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Addressing California's Food and Income Security for a Vulnerable Community

Publication date: 
Tuesday, February 6, 2018

In a recent report, the Legislative Analyst’s Office (LAO) initiated a study of the potential effects of ending the cash-out process for the Supplementary Security Income (SSI) / State Supplementary Payment (SSP) program. SSI / SSP provides monthly cash grants to low-income aged, blind, and disabled persons in California. SSI is the federally funded portion of the program, while SSP is funded through state funds. The term “cash-out” refers to the process in which the state includes the cash amount equal to an SSI recipient’s food benefit within the estimated value of their SSP. Through this process, California is able to avoid the high administrative costs of delivering the SNAP benefits of SSI/SSP recipients. The LAO is proposing to eliminate the cash-out process so that households currently receiving SSI / SSP receive a projected higher cash assistance to pay for food.

The LAO determined that terminating the SSI cash-out would allow certain households to become eligible for the CalFresh program, known also as the Supplemental Nutrition Assistance Program (SNAP). This will also allow certain households to receive more food benefits. Relying on data from various sources, the LAO notes a $3.5 million to $205 million net positive impact on the amount of annual federal food benefits received by Californians as a result of ending SSI cash-out. While a majority of households are expected to benefit from ending the SSI cash-out process, the LAO also prepared several “hold harmless” options to address the legal liability of the state to households that might potentially receive less food benefits.

BACKGROUND

Over 1.3 million households receive SSI/SSP payments in California, many of whom most are disabled adults and seniors. In the past, the cost of administering CalFresh exceeded the total amount of food benefits to recipients that the state received. In 1974, states were given the option to increase monthly SSP grant payments by $10 in lieu of federal food benefits. This effectively “cashed‑out” SSI/SSP recipients of their federal food benefits. The cash-out was a way to provide a cash benefit that was roughly equivalent to the food benefit at the time. California adopted the SSI cash‑out option, making SSI/SSP recipients ineligible for federal food benefits. Today, California remains as the only state in which the SSI cash-out remains in place.

Eliminating the cash-out process will make a majority SSI/SSP recipients eligible for federal food benefits under CalFresh. However, changes in the SSI/SSP program will leave a “winners and losers” scenario. The LAO reported that the type of SSI/SSP household was a key determinant of whether a recipient would benefit from the change:

  • “Pure” SSI Households or households composed of elderly or disabled nonelderly who live alone or with other SSI/SSP recipients will become newly eligible for food benefits.
  • “Mixed” SSI households or households that include both SSI/SSP and non-SSI/SSP members and very low-income households will either have an increase or decrease in food benefits depending on the additional countable income SSI/SSP household member.
  • Due to income eligibility thresholds, some mixed SSI households will become ineligible for food benefits.

POLICY RECOMMENDATIONS

Over 140,000 households are estimated to lose over $160 million in federal food benefits with the elimination of the SSI cash-out. The following are hold harmless options for households prepared by the LAO:

  • Option 1 - Provide a short-term food benefit to existing population. This entails providing households who are anticipated to lose food benefits a fixed level of food benefits within a fixed amount of time (i.e. six months).
  • Option 2 – Provide a long-term food benefit to existing population. This entails providing a state-funded program that mirrors the program structure and rules of CalFresh today for households who are anticipated to lose food benefits with levels of food benefit adjusted for any household changes. If participants can receive more CalFresh benefits, the participant can exit the program and enroll for CalFresh, however, will not be able to return to the state-funded program
  • Option 3 – Provide a long term food benefit to existing and future populations. – This entails creating a program similar to option 2, but with the addition of future households.
  • Option 4 – Provide a policy to a more narrow population. This entails providing a temporary or permanent program that captures only a portion of mixed SSI households.

Additionally, the LAO listed four prevailing issues for consideration of the California State Legislature before proceeding to take on legislative action:

  1. There are “winners and losses” or efficiency-welfare tradeoffs associated with ending the program.
  2. Stronger estimates are needed to fully capture the impact of ending SSI.
  3. There are questions regarding ways to reduce administrative challenges and costs for the state and counties and determining the appropriate hold harmless policy to be instituted in the state.
  4. Whether instituting a hold harmless policy and providing a state food benefit would affect individual’s eligibility for other public assistance programs.

While the California State Legislature weighs-in on the various scenarios and implications of ending SSI cash-out process, the LAO’s determination that a greater share of households will become eligible to apply for CalFresh / SNAP may allow California to better address poverty and provide economic growth and opportunity within the state. The Food and Research Action Center (FRAC) reported that programs such as the Supplemental Nutrition Assistance Program (SNAP) has been tremendously successful in reducing poverty and meeting the needs of vulnerable populations. FRAC highlighted that SNAP has lifted over 3.6 million Americans out of poverty in 2016 and is nearly as effective as the Earned Income Tax Credit in lifting families above the poverty line. Additionally, one SNAP dollar is estimated to generate over $1.79 in economic activity. However, the California Food Policy Advocates (CFPA) argued that the administrative cost of delivering the $16 (adjusted from $10 in 1974) minimum CalFresh benefit is significantly higher than the face value of the benefit, potentially running to the same issue as in 1974. Additionally, CFPA raised the concern that elderly participation in the CalFresh currently is very low and it is not certain how likely seniors will apply for CalFresh once eligible.

 

If you have questions or comments, please contact Sean Tan, Public Policy Intern, at (213) 680-8866 ext. 215 or [email protected]

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