The 2022-23 Budget: Supplemental Security Income/State Supplementary Payment (ssi/ssp) Program

The 2022-23 Budget: Supplemental Security Income/State Supplementary Payment (SSI/SSP) Program FEBRUARY 2022 Summary. This post summarizes the Governor’s in Figure 1, the Governor’s budget projects that budget assumptions and proposals related to the caseload will decrease by 3.8 percent in 2021-22 SSI/SSP program, including the Governor’s intent and 2.5 percent in 2022-23, which is a slightly to increase SSP grants in 2023-24. The post also higher rate of decline relative to past caseload summarizes other SSI/SSP goals the Legislature trends. We are working with the Department of could pursue relative to the intended 2023-24 SSP Social Services to better understand the reasons grant increase. behind the continued decline in SSI/SSP caseload and will provide further comments at the time of the Background May Revision if necessary. The SSI/SSP program provides cash grants to Governor’s 2022-23 and 2023-24 low-income aged, blind, and disabled individuals. Grant levels for SSI/SSP are determined by both SSI/SSP Grant Assumptions the federal government and the state. Specifically, Federal Government Required to Provide the federal government pays for the SSI portion Annual COLA to SSI Grants, While State Has of the grant while the state pays the SSP portion Option to Provide Annual COLA to SSP Grants. of the grant. For 2022-23, the Governor’s budget The federal government is required to provide an proposes $3.1 billion from the General Fund for annual cost-of-living-adjustment (COLA) each the state’s share of SSI/SSP—an increase of January to the SSI portion of the grant. The federal $226 million (8 percent) over estimated 2021-22 expenditures. This increase would bring total program funding to $10.3 billion Figure 1 ($3.1 billion from the General Fund and $7.2 billion federal funds) in 2022-23. Actual and Projected SSI/SSP The primary driver of this increase Caseload Trends in Governor's Budget is the full-year cost impact of the Annual Caseload 23.95 percent SSP grant increase that took effect on January 1, 2022. 1,350,000 Governor’s Budget 1,300,000 Actuals Caseload Assumptions 1,250,000 Governor’s January Budget 1,200,000 Assumes SSI/SSP Caseload 1,150,000 Continues to Decline. The SSI/SSP 2022-23 Governor's caseload grew at a rate of less than 1,100,000 Budget Projections 1 percent each year between 2011-12 1,050,000 and 2014-15. Beginning in 2015-16, however, SSI/SSP caseload began 1,000,000 2015-16 2016-17 2017-18 2018-10 2019-20 2020-21 2021-22 2022-23 to slowly decline at an average rate of 1.5 percent each year. As shown 2022-23 Budget Series 1 COLA increase is based on the Consumer Price …However, SSP Grants Were Increased in Index for Urban Wage Earners and Clerical Workers 2016-17 and 2021-22. Since the past SSP grant (CPI-W). In years that the CPI-W is negative (as reductions, grants for individuals and couples were was the case in 2010, 2011, and 2016), the federal increased twice—in 2016-17 (by 2.76 percent) and government does not decrease SSI grants, but 2021-22 (by 23.95 percent). The 2016-17 SSP grant instead holds them flat. increase was based on applying the CNI only to the The state has full discretion over whether and SSP portion of the grant (increasing grants by $4 for how to provide increases to the SSP portion of the individuals and $11 for couples). The 2021-22 SSP grant. Until 2011, the state had a statutory annual grant increase is based on a statutorily required COLA. (Despite the state statutory COLA, there calculation that required the Department of Finance to were many years prior to 2011 when the COLA was estimate what grant increase could be supported in not provided due to budget constraints.) Prior to the 2021-22 for a total cost of $291 million. Based on this Great Recession, the state annual COLAs generally calculation, SSP grants increased by 23.95 percent reflected whole-grant COLAs. Whole grant COLAs on January 1, 2022 (increasing grants by $39 for worked by applying the California Necessity Index individuals and $98 for couples). (CNI) to the total SSI/SSP grant. If the federal Governor’s January Budget Includes SSI COLA was not enough to increase total Federal SSI COLA Estimates and a 2023-24 SSP SSI/SSP grants to CNI-adjusted levels, then the Grant Increase. Figure 3 demonstrates how actual SSP portion of the grant was increased by the maximum SSI/SSP grant levels in 2021-22 compare remaining amount. Alternatively, SSP grants to the administration’s estimates of maximum occasionally were increased by applying the SSI/SSP grant levels in 2022-23 and 2023-24. CNI only to the SSP portion of the grant (in 2016-17 The projected changes in maximum SSI/SSP and 2021-22). Additionally, the 2018-19 budget grant levels in 2022-23 and 2023-24 are due to included legislation to provide annual state COLAs the following factors: beginning in 2022-23, to the extent that funding is • Increase in 2022-23 Driven by Estimated provided in future budget years. (We understand Federal COLA. The Governor’s budget that the Governor’s multiyear grant projections do estimates that the federal COLA for the SSI not include an annual state SSP COLA in 2022-23 portion of the grant will be 2.3 percent in and onwards.) 2022-23, increasing maximum SSI grants by During Constrained Budget Environment, $19 for individuals and $29 for couples on SSP Grants for Individuals and Couples Were Reduced to Federally Required Minimum... The state is required to Figure 2 maintain SSP monthly grant levels at or above the nominal levels in Maximum SSP Grant for Individuals and Couplesa place in March 1983 ($156.40 for 2000-01 to 2023-24 SSP individual grants and $396.20 for SSP couple grants) in order $700 to receive federal Medicaid 600 500 Couples funding. As shown in Figure 2, 400 during the Great Recession, the 300 Individuals state incrementally decreased 200 SSP grants for individuals and 100 couples until they reached these 2000-01 2005-06 2010-11 2015-16 2020-21 minimum levels in June 2011 and 2022-23b 2023-24b November 2009, respectively. a The maximum SSP monthly grants for aged and disabled individuals and couples living in their own households, effective January of each fiscal year. b Reflects SSP grant levels assumed in 2022-23 Governor's budget and 2023-24 projections. 2022-23 Budget Series 2 January 1, 2023. (We estimate that the federal Despite Recent and Future SSI and SSP SSI COLA in 2022-23 will be 3.8 percent, Grant Increases, Grant Levels Remain Below increasing grants by an additional $13 for FPL for Individuals. As shown in Figure 4 on individuals and $19 for couples above the the next page, the maximum combined SSI/SSP administration’s estimates. Overall, the actual monthly grant amount for individuals (the bulk federal SSI COLA will not be known until fall of the SSI/SSP caseload) and couples has been 2022.) Total maximum SSI/SSP grant levels increasing on average by 1.2 percent annually only would increase by the federal COLA since since January 2014—predominantly due to the maximum SSP grant levels would remain flat provision of federal SSI COLAs. In 2022, maximum between 2021-22 and 2022-23 under the SSI/SSP grant levels for individuals and couples Governor’s budget. experienced a more significant increase (an overall • Increase in 2023-24 Driven by Anticipated increase of 9 percent and 10 percent, respectively) SSP Grant Increase and Estimated due to the highest one-time SSP grant increase Federal COLA. The Governor’s budget (23.95 percent) and federal SSI COLA (5.9 percent) estimates that the federal COLA for the SSI in history taking effect on January 1, 2022. Despite portion of the grant will be 1.9 percent in these 2022 grant increases, current maximum 2023-24, increasing maximum SSI grants by SSI/SSP grant levels for individuals remain below $16 for individuals and $24 for couples on the federal poverty level (FPL), while grant levels for January 1, 2024. (We estimate that the federal couples remain above the FPL. Moreover, despite SSI COLA in 2022-23 will be 2.3 percent, the intended 23.95 percent SSP grant increase on increasing grants by an additional $4 for January 1, 2024, maximum SSI/SSP grant levels individuals and $6 for couples above the for individuals are projected to remain below the administration’s estimates. Overall, the actual FPL in 2023-24. federal SSI COLA will not be known until fall 2023.) Additionally, Figure 3 the Governor’s budget assumes that maximum SSP grants would SSI/SSP Monthly Maximum Grant Levelsa increase on January 1, 2024. Governor’s Proposal Specifically, the 2021-22 budget 2021-22 2022-23b 2023-24b included legislation to provide (Actual) (Projected) (Projected) an SSP grant increase on Maximum Grant—Individuals January 1, 2024, subject to future SSI $841.00 $860.00 $876.00 appropriation in the Budget SSP 199.21 199.21 246.92 Act of 2023. In response to this Totals $1,040.21 $1,059.21 $1,122.92 requirement, the Governor’s Percent of Federal Poverty Levelc 92% 89% 92% outyear budget assumptions Maximum Grant—Couples include $296 million General SSI $1,261.00 $1,290.00 $1,314.00 SSP 504.64 504.64 625.51 Fund in 2023-24 (increasing to Totals $1,765.64 $1,794.64 $1,939.51 $593 million General Fund in Percent of Federal Poverty Levelc 116% 112% 118% 2024-25) to increase all SSP a The maximum monthly grants displayed refer to those for aged and disabled individuals and couples grants by 23.95 percent on living in their own households in January of fiscal year. January 1, 2024. This would b Reflects administration’s estimate of the January 2023 and January 2024 federal cost-of-living adjustment for the SSI portion of the grant. Also reflects intended SSP grant increase in January increase maximum monthly SSP 2024. grants by $48 for individuals and c Compares grant level to federal poverty guidelines from the U.S. Department of Health and Human Services up to 2021-22. Estimates of federal poverty guidelines for 2022-23 and 2023-24 are based $121 for couples. Overall, total on Consumer Price Index for All Urban Consumers projections. The 2022-23 and 2023-24 federal poverty guidelines will not be finalized until fall 2022 and fall 2023, respectively. maximum SSI/SSP grants would increase by $64 for individuals (6 percent) and $145 for couples (8 percent) in 2023-24. 2022-23 Budget Series 3 Figure 4 Maximum SSI/SSP Grants for Individuals and Couplesa Compared to Federal Poverty Levelb $2,500 Individuals 2,000 1,500 1,000 500 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23b 2023-24b SSP SSI Federal Poverty Levelb $2,500 Couples 2,000 1,500 1,000 500 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23b 2023-24b a The maximum monthly grants displayed refer to those for aged and disabled individuals and couples living in their own households, effective as of January 1 of the fiscal year. b Federal poverty guidelines as established by U.S. Department of Health and Human Services up to 2021-22. Federal poverty guidelines for 2022-23 and 2023-24 reflect estimates based on Consumer Price Index for All Urban Consumers projections. The 2022-23 and 2023-24 federal poverty guidelines will not be finalized until fall 2022 and fall 2023, respectively. 2022-23 Budget Series 4 Grant Increases Should Specifically, if the state provided consistent Reflect the Legislature’s Goals annual COLAs beginning in 2008-09, we estimate that maximum SSI/SSP grants for SSI/SSP Grant Levels would be roughly $115 to $275 higher for The administration’s planned SSP grant increase individuals and roughly $250 to $500 higher in 2023-24 is intended to restore SSP grant levels for couples relative to projected 2023-24 grant for individuals and couples to “pre-recession” levels. (The actual loss in purchasing power levels, which we understand to mean the SSP grant depends on whether the annual state COLA levels in place in January 2009 (prior to the start would have been provided only to the SSP of multiple SSP grant reductions). Additionally, the portion of the grant [similar to the 2016-17 Governor’s stated intent to provide an SSP grant and 2021-22 SSP grant increases] or the increase in 2023-24 complies with the legislation whole SSI/SSP grant [similar to state COLAs included as part of the 2021-22 budget agreement. provided prior to Great Recession].) Overall, to However, we understand that the administration fully make-up for the loss in purchasing power does not include ongoing SSP COLAs beginning in 2023-24—depending upon which type of 2022-23 (providing COLAs would align with the COLA is used—we estimate that an additional intent language adopted in the 2018-19 budget). roughly $700 million to $1.6 billion General While the Governor’s goal of restoring grants to Fund (annualizing to roughly a $1.4 billion to their pre-recession levels is one way of setting a $3.3 billion General Fund increase in 2024-25 goal for SSI/SSP grants, the Legislature may wish and ongoing) would be needed above what is to set its own goals for where it would like already included in the Governor’s multiyear SSI/SSP grant levels to be, and over what time budget projections. period it would expect to take to get there. In doing • Increase Grants to 100 Percent of FPL for so, considering the rising costs of inflation, the All Recipients. Another possible SSI/SSP Legislature could also consider how to maintain the goal could be to bring the maximum SSI/SSP purchasing power of its ultimate SSI/SSP grant goal grants for all recipients to at least 100 percent over time. Below, we provide examples of different of the FPL (similar to how maximum ways the Legislature could approach possible SSP SSI/SSP grants for individuals compared grant increases—depending on its specific goal. to the FPL in January 2009). This would, Examples of Possible Goals for in part, address the current disparity of SSI/SSP Grant Levels. The Governor’s planned maximum SSI/SSP grants for couples 2023-24 SSP grant increase (from $199 to $247 continuing to fall above the FPL while for individuals and from $504 to $625 for couples) maximum SSI/SSP grants for individuals more than achieves our understanding of the are projected to remain below the FPL in administration’s intended goal increasing SSP 2023-24 despite the Governor’s intended SSP grants to reach at least January 2009 levels grant increase. We estimate that maximum ($233 for individuals and $568 for couples). SSP grants for individuals would have to However, as shown in Figure 5 on the next page, increase by about 70 percent to reach at least the Governor’s planned 2023-24 SSP grant 100 percent of the FPL in 2023-24. This means increase would not be enough to achieve alternative that SSP grants for individuals would need to definitions of “pre-recession” levels and SSI/SSP increase by about $95—beyond the increase goals, which we describe below. the Governor has included for 2023-24—to • Increase Grants to Regain Purchasing reach at least 100 percent of the FPL. One Power Lost Since 2008-09. During the way the Legislature could structure such a Great Recession, the state stopped providing grant increase would be to fully redirect the annual COLAs. As a result, the value, or funding for the 2023-24 SSP grant increase to purchasing power, of the maximum only increase grants for individuals, meaning SSI/SSP grants eroded over time. SSI/SSP grants for couples would remain the 2022-23 Budget Series 5 Figure 5 Visualizing Incremental SSP Grant Increases for Various SSI/SSP Grant Goals Estimated Maximum SSI/SSP Grant Levels in 2023-24 Under Various Scenarios $2,500 Regain Lost Purchasing Power of Entire SSI/SSP Granta +$250 Regain Lost Purchasing Power of SSP Grant Onlya SSI/SSP Grants Equal at Least 100 Percent of FPLb +$250 2,000 Governor's 2023-24 SSP Grant Increase +$121 Existing Grant Levelsc 100 percent of Federal Poverty Leveld 1,500 +$160 +$20 +$95 +$48 1,000 $1,819 $1,075 500 Individuals Couples a Reflects estimated loss purchasing power since January 2009. b The goal of SSI/SSP grants equaling at least 100 percent of the federal poverty level does not require a grant increase for couples since couple grants already fall above the federal poverty level. c Existing grant levels reflect projected 2023-24 SSI/SSP grant levels without the administration's intended 2023-24 SSP grant increase. d Reflects estimates of federal poverty guidelines for 2023-24 based on Consumer Price Index for All Urban Consumers projections. The 2023-24 federal poverty guidelines will not be finalized until fall 2023. Note: Reflects estimates of SSP grant increases needed to reach each maximum SSI/SSP grant goal in 2023-24. 2022-23 Budget Series 6 same. If the Legislature took this approach, available funding included in the Governor’s we estimate that it still would need to provide budget could be prioritized for individuals’ roughly $600 million additional General Fund grants. The Legislature could also target (roughly $1.2 billion in 2024-25 and ongoing) to available resources to increase grants for increase maximum SSI/SSP individual grants certain grant categories or recipient groups to 100 percent of the FPL. (such as SSI/SSP recipients residing in residential care facilities). Ways the Legislature Could Structure SSP • Provide Annual State COLAs to Maintain Grant Increases to Further Its Goals. As we Value of Grant Levels. Once SSI/SSP grants have discussed above, there are various goals the are at desired levels, the Legislature also Legislature may wish to establish when considering may want to consider providing ongoing SSI/SSP grant increases, all at various costs. Once COLAs to maintain the purchasing power the Legislature sets its goals for the program, it of those grants. This approach would align can ensure that whatever funding level provided with existing intent language to provide for SSI/SSP grant increases—be it the $296 million annual state COLAs. The Legislature could in 2023-24 ($593 million in 2024-25 and ongoing) consider what start date aligns with its proposed by the Governor or some other amount— SSI/SSP grant goal (such as beginning in furthers those goals. Below we discuss additional 2022-23 per existing intent language or approaches the Legislature could consider in a later date). Additionally, the Legislature structuring an SSP grant increase to further could structure the COLAs as whole-grant its own goals. COLA (similar to how state annual COLAs • Develop Phase in for Grant Increases were provided prior to the Great Recession). Over Multiple Years. We understand This approach maintains overall SSI/SSP that the proposed timing of the SSP grant grant levels consistent with changes in increase—January 1, 2024—reflects intent California prices. Alternatively, the Legislature language adopted in the 2021-22 budget. could provide annual COLAs only to the SSP Depending on the Legislature’s ultimate goal portion of the grant (similar to how the SSP for SSI/SSP grants, it could consider an grant increases were applied in 2016-17 alternative start date for the proposed SSP and 2021-22). This approach maintains the grant increase (such as January 1, 2023). state-funded SSP portion of the grant based Additionally, if the Legislature were interested on changes in California prices, while federal in ultimately increasing SSP grants above COLAs would continue to adjust the SSI the proposed 2023-24 SSP grant increase, it portion of the grant based on national prices. could phase-in the remaining grant increases To the extent the Legislature does provide over multiple years. ongoing COLAs, it would want to consider • Target Available Resources to Most how these long-term costs would be sustained Effectively Achieve Legislature’s Goals. in future years. The Legislature may have other SSI/SSP Legislature May Wish to Revisit Existing goals that could suggest targeting the grant 2023-24 SSP Grant Increase Language in increases among recipients. For example, Light of Its Goals. After determining its if the Legislature established a goal to SSI/SSP grant goals, the Legislature may wish to ultimately bring the maximum SSI/SSP grant revisit the 2023-24 SSP grant increase language for all recipients to at least 100 percent of in light of those goals. Importantly, the language the FPL, providing the same grant increase indicates that an SSP grant increase will be to all SSI/SSP individuals and couples (as provided in 2023-24 (subject to Budget Act of 2023 proposed by the Governor) would maintain appropriation), but is not specific about the amount the disparity between individual and couple of that grant increase. Additionally, the language beneficiaries relative to the FPL. Instead, the assumes that the grant will be provided in a similar 2022-23 Budget Series 7 way to the grant increase that was provided in the purchasing power of the grant given future inflation. 2021-22 budget. To the extent the Legislature’s Overall, whatever grant goal the Legislature selects goal may require the SSP grant increase to be and chooses to reflect in language, it will want to provided utilizing a different methodology, some consider balancing the long-term costs associated changes will be needed. The Legislature also could with SSP grant increases and annual COLAs with consider providing annual state COLAs following the ability to sustain these costs in future years. the SSP grant increase as a way to maintain the LAO PUBLICATIONS This post was prepared by Jackie Barocio, and reviewed by Ginni Bella Navarre and Carolyn Chu. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. 2022-23 Budget Series 8