The 2022-23 Budget: California Food Assistance Program

The 2022-23 Budget: California Food Assistance Program FEBRUARY 2022 Summary. In this post, we analyze the CalFresh Administration Is Funded by the Governor’s proposal to provide food assistance to State, Counties, and Federal Government. currently ineligible immigrants aged 55 and older. CalFresh is overseen at the state level by the First, we provide some essential background on Department of Social Services (DSS) and California’s food assistance programs, then we administered locally by county human services describe the Governor’s proposed expansion, and departments. Although CalFresh benefits are finally provide an analysis of the proposal as well as paid by the federal government, the costs to issues for legislative consideration. administer the program are shared by state, county, and federal governments. The total cost of Background administering CalFresh in 2020-21 was $2.1 billion CalFresh Provides Federally Funded ($1 billion federal funds, $740 million General Fund, Nutrition Assistance to 4.5 Million Californians. and $290 million county funds). CalFresh is California’s version of the federal CalFresh Administered Through Two Main Supplemental Nutrition Assistance Program, which Automated Systems. First, CalFresh eligibility and provides monthly food assistance to qualifying enrollment is tracked using two county automation low-income households. To be eligible, households systems collectively known as the Statewide generally must earn less than 200 percent of the Automated Welfare System (SAWS). SAWS is in the federal poverty level. CalFresh benefits can be process of converting to a single, statewide system used to buy most groceries and some prepared by the end of 2023 (the single system is known food at participating vendors, which include most as CalSAWS). Second, the federal government grocery and convenience stores. Monthly benefits manages an Electronic Benefits Transfer (EBT) per household vary based on household size, system which deposits monthly benefits for income, and deductible living expenses, with larger CalFresh and other human services programs onto households generally receiving more benefits than cards that can be used at grocery and convenience smaller households and relatively higher-income store checkout counters. households generally receiving fewer benefits than California Food Assistance Program (CFAP) lower-income households. In 2020-21, 4.5 million Provides State-Funded Food Assistance to Californians received a total of $9.8 billion in 35,000 Legal Permanent Residents. In 1996, CalFresh benefits, all of it federally funded, for Congress passed a welfare reform bill that, among an average monthly benefit of about $184 per other things, restricted federal food assistance for recipient. (Note that average benefits are somewhat certain noncitizens. Most notably, legal permanent higher than they otherwise would be because the residents were rendered ineligible for federally federal and state governments took actions to funded food assistance until they had resided in increase both CalFresh participation and benefits the country for five years. The federal government in response to COVID-19.) The federal government gave states the option to provide state-funded annually adjusts CalFresh benefits in accordance food assistance to populations affected by the with changes in the cost of food. 1996 policy change (such as legal permanent residents who arrived less than five years ago). 2022-23 Budget Series 1 In response, California established CFAP, which Governor’s 2022-23 Proposal provides benefits through the same EBT and SAWS Expands CFAP to Undocumented Immigrants systems as CalFresh. Because CFAP operates Over Age 55. The Governor’s budget proposes through the EBT system, the federal government expanding CFAP to all income-eligible individuals is directly responsible for depositing funds into aged 55 or older (regardless of their immigration the accounts of participating households, and status) and provides $40 million in 2022-23 to the state reimburses the federal government for continue making associated automation changes. these costs. In addition, the federal government This amount is intended to increase to $113.4 million charges California for all associated administrative by 2025-26 (after a few years of providing benefits costs. In 2020-21, CFAP benefits were $69 million and increasing take-up). The administration has General Fund ($165 average monthly per person), indicated that, by 2025-26, it expects this expansion and administration costs were $2.5 million General to reach about 75,000 individuals annually (for an Fund. (In line with benefit augmentations for estimated take-up rate of 60 percent). CalFresh, CFAP benefits also were temporarily expanded in response to COVID-19.) LAO Analysis Take-Up Rates for Food Assistance Governor’s Proposal Is Broadly in Line and Related Programs Vary Considerably. With Prior Budget Action for CFAP Expansion… DSS estimates about 70 percent of In line with last year’s budget actions, the CalFresh-eligible individuals actually enrolled in Governor’s proposal would expand CFAP the program in 2019, up from about 50 percent access using an age-based approach. In this in 2010. There is no direct estimate of CFAP way, the Governor’s proposal mirrors recent take-up rates (which are more difficult to calculate legislative priorities. due to the program’s small size), although …But the Legislature May Wish to Set Its some research suggests that participation Own Target Populations for Such an Expansion. in food assistance programs is lower among To comply with an “age-based” expansion immigrants than among naturalized citizens. to CFAP, the administration has proposed to Outside of food assistance programs, we prioritize immigrants aged 55 years or older. estimate participation in the California Work When the Medi-Cal expansion to undocumented Opportunity and Responsibility to Kids program individuals began, an age-based expansion is around 60 percent, whereas participation in also was used. However, benefits were first Medi-Cal is estimated to be over 90 percent (and expanded to younger individuals (those under the take-up for full- and restricted-scope Medi-Cal age of 25), next to older individuals (those aged is believed to be similarly high even among 50 and up), and is now being proposed for prime undocumented immigrants). working-aged individuals (those aged 26-49). Recent Budget Actions Seek to Expand Food Under the Governor’s approach to expand CFAP Assistance to Undocumented Immigrants. first to older undocumented individuals, younger The 2021-22 spending plan included $5 million undocumented immigrants would remain ineligible in 2021-22 to begin making necessary automation for food assistance programs. We estimate older changes for an expansion of CFAP to currently immigrants make up about 20 percent of the ineligible immigrants. The budget-related undocumented population in California and roughly legislation stated only that the expansion would 15 percent of undocumented immigrants who are be age-based but did not specify which age likely income-eligible for CFAP (by comparison, ranges would first benefit; these details were we estimate undocumented immigrants aged expected to be determined as part of this year’s 26 and under make up about 20 percent of the budget discussions. undocumented population in California and roughly 24 percent of undocumented immigrants who are likely income-eligible for CFAP). These estimates are subject to significant uncertainty, however, as there are limited survey data which 2022-23 Budget Series 2 directly captures information about undocumented The administration’s proposal that expands CFAP immigrants. However, these numbers are consistent to undocumented individuals over the age of 55 is with Medi-Cal administrative data, which show in line with this statutory guidance. That said, the that older undocumented immigrants account for Legislature may wish to roll out a CFAP expansion about 15 percent of undocumented immigrants in a different way—for example starting with a enrolled in full- or restricted-scope coverage (and different or larger age group. We understand undocumented immigrants aged 25 or under part of the administration’s consideration in account for about 20 percent). targeting older immigrants is the availability of Expanding Food Assistance to Currently other food assistance programs (such as free Ineligible Immigrants Involves Various and reduced-price school meals) to younger Administrative Challenges. Although the populations. In considering where to the start, the administration includes $40 million in its proposed Legislature may wish to ask the administration 2022-23 budget for the automation changes (1) any analysis that was done on the relative needed to facilitate a CFAP expansion to currently availability of food assistance to younger and older ineligible individuals, we understand they are still immigrants; (2) their rationale for choosing 55 and working internally and with stakeholders to fully over, rather than 50 and over as was done for develop this automation plan. For that reason, we Medi-Cal; and (3) any lessons learned from first consider the proposed funding level preliminary expanding Medi-Cal to younger undocumented at this time. immigrants which could inform whether that approach should be used for CFAP as well? Specific Challenges With Updating Automated Systems. In the past, when a CFAP Potential Take-Up Rate for Proposed expansion has been considered, three major New Program Highly Uncertain. As noted challenges involving automated systems have above, take-up rates for existing health and emerged. First, the necessary changes to SAWS human services programs vary widely, thus likely must wait until after the new CalSAWS system projecting an appropriate take-up rate for any has been fully implemented statewide—currently new program is inherently difficult. In addition estimated to be December 2023. Second, federal to this basic uncertainty, numerous studies rules may prohibit California from using the existing suggest outreach to undocumented individuals EBT system to benefit undocumented immigrants, is particularly challenging. Such individuals are which may require the state to develop its own often hesitant to enroll in benefit programs for system or another kind of work-around. Finally, fear that their information may be shared with recent changes to federal law make it challenging federal law enforcement or that their participation to ensure that undocumented immigrants benefiting may negatively affect any future effort to from state-funded food assistance would not secure citizenship. While these factors would have their information shared with federal law reduce participation in any expanded program, enforcement either through SAWS or EBT access. unfortunately, we are not able to estimate such In speaking with DSS and various stakeholders, effects with any degree of precision. we have heard the most concern about the last Full Implementation Costs Depend on of these challenges, although all parties appear the Size of Targeted Populations and Their confident that each of these administrative hurdles Take-up Rates. If the Legislature decided to target can be overcome with sufficient time and funding. a younger age range than the administration’s proposal, more individuals likely would qualify for Issues for Legislative Consideration expanded food assistance and the associated Administration Has One Approach, cost of providing those benefits would be greater. Legislature Could Consider Others. As we have Benefit costs also depend crucially on the eventual noted, the 2021-22 budget included legislation that take-up rate of the program, as a program with a required the implementation of an “age-based” lower take-up rate could cost hundreds of millions expansion of CFAP to undocumented individuals. of dollars less than an otherwise identical program 2022-23 Budget Series 3 with a higher take-up rate. Take-up rates can be relatively lower levels to relatively higher levels as influenced in part by policy design, as programs a program matures and becomes more widely which are easier to apply for and remain enrolled known. Such considerations will be important as in tend to have higher take up. In addition, take-up the Legislature decides how to realize its goal of rates tend to vary over time, often growing from expanded food assistance. LAO PUBLICATIONS This post was prepared by Ryan Anderson, 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 4