BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1391|
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THIRD READING
Bill No: SB 1391
Author: Liu (D)
Amended: 5/25/12
Vote: 21
SENATE HUMAN SERVICES COMMITTEE : 6-0, 4/10/12
AYES: Liu, Emmerson, Berryhill, Hancock, Wright, Yee
NO VOTE RECORDED: Strickland
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/24/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SUBJECT : CalFresh benefits: overissuance
SOURCE : Western Center on Law and Poverty
DIGEST : This bill establishes procedures for recovering
CalFresh overissuances for both current and former
recipient households. This bill would define minimum
thresholds for overissuance establishment and collection
caused by administrative error (AE), inadvertent household
error (IHE), intentional program violation (IPV) or fraud.
This bill would also authorize the Department of Social
Services (DSS) to establish a minimum cost-effective
threshold for collecting overissuances, as specified.
ANALYSIS : Existing law:
1.Establishes the Cal Fresh program, which administers the
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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
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.
1.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).
2.Permits states, under federal law, to create a
cost-effective threshold for collecting overissuances of
Supplemental Nutritional Assistance Program.
3.Establishes in federal law a threshold of $125 for states
to opt to neither establish or collect overissuances in
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the Supplemental Nutritional Assistance Program, as
specified.
This bill:
1.Provides that current and future CalFresh benefits shall
be reduced subject to adequate and timely notice, as
specified, and as follows:
A. For overissuances caused by IHE, IPV, or fraud -
monthly benefits shall not be reduced by more than
five percent of $10, whichever is greater, unless the
recipient elects a higher rate.
B. For overissuances caused by AE - monthly benefits
shall not be reduced by more than five percent or $10,
whichever is greater, unless the recipient elects a
higher rate. AE claims will only be recovered if
required by federal law or if the overissuance exceeds
$125 or the threshold established by DSS, whichever is
greater.
1.For households no longer receiving CalFresh:
A. No overissuance caused by AE shall be established
or collected under $125 or the DSS-established
threshold, whichever is greater.
B. Overissuances caused by IHE shall be collected if
$35 or greater.
C. Overissuances caused by IPV or fraud shall be
collected pursuant to federal law.
1.Specifies that IHE and IPV allotment reduction rates
conform to current DSS practice.
Background
Cal Fresh . A November 2010 federal survey indicated that
nearly 15 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
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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 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
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Nutrition Service also added a state option to create its
own cost effectiveness plan, which must be approved by the
federal agency.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
One-time costs of approximately $150,000 (General Fund)
to modify automation systems.
Potential ongoing administrative cost savings due to
raising the overissuance recovery threshold, however, due
to county budget constraints, administrative savings may
be difficult to realize. Additionally, the conversion to
semi-annual reporting (SAR) may result in minimal
administrative impact due to increasing the overissuance
threshold.
Potentially significant DSS workload and staffing costs
to revise regulations and complete a cost-benefit
analysis to submit for federal approval.
SUPPORT : (Verified 5/25/12)
Western Center on Law and Poverty (source)
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.
Feeding America San Diego
National Association of Social Workers
San Francisco Board of Supervisors Food Security Task Force
St. Anthony Foundation in San Francisco
ARGUMENTS IN SUPPORT : The Western Center on Law and
Poverty states that this bill aligns California policy with
other states in setting the collection of CalFresh
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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."
CTW:nl 5/25/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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