BILL ANALYSIS
AB 1642
Page 1
Date of Hearing: April 13, 2010
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Jim Beall, Jr., Chair
AB 1642 (Beall) - As Amended: March 18, 2010
SUBJECT : Food Stamp and CalWORKs: reporting
SUMMARY : Converts the Food Stamp Program (FSP) and CalWORKs
recipient income reporting periods from quarterly to semi-annual
as specified.
EXISTING LAW
1)Provides, under federal law, states the option to adopt
"Simplified Reporting" (or as it is known here in California,
Semi-Annual Reporting (SAR).
2)Requires, via an existing federal directive from the United
States Department of Agriculture, that the Department of
Social Services (DSS) convert its FSP recipient income
reporting period from a quarterly to SAR period or comply with
other federal reporting law, as specified.
3)Requires, in both the FSP and CalWORKs programs, that counties
review recipient eligibility and grant amounts on a quarterly
basis using prospective budgeting.
4)Establishes procedures for quarterly reporting, including a
county option for staggered reporting cycles, criteria for a
complete report, and steps to be taken when a recipient fails
to submit a complete report.
FISCAL EFFECT : Unknown
COMMENTS :
Background : According to the United States Department of
Agriculture (USDA), the effectiveness of the Food Stamp Program
depends on the extent to which it reaches those who are entitled
to its benefits. In its bi-annual nationwide ranking of states'
FSP Participation Rates, California consistently ranks lowest
among all states for the number of eligible people receiving
food stamps benefits. Fewer than half (48 percent) participated
in federal fiscal year 2007, the last time the rankings were
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calculated. The national average is almost 20 percentage points
higher at 67 percent.
In the 1990s, the USDA observed that participation in the FSP
was in decline, decided to study the issue, and formally
identified, among other things, income reporting frequency as a
barrier to participation in the Food Stamp Program. In
response, several recommendations known as "States Options" were
offered for states to adopt to increase their participation. In
2008, the Legislature approved and the Governor signed one of
these options--AB 433 (Beall), Chapter 625, Statutes of 2008.
AB 433 expanded and streamlined eligibility to an estimated
86,000 people through a federal option called Modified
Categorical Eligibility. Through this bill, the author seeks to
implement another federal option known as SAR.
Why is the reporting frequency requirement a barrier ? Both the
FSP and CalWORKs are federal programs with federal rules,
although, states are granted some authority for customization.
The federal government allows states to set the frequency of
reporting and California has chosen to require both FSP and
CalWORKs recipients to report their income every three months as
a way to ensure that they are still eligible for benefits.
The USDA and food advocates report that in order for applicants
to obtain food stamp benefits, they must make multiple trips to
the county welfare office, where the application, proof of
income and assets documents and fingerprints are processed, and
the face-to-face interview occurs. Both groups report that
applicants must make three to five trips to the county welfare
office before the entire application process is completed. For
low-income applicants and recipients, this number presents a
barrier because getting to the county office presents the
following challenges: They: a) cannot afford the time of work;
b) do not want to explain to their employer the reason for the
time off; or c) do not own a vehicle and must take public
transportation, a mode that does not provide for quick and
convenient mobility. Ultimately, the reality is that applicants
sometimes do not complete the application process and go without
benefits, and recipients end up falling of the programs because
of the demanding frequency of reporting.
According to the author, "California passes up significant
federal food stamp benefits every year. We can begin to claim
some of this lost federal money by simplifying the Food Stamp
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Program. AB 1642 would reduce administrative errors and remove
millions of pages of paperwork from the food stamp and CalWORKs
processes in California."
This bill adopts the federal "simplified reporting" option
permitting food stamp recipients to report their income,
resources and circumstances on a semiannual rather than a
quarterly basis.
Background on SAR : The current quarterly reporting/prospective
budgeting system was enacted in AB 444 (Committee on Budget),
Chapter 1022, Statutes of 2002, which ended the state's use of
the wasteful and error-prone monthly reporting system. It was
fully implemented statewide in 2004. California is now the only
state in the nation to use a quarterly reporting system for food
stamps. Quarterly reporting is more vulnerable to federal food
stamp error rate penalties than would be a semi-annual reporting
system, since the opportunities for errors are twice as
frequent.
According to the USDA, 49 states and the District of Columbia
use the "simplified reporting" option utilizing certification
periods of four months or longer, "most typically choose either
a 12-month certification period with a required semi-annual
report that the household must submit, or a six-month
certification period." This bill adopts the former approach.
The "redetermination" in this bill is not the equivalent of
"recertification," which requires that recipients re-submit all
of the documentation used for the initial application.
SAR requires that a household report when its income exceeds
130% of poverty, the basic income eligibility threshold for the
FSP. It also permits adjustments within the six-month period if
a household reports a change in circumstances that would qualify
it for higher benefits.
While SAR is available under federal food stamp law, the
substantial overlap of food stamp and CalWORKs cases can cause
confusion and automation challenges if the two programs operate
under different reporting rules. This bill therefore adopts SAR
for both food stamps and CalWORKs. Moreover, SAR is currently
used in the Medi-Cal program. AB 1642 would therefore result in
alignment of reporting periods among the three main programs
serving California's poor.
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The USDA actively promotes simplified reporting to states. A
March 31, 2006, letter from its Regional Administrator observed,
"With regard to the impact that simplified reporting has had on
client access and participation, as well as the question of
whether it has helped reduce administrative burdens on state
staff, the answer is that it has had a beneficial effect on all
three." Additionally, the letter cites a May 2004 report
prepared by Mathematica Policy Research, Inc. under a
cooperative assistance agreement with USDA's Economic Research
Service, examining four states that had implemented simplified
reporting (Arizona, Louisiana, Missouri and Ohio). The report
found that staff workload was reduced, client access improved,
and participation rates of families have increased.
Rules governing semi-annual reporting for food stamps and
CalWORKs : Procedures and rules governing SAR reporting will
generally follow federal FSP reporting rules. Under this bill,
food stamp recipients would fall under federal food stamp
requirements to report when their income exceeds 130% of the
federal poverty level (FPL).
Under SAR, pursuant to these federal rules, some families will
continue to receive benefits in the last three months of the
six-month period at a higher level than they would have if an
adjustment were made after a quarterly report, since there is no
obligation to report unless income exceeds 130% of poverty.
While food stamp benefits are an entitlement paid entirely by
federal funds, CalWORKs benefits are paid from the state's fixed
TANF block grant and state maintenance-of-effort (MOE) funds.
CalWORKs families however will have a different IRT. Section 11
of this bill would require establishing an income reporting
threshold for CalWORKs recipients that is the lesser of: (1)
three quarters of the monthly income for a family of three at
the federal poverty level plus the income last used to calculate
the recipients monthly benefits OR (2) the amount likely to
render a recipient ineligible for CalWORKS benefits . This means
that CalWORKs families would have to report in the six-month
period if their income increases by just over $1,144. The
$1,144 is fair; it results in significant administrative
savings, rewards work, and allows families to make significant
progress towards getting out of poverty before having to report.
Positive fiscal effect of food stamp benefits: According to
Moody's Investor Services, an independent provider of credit
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ratings and financial services research, food stamps have the
highest economic multiplier effect out of all government
programs or fiscal policy tools that stimulate the economy.
Moody's finds that for every food stamp dollar spent, a $1.74 is
generated in economic activity. (The USDA finds this amount to
be $1.84). Additionally, food stamps generate sales tax revenue
for county and the state coffers. To the extent that this bill
increases food stamp participation, the state could expect to
receive additional state General Fund revenues due to increased
taxable purchases by recipients. This is possible because
studies show that low-income families such as food stamp
recipients 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 purchasing taxable goods.
Potential for increased fraud : As the USDA stated in a March
2006 letter, "There is no known connection between SAR and
increased fraud." As well, the Bush administration supported
simplified reporting when it signed it into law in 2003. Thus,
the federal government has not accepted arguments that six-month
reporting undermines the $38 billion dollar investment it makes
in the food stamp program.
Support
The California Retailers Association (Retailers) and California
Grocers Association (Grocers) are both in support of this bill.
The Retailers, among other businesses represent major
supermarkets, and the Grocers represent over 500 retail members
operating more than 6,000 food stores in California and Nevada,
and approximately 200 grocery supplier companies. The Grocers
state that their supermarkets serve families that use food
stamps and "see firsthand how necessary the program is,
particularly in these tough economic times for California
residents." The Retailers additionally state that the difficult
economic climate makes access to food stamps even more
necessary, and add that the state could benefit from the
millions of dollars in food stamp benefits that would enter the
state with a rise in FSP participation and the ripple effect
that those dollars have on economic activity, as estimated by
Moody's Investor Services.
Related or past legislation
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AB 1057 (Beall), 2009-2010
SB 718 (Leno), 2009-2010
AB 231 and AB 2013 (Steinberg), 2003-2004
AB 696 (Chu) of 2005-2006
AB 1382 (Leno) of 2007-2008
AB 2844 (Laird) of 2007-2008
AB 3029 (Laird) of 2005-2006
REGISTERED SUPPORT / OPPOSITION :
Support
California Food Policy Advocates (sponsor)
California Chamber of Commerce
California Grocers Association
California Retailers Association
California Association of Food Banks
California State Association of Counties (CSAC)
Central Coast Hunger Coalition
Children's Law Center of Los Angeles
Coalition of California Welfare Rights Organizations, Inc.
(CCWRO)
County Welfare Directors Association of CA (CWDA)
Food For All Mendocino
Hunger Action Los Angeles
Jewish Family Service of Los Angeles (JFS)
Maternal and Child Health Access
Plowshares
Second Harvest Food Bank, Orange County
Second Harvest Food Bank, Santa Cruz County
SOVA Community Food and Resource Program
St. Anthony Foundation
St. Joseph's Family Center
The Beacon House Association of San Pedro
United Way Silicon Valley
Western Center on Law and Poverty
Opposition
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None on file.
Analysis Prepared by : Frances Chacon / HUM. S. / (916)
319-2089