b)ProvideIfthea county takes an adverse action against an applicant ora19 recipient, the determination of which was based in whole or SB 1232 Page 9 part upon information contained in the consumer credit report, the county shall do all of the following:(1) pP rovide theapplicant orapplicant or recipient with the notice required P3 1 by Section 615 of the federal Fair Credit Reporting Act (15 U.S.C. 2 Sec. 1681m), indicating that the verification or eligibility 3 determination was based, in whole or in part, upon the information 4 contained in the consumer credit report. For purposes of this 5paragraph,subdivision, an "adverse action" means a determination of 6 ineligibility for CalFresh or CalWORKs or a reduction in benefits 7 or services. SB 1232 Page 10 8(3)(2) Issue the notice required by paragraph(2)(1) in writing and in 9 accordance with the standards for adequate notice established in 10 federal law. 11(4)Issue the notice required by paragraph (2) before taking any12adverse action, including a denial of CalFresh eligibility or13CalWORKs benefits or services, against the applicant or recipient.14(5)15(4)(3) Make the information available to an applicant or recipient 16 SB 1232 Page 11 who requests a copy of his or her case file or appeals a negative 17 action based in whole or in part on information the county obtained 18 from the consumer credit report. 19(b)(c) The written authorization and notice required by this section 20 may be provided by electronic means. 21(c)(d) If the county human services agency elects to use information 22 contained in a consumer credit report for the determination of 23 benefit level, the county shall not require the applicant or recipient 24 to submit hard-copy documentation that is duplicative of the SB 1232 Page 12 25 information it will verify using the credit report. 26(d)(e) Nothing in this section precludes the use of other forms of 27 verification or prohibits the county from requesting additional 28 documentation when the county establishes, in writing, that the 29 information it has already received is questionable. REGISTERED SUPPORT / OPPOSITION: Support Western Center on Law and Poverty -sponsor SB 1232 Page 13 California Association of Food Banks California Catholic Conference Children's Defense Fund Community Action Partnership of Orange County St. Anthony Foundation Food Bank of Contra Costa and Solano United Ways of California Opposition None on file. Analysis Prepared by:Daphne Hunt / HUM. S. / (916) 319-2089