BILL ANALYSIS
AB 1642
Page 1
Date of Hearing: April 28, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1642 (Beall) - As Amended: March 18, 2010
Policy Committee: Human
ServicesVote:4 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill repeals the quarterly redetermination requirements for
CalWORKs and Food Stamps and instead imposes a semiannual
redetermination requirement. Specifically, this bill:
1)Requires counties to use information reported by program
participants on a semiannual report form to prospectively
determine eligibility and grant amounts for the following six
months.
2)Requires that any GF savings associated with the change from
quarterly to semi-annual reporting be reinvested in the
administration of county welfare programs, unless the savings
exceed any underfunding of the actual costs to the counties of
administering the foods stamps and CalWORKs programs.
3)Establishes an income reporting threshold which requires
recipients to report changes in income during the interim if
those changes exceed the lesser of 130% of the federal poverty
level, the point at which they would become ineligible for
food stamps, or the point at which they would become
ineligible for CalWORKs. For most families, the amount will
be a change in their income of approximately $1100.
4)Establishes procedures for adoption of reporting cycles,
criteria for a complete semi-annual report, and steps to be
taken when a recipient fails to submit a completed report,
consistent with procedures currently used in quarterly
reporting.
5)Provides that rules and procedures governing reporting for
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food stamps and CalWORKs be consistent with federal food stamp
rules and procedures for simplified reporting.
FISCAL EFFECT
One-time costs in the range of $17 million with annual on-going
savings of approximately $2 million and an increase in federal
funding for the state of approximately $150 million.
1)One-time costs in the $17 million (TANF/GF) range for systems
changes and providing notices to participants about the
implementation of the new reporting requirements. Those costs
may be partially offset through the use of a portion of the
additional $30 million California received from the federal
government for food stamp administration in a Department of
Defense appropriation bill. Those funds may be used for
various food stamp administrative activities and are not
limited to these automation costs.
2)On-going annual CalWORKs grant savings in of approximately $2
million as a net result of some CalWORKs recipients receiving
slightly higher grants than they would under the current
quarterly reporting system where the grant is adjusted more
often due to earnings and other individuals receiving slightly
less than they would under the current system.
3)To the extent that this bill increases food stamp
participation, the state could expect to receive additional
state GF revenues due to increased sales tax. Studies show
that low income families spend approximately 45% of their
income on taxable goods. By providing these families with food
stamps, 45% of the money previously used by the family to
purchase food would now be used for taxable goods. Based on
this assumption, if there is a 5% increase in the food stamp
caseload the state could expect to receive up to $3 million in
additional sales tax revenue.
4)Assuming a 5% increase in food stamps cases, Californians
could receive over $125 million in federal food stamp
benefits. Further, this bill would allow the children in these
families to be eligible for free school meals, which are
primarily federally funded. Over $20 million dollars in
additional federal funding could flow to the state to provide
these children with free school lunches and breakfasts.
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Finally, several million dollars in increased federal child
welfare services funds could be received by the state.
COMMENTS
1)Rationale . The current complexity of the food stamp program is
hurting participation. United States Department of Agriculture
(USDA) studies show that only 50% of eligible Californians
receive food stamps. This bill is designed to improve food
stamp participation and create efficiencies in the program by
continuing the practice of aligning eligibility requirements
for both the CalWORKs and Food Stamps programs.
2) USDA Opinion . In a letter provided to former assemblymember,
John Laird, on a similar bill dealing with semi-annual
reporting (AB 2844 of 2008), the USDA strongly encouraged the
state to move to a semi-annual reporting process. According to
USDA findings from other states, semi-annual reporting should
have numerous positive impacts for California, such as:
i) Improving the state's food stamps error rate by
limiting the number of changes that would need to be
reported by food stamps participants.
ii) Significantly reducing county administrative
workload due to less frequent certifications and
interviews, fewer reapplications following closures, and
fewer periodic report forms to process.
iii) Providing greater access to food stamps for eligible
families because there would be fewer terminations due to
incomplete recertifications, less frequent
recertification reviews, and more time to provide case
managements and other services designed to assist
clients.
iv) Increasing the number of families that receive food
stamps based on the study of four states that saw an
increase in participation once they adopted semi-annual
reporting. The USDA also notes that there is no known
correlation between simplified reporting and an increase
in fraud.
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3)Quarterly Reporting Grant Impacts . With the change from a
monthly reporting system to quarterly reporting for CalWORKs
and Food Stamps, the prior administration estimated that there
would be a significant cost associated with families
continuing to receive grants for two months for which they are
no longer entitled. However, once the system was implemented,
the actual data on grant payments showed that this concern was
unfounded. Given the state's experience with the move from
monthly to quarterly reporting, there is no evidence to
suggest that a move from quarterly to semi-annual reporting
would have a significant cost impact on CalWORKs grants. In
fact, as noted in the fiscal section, DSS estimates that this
change would actually result in a CalWORKs grant savings.
4)Food Stamps and Hunger . According to research by the
University of California at Los Angeles, over 2.2 million
Californians cannot always afford enough food, and almost
one-third, or 658,000 of these adults experience episodes of
hunger. According to the U. S. Department of Agriculture, only
about half of eligible food stamp recipients participate in
the program due to programmatic and administrative barriers.
California ranks last in the nation with a participation rate
of 39% of eligible people. A 2004 study by Mathematica
indicated that Food Stamps participation is 12% lower among
working low-income families because of the burdensome
eligibility process.
5)Increases in the Cost of Food . Some food items experienced a
double-digit increase in price during 2007, including milk,
17%, cheese, 15%, and bread, 12%. Increasing food costs are a
greater problem for families than soaring oil prices. The
average household spends three times as much for food as for
gasoline, with food accounting for 13% of household spending
compared to 4% for gas.
6)School Meals Program . School meal programs are also
underutilized. Only half of income eligible students receive
lunch at school, and 18% receive school breakfasts. Some
low-income children with incomes between 133% and 185% of the
federal poverty level, currently ineligible for food stamps,
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may not receive school meals because their families cannot
afford the 40 cents required for a reduced price lunch and 30
cents for breakfast. The children in new food stamps
households would be eligible for free school meals.
7)Additional Federal Child Welfare Services Funds. The federal
government awards funding to states through the Promoting Safe
and Stable Families (PSSF) program that can be used in the
Child Welfare Services program for efforts to reduce the
incidences of child abuse and neglect, and to promote
stability and permanency for at-risk children within families.
The federal government sets a capped amount for funding and
then awards those funds to states and territories based upon
the number of children in each state who are receiving food
stamps. Despite serving over 25% of the national child welfare
caseload, California receives less than 15% of the federal
PSSF funds because of the low food stamps participation rate.
To the extent this legislation increases food stamps
participation among families with children, California's share
of the PSSF funding should increase.
8)Related Legislation . AB 1057 (Beall) in 2009 contained these
provisions, along with other provisions to eliminate finger
imaging for food stamps recipients and create a new duplicate
aid fraud system. That bill was held on this committee's
Suspense File.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081