BILL ANALYSIS �
SENATE HUMAN
SERVICES COMMITTEE
Senator Jim Beall, Chair
BILL NO: AB 1613
A
AUTHOR: Stone
B
VERSION: May 7, 2014
HEARING DATE: June 10, 2014
1
FISCAL: Yes
6
1
CONSULTANT: Mareva Brown
3
SUBJECT
CalWORKs: benefits overpayment
SUMMARY
This bill authorizes the state to establish a minimum
cost-effectiveness threshold for collecting an overpayment
of a CalWORKs benefit. Additionally, it alters the
repayment method from a reduction of 5 percent of the
state's maximum aid payment to 5 percent of the recipient's
monthly payment if the overpayment was due to agency error.
The repayment mechanism for overpayments made for other
reasons would become 10 percent of the beneficiary's
monthly payment.
ABSTRACT
Existing law:
1) Establishes in Federal law the Temporary Assistance
for Needy Families (TANF) program to provide
assistance to needy families so that children may be
cared for in their own homes or in the homes of
Continued---
STAFF ANALYSIS OF ASSEMBLY BILL 1613 (Stone)
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relatives, and to end the dependence on government
benefits by promoting job preparation, work and
marriage. (45 CFR 260.2)
2) Establishes in California the California Work
Opportunity and Responsibility to Kids (CalWORKs) Act,
administered by the Department of Social Services
(CDSS) to provide cash benefits, employment training
and other supports to low-income families through a
combination of state and county funds and federal
funds through the TANF block grant. (WIC 11200, et
seq)
3) 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 approximately 40% of the Federal Poverty
Level. (WIC 11450, 11150 et seq.)
4) 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)
5) 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)
6) Authorizes counties to reduce current and future
CalWORKs grant amounts due to prior overpayments, and
requires grant payments to be reduced by 5 percent of
the maximum aid payment of the assistance unit if the
overpayment is due to agency, or county, error and 10
percent for any other reason. (WIC 11004 (c))
7) Requires a county to advise a CalWORKs recipient of
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the proposed grant reduction and of his or her
entitlement to a state hearing on the propriety of the
reduction prior to effectuating any grant reduction.
(WIC 11004 (e))
8) Prohibits a county from attempting to collect
overpayments from a recipient who no longer is
receiving CalWORKs benefits if the overpayment is less
than $35, and requires that reasonable cost-effective
efforts at collection be implemented if the amounts
owed are $35 or more. Requires every effort to be
made to collect overpayments regardless of the amount
in cases involving fraud. (WIC 11004 (g))
9) Establishes the right of any applicant for or
recipient of public social services to request a state
hearing, as specified, if he or she is dissatisfied
with any action of the county relating to his or her
application for or receipt of public social services.
(WIC 10950)
10)Prohibits a civil or criminal action from being taken
against a person based on an unlawful application for
public social services if the case record of that
person has been destroyed after a required four-year
retention period. (WIC 11004 (j))
This bill:
1) Alters the required collection rate from 5 or 10
percent of a beneficiary's maximum aid payment to that
percentage of their actual monthly benefit.
2) Prohibits a county from establishing an overpayment
if either of the following conditions are met:
a. The costs of collecting the outstanding
overpayments are expected to exceed the average
amounts to be recovered by the county.
b. The amount of the overpayment is less
STAFF ANALYSIS OF ASSEMBLY BILL 1613 (Stone)
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than one hundred twenty-five dollars ($125) or a
minimum cost-effectiveness threshold established
by CDSS, whichever is greater.
3) Increases the minimum overpayment amount required
to initiate collection action by counties from former
CalWORKs recipients from $35 to $125, or the minimum
cost-effectiveness threshold established by CDSS,
whichever is greater.
4) Adds the prohibition of administrative action to
the prohibition of civil and criminal action to be
taken against a person based on an unlawful
application for the receipt of public services. Adds
the category of erroneous application to this
prohibition.
5) Permits CDSS to establish a minimum
cost-effectiveness threshold consistent with federal
law for collecting an overpayment that is greater than
one hundred twenty-five dollars ($125). Requires that
if the department establishes such a threshold, each
county must implement the new threshold.
FISCAL IMPACT
An Assembly Appropriations Committee analysis calculated
this bill would result in minor general fund revenue loss
to DSS from the reduced ability to collect overpayments,
likely offset by efficiencies gained through reduced
workload associated with not pursuing all overpayments.
Additional one-time costs for changes to the Statewide
Automated Welfare System (SAWS) should be minor and
absorbable within the existing SAWS maintenance and
operations budget. The committee also noted that there may
be potential general fund savings to the extent there is
corresponding reduction in the requests for state hearings
regarding overpayments.
BACKGROUND AND DISCUSSION
Purpose of the bill:
According to the author, this bill is critical to conserve
essential benefits for needy families who received
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erroneous overpayments as well as to prevent counties from
spending more collecting those payments than they recover
in collection. California law requires collection of all
overpayments to current beneficiaries through a reduction
in their grants and collection from former beneficiaries if
the overpayment exceeds $35. The author states that
because there is no threshold for the collection of
overpayments to current CalWORKs cases, county costs to
collect overpayments often exceed the actual amount of the
overpayment. In many cases, those costs can include a state
hearing at a cost of $1,025.
By establishing a minimum threshold for overpayment
collection of $125 in all cases, counties save
administrative costs of identifying and pursuing
overpayments below the threshold. The $125 threshold
reflects those set in California and other states as a
cost-effective minimum for collection of food stamp
overissuances.
Currently, overpayments are collected by reducing a
family's future grants by 5 percent or 10 percent of the
maximum aid payment (MAP) based on family size. This means
that a family of three receiving $463 per month might see a
$63 reduction each month until the overpayment is paid off
because the MAP for a family of three is $633. By applying
the reduction percentage for overpayment collection to a
family's actual monthly grant amount instead of the MAP,
this bill will further reduce the monthly financial burden
and hardship for families, the author states.
Poverty
A survey by the National Poverty Center by researchers at
the University of Michigan and Harvard University released
in May 2013 documents a significant increase in deep
poverty among children in the United States. In mid-2011,
researchers found 1.65 million households with 3.55 million
children were living in extreme poverty in a given month.
This number represented 4.3 percent of non-elderly
households in the United States with children. The
prevalence of extreme poverty has risen sharply since 1996,
researchers found, and particularly among families impacted
by the 1996 welfare reform.
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Researchers noted that changes to public programs in the
past 15 years have impacted poor families. Today, a single
mother earning minimum wage and working an average of 25
hours a week likely would be in deep poverty, although the
effects to her and her children could be lessened by
receipt of various public benefits.<1> This finding was
echoed in research that led to the U.S. Census Bureau's
development of the Supplemental Poverty Measure, an
informational tool which calculates poverty rates more
accurately throughout the country.
Other recent research has drawn strong correlations between
living in poverty and poor childhood outcomes such as
educational achievement, social adjustment and physical and
mental health.
CalWORKs
The California Work Opportunity and Responsibility to Kids
(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 Temporary Assistance
for Needy Families (TANF) block grant. According to recent
data from CDSS, 554,292 families rely on CalWORKs,
including more than 1 million children. Nearly 80 percent
of children are under age 12.
The average monthly CalWORKs cash grant for a family of
three is $463, or $15.43 per day to meet basic needs such
as rent, clothing, utilities and other necessities. A
family of three receiving the average grant amount would
have an annual household income at $5,556 per year -- about
one quarter of the Federal Poverty Guidelines level for the
same size family of $19,790.
While federal law limits cash assistance to a family with
an adult to 60 months, California law limits eligibility
for the CalWORKs program to 48 months, with a requirement
that families must meet federal work participation
requirements for 24 of those months in order to retain
-------------------------
<1> "Rising Extreme Poverty in the United States and the
Response of Federal Means-Tested Transfer Programs,"
Shaefer, Luke and Kathryn Edin, National Poverty Center,
May 2013, pg.6.
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eligibility and benefits.
Overpayments and overissuances
California requires counties to collect overpayments from
beneficiaries by withholding 5 percent or 10 percent per
month of the maximum aid payment for their family unit,
depending on the nature of the overpayment. In the last two
fiscal years, approximately 1,100 overpayments were
identified and collected. Monies collected from
overpayments are returned to the state's TANF fund and
moneys used to pursue collections are spent from the
state's TANF administrative account.
Existing law requires the state to collect all overpayments
from current aid recipients, regardless of the amount. In
the case of a discovery of an overpayment by a former
recipient, California law sets the minimum threshold for
collection at $35.
The federal government grants TANF money to states to
allocate under state guidelines, including setting
guidelines for recovering overpayments. While federal law
does not prescribe standards of collecting overpayments, it
generally requires that state grant recipients promote
effective program delivery, efficiency, and better
relationships between governmental units and the Federal
Government. (2 CFR 225.20).
In 2012, AB 1391 (Liu) Chapter 491, Statutes of 2012,
authorized CDSS to establish a minimum cost-effective
threshold for collecting overissuances of CalFresh
benefits. In the absence of a cost-effective calculation,
the state implemented a minimum threshold of $125 for
collecting overissuances, following the lead of a number of
other states and the U.S. Department of Agriculture (USDA),
which oversees the CalFresh program.
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
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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.
This bill would align the $125 minimum threshold that
exists already in the CalFresh program with the CalWORKs
program.
Related legislation
SB 1391 (Liu) Chapter 491, Statutes of 2012, to establish a
minimum cost-effective threshold for collecting
overissuances of CalFresh benefits.
COMMENTS
1. Due to a number of information technology changes
to welfare systems statewide, staff recommends moving
the implementation date of this bill to April 1, 2015,
to allow the Office of Systems Integration sufficient
time to make program changes. Staff recommends the
following amendment:
Section 4:
(a) Notwithstanding the Administrative Procedure Act
(Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code), the
State Department of Social Services shall implement
this act through an all-county letter or similar
instructions from the director no later than April 1,
2015.
(b) The department shall adopt regulations as
necessary to implement this act no later than July 1,
2016.
PRIOR VOTES
Assembly Floor 49 - 24
Assembly Appropriations 12 - 5
Assembly Human Services 5 - 0
POSITIONS
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Support: Western Center on Law and Poverty
Oppose: None received.
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