The Potential Effects of Ending the SSI Cash-Out

The Potential Effects Of Ending the SSI Cash-Out MAC TAYLOR LEGISLATIVE ANALYST JANUARY 8, 2018 analysis full gutter AN LAO REPORT LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Executive Summary Supplemental Report Language (SRL) Required LAO to Report on Effects of Ending the “SSI Cash-Out.” During deliberations on the 2017-18 budget package, the Legislature directed our office to report on the programmatic and fiscal implications of ending a long-standing state policy that provides Supplemental Security Income/State Supplementary Payment (SSI/SSP) recipients an extra $10 payment in lieu of their being eligible to receive federal food benefits through California’s CalFresh program. This is known as the SSI cash-out or the CalFresh cash-out. Due to data limitations, we were not able to develop our own estimates of the impact of ending the SSI cash-out in California. Instead, we rely on estimates developed by Mathematica and modified by the Department of Social Services (DSS) to assess the potential impact of ending the SSI cash-out on households, the state, and counties. Ending the SSI Cash-Out Expected to Increase Food Benefits for Most Households. As estimated by DSS in 2017, and shown in the figure below, most households affected by ending the SSI cash-out would experience an increase in CalFresh benefits. These households are typically comprised solely of SSI/SSP members who would become newly eligible for and receive more CalFresh benefits today than the initial $10 payment provided to them in lieu of federal food benefits. The impacts are very different for current CalFresh households comprised of both SSI/SSP members and non-SSI/SSP members. The vast majority of these households would experience a reduction in food benefits. Key Factors to Consider Majority of Households Affected by in Deciding Whether to Ending the SSI Cash-Out Expected to Benefit End the SSI Cash-Out. Ending the SSI cash-out in California would affect food Newly Ineligible for CalFresh Still Eligible for CalFresh, benefits on a statewide Decreased Food Benefits 3% 14,000 households and per household basis. 23% 126,000 households Although difficult to predict, both of these effects are key factors for the Legislature to consider when weighing the trade-offs of ending the SSI cash-out: • What Is the Statewide Net Effect on Total Still Eligible for CalFresh, Food Benefits Increased Food Benefits 6% Received by 34,000 households California? Because Newly Eligible for and some households Participating in CalFresh will experience an 68% 369,000 households increase in CalFresh benefits and others will experience a www.lao.ca.gov 1 analysis full gutter AN LAO REPORT decrease in CalFresh benefits, the state could potentially draw down more or less total federal food benefits as a result of ending the SSI cash-out. The statewide net effect on food benefits depends on a number of key assumptions (such as the number of eligible households that would opt to participate in CalFresh). Initial estimates from Mathematica and DSS show that the state would receive more food benefits, on net, by ending the SSI cash-out. However, Mathematica’s and DSS’ estimates of the net increase in food benefits are very different—$3.5 million and $205 million, respectively. These different estimates illustrate how any variation in the underlying assumptions can create significantly different estimates of the net effect. • How Do Households That Benefit From Ending the SSI Cash-Out Compare to Households That Lose Food Benefits? In addition to considering the statewide net effect of ending the SSI cash-out, the Legislature should consider which households would experience an increase in food benefits and which households would experience a decrease in food benefits, and how these households compare to one another in terms of income and resources. Mathematica and DSS estimates show that households that are expected to benefit from ending the SSI cash-out have relatively less income than those who are expected to experience a reduction in food benefits. However, we note that even households that are expected to lose food benefits as a result of ending the SSI cash-out, although relatively higher income than those who are expected to experience increased food benefits, are not necessarily far above the federal poverty level. There Are Many Ways the Legislature Could Hold Households Negatively Affected by Ending the SSI Cash-Out Harmless. The SRL required our office to provide potential hold harmless options for households that would experience a reduction in food benefits as a result of ending the SSI cash-out. A hold harmless policy would create a state-funded food program that would aim to backfill all, or a portion of, these lost CalFresh benefits. We provide a number of hold harmless options, ranging from a short-term food benefit for the existing population to a long-term food benefit for existing and future populations. We note that the costs and administrative complexity of these policies vary based on a number of policy and program decisions, such as whether the state food benefit will be provided to all or a subset of negatively affected households and if the benefit will be provided on a temporary or permanent basis. Additional Issues That Merit Legislative Consideration. Finally, prior to making the decision to end the SSI cash-out and implement a hold harmless policy, we identify several key issues that merit further consideration by the Legislature. These issues include (1) understanding the trade-offs associated with keeping or ending the SSI cash-out, (2) determining whether there is a way to get more updated estimates of the impact of ending the SSI cash-out, (3) identifying ways to reduce potential administrative challenges and costs for the state and counties associated with ending the SSI cash-out or instituting a hold harmless policy, and (4) whether instituting a hold harmless policy and providing a state food benefit would affect an individual’s eligibility for other public assistance programs. 2 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT INTRODUCTION 2017-18 Supplemental Report Language Significant Data Limitations. A significant (SRL) Requires Report on Implications of Ending challenge in assessing the potential impact of ending the SSI Cash-Out. During deliberations on the the SSI cash-out is the notable limitation of available 2017-18 budget package, the Legislature directed data. As a result, we were not able to develop our own our office to report on the programmatic and fiscal estimates of the impact of ending the SSI cash-out implications of ending a long-standing state policy on the total amount of federal food benefits drawn that provides Supplemental Security Income/State down by the state or assess the effect of ending the Supplementary Payment (SSI/SSP) recipients an extra SSI cash-out on the poverty status of all affected $10 payment in lieu of their being eligible to receive households. Instead, we rely on estimates developed federal food benefits in California. This is known as the by Mathematica, a policy research organization, and SSI cash-out (or the CalFresh cash-out). In this report, modified by the Department of Social Services (DSS) to we describe the potential programmatic and fiscal assess the potential impact of ending the SSI cash-out effects of ending the SSI cash-out in California. Next, on federal food benefits received by the state and we provide examples of how ending the SSI cash-out note how these estimates could vary. Additionally, we would affect the poverty status of certain households. provide examples of specific households to show how Finally, as directed by the SRL, we conclude by a change in federal food benefits as a result of ending discussing potential options the Legislature could the SSI cash-out could ultimately impact their poverty consider to hold households negatively affected by the level. elimination of the SSI cash-out harmless and present additional issues that merit legislative consideration. BACKGROUND CalFresh household basis. Households are generally defined as individuals who purchase and prepare meals The CalFresh program is California’s version of the together. Applicants must be below certain income federal Supplemental Nutrition Assistance Program, thresholds to be eligible for CalFresh. The food benefit which provides monthly food assistance to qualifying amount a household receives is primarily based on low-income households. It is overseen at the state level household size, household income, and deductible by DSS and administered locally by county human living expenses. Figure 1 (see next page) shows how services departments. During federal fiscal year (FFY) these factors impact the amount of food benefits a 2016-17, an average of 4.3 million individuals (roughly household is eligible to receive. First, as shown in 11 percent of the state’s population) received CalFresh Figure 2 (see next page), households are eligible benefits each month. The cost of food benefits in the to receive food benefits up to a maximum amount CalFresh program, which totaled about $7 billion in that varies by household size—the more household FFY 2016-17, is paid almost entirely by the federal members, the higher the amount of food benefits they government. Costs to administer the CalFresh program are eligible to receive. Next, this maximum food benefit are shared among the federal government, the state, is adjusted downward to account for any income and counties. Total budgeted administrative costs in the household may have. A household’s income is 2016-17 were $1.9 billion ($956 million federal funds, calculated by adding up the earned income (such $683 million General Fund, and $279 million county as wages and salaries) and unearned income (such funds). as unemployment benefits) of all eligible household CalFresh Eligibility and Benefit Determination. members. Finally, households can deduct a portion of CalFresh eligibility and benefits are determined on a their shelter, medical, and other living expenses from www.lao.ca.gov 3 analysis full gutter AN LAO REPORT In 2017, the maximum SSI/SSP Figure 1 monthly grant amount for aged CalFresh Benefits Vary by Household Size, and/or disabled individuals Income, and Deductible Living Expenses ($895) was below the federal poverty level (FPL)—at 89 percent Household Size of the FPL—while the maximum As household size increases, CalFresh benefits increase SSI/SSP grant amount for aged and/or disabled couples ($1,510) was above the FPL—at 112 percent of the FPL. SSI/SSP grant amounts are generally reduced dollar-for-dollar by a recipient’s Household Income income, meaning applicants with As household income increases, CalFresh benefits decrease income in excess of the maximum SSI/SSP grant amount typically are not eligible to receive SSI/SSP benefits. The income of other household members generally does not offset a recipient’s SSI/SSP Deductible Living Expenses grant amount. This means that an As medical, shelter, and other deductible living expenses increase, CalFresh benefits increase individual SSI/SSP recipient may reside in a household with earned income from other household members that does not affect the SSI/SSP recipient’s grant— regardless of how much income the other household members have. What Is the SSI Cash-Out? their income to calculate the income they have available SSI Cash-Out Makes SSI/SSP Recipients to purchase food. Typically, food benefits increase as Ineligible for Federal Food Benefits. In 1974, states households have more deductible living expenses. were given the option to increase monthly SSP grant (More detail concerning the CalFresh eligibility and benefit determination process is in the Appendix.) Figure 2 SSI/SSP CalFresh Maximum Food Benefit The SSI/SSP program provides monthly cash grants Amount Varies by Household Sizea to low-income aged, blind, and disabled persons. Maximum Monthly The 2017-18 caseload is estimated to be 1.3 million Household Size Food Benefit Amount recipients. Most SSI/SSP recipients are disabled adults or seniors (aged 65 years or older). The state’s 1 $192 General Fund provides the SSP portion of the grant 2 352 3 504 while federal funds pay for the SSI portion of the 4 640 grant. Federal law requires that the state maintain SSP 5 760 monthly grant levels at or above March 1983 levels 6 913 ($156 for individuals and $396 for couples). If SSP 7 1,009 grants fall below these levels, the state risks losing its Each additional person +144 federal Medicaid funding. a Reflects 2017-18 CalFresh maximum benefit levels. 4 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT payments by $10 (at the time the estimated average SSI cash-out were not in place, and there are some monthly food benefit for SSI/SSP recipients) in lieu households that are better off due to the SSI cash-out of providing federal food benefits to this population. than they otherwise would be. Below, we describe This effectively “cashed-out” SSI/SSP recipients of these different households and explain why the their federal food benefits. California adopted the SSI cash-out impacts them differently. SSI cash-out option, making SSI/SSP recipients Pure SSI Households Are Worse Off Under the ineligible for federal food benefits. SSI Cash-Out. Households that are disadvantaged SSI Cash-Out Was an Alternative Way States under the SSI cash-out are primarily composed Could Provide Funding for Food to SSI/SSP solely of SSI/SSP recipients, referred to as “pure Recipients and Reduce Food Stamp Administrative SSI households” for purposes of this report. Pure Costs. At the time the SSI cash-out was implemented SSI households are composed of elderly or disabled in California, the administrative cost to the state to nonelderly adults who live alone or with other provide federally funded food benefits to SSI/SSP SSI/SSP recipients. Under the SSI cash-out, pure recipients was significantly greater than the total SSI households cannot receive CalFresh benefits even amount of federal food benefits the state received for though their income (accounting for the $10 payment SSI/SSP recipients. At one point, it was estimated in lieu of federal food benefits) is low enough to meet that the total costs of administering food benefits the CalFresh eligibility requirements. In addition, in most to SSI/SSP recipients in California would have been cases, pure SSI households would be eligible to receive more than double the total amount of food benefits a higher amount of CalFresh benefits than the initial SSI/SSP recipients would have received absent the $10 payment provided to SSI/SSP recipients in lieu of SSI cash-out. The SSI cash-out was a way to provide federal food benefits. As a result, these households are SSI/SSP recipients with a cash benefit that was roughly worse off than they would be if the SSI cash-out were equivalent to the food benefit at the time, while avoiding not in place. the administrative costs of providing benefits through Effect of SSI Cash-Out on Mixed SSI Households the CalFresh program. Varies. The effect of the SSI cash-out on households The Federal Government Treats SSI Cash-Out that include both SSI/SSP and non-SSI/SSP as a State Policy. Currently, California is the only members—referred to as “mixed SSI households” remaining state in which the SSI cash-out remains in for purposes of this report—is more complicated. place and SSI/SSP recipients are therefore ineligible Even though mixed SSI households include SSI/SSP for federal food benefits. It is our understanding that recipients who are ineligible for CalFresh due to the federal approval is not needed to end the SSI cash-out. SSI cash-out, these households can still receive If the state decides to terminate its SSI cash-out, the food benefits if the non-SSI/SSP members meet administration would only need to notify the federal the CalFresh eligibility requirements. As previously government of the action. Additionally, California would mentioned, the amount of food benefits a household have to end the SSI cash-out for all households with receives primarily depends on two main factors SSI/SSP recipients. Although not required, some states that work in opposite directions—household size that ended their SSI cash-out also reduced the SSP and income. Specifically, food benefits increase grant by the $10 that was added in lieu of federal food as household size increases, and food benefits benefits. We note that, in California, SSP grants could decrease as household income increases. Under not be reduced by a full $10 because this would cause the SSI cash-out, SSI/SSP recipients in mixed SSI them to fall below the federal minimum grant level. households are excluded from the CalFresh eligibility and benefit calculation, meaning that SSI/SSP What Has Been the recipients are excluded from the household size Effect of the SSI Cash-Out? calculation and the income of the SSI/SSP recipient is excluded from the total household income calculation. The SSI Cash-Out in California Has Affected Below, we describe how these modifications to the Households With SSI/SSP Recipients Differently. CalFresh eligibility and benefit determination process Today, there are some households with SSI/SSP effect mixed SSI households. recipients that are worse off than they would be if the www.lao.ca.gov 5 analysis full gutter AN LAO REPORT • Most Mixed SSI Households Receive More these households, the gain in food benefits CalFresh Benefits Under the SSI Cash-Out. due to the exclusion of the income of SSI/SSP For most mixed SSI households, the positive household members is relatively less than the effect of excluding the income of SSI/SSP loss in food benefits due to the exclusion of the household members has a relatively greater SSI/SSP member(s) from the household size impact on its food benefits than the negative calculation. We note that this is typically the case effect of not including the SSI/SSP member(s) for very low-income, mixed SSI households. in the household size calculation. This means Some SSI/SSP Recipients and Mixed SSI that the SSI cash-out allows most mixed SSI Households Are Not Affected by the SSI Cash-Out. households to receive more food benefits than We note that some SSI/SSP recipients and mixed they would otherwise receive if the income of the SSI households neither benefit nor lose under the SSI/SSP member were included in the household SSI cash-out. This is because some SSI/SSP recipients income calculation, even after accounting and mixed SSI households are ineligible for CalFresh for the decreasing effect on food benefits by for reasons other than the SSI cash-out. For example, not including the SSI/SSP member(s) in the individuals who reside in an institution, such as a household size calculation. nursing home, are generally ineligible for CalFresh. This • A Small Portion of Mixed SSI Households means that SSI/SSP recipients that reside in a nursing Receive Fewer Food Benefits Under the home are typically ineligible for CalFresh, regardless SSI Cash-Out. However, for some mixed SSI of whether the SSI cash-out is in place. For purposes households, excluding the SSI/SSP member(s) of the report, we focus on households that would from the household size calculation makes the experience a change in CalFresh eligibility or benefits as household eligible for fewer food benefits. For a result of ending the SSI cash-out. WHAT HAPPENS TO HOUSEHOLD ELIGIBILITY AND CALFRESH BENEFITS IF THE STATE ENDS THE SSI CASH-OUT? SSI/SSP Recipients Become Factored increase the amount of food benefits they receive today, while for other households ending the SSI cash-out Into CalFresh Eligibility and would decrease their current amount of food benefits. Benefit Calculation Generally, if the SSI cash-out is ended, the resulting If the SSI cash-out is eliminated, SSI/SSP recipients changes to the CalFresh eligibility and benefit would become eligible for CalFresh benefits. In effect, calculation will affect households in one of the following SSI/SSP recipients would be included in the CalFresh ways: eligibility and benefit calculation, meaning the income • Become Newly Eligible for Food Benefits. By of SSI/SSP recipients would count towards the total ending the SSI cash-out, pure SSI households household income and SSI/SSP recipients would be would become newly eligible for CalFresh included in the household size calculation. (We note benefits. Even though these households would that SSI/SSP recipients becoming eligible for and become eligible for food benefits, it is likely that receiving CalFresh benefits would not change their not all would choose to participate or enroll in SSI/SSP grant amount.) CalFresh. (For example, a household may choose Most Households Would See Food Benefits not to participate if they view the application Increase, While Others Will Experience a Reduction. process to be too burdensome.) For some households, ending the SSI cash-out would 6 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT • Experience an Increase in Food Benefits. three-fourths of households with SSI/SSP recipients Ending the SSI cash-out would make certain would benefit, either by becoming newly eligible for and very low-income, mixed SSI households eligible participating in CalFresh or experiencing an increase for increased food benefits primarily due to the in food benefits. However, some current CalFresh increase in the calculated household size. households would experience a reduction of food • Experience a Decrease in Food Benefits. benefits if the SSI cash-out were ended. We discuss For other mixed SSI households, their CalFresh these effects in detail below: benefits would decrease due to the additional • Pure SSI Households Would Become Newly countable income from the SSI/SSP household Eligible for CalFresh. The majority of households member(s). that would benefit from the elimination of the • Become Ineligible for Food Benefits. For some SSI cash-out are pure SSI households that would mixed SSI households, including the income become newly eligible for and participate in of SSI/SSP recipients would increase total CalFresh benefits (369,000 households). (We note household income over the CalFresh income that DSS estimated that 123,000 households eligibility thresholds, making them newly ineligible would become newly eligible for CalFresh but for food benefits. make the decision not to participate.) DSS estimated that newly eligible households that Most Households With SSI/SSP Recipients opt to participate in CalFresh would receive, on Expected to Benefit From the Elimination of average, about $75 in monthly food benefits. the SSI Cash-Out. As shown in Figure 3, DSS estimates that if the SSI cash-out is eliminated, almost Figure 3 a Majority of Households Affected by Ending the SSI Cash-Out Expected to Benefit Newly Ineligible for CalFresh Still Eligible for CalFresh, 3% Decreased Food Benefits 14,000 households 23% 126,000 households Newly Eligible for and Still Eligible for CalFresh, Participating in CalFreshb Increased Food Benefits 68% 6% 369,000 households 34,000 households a Reflects estimates of number of households that would experience a change in food benefits b We note that DSS estimated 123,000 households would become eligible for, but decide not to participate in CalFresh. SSI = Supplemental Security Income. Based on April 2017 California Department of Social Services estimates. www.lao.ca.gov 7 analysis full gutter AN LAO REPORT • Some Mixed SSI Households Would household rule is infrequent and varies by county. This Experience an Increase in Food Benefits . . . is in part because the use of this rule is not automatic, DSS estimated that 6 percent, or 34,000 but requires a county worker to determine that a households, with SSI/SSP recipients currently household would receive more CalFresh benefits receiving CalFresh benefits would experience, on if the elderly and disabled separate household rule average, a $97 increase in monthly food benefits if were applied. It is our understanding that currently the SSI cash-out were eliminated. This is primarily most households would not receive more CalFresh due to the inclusion of the SSI/SSP member(s) benefits from the application of the elderly and disabled in the household size calculation—as household separate household rule, which also contributes to its size increases, CalFresh benefits increase. current infrequent use. However, if the SSI cash-out is • . . . While Other Households Would Experience ended, this rule could potentially reduce the number a Reduction in Food Benefits. As previously of households that would lose food benefits as a result mentioned, ending the SSI cash-out would of including the SSI/SSP household member(s) in the require that the income of SSI/SSP members be CalFresh eligibility and benefit calculation. included in the household income calculation. Mathematica and DSS apply the elderly and disabled Given that CalFresh benefits are generally separate household rule to some but not all qualifying adjusted downward as households have more SSI/SSP households when estimating how households income, ending the SSI cash-out would result would be affected by ending the SSI cash-out. Based in some CalFresh households receiving fewer on CalFresh and SSI/SSP administrative data, it food benefits. Of the households that would would be reasonable to estimate that if the elderly and be negatively affected by the elimination of the disabled separate household rule were applied to all SSI cash-out, the majority of them would still qualifying households that would be negatively affected be eligible for CalFresh, but are estimated to as a result of ending the SSI cash-out, the number of experience, on average, an $88 reduction in households that would lose or become ineligible for monthly food benefits (126,000 households). For CalFresh benefits could potentially decrease by roughly some households currently receiving CalFresh 7 percent, or 18,000 households. benefits, including the SSI/SSP member(s) in the Potential Administrative Challenges With household income calculation would result in total household income exceeding the CalFresh income Ending the SSI Cash-Out eligibility thresholds, meaning that the household Elimination of the SSI cash-out may create would no longer be eligible to receive CalFresh administrative challenges and costs for counties and benefits. It is estimated that 3 percent, or 14,000, the state. These challenges and costs primarily stem of affected households with SSI/SSP recipients from (1) the initial enrollment of hundreds of thousands would become newly ineligible for CalFresh, losing, of previously ineligible SSI/SSP recipients in CalFresh on average, about $150 in monthly food benefits. and (2) the redetermination of eligibility and benefits Number of Households That Lose Food Benefits for hundreds of thousands of currently participating Could Be Lower Due to Elderly and Disabled CalFresh households. In addition, there would be Separate Household Rule. As previously stated, ongoing challenges and costs associated with the CalFresh benefits are provided to a household of maintenance of a larger CalFresh caseload. Recently, individuals that purchase and prepare meals together. the state has implemented a streamlined CalFresh However, there is an exception to this rule. An elderly application and recertification process for elderly and/or and disabled member living with others can become a disabled individuals, which may help with the enrollment separate CalFresh household even if they purchase or of newly eligible SSI/SSP recipients. Any legislative prepare meals with the other household members. To efforts to streamline the CalFresh application process qualify for the elderly and disabled separate household further in order to mitigate potential administrative rule, the income of the other household members challenges associated with ending the SSI cash-out cannot exceed 165 percent of the FPL. Currently, would most likely require input and/or approval from the the application of the elderly and disabled separate federal government. 8 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT STATEWIDE NET EFFECT OF ENDING THE SSI CASH-OUT ON CALFRESH BENEFITS IN CALIFORNIA In addition to understanding how ending the annual federal food benefits received by the state by SSI cash-out could potentially affect food benefits $205 million, on net. (We note that both Mathematica on a per household basis, it is helpful to consider the and DSS estimates are based on 2015 CalFresh aggregate, statewide effect on the total food benefits program data. Any subsequent change in program received by California. We note that the statewide effect rules, caseload, or food benefit amount will result in a that ending the SSI cash-out has on food benefits different estimate of the net effect.) depends on a number of key assumptions, including Difference Between Mathematica’s and (1) the number of households that would experience DSS’ Estimates Primarily Driven by Different a change in eligibility or food benefits, (2) the amount Assumptions About Participation Rate for Newly of food benefits affected households gain or lose, and Eligible Households. DSS largely based its estimates (3) the rate at which newly eligible households opt to on Mathematica’s study with the exception of one key participate in CalFresh. In 2010 and 2015, Mathematica assumption—the CalFresh participation rate for newly conducted a study that simulated the effects of ending eligible households. As previously stated, although the SSI cash-out in California. After accounting for all ending the SSI cash-out would make many SSI/SSP of the households they expected to gain and lose food recipients eligible for CalFresh benefits, these individuals benefits, as shown in Figure 4, Mathematica estimated would still need to make the decision to participate a $3.5 million net positive impact on the amount of in the program in order to receive food benefits. annual federal food benefits drawn down by the state Although difficult to predict, the assumed participation following the elimination of the SSI cash-out. In the rate in CalFresh for newly eligible households is a key spring of 2017, DSS modified Mathematica’s estimate factor that directly affects the amount of additional to develop its own estimates of the effect of ending food benefits drawn down by the state. Specifically, the SSI cash-out on CalFresh benefits, estimating that DSS assumed a higher participation rate for newly ending the SSI cash-out would increase the amount of eligible households (75 percent) than Mathematica Figure 4 Estimated Changes to Food Benefits and Administrative Costs Due to Ending the SSI Cash-Out Vary (In Millions) Newly Still Eligible for CalFresh Eligible for Newly Ineligible Net CalFresha Increased Food Benefits Decreased Food Benefits for CalFresh Total 2015 Mathematica Estimates Change in Annual Federal $123.40 $39.40 -$133.90 -$25.50 $3.50 Food Benefits Change in Annual Nonfederal 14.70 —c 0.90 -1.30 14.50 Administrative Costsb 2017 DSS Estimates Change in Annual Federal 325.30 39.40 -133.90 -25.50 205.40 Food Benefits Change in Annual Nonfederal 38.70 —c $0.90 -1.30 38.50 Administrative Costsb a Reflects estimates of total federal food benefits received by newly eligible households expected to participate in CalFresh. b Historically, counties pay 30 percent of the nonfederal CalFresh administrative costs and the state pays the remaining 70 percent. Additionally, these estimates reflect one-time increases to CalFresh nonfederal administrative costs. Ongoing CalFresh nonfederal administrative costs would be lower. c Less than $500,000. DSS = Department of Social Services. www.lao.ca.gov 9 analysis full gutter AN LAO REPORT (29 percent), resulting in a higher estimate of additional ending the SSI cash-out. We note that the ongoing federal food benefits drawn down by the state as administrative costs associated with the elimination a result of ending the SSI cash-out. Mathematica’s of the SSI cash-out would be lower than the initial participation rate is based on the national average administrative costs. participation rate of all current CalFresh recipients who Bottom Line: Actual Effect of Ending the receive a food benefit amount that is similar to the SSI Cash-Out Not Fully Known Until Policy Change amount of food benefit SSI/SSP recipients are expected Occurs. While we do not find the assumptions used to receive if the SSI cash-out is ended. DSS instead by both Mathematica and DSS to be unreasonable, based its participation rate on the national average the actual effect of ending the SSI cash-out may not be participation rate of SSI/SSP recipients. reflected in either estimate. That is, to the extent that Net Increase to Food Benefits Partially Offset key assumptions differ in actuality from initial estimates, by Increased Administrative Costs. DSS estimates the statewide net effect of ending the SSI cash-out on that ending the SSI cash-out would increase food benefits could be different from these estimates. administrative costs as counties process new CalFresh For example, for every percentage point that the cases, redetermine eligibility and benefit amounts participation rate for newly eligible SSI/SSP recipients is for existing CalFresh cases, and maintain a larger lower (or higher) than DSS’ initial estimate (75 percent), CalFresh caseload. The increase in administrative the estimated net amount of additional annual food costs is primarily driven by the assumed number of benefits to the state decreases (or increases) by newly eligible households that would participate in $4 million. CalFresh—the more households that participate in Finally, we note that the statewide net effect on food CalFresh, the higher the administrative costs. Based benefits is only one of many factors the Legislature on Mathematica’s and DSS’ estimates, it is estimated could consider in deciding whether to end the that the nonfederal share of CalFresh administrative SSI cash-out. Other factors include a consideration costs would initially increase by about $15 million to of which individual households would experience an $40 million. (We note that, historically, the counties’ increase in federal food benefits and which households share of nonfederal CalFresh administrative costs would experience a decrease in federal food benefits is 30 percent and the state’s share is the remaining and how these households compare to one another 70 percent.) These costs primarily reflect the initial in terms of income and resources. In the next section, costs of enrolling newly eligible households into we provide some examples of how ending the CalFresh and redetermining the eligibility and benefit SSI cash-out could impact households differently. amount of existing CalFresh households as a result of EXAMPLES OF POTENTIAL IMPACTS OF ENDING SSI CASH-OUT ON POVERTY The SRL required that our office evaluate how and CalFresh administrative data to identify common ending the SSI cash-out would affect the poverty characteristics of households that would either gain status of households that would either gain or lose or lose food benefits due to the elimination of the food benefits as a result. Given data constraints, we SSI cash-out. We note that while the households we are unable to calculate the aggregate net impact of simulate could exist, we have no way of assessing ending the SSI cash-out on the poverty status of exactly how common they would be in the current affected households. As an alternative, we developed caseload. We found that ending the SSI cash-out four distinct household scenarios and simulated how would place some households below the FPL while the poverty status of each household would change if others would move above the FPL. Additionally, for the SSI cash-out were eliminated (see Figure 5). We some households, ending the SSI cash-out would have utilized the previous Mathematica and DSS studies little to no effect on their poverty status. 10 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT Below, we describe each sample household profile SSI cash-out on a household’s poverty status. We and the importance of deductible living expenses, caution that these scenarios are for illustrative purposes income, and the elderly and disabled separate and only apply to households that fit the household household rule in determining the effect of ending the scenarios exactly, meaning any variation in assumed Figure 5 Effect of Ending the SSI Cash-Out on Poverty Status Varies by Household Scenario Newly Eligible Still Eligible for CalFresh, Still Eligible for CalFresh, Newly Ineligible for CalFresh Increased Food Benefits Decreased Food Benefits for CalFresh Mixed SSI Household Mixed SSI Household Household Single SSI/SSP Mixed SSI Household Receiving Scenario Recipient Living Alone With Only SSI/SSP Grant Maximum CalWORKs Grantb With Earned Income and as Income SSI/SSP Disabled Child Household Two, with single Four, with single Four, with single Single SSI/SSP recipient Size SSI/SSP recipient SSI/SSP recipient SSI/SSP disabled child $895.72 (maximum $895.72 (maximum $1,609.72 (maximum $2,895.72 (maximum Income SSI/SSP grant)a SSI/SSP grant) SSI/SSP and CalWORKs grant) SSI/SSP grant and earned income) Per Person $645 $323 $199 $230 Shelter Costs Change to Monthly Food +$171 +$140 -$144 -$210 Benefitsc 151% 141% Change to Poverty Statusd (as a percentage of FPL) 106% 103% 100% FPL 91% 96% 89% 81% a The maximum monthly SSI/SSP grants refer to those for aged and disabled individuals, effective as of January 1, 2017. b Maximum CalWORKs grant for a high-cost county, family of three (excludes SSI/SSP recipient from eligibility and benefit calculation) in 2016-17. c Based on 2016-17 CalFresh program rules and benefit amounts. d Federal poverty level (FPL) as established by U.S. Department of Health and Human Services, effective January 1, 2017. www.lao.ca.gov 11 analysis full gutter AN LAO REPORT income, deductions, or household size would result household of one decreased from $194 in 2016-17 to in a different outcome. (We note that the eligibility and $192 in 2017-18.) We note that survey data indicate benefit calculation for these household examples is that roughly 40 percent of SSI/SSP recipients are based on 2016-17 CalFresh program rules.) homeowners, some with no mortgage payments (meaning they have little to no shelter costs). As a Scenario 1— result, we anticipate that a portion of newly eligible Newly Eligible for Food Benefits: households would have little to no deductible shelter Single SSI/SSP Recipients Living Alone costs, receive the minimum food benefit amount ($16), and therefore remain below the FPL. Additionally, to the It is estimated that the majority of households extent that newly eligible households receive assistance newly eligible for federal food benefits would consist paying their shelter costs (either by relatives or through of a single aged and/or disabled SSI/SSP recipient a public assistance program), this would also reduce with income roughly equal to the maximum SSI/SSP their shelter costs and therefore their food benefit grant ($895 for an individual SSI/SSP recipient). If it amount. is assumed that an individual SSI/SSP recipient has monthly shelter costs of $645 and no deductible Scenario 2— medical costs, by ending the SSI cash-out this Still Eligible, Increased Food Benefits: particular household would be eligible for $171 in Mixed SSI Household With Only food benefits. This would improve their poverty status SSI/SSP Grant as Income from below the FPL (89 percent) to above the FPL (106 percent). A small percentage of mixed SSI households could Food Benefits for Newly Eligible Households Are qualify for an increased food benefit if the SSI cash-out Highly Dependent on Medical and Shelter Costs. As is ended. Estimates show that mixed SSI households previously mentioned, households can deduct certain with no countable income besides the SSI/SSP grant living expenses, such as medical and shelter costs, payment are one of the most common types of mixed from their income in determining food benefits. These SSI households that would receive increased food deductions have the effect of increasing the amount benefits if the SSI cash-out were eliminated. This could of food benefits households are eligible to receive. For be the case for a low-income household in which the this particular household scenario, we assumed no non-SSI household member recently lost their job and deductible medical costs. However, if we assumed is in the process of applying to other public assistance $120 in monthly medical deductions, the monthly food programs. benefit amount for this particular household would To illustrate this point, we modified the previous increase from $171 to $194. household example of a single SSI/SSP recipient to In addition, for this particular household scenario, also include one non-SSI/SSP household member we assumed $645 in monthly shelter costs. We chose with no countable income. Additionally, we assume this amount because survey data indicates that this the same total monthly shelter costs as Scenario 1 is the average shelter cost for SSI/SSP renters and ($645 total or about $323 per person) and no medical homeowners. However, if we assumed monthly shelter deduction. Under the SSI cash-out, this household costs of less than $160 per month, the household could receive monthly food benefits through the would only receive the minimum food benefit amount non-SSI/SSP household member who has no income. of $16, resulting in only a slight improvement in their In that case, the household would receive $194 in poverty status to about 93 percent of the FPL. If monthly food benefits, the maximum food benefit monthly shelter costs exceeded $750, the household amount for a household of one. Combined with the would receive the maximum food benefit amount of SSI/SSP grant payment, the household’s total monthly $194, changing their poverty status to 108 percent resources would be about $1,170, which is 81 percent of the FPL. (We note that the minimum food benefit of the FPL. If the SSI cash-out were eliminated and amount decreased from $16 in 2016-17 to $15 in the SSI/SSP recipient were included in the CalFresh 2017-18 and the maximum food benefit amount for a household size and income calculation, the household 12 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT would receive $334 in monthly food benefits— separate CalFresh household even if they purchase increasing the monthly food benefit to this household or prepare meals with other household members. by $140 and changing the household’s poverty status For this particular household profile, if the SSI/SSP from 81 percent of the FPL to 91 percent of the FPL. In recipient were elderly and disabled, and the rest of this case, the increase in household size increased the the household had income at or below 165 percent food benefit amount more than the additional income of the FPL, this rule could allow the household to be from the SSI/SSP recipient reduced it. treated as two separate households for purposes of Food Benefits Would Decrease as Household determining CalFresh eligibility. In effect, this would Income Increases. If the non-SSI/SSP household make it so the SSI/SSP recipient is treated as a pure member with no income in this example were to instead SSI household (similar to Scenario 1), and the other have income, the household’s food benefit would be members of the household see no change in their less than $334. This is because the amount of food monthly food benefit amount as a result of ending the benefits a household is eligible to receive generally SSI cash-out. decreases as household income increases. Scenario 4— Scenario 3— Newly Ineligible for Food Benefits: Still Eligible, Decreased Food Benefits: Mixed SSI Household With Earned Mixed SSI Household Receiving Income and an SSI/SSP Disabled Child Maximum CalWORKs Grant Ending the SSI cash-out would make some mixed Unlike the previous examples, for an estimated SSI household currently receiving CalFresh ineligible for 23 percent of affected households, ending the CalFresh benefits. For these households, including the SSI cash-out would reduce their food benefit amount. SSI/SSP grant payment in the income calculation for Estimates show that the majority of these households CalFresh eligibility would increase their income beyond who would experience a decrease in food benefits the CalFresh income eligibility thresholds, making them have income other than the SSI/SSP grant, often in ineligible to receive food benefits. Mathematica and the form of other public assistance benefits, such as DSS estimates show that one of the more common California Work Opportunity and Responsibility to Kids types of households that would become ineligible for (CalWORKs). (This program provides cash grants and food benefits would be mixed SSI households with welfare-to-work services for families whose income is income above the FPL. To illustrate this scenario, we inadequate to meet their basic needs.) For example, consider a household of four with about $3,000 in total ending the SSI cash-out would decrease the monthly household income ($2,000 monthly earned income and food benefit by $144 for a household of four who is $895 SSI/SSP grant payment). In addition, we assume currently receiving the maximum CalWORKs grant and the household has one SSI/SSP disabled child receiving has one family member on SSI/SSP. In these cases, the maximum SSI/SSP monthly grant payment, $230 in the additional income of the SSI/SSP recipient reduced per-person monthly shelter costs ($920 total), and the level of food benefit far more than the increase no deductible medical costs. Under current CalFresh in household size raised it. This scenario assumes program rules, this household would receive $210 in monthly shelter costs of about $200 per person monthly food benefits. By ending the SSI cash-out, ($800 total) and no deductible medical costs. For this the household would no longer be eligible for food particular household, the decrease in monthly food benefits. Even though the household would lose all benefits would change their poverty status from above their food benefits, their poverty status would remain (103 percent) to below the FPL (96 percent). above the FPL (although dropping from 151 percent to 141 percent). Elderly and Disabled Separate Household Rule Could Reduce the Negative Effects of Ending We note that newly ineligible households with the SSI Cash-Out in Certain Circumstances. As different characteristics may experience a smaller or previously noted, under certain conditions, an elderly greater loss in monthly food benefits as a result of the and disabled SSI/SSP recipient could become a elimination of the SSI cash-out. For example, if this www.lao.ca.gov 13 analysis full gutter AN LAO REPORT same household had total earned income of $2,500, an improvement in the poverty status for households it would lose $30 in monthly food benefits as a result with the lowest income, while households with of ending the SSI cash-out. The loss in food benefits relatively higher income are more likely to experience would have a relatively small impact on their poverty a reduction. Although some households with SSI/SSP status—changing from 167 percent of the FPL to recipients are expected to lose benefits, they would 166 percent of the FPL. receive the same amount of food benefits as a similar household of the same household size, income, and Bottom Line: Households That Benefit deductible living expenses that do not have an SSI/SSP Most From Ending SSI Cash-Out Have recipient. This is because ending the SSI cash-out Relatively Less Income Than Those Who would apply the same CalFresh eligibility and benefit Experience Food Benefit Reductions determination process to all households, regardless of whether the household includes an SSI/SSP recipient. As these scenarios illustrate, there are many factors We note, however, that even households that are that determine how a household’s food benefit is expected to lose food benefits as a result of ending the calculated. Changes in a household’s income, size, SSI cash-out, although relatively higher income than and medical and shelter costs can have significant those who are expected to experience increased food impacts on its food benefit amount. Making SSI/SSP benefits, are not necessarily far above the FPL. recipients eligible for food benefits generally results in LEGISLATIVE OPTIONS FOR HOLDING HOUSEHOLDS HARMLESS For households that will experience a reduction in be eligible? Or would it only be available to a food benefits as a result of ending the SSI cash-out, the subset of those negatively impacted? Would the SRL requires that we provide potential hold harmless policy only be available to those in the program options and assess the administrative complexity when the SSI cash-out ends, or would it also and cost of each option. As we have shown, DSS be available to future households? The more estimates that if the SSI cash-out ends, there would be individuals eligible for the hold harmless policy, the approximately 140,000 households that are expected more costly the policy will be. to experience a loss in food benefits. In total, these • What Is the Duration of a Hold Harmless households are estimated to lose about $160 million Policy? How long would the hold harmless policy in federal food benefits. A hold harmless policy would be in effect? Would it be for a limited amount create a state-funded food program that would aim of time? Or until the person naturally exits the to backfill all, or a portion of, these lost federal food program? The longer the hold harmless policy is benefits. (We note that holding negatively affected in place, the more costly the policy will be. households with SSI/SSP recipients harmless would • What Is the Benefit Amount? Should mean that these households would, in effect, continue households receive the same amount of benefits to receive more food benefits than households with no they received prior to ending the SSI cash-out SSI/SSP recipients but with the same household size, or some other, potentially lower, fixed benefit income, deductible living expenses, and poverty status.) amount? For more long-term hold harmless The main factors the Legislature may wish to consider policies, would the benefit amount adjust if when constructing a hold harmless policy following the households experience a change, such as an elimination of the SSI cash-out include: increase in income? The higher the benefit amount, the more costly the hold harmless policy • Who Is Eligible? Who would be eligible for will be. the hold harmless policy? Would all individuals negatively affected by the end of the SSI cash-out 14 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT • How Administratively Complex Is the Hold the state-funded food benefit program. Once the hold Harmless? How complicated would it be—for harmless time period expires, all households would be both recipients and counties—to implement the subject to the standard CalFresh rules. In other words, hold harmless policy? What are the potential following the expiration of the state program, previously automation costs? What are the potential impacts held harmless households would either become on county workload? ineligible for or receive fewer CalFresh benefits. As shown in Figure 6, this example of a hold Below, we present hold harmless policy examples harmless policy would result in state costs of roughly that range in cost and administrative complexity. First, $80 million to $100 million. The policy would cost we provide rough estimates of the benefit costs of the more (or less) if the duration of the benefit is longer policies and then we describe the potential automation (or shorter). Additionally, policy costs would be lower and administrative costs. For the estimated cost of the if households only received a portion (for example, various hold harmless policies below, we rely on DSS one-half) of the food benefits they lost due to the estimates of the total amount of federal food benefits elimination of the SSI cash-out. lost by the state if the SSI cash-out is ended. As we Example 2: Provide a Long-Term Food Benefit have noted, these estimates are subject to uncertainty to Existing Population. The Legislature could also and may change in future years as the caseload and consider implementing a state-funded food program benefit levels change. For all examples, the benefit for existing households that experience a reduction and automation costs are rough estimates based in federal food benefits as a result of the ending the on hypothetical program models and would change SSI cash-out with no defined end date. The state following further clarity on actual program structure. program could mirror the program structure and rules Benefit Costs of Various of CalFresh today—when the SSI cash-out is in place— Hold Harmless Policies meaning that the eligibility and benefit calculation would continue to exclude SSI/SSP household members for Example 1: Provide a Short-Term Food Benefit those mixed SSI households that were better off under to Existing Population. When considering various the SSI cash-out. Similar to Example 1, only currently hold harmless policies, the Legislature could consider participating households that would be negatively creating a temporary state-funded food benefit affected by the elimination of the SSI cash-out would program for households negatively affected by the receive state food benefits. elimination of the SSI cash-out. The program could Unlike Example 1 where the benefit amount would provide households with a fixed level of food benefits, be fixed, in this example, the benefit amount would meaning that the state food benefit would not change be adjusted for any household changes, such as even if a household experienced a change in income income—similar to how the CalFresh program works or household size. Additionally, the state food benefit today. A household would continue to receive state would be provided over a fixed amount of time. For food benefits as long as it (1) continued to be eligible example, for a period of six months, households could for CalFresh if the SSI cash-out were not eliminated, receive state food benefits equivalent to the amount and (2) would have received more CalFresh benefits if of federal food benefits they lost as a result of ending the SSI cash-out. Figure 6 To simplify the administration of this Example 1: option, the benefit level would remain Short-Term Food Benefit for Existing Population fixed for the duration of the hold harmless policy, meaning the benefit • Eligibility. All currently enrolled mixed SSI households that would have amount would not change in the received more food benefits prior to ending the SSI cash-out. six-month period. Only households • Duration of Hold Harmless. Six months. receiving CalFresh benefits at the • Benefit Amount. Enough to maintain food benefit amount received prior to ending the SSI cash-out. time of the effective elimination date of the SSI cash-out would qualify for Estimated Cost: $80 million to $100 million. www.lao.ca.gov 15 analysis full gutter AN LAO REPORT the SSI cash-out were in place. If a household failed the more narrow population to target, the Legislature to meet one of the two aforementioned conditions, the would still have to make the decisions related to benefit household would exit the state-funded hold harmless amount and duration as in the prior examples. The cost program and would instead receive federal food of this targeted hold harmless policy is unknown at this benefits through the CalFresh program. Households time, but would likely be less than the other examples would not be able to cycle in and out of the state we have shown. program, meaning that once removed from the state The Elderly and Disabled Separate Household program, households could not reapply to receive state Rule Could Reduce Costs for All Options. As food benefits at a later date. As shown in Figure 7, previously noted, an elderly and disabled SSI/SSP based on DSS estimates, the cost of this hold recipient could become a separate CalFresh household harmless policy could be in the range of $160 million to unit if the income of other household members is less $200 million annually—which would decrease over time than 165 percent of the FPL. By becoming a separate as individuals naturally exit the program. household, the elderly and disabled SSI/SSP recipient Example 3: Provide a Long-Term Food Benefit and his/her SSI/SSP grant would not be included in to Existing and Future Populations. This option the CalFresh eligibility and benefit calculation for the would establish a permanent state-funded food other household members, meaning the food benefits benefit program for all current and future households for other household members would remain the same. that would have received more federal food benefits In effect, use of this administrative rule could allow under the SSI cash-out. The program rules and benefit a portion of households that would either become calculation would be the same as Example 2, with ineligible for or experience a reduction in CalFresh the exception that the program would be available to benefits if the SSI cash-out were eliminated to remain both current households and future households. Of all in the CalFresh program and continue to receive the the examples presented here, this would likely be the same amount of federal food benefits. Based on most costly policy for the state. As shown in Figure 8, CalFresh and SSI/SSP administrative data, it would be initial benefit costs would be about $160 million to reasonable to estimate that the elderly and disabled $200 million annually (similar to Example 2). However, because the program would be open to future Figure 7 households that would have been Example 2: better off if the SSI cash-out would Long-Term Food Benefit for Existing Population have remained in place, costs would • Eligibility. Same as Example 1. not decline over time. • Duration of Hold Harmless. As long as current mixed SSI households Example 4: Create a Narrowly remain eligible for state food benefits. Targeted Hold Harmless Program. • Benefit Amount. Same as Example 1. Finally, one option the Legislature Estimated Cost: $160 million to $200 million, declining over time. may wish to consider is implementing a hold harmless policy for only a subset of mixed SSI households who Figure 8 are negatively affected by ending Example 3: the SSI cash-out. For example, the Long-Term Food Benefit for Legislature could target the hold Existing and Future Populations harmless policy only to families that fall below the FPL as a result ending • Eligibility. All current and future mixed SSI households that would have the SSI cash-out. Another example received more food benefits prior to ending the SSI cash-out. would be to target the hold harmless • Duration of Hold Harmless. Permanent. • Benefit Amount. Same as Example 2. policy to those participating in other public assistance programs. As Estimated Cost: $160 million to $200 million, shown in Figure 9, after choosing with unknown costs in future years. 16 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT household rule could apply to roughly 18,000 mixed to Example 3) would likely be relatively more expensive, SSI households if the SSI cash-out were eliminated, as it would require more sophisticated automation potentially reducing the state costs of any hold and workload to track households over a longer harmless policy (including those in the examples above) period of time. In any case, it is possible that the initial by roughly $10 million to $20 million. automation and administration of any hold harmless policy could range from the low millions of dollars for Potential Administrative Cost and a relatively simple policy to the low tens of millions of Complexity of Hold Harmless Policies dollars for a more complex policy, with relatively lower costs in the out years. In addition, there would be In addition to the benefit costs described above, ongoing administrative costs, primarily driven by the all of the examples of hold harmless policies that we number of participating households. provide would have additional automation and state and county administrative costs that should be considered. These costs Figure 9 would depend on the complexity Example 4: of the hold harmless policy that Narrowly Targeted Hold Harmless Program is adopted. For example, a hold harmless policy that includes a fixed • Eligibility. A subset of households that would have received more food benefits prior to ending the SSI cash-out. benefit for a fixed amount of time • Duration of Hold Harmless. Permanent or ongoing. (such as Example 1) would likely • Benefit Amount. A fixed amount or what they would have received prior have the lowest administrative and to ending the SSI cash-out. automation costs. A policy that Estimated Cost: Unknown, but likely lower than includes a variable benefit level for the other hold harmless examples. current and future households (similar ADDITIONAL ISSUES FOR LEGISLATIVE CONSIDERATION Prior to making a decision to end the SSI cash-out in SSP recipients. It is also difficult to estimate the California and implement a hold harmless policy, there statewide net impact ending the SSI cash-out are several key issues that merit further consideration would have on total food benefits received by the Legislature. Primarily, there are trade-offs to by California. Prior to a decision to end the both keeping or eliminating the SSI cash-out. Currently, SSI cash-out, the Legislature should ask DSS under the SSI cash-out, individual SSI/SSP recipients if there is any way to further refine and increase cannot receive CalFresh benefits even though their confidence in its most recent estimates. income is low enough to meet the CalFresh eligibility • How Could Potential Administrative requirements. Although ending the SSI cash-out would Challenges for Counties and the State Be make these SSI/SSP recipients eligible to receive Mitigated? Ending the SSI cash-out and CalFresh benefits, it would result in some households implementing a hold harmless policy both present losing CalFresh benefits. Below we present additional significant administrative costs and challenges for issues for the Legislature to consider when deciding the state and counties. Are there ways to reduce whether to eliminate the SSI cash-out. these challenges? For example, what would the timeline for implementation be? Is there a • Can More Up-to-Date Estimates Be way to phase in the enrollment of newly eligible Developed? As we have noted throughout this households into the CalFresh program prior to the report, due to data limitations, there are significant elimination of the SSI cash-out in order to reduce challenges associated with estimating the effect the administrative burden? of ending the SSI cash-out on the amount of food benefits received by households with SSI/ www.lao.ca.gov 17 analysis full gutter AN LAO REPORT • Are There Ways to Further Simplify the (1) the number of negatively affected households CalFresh Application Process? Although ending that could be held harmless by the separate the SSI cash-out makes SSI/SSP recipients household rule, (2) current and potential future eligible for CalFresh, they still need to apply administrative challenges for counties in applying for the benefit. The department has recently the separate household rule if the SSI cash-out received federal approval for a more streamlined were eliminated, (3) administrative costs, and application and redetermination process for (4) how requiring the use of the elderly and elderly and/or disabled recipients. In order to disabled separate household rule could affect increase participation rates, the Legislature may other CalFresh rules for elderly and/or disabled wish to consider whether there are more steps applicants. the state could take to increase the likelihood that • Would Ending the SSI Cash-Out Affect newly eligible SSI/SSP recipients actually apply Other Public Assistance Programs? It is our for CalFresh benefits. We note that attempts understanding that ending the SSI cash-out to to change the CalFresh application process enable SSI/SSP recipients to receive CalFresh would most likely require approval by the federal benefits would have no effect on one’s eligibility government. for, and amount of, the SSI/SSP or CalWORKs • Are There Challenges Associated With grant. However, it is unclear if providing Utilizing the Elderly and Disabled Separate state-funded food benefits would affect an Household Rule? As previously mentioned, the individual’s ability to qualify for and receive other elderly and disabled separate household rule is forms of public assistance. The Legislature should infrequently used. The Legislature could request ask the department if ending the SSI cash-out the following information from the administration and establishing a hold harmless program would to fully understand the benefits and potential affect an individual’s eligibility for, or amount of, challenges of using the elderly and disabled benefits received from other public assistance separate household rule as a way to reduce the programs. costs associated with a hold harmless policy: CONCLUSION The decision of whether to end the SSI cash-out from ending the SSI cash-out. The Legislature could involves trade-offs. The majority of households with consider establishing a state food benefit program that SSI/SSP recipients would benefit from the elimination of would replace some or all of the lost food benefits. the SSI cash-out. However, some households currently There are many ways a state food benefit program receiving CalFresh benefits would either experience could be structured, each with its own trade-offs. In a decrease in food benefits or become ineligible addition, depending on how the hold harmless program for CalFresh. While negatively affected households is structured, and other key policy decisions, state and generally have limited financial means, they tend to county costs and administrative complexity could vary. have more income than households that would benefit 18 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT APPENDIX: CALFRESH ELIGIBILITY AND BENEFIT CALCULATION In Appendix Figure 1 (see next page), we walk ineligible for CalFresh. We note that households with through the steps to determine whether a household an eligible elderly or disabled member (who is not an is eligible for food benefits and, if so, how much food SSI/SSP recipient) are exempt from the gross income benefits the households would receive. We also discuss requirement, meaning even if they have gross income how the CalFresh eligibility and benefit determination above 200 percent of the FPL, the households could process would change if the SSI cash-out were continue on to Step 3. eliminated. Step 3: Calculate Net Income. If a household Step 1: Determine Household Size of Eligible passes the gross income requirement, they proceed to Individuals. The first step in determining a household’s the second income requirement—having net income eligibility and CalFresh benefit amount is calculating that is generally less than 100 percent of the FPL. their household size of eligible individuals. This is A household’s net income is intended to represent necessary because the CalFresh benefit amount varies the income they have available to purchase food. To by household size, increasing with every additional calculate the net income, a household’s earned income household member. Households are generally defined is first reduced by 20 percent for assumed work-related as individuals who purchase and prepare meals expenses. Next, the household’s unearned income together. Individuals must meet several eligibility criteria is added to this amount. Finally, the net income is to be found eligible for CalFresh benefits. For example, adjusted downward to account for any deductions. (We Supplemental Security Income/State Supplementary note that the income of and living expenses paid by Payment (SSI/SSP) recipients are ineligible for household members ineligible for CalFresh are excluded CalFresh benefits. Eligible household members can from the net income calculation.) All households receive receive CalFresh benefits even if the household includes a standard deduction, which varies by household size. ineligible members, such as an SSI/SSP recipient. In Additional deductions include: practice, household members ineligible for CalFresh • Dependent Care Costs. Households can deduct are excluded from the CalFresh eligibility and benefit child or other dependent care costs from their calculation. This means that members ineligible for gross income to determine their net income. The CalFresh are not included in the household size care must be necessary to allow a household calculation for purposes of determining the household’s member to accept or continue to work, or to CalFresh benefit amount. attend training or schooling that prepares the Step 2: Calculate Gross Income. After determining person for work. There is no cap on dependent household size of eligible individuals, the next step is care deductions. to calculate a household’s gross income, one of two • Standard Medical Deduction. A household income requirements within the CalFresh benefit and with at least one eligible elderly (aged 60 years or eligibility determination process. Typically, households older) and/or disabled member can deduct that are required to have gross income below 200 percent member’s non-reimbursed medical expenses. of the federal poverty level (FPL). Gross income is As of October 1, 2017, elderly and/or disabled defined as earned and unearned income, including households with monthly medical expenses wages and salaries, alimony, social security, and between $35 and $155 qualify for the standard workers’ compensation. The income of ineligible medical deduction, meaning they can deduct CalFresh members is excluded from the gross income $120 per month from their gross income. calculation. If a household has gross income less than Households with monthly medical expenses 200 percent of the FPL, they pass the gross income greater than $155 can deduct actual medical requirement and proceed to Step 3. However, if a expenses. household has gross income greater than 200 percent, they fail the gross income requirement and therefore are www.lao.ca.gov 19 analysis full gutter AN LAO REPORT Appendix Figure 1 CalFresh Eligibility and Benefit Calculation Step 1: Determine Household Size Step 3: Calculate Net Income for Eligible Individuals • Count individuals who eat and prepare meals together • Total earned income Minus • Exclude household members ineligible for CalFresh such as SSI/SSP recipients • 20 percent for assumed work-related expenses Plus • Total unearned income Step 2: Minus Calculate Gross Income • Deductions - Standard deduction (by household size) • All earned and unearned income, such as: - Dependent care costs - Wages and salaries - Standard medical deduction - Unemployment benefits Equals - TANF/CalWORKs - Social Security • Adjusted income Minus • Exclude income of household members ineligible for CalFresh (such as SSI/SSP recipients) • Shelter costs - Shelter costs in excess of half of a household's adjusted income • If gross income is less than 200 percent of the FPL, proceed to Step 3 • If net income is less than 100 percent of the FPL, • If gross income is greater than 200 percent of the FPL, proceed to Step 4 the household is ineligible for CalFresh - Household with eligible elderly or disabled member • If net income is greater than 100 percent of the FPL, proceed to Step 3, even if gross income is greater the household is ineligible for CalFresh than 200 percent of the FPL Step 4: Calculate Monthly Food Benefit Amount • Maximum food benefit amount for household size Minus • One-third of household’s net income (round up to the nearest dollar) TANF = Temporary Assistance for Needy Families and FPL = federal poverty level. 20 LEGISLATIVE ANALYST’S OFFICE analysis full gutter AN LAO REPORT • Shelter Costs. Households can deduct monthly amount for a household of four. Maximum food benefit shelter costs that exceed 50 percent of their amounts are set by the federal government and adjusted income. Shelter costs include rent, are generally adjusted on an annual basis to reflect mortgage payments, taxes and insurance on changes in the price of food. In 2017-18, the minimum the home, and utilities. The maximum shelter food benefit amount for a one- and two-person deduction in federal fiscal year 2017-18 is household is $15. $535 unless there is an eligible elderly and/or CalFresh Eligibility and Benefit Determination disabled household member—there is no cap on Process Would Change if SSI Cash-Out Is deductible shelter costs for these households. Eliminated. Given that SSI/SSP recipients are currently ineligible for CalFresh, they are currently excluded After applying all the applicable deductions, if a from the CalFresh eligibility and benefit calculation. household’s net income is less than 100 percent of the For households with a mix of SSI/SSP recipients and FPL they would be eligible to receive CalFresh benefit non-SSI/SSP recipients this means that SSI/SSP and proceed to Step 4. However, if a household’s net recipients are excluded from the household size, gross income exceeds 100 percent of the FPL, they would income, and net income calculation. Additionally, any generally be ineligible for CalFresh benefits. deductible living expenses paid for by the SSI/SSP Step 4: Calculate Monthly Food Benefit Amount. recipient, such as shelter or medical costs, are not If a household is found eligible, a household’s net included in the eligibility and benefit calculation. If the income is used to calculate the amount of monthly food SSI cash-out is eliminated, SSI/SSP recipients would benefits they will receive. This means that households become newly eligible for CalFresh benefits, meaning receive food benefits up to a maximum amount based households would be required to include SSI/SSP on household size, which is adjusted downward by members in the household size, gross income, and net one-third of a household’s net income. For example, a income calculations. household of four with zero net income would receive $640 in CalFresh benefits, the maximum food benefit www.lao.ca.gov 21 analysis full gutter AN LAO REPORT LAO PUBLICATIONS This report was prepared by Jacqueline Barocio and reviewed by Ginni Bella Navarre. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. 22 LEGISLATIVE ANALYST’S OFFICE