One of the most important sources of income for low-income seniors and people with disabilities in California is SSI/SSP cash assistance.* Each month, well over 1 million Californians — adults and children alike — use SSI/SSP grants to help pay for basic necessities such as housing, food, and medicine. SSI/SSP grants have always been modest, but they became even more meager starting in 2009, when state policymakers made the first in a series of cuts to the state (SSP) portion in order to help close massive budget shortfalls caused by the Great Recession. For example, the maximum SSP grant for an individual living in her own home was reduced by almost one-third (32.9%), falling from $233 per month in January 2009 to $156.40 per month by mid-2011.
While SSI/SSP advocates have made a persuasive case for restoring state funding for this critical support, they’ve been unable to make much headway even as state revenues have far exceeded expectations. As a result, this year advocates have turned their attention to another way to boost support for SSI/SSP recipients: ending the state ban that prevents these individuals from signing up for federal food benefits provided through CalFresh (also known as the “SSI cash-out”). State policymakers have been listening: Last week, a state Senate budget subcommittee voted to end the SSI cash-out, and an Assembly budget subcommittee is set to take action on this issue tomorrow. Governor Brown’s position on this issue is not known — at least not publicly.
This post highlights recent advocacy efforts around increasing state funding for SSI/SSP grants, describes the benefits and drawbacks of ending the SSI cash-out, and explains how state policymakers can end cash-out in a way that both delivers meaningful benefits to hundreds of thousands of households and ensures that no one is left behind.
Efforts to Persuade California Leaders to Substantially Boost SSI/SSP Grants Have Foundered, Due in Part to the Cost to the State Budget
For several years, a broad array of advocates have worked to persuade state policymakers to build back state funding for SSI/SSP grants. However, for the most part, they have hit a brick wall. While state policymakers provided a modest (2.76%) increase in 2017 — boosting grants by a few dollars per month — maximum SSI/SSP grants for individuals continue to fall short of the federal poverty line, and state funding for SSI/SSP remains at recession-era levels. Even if state policymakers provided a cost-of-living adjustment to the SSP portion in the upcoming fiscal year (2018-19), maximum SSI/SSP grant levels would continue to fall well below the poverty line, leaving recipients struggling to make ends meet.
The key problem for advocates: Because state support for SSI/SSP was cut so deeply, rebuilding funding to pre-recession levels would be a heavy financial lift. Under this scenario, the state’s additional ongoing cost for SSI/SSP grants could easily approach, if not exceed, $2 billion per year — close to the $2.5 billion that the state currently spends on SSI/SSP. While state leaders could make such a funding commitment, doing so would constrain their ability to boost state support for many other key budget and policy priorities. So, despite SSI/SSP advocates’ best efforts to break through, state support for this critical basic income program has languished, and low-income seniors and people with disabilities have continued to pay the price.
Ending the State’s “SSI Cash-Out” Policy Provides Another Option for Boosting Support for SSI/SSP Recipients — but There’s a Catch
In California, seniors and people with disabilities who enroll in SSI/SSP are not eligible to receive federal food benefits through CalFresh, which is California’s version of the federal Supplemental Nutrition Assistance Program (SNAP, formerly called the Food Stamp Program). This ban goes back to the mid-1970s, when California — as allowed by the federal government — added $10 to the state’s SSP payment in lieu of providing federal food benefits to SSI/SSP recipients. This change, which is known as the “SSI cash-out,” generated budgetary savings by reducing the state’s cost of administering federal food assistance through the former Food Stamp Program. (In other words, it was less expensive for the state to provide a $10-per-month supplement to the SSP grant than to administer food stamp benefits for SSI/SSP recipients.) Today, California is the only state in which the SSI cash-out remains in effect. As a result, SSI/SSP recipients continue to be ineligible for CalFresh food assistance.
At first glance, one seemingly foolproof way to boost support for SSI/SSP recipients — short of increasing monthly grant payments — would be to simply end the SSI cash-out, which would allow these individuals to apply for CalFresh benefits to supplement their modest household resources. (California can end the SSI cash-out without federal approval so long as this change applies to all households with SSI/SSP recipients.) Since CalFresh food assistance is funded with federal tax dollars, the federal government would pay for the increased CalFresh benefit costs associated with this change. The state, however, would pay part of the cost of administering these new CalFresh benefits, shared with the federal government as well as with the counties.
However, although ending the SSI cash-out seems appealing — an apparent “win-win” for SSI/SSP recipients and the state alike — there’s a catch: While many households with SSI/SSP recipients would indeed benefit from this change by gaining access to CalFresh food benefits for the first time, other households actually would be made worse off.
Why Would Some Households With SSI/SSP Recipients Be Disadvantaged if California Ended the SSI Cash-Out?
Why would some households be worse off if the state ended the SSI cash-out? The explanation starts with the fact that many SSI/SSP recipients live with people who are not enrolled in SSI/SSP, but who do have incomes that are low enough to receive CalFresh food benefits on their own behalf. In other words, in these “mixed” households, SSI/SSP recipient(s) — and their income — are excluded from the household for the purpose of calculating the amount of CalFresh food benefits that the other household members are eligible to receive. (Household size and income are the primary factors in determining a household’s amount of CalFresh benefits.)
If the state ended cash-out, SSI/SSP recipients would be newly eligible for CalFresh. As a result, in mixed households, SSI/SSP recipients would be counted in the CalFresh household size calculation and their income would be counted as part of the household’s income in determining the amount of food assistance they receive. Because of how CalFresh benefits are calculated, this change in many cases would reduce the amount of food benefits that mixed households receive, with some of these households losing all of their CalFresh assistance. In contrast, other households — primarily those that consist entirely of SSI/SSP recipients — would see substantial gains in CalFresh food assistance if the state opted to end the SSI cash-out.
In estimates released last week, the California Department of Social Services (DSS) quantified the impact of ending the SSI cash-out on various types of households. On the one hand, the DSS estimates that more than 400,000 households with SSI/SSP recipients would gain CalFresh food benefits if the state ended cash-out. Specifically:
- 369,000 households that consist solely of one or more SSI/SSP recipients would opt to enroll in CalFresh after becoming newly eligible. This assumes a 75% participation rate among newly eligible households.
- 44,800 mixed households — which consist of SSI/SSP recipients as well as people not enrolled in SSI/SSP — would remain eligible for CalFresh and receive higher food benefits because of how the household size calculation would interact with the household income calculation.
On the other hand, the DSS estimates that about 80,000 households would lose some or all of their CalFresh food benefits if the state ended the SSI cash-out. Specifically:
- 73,200 mixed households would remain eligible for CalFresh, but would receive lower food benefits because of how the household size calculation would interact with the household income calculation.
- 7,100 mixed households would become ineligible for CalFresh and, as a result, would lose all of their food benefits because of how the household size calculation would interact with the household income calculation.
If Policymakers Opt to End the SSI Cash-Out, They Also Should Create a New State-Funded Food Benefit to Avoid Leaving Tens of Thousands of Households Worse Off
As shown above, more than 400,000 households with SSI/SSP recipients would gain CalFresh food benefits if the state ended the SSI cash-out, whereas about 80,000 other households — which include adults and/or children with disabilities — would lose some or all of their CalFresh food assistance. Households that include people with disabilities tend to face greater material hardship than other low-income households due to the special needs of the disabled family member(s), according to research cited by advocates for seniors and people with disabilities. For many of these households, losing even just a portion of their federal food benefits would magnify the difficulties that they already face.
If policymakers decide to end the SSI cash-out, they should create a state-funded food benefit to avoid leaving tens of thousands of households worse off. This new state benefit would plug the gap in the budgets of low-income households whose CalFresh food assistance would be reduced or eliminated with the end of the SSI cash-out. Based on an action taken last week, the California Senate’s version of the 2018-19 state budget includes such a state benefit, which is intended to “hold harmless those households that would see either a loss or reduction” of CalFresh food assistance. Under the state Senate’s proposal, this new benefit would be available to both current and future households that would be disadvantaged if the SSI cash-out were ended. The state Assembly’s proposal to end cash-out also includes a state-funded food benefit, although this benefit would be provided only to disadvantaged households that are currently receiving CalFresh food assistance. (The Senate’s action may ultimately be changed to match the Assembly’s proposal.)
Ending the SSI Cash-Out and Creating a State-Funded Food Benefit Would Increase Ongoing State Costs by More Than $110 Million Per Year
The DSS estimates that ending the SSI cash-out and providing a state-funded food benefit to households with SSI/SSP recipients that would lose CalFresh assistance would increase ongoing state costs by more than $110 million per year starting in 2019-20 (the fiscal year that begins on July 1, 2019). This DSS estimate:
- Assumes that the state ends the SSI cash-out beginning on June 1, 2019, with a six-month phase-in ending in November 2019. The DSS notes that this “rolling effective date” might require federal approval. Absent federal approval, the state’s annual cost could be higher.
- Reflects the cost of automation (reprogramming computer systems), administering new federal CalFresh benefits, conducting outreach to households that would be newly eligible for CalFresh, providing a new state-funded food benefit to certain households, and other factors.
- Assumes that a state-funded food benefit would be provided only to current households that would be disadvantaged if the state opted to end the SSI cash-out. (“Current households” are defined as those enrolled in CalFresh as of May 31, 2019.)
Ending the SSI Cash-Out Would Modestly Boost State Sales Tax Revenues by Bringing Additional Federal Food Benefits to California
A relatively small share of California’s cost of ending the SSI cash-out would be offset by increased state sales tax revenues. Here’s how:
The DSS estimates that ending cash-out would boost the overall amount of federal CalFresh benefits received by Californians by about $200 million in 2019-20, rising to approximately $276 million in 2021-22.** These additional food benefits would “free up” dollars that low-income households currently spend on food. Some of these freed-up dollars would be spent on items, such as clothing, that are subject to the sales tax. Some research suggests that households with incomes low enough to qualify for CalFresh spend about 45% of their budgets on taxable goods. Based on this assumption, a net increase of $200 million in CalFresh benefits in 2019-20 could result in $90 million in additional taxable purchases: $200 million x 0.45 = $90 million.
The state’s General Fund receives almost 4 cents for each dollar spent on taxable goods. (The General Fund sales tax rate is 3.9375%.) Therefore, a $90 million increase in taxable purchases in 2019-20 would generate an additional $3.5 million in sales tax revenue for the state’s General Fund: $90 million x 0.039375 = $3.5 million. (The state’s annual revenue gain could be closer to $5 million in 2020-21 and 2021-22 based on the DSS’s assumption that the increase in federal food benefits would be larger in those years.) While relatively small, this additional state revenue could initially be used to fund a robust outreach campaign designed to educate SSI/SSP recipients about — and sign them up for — CalFresh food assistance.
By Ending the SSI Cash-Out in a Careful Way, Policymakers Could Deliver Meaningful Benefits to Hundreds of Thousands of SSI/SSP Recipients While Ensuring That No Households Are Left Behind
Despite the significant growth of state revenues in recent years, Governor Brown and lawmakers have not prioritized rebuilding state funding for SSI/SSP, which continues to reflect recession-era levels. As a result, the more than 1 million seniors and people with disabilities who use SSI/SSP grants to pay for basic living expenses “are in a state of desperation,” according to a memo circulated by advocates for SSI/SSP recipients. Yet, despite the clear need for action, a major state funding increase for SSI/SSP grants appears to remain off the table in the state Capitol — at least for now.
So this year, state policymakers should do the next best thing: Move toward ending California’s longstanding SSI cash-out policy and letting SSI/SSP recipients apply for CalFresh food assistance. Such a change would deliver meaningful benefits to hundreds of thousands of low-income seniors and people with disabilities across California who struggle to make ends meet. At the same time, in order to avoid harming any low-income families with SSI/SSP recipients, state policymakers should couple the end of the SSI cash-out with a new state-funded food benefit. This new benefit would supplement the modest incomes of households that would see their CalFresh food assistance reduced if state policymakers opt to end the SSI cash-out.
— Scott Graves
* SSI/SSP = Supplemental Security Income/State Supplementary Payment program. SSI/SSP grants are funded with both federal (SSI) and state (SSP) dollars.
** These figures are net estimates, which reflect the fact that some households would receive increased CalFresh food benefits if the state ended the SSI cash-out, whereas other households would receive decreased benefits or lose eligibility for CalFresh.
