Analysis of the 2004-05 Budget Bill Legislative Analyst's Office February 2004

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 $3.3 billion from the General Fund for the state's share of SSI/SSP in 2004-05. This is an increase of $202 million, or 6.4 percent, above estimated current-year expenditures. This increase is primarily due to costs associated with replacing one-time federal fiscal relief funds with General Fund monies and a caseload increase, partially offset by savings due to not "passing through" the January 2005 federal cost-of-living adjustment (COLA), and eliminating the California veterans cash benefit.

In December 2003, there were 345,116 aged, 21,753 blind, and 788,331 disabled SSI/SSP recipients. In addition to these federally eligible recipients, the state-only Cash Assistance Program for Immigrants (CAPI) was estimated to provide benefits to about 8,600 legal immigrants in December 2003.

Budget Proposes COLA Suspensions

By suspending the January 2005 state cost-of-living adjustment (COLA) and not passing through the January 2005 federal COLA, the budget achieves combined savings of $147 million in 2004-05 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 COLAs are funded by both the federal and state governments. The state COLA is based on the California Necessities Index 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) is applied annually to the SSI portion of the grant. The remaining amount needed to cover the state COLA on the entire grant is funded with state monies.

Governor's Proposals Achieve $147 Million in Savings. The Governor proposes to suspend the January 2005 state COLA (2.77 percent) which results in a cost avoidance of $84.6 million in 2004-05. In addition, the Governor proposes no pass through of the January federal SSI which results in savings of $62.5 million. Under this proposal the state funded SSP portion of the grant is reduced by the precise amount of the federal increase which becomes effective January 2005.

Impact on Recipients. Figure 1 shows the SSI/SSP grants for January 2005 for individuals and couples under both current law and the Governor's proposal. Although the total grant remains the same in January 2005, the SSP portion is $22 (9.2 percent) less than the grant under current law. For couples, the SSP grant is $39 (6.8 percent) less than current law. Figure 1 also compares the grants under current law and the Governor's proposal to the 2003 federal poverty guideline. Specifically, the maximum monthly grant for individuals would be 109 percent of poverty under current law, but would fall to 106 percent under the Governor's proposal. Grants for couples would be 142 percent of poverty under current law, but would fall to 139 percent under the Governor's proposal. (We note that poverty guidelines are adjusted annually for inflation.) 

About 560 Recipients Would Become Ineligible. Recipients who receive social security payments in excess of the federal SSI grant do not receive SSI but may receive SSP payments, and are known as "SSP-only" cases. The Governor's proposal to not pass through the federal COLA has the effect of reducing the maximum monthly SSP grant by $10 for an individual and $15 per couple compared to the current SSP grant. Under this proposal, individuals receiving $10 or less in SSP benefits in December 2004 would have their benefits drop to zero and become ineligible for SSI/SSP in January 2005. (The corresponding figure for couples is $15 per month.) In total, about 560 individuals and couple members would lose eligibility under this proposal. Becoming ineligible for SSI/SSP may result in a Medi-Cal share of cost for affected individuals.

Enrollment Cap and County Block Grant For Program Serving Immigrants

The CAPI provides state-only SSI/SSP for legal noncitizens who are ineligible for federal benefits. The Governor proposes to cap enrollment in this program at 8,645 recipients effective April 1, 2004. As of October 2004, the Governor proposes to shift funding for this program (and other programs that serve immigrants) to counties in the form of a block grant. The budget assumes that counties will achieve service delivery efficiencies and therefore reduces funding for this program (and the other block grant programs) by 5 percent. For our comments on this proposal, please see the "Crosscutting Issues" section of this chapter of this Analysis.