Legislative Analyst's Office Analysis of the 2002-03 Budget Bill

Supplemental Security Income/State Supplementary Program

The Supplemental Security Income/State Supplementary Program (SSI/SSP) provides cash assistance to eligible aged, blind, and disabled persons. The budget proposes an appropriation of $3 billion from the General Fund for the state's share of SSI/SSP in 2002-03. This is an increase of $228 million, or 8.1 percent, over estimated current-year expenditures. This increase is due primarily to the full-year cost of grant increases provided in the current year, caseload growth, and an increase in the federal administrative fee.

In November 2001, there were 336,478 aged, 21,780 blind, and 739,852 disabled SSI/SSP recipients. In addition to these federally eligible recipients, the state-only Cash Assistance Program for Immigrants is estimated to provide benefits to about 11,800 legal immigrants in November 2001.

Budget Proposes to Suspend State Cost-of-Living Adjustment

By proposing to suspend the statutory cost-of-living adjustment, the budget achieves General Fund savings of $127 million compared to current law.

Background. Under current law, both the federal and state grant payments for SSI/SSP recipients are adjusted for inflation each January. The cost-of-living adjustments (COLAs) are funded by both the federal and state governments. The state COLA is based on the California Necessities Index (CNI) and is applied to the combined SSI/SSP grant. The federal COLA (based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or the CPI-W) is applied annually to the SSI portion of the grant. The remaining amount needed to cover the state COLA is funded with state monies.

Budget Impact of Governor's Proposal. The Governor's budget estimates that the CPI-W will be 1.8 percent and that the CNI will be 3.9 percent. Based on these assumptions, providing the state COLA on January 1, 2003 would result in a six-month General Fund cost of $133 million. Based on more recent actual data, however, the CNI will be 3.7 percent. Using the lower actual CNI, we estimate that suspending the state COLA in the budget year would result in a six-month savings of $127 million, a difference of approximately $6 million.

Impact on Recipients. Figure 1 shows SSI/SSP grants for January 2003 for individuals and couples under both current law and the Governor's proposal. Although the budget proposes suspension of the state COLA, the budget includes the "pass through" of the federal SSI portion of the COLA, resulting in maximum monthly grant increases above the current year of $9 per individual and $15 per couple.

Although SSI grants increase under the Governor's budget, the increase in the total grant is less than required by current law. Specifically, under the Governor's proposal grants would be 8.5 percent less (for individuals) and 6.4 percent less (for couples) than current law. As a point of reference, the federal poverty guideline for 2001 is $759 per month for an individual and $968 per month for a couple. Thus, under the Governor's proposal, the grant for an individual would be 6 percent above the 2001 poverty guideline and the grant for a couple would be 39 percent above the poverty guideline. (We note that the poverty guidelines are adjusted for inflation annually.)