BILL ANALYSIS �
SENATE HUMAN
SERVICES COMMITTEE
Senator Carol Liu, Chair
BILL NO: SB 1391
S
AUTHOR: Liu
B
VERSION: April 9, 2012
HEARING DATE: April 10, 2012
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FISCAL: Yes
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CONSULTANT: Mareva Brown
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SUBJECT
CalFresh benefits: Overissuance
SUMMARY
Establishes a cost-effective threshold for collecting
overissuances to CalFresh recipients in cases where the
overissuance is made due to administrative error.
ABSTRACT
Current law
1)Establishes the Cal Fresh program, which administers the
provision of federal Supplemental Nutritional Assistance
Program benefits (formerly called food stamps) to
families and individuals meeting specified income and
other criteria.
2)Establishes under state and federal law that when an
overissuance of benefits is made to a CalFresh
beneficiary, that overissuance must be collected.
3)Establishes under state law a structure for collecting
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such overissuances from beneficiaries of public social
services, including CalFresh, which includes the
withholding of five percent of benefits if the
overissuance was caused by agency error, and a 10 percent
withholding if the error was for any other reason.
4)Establishes a repayment structure for families who are
not current beneficiaries.
5)Establishes in federal law three categories of
overissuances:
a) Intentional program violation, which are deliberate
fraudulent mistakes
b) Inadvertent Household Errors, which are
unintentional mistakes made by the recipient
c) Administrative Errors, which are mistakes made by
the social services agency, either through processing
or other means
6)Requires in federal statute that states return 100
percent of collected overpayments to the federal USDA
when those overpayments are the result of administrative
error. States retain a percentage of the collections when
overissuances are the result of inadvertent household
error (20 percent) or intentional program violation (35
percent).
7)Permits states, under federal law, to create a
cost-effective threshold for collecting overissuances of
Supplemental Nutritional Assistance Program.
8)Establishes in federal law a threshold of $125 for states
to opt to neither establish or collect overissuances in
the Supplemental Nutritional Assistance Program, as
specified.
This bill
1)Creates a new section under WIC 18927 that establishes
rules and a process guiding counties in collecting
overpayments specifically from CalFresh recipients.
2)Establishes that current and future benefits be reduced
when overissuances are caused by intentional program
violation, inadvertent household error or fraud.
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3)Establishes that current and future benefits be reduced
when the overissuance is the result of administrative
error if required by federal law, or when the
overissuance is above the threshold established in this
section.
4)Establishes that a household's benefits shall not be
reduced to repay an overissuance unless the household
receives adequate and timely notice of the overissuance
including, but not limited to a budget worksheet that
includes the amount and calculation of the overissuance
and the reason for the overissuance.
5)Establishes a repayment structure that reflects state and
federal law prohibiting the reduction of a household's
monthly benefits beyond 5 percent or $10, whichever is
less, unless the recipient elects for the benefits to be
reduced at a higher rate.
6)In cases where the family is no longer receiving CalFresh
benefits, prohibits the establishment of an overissuance
caused by an administrative error when the overissuance
is less than $125 or the threshold established in this
section, whichever is greater.
7)When the collection of an overissuance for an
administrative error is pursued, requires that the
Department of Social Services define reasonable
cost-effective collection methods, including adequate and
timely notice of the overissuance which includes at a
minimum:
The amount and calculation of, and reason for,
the overissuance
A statement of the threshold for collecting
overissuances in cases of administrative error
Information about how to appeal the
overissuance
Instructions for timely repayment
Consequences of delinquent payment
1)Permits the Department of Social Services to establish a
minimum cost-effective threshold for collecting CalFresh
overissuances and requires that if that threshold is more
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than $125, the department shall include that threshold in
the state's CalFresh plan, which is submitted annually
for federal approval.
2)In cases where the family is receiving CalFresh benefits,
prohibits the establishment or collection of an
overissuance caused by an administrative error when the
overissuance is less than $125 or the threshold
established in this section, whichever is greater.
3)Permits the Department of Social Services to implement
this language through an all-county letter or similar
instructions from the department director no later than
January 1, 2013.
FISCAL IMPACT
This bill has not yet been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
Purpose of the bill
The author states that given California's difficult fiscal
climate, it makes no sense for the state to spend more in
collecting overpayments from CalFresh recipients than the
amount of the overissuance, especially when the error is
through no fault of the recipient. These issues are
exacerbated by significant increases in requests for
assistance in the CalFresh and CalWORKs programs due to the
recession, at a time when administrative costs for CalFresh
remain at 2001 cost levels. When administrative errors are
made, the state must collect those overissuances from
recipients and return 100 percent of that money to the U.S.
Department of Agriculture. Since federal law permits states
to establish a threshold for collecting overissuances, and
encourages cost-effective program implementation, the
author argues that California should establish a reasonable
cost-effective overissuance payment structure, as other
states have done.
Cal Fresh
A November 2010 federal survey indicated that nearly 15
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percent of U.S. households experienced food insecurity in
2008 and 2009, the highest number since food security
surveys were begun in 1995. Food-insecure households had
difficulty at some time during the year providing enough
food for all their members due to a lack of resources.
Nearly 7 million Americans, or 6 percent of the country,
experienced a severe range of food insecurity in which the
food intake of some household members was reduced and
normal eating patterns were disrupted due to limited
resources. Ten percent of the country's families with
children experienced food insecurity at least once annually
during each of those years.
CalFresh, California's food stamp program, serves about 3.9
million people annually, a number that has grown by
approximately 1 million since 2009. Benefits are funded by
the U.S. Department of Agriculture; however the federal
government, California and counties share the cost of
administering the program.
The state has had historically low participation rates in
the program, which have been the source of various studies
and bills. The state ranked last in 2010 among states in
use of benefits by eligible residents, and California
ranked last in use of benefits among eligible working poor
families, according to the USDA.
Error claims
Of the $24 million collected from CalFresh recipients for
overissuances in the third quarter of the 2011 fiscal year,
$10.6 million or 44 percent was classified as
administrative error, according to federal data. All of
that money was returned to the federal government. Of the
$12.2 million collected from overissuances classified as
inadvertent household errors, 20 or 35 percent (depending
on collection method) - or a minimum of $2.4 million - was
retained by the state. Of the $1.4 million collected under
the classification of intentional program violation, 35
percent - or $473,000 was retained by the state.
Federal guidance
In 2000, the USDA's Food and Nutrition Service issued rules
and regulations for the establishment and collection from
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food stamp recipients. In announcing a departure from the
previous federal claims threshold of $35, the agency noted
that $35 was "outdated" and did not reflect actual
collection costs to state agencies. Instead, it established
a $125 threshold for collecting federal overissuances of
food stamp benefits. The Food and Nutrition Service also
added a state option to create its own cost effectiveness
plan, which must be approved by the federal agency.
Related Legislation
AB 6 (Fuentes, Chapter 501, Statutes of 2011) changed
reporting requirements for recipients from quarterly to
semi-annually, among other policy changes.
Arguments in support
The Western Center on Law and Poverty, the bill's sponsor,
argues that SB 1391 would align California policy with
other states in setting the collection of CalFresh
overissuances at $125, or greater while not altering
California's efforts to collect
overissuances that result from client errors or fraud.
"Many recipients who receive administrative overpayments,
and then are noticed that they must repay them, experience
shame and anxiety, as well as uncertainty about the
process. ? By relieving county administrators of the time
required to pursue small overpayments, they can more
effectively use their time to help eligible receive the
timely, quality assistance."
POSITIONS
Support: Western Center on Law and Poverty (sponsor)
Alameda County Community Food Bank
American Federation of State, County and
Municipal Employees
California Alliance of Child and Family Services
California Association of Food Banks
California Catholic Conference, Inc.
California Family Resource Association
California Food Policy Advocates
Coalition of California Welfare Rights
Organizations, Inc.
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Feeding America San Diego
National Association of Social Workers
San Francisco Board of Supervisors Food Security
Task Force
St. Anthony Foundation in San Francisco
Oppose:None received
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