Legislative Analyst's Office

Analysis of the 2002-03 Budget Bill

Food Stamps Program

This program provides food stamps to low-income persons. With the exception of the state-only food assistance program (discussed below), the cost of the food stamp coupons is borne by the federal government ($1.6 billion). Administrative costs are shared between the federal government (50 percent), the state (35 percent), and the counties (15 percent).

California Food Assistance Program

Federal Restrictions on Benefits for Noncitizens. With respect to noncitizens, current federal law generally limits food stamp benefits to legal noncitizens who immigrated to the U.S. prior to August 1996, and are under the age of 18 or were at least 65 years old as of August 1996.

State Program for Noncitizens. In response to these federal restrictions, the California Food Assistance Program (CFAP) was created in 1997 to provide state-only funded food stamp benefits to (1) pre-August 1996 legal immigrants who are ineligible for federal benefits, and (2) a very limited number of post-August 1996 legal immigrants whose sponsors are dead, disabled, or abusive. In 1999 and again in 2000, CFAP eligibility was temporarily expanded to include all post-August 1996 legal immigrants who were otherwise eligible but for the fact they arrived after August 1996. Chapter 111, Statutes of 2001 (AB 429, Aroner), made this expansion permanent.

The CFAP purchases food stamp coupons from the federal government and distributes them to eligible recipients. Adult recipients are subject to a specified work requirement.

Assumed Federal Eligibility Restoration Creates Some Budget Risk

The Governor's budget assumes that federal food stamp eligibility will be restored for all otherwise eligible legal immigrants. This assumption represents a budget risk of up to $35 million General Fund. However, recent federal developments suggest that federal food stamp benefits will be restored for most legal immigrants, thus substantially mitigating the risk to the General Fund.

Budget Proposal. The budget assumes that federal food stamp eligibility will be restored for all otherwise eligible legal immigrants, effective July 1, 2002. Essentially, this means that legal immigrants who entered the country after August 1996 would be eligible for federally funded food stamp benefits. The budget therefore proposes no funding for CFAP in 2002-03.

We note that the Governor does not propose a statutory change to eliminate CFAP in the absence of such federal action. If federal eligibility were not restored for those immigrants currently eligible for CFAP, approximately 101,000 legal immigrants would receive CFAP benefits in 2002-03. This would represent a 2 percent increase over the estimated 2001-02 caseload. The projected state costs of the CFAP program in 2002-03 would be approximately $106 million absent federal action. This includes $80 million for the benefit coupons and $26 million for administrative costs.

General Fund Savings. Although CFAP costs absent federal action are estimated to be $106 million, the restoration of federal food stamp eligibility for the CFAP caseload would result in net General Fund savings of only $35 million. Net savings are less because of (1) the offsetting state costs of administering federal food stamp benefits for the newly-eligible caseload (approximately $10 million), and (2) the need to replace countable CFAP maintenance-of-effort (MOE) spending with California Work Opportunity and Responsibility to Kids (CalWORKs) MOE spending (discussed below).

As described in the "CalWORKs" section of this Analysis, California must meet a minimum spending requirement in order to receive the federal Temporary Aid for Needy Families block grant. Since the creation of CFAP in 1997, California has counted the portion of CFAP spending for families with children toward this MOE requirement. In 2002-03, absent restoration of federal eligibility, approximately $58 million of the projected CFAP costs would be counted in this way. In order to maintain MOE compliance, the Governor's budget increases General Fund spending in the CalWORKs program by the same $58 million. For technical reasons, additional county MOE spending of $3 million would be shifted to the General Fund as well. Together with the offsetting food stamp administrative costs, these shifts reduce total General Fund savings to only $35 million.

Pending Federal Action. There are two pending federal proposals to restore food stamp eligibility to legal immigrants. We note that both proposals are somewhat more narrow than the Governor's restoration assumption. Under the Bush administration proposal, benefits would be restored to all otherwise eligible legal immigrants who have lived in the United States for at least five years. At the time this analysis was prepared, this proposal was expected to be incorporated into the President's February budget proposal for federal fiscal year (FFY) 2003. The farm bill under consideration by the U.S. Senate (S.1731) would also restore federal food stamp benefits, but for an even more narrow group of immigrants. Specifically, eligibility would be restored to immigrants who have worked in the country for at least four years and to recent immigrants who are under 18, blind, or disabled.

The Department of Social Services has estimated the net General Fund savings compared to current law associated with both proposals. Assuming the Bush administration's proposal becomes law effective October 1, 2002 (the start of the new FFY), the resulting net General Fund savings would be approximately $25 million in 2002-03 ($10 million below the savings assumed in the Governor's budget). Under the U.S. Senate's version of the farm bill, net savings would be approximately $14 million ($21 million below the savings assumed in the Governor's budget). This estimate also assumes that restoration would be effective October 1, 2002.

Budget Risk. As noted above, the Governor does not propose eliminating CFAP in the absence of federal action to restore eligibility. As a result, because federal proposals to restore benefits are still pending, the Governor's proposal represents a risk to the General Fund of up to $35 million (the net General Fund savings assumed in the Governor's budget). We will continue to monitor federal legislative actions and advise the Legislature accordingly.

Return to Health and Social Services Table of Contents, 2002-03 Budget Analysis