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 $3.5 billion from the General Fund for the state's share of SSI/SSP in 2005-06. This is an increase of $79 million, or 2.3 percent, above estimated current-year expenditures. This increase is primarily due to caseload growth of 2.4 percent, partially offset by savings due to not "passing through" the January 2006 federal cost-of-living adjustment (COLA).

In December 2004, there were 352,716 aged, 21,766 blind, and 813,158 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 2004.

Budget Proposes COLA Suspensions

By suspending the January 2006 state cost-of-living adjustment (COLA) and capturing General Fund savings equal to the January 2006 federal COLA, the budget achieves combined savings of $229 million in 2005-06 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 $229 Million in Savings. The Governor proposes to suspend the January 2006 state COLA (4.07 percent) which results in a six-month cost avoidance of $144 million in 2005-06. In 2006-07, the annual savings from this proposal would double to $298 million. In addition, the Governor proposes to capture General Fund savings equal to the federal SSI COLA (2.3 percent). This is accomplished by reducing the state funded SSP portion of the grant by an amount equal to the federal COLA increase in the SSI portion of the grant scheduled for January 2006. For example, the maximum monthly SSP grant for an individual would be reduced by $13 from the current level of $233 to $220, just enough to offset the estimated SSI increase of $13 per month. This approach, sometimes referred to as "no pass through" of the federal SSI COLA, results in a six-month savings of $85 million in 2005-06, rising to $170 million in 2006-07.

Impact on Recipients. Figure 1 shows the SSI/SSP grants for January 2006 for individuals and couples under both current law and the Governor's proposal. Although the total grant for individuals remains the same in January 2006, the SSP portion is $33 (13 percent) less than what the grant would be under current law. For couples, the SSP grant is $58 (9.6 percent) less than what is called for under current law. Figure 1 also compares the grants under current law and the Governor's proposal to the 2004 federal poverty guidelines. Specifically, the maximum monthly grant for individuals would be 109 percent of poverty under current law, but would fall to 105 percent under the Governor's proposal. Grants for couples would be 144 percent of poverty under current law, but would fall to 138 percent under the Governor's proposal. (We note that poverty guidelines are adjusted annually for inflation.)

About 1,200 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 $13 for an individual and $20 per couple compared to the current SSP grant. Under this proposal, individuals receiving $13 or less in SSP benefits in December 2005 would have their benefits drop to zero and become ineligible for SSI/SSP in January 2006. (The corresponding figure for couples is $20 per month.) In total, about 1,215 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.

Caseload Overestimated for Cash Assistance Program for Immigrants

We recommend that proposed General Fund spending for the Cash Assistance Program for Immigrants be reduced by $2 million in 2004-05 and $3.5 million in 2005-06 because the caseload is overstated. (Reduce Item 5180-111-0001 by $3,497,000.)

The CAPI provides state-only funded SSI/SSP benefits to legal noncitizens who are ineligible for federal benefits. During 2003-04, the average monthly caseload for CAPI was just under 8,300 cases.

Department of Social Services Caseload Projection. The department projects that the CAPI caseload will increase by 4 percent during 2004-05 and 4.9 percent in 2005-06. The department based this projection on available data through June 2004.

LAO Caseload Projection. Our review of the actual data through November 2004 indicates that the caseload has been essentially flat since May 2004. However, given the caseload growth in the months prior to May 2004, we believe it is prudent to budget for some caseload increase in the future. Specifically, we calculated the growth rate from the most recent full year of data (November 2003 through November 2004). Based on that growth rate of 23 cases per month, we estimate that the CAPI caseload will increase by 1.4 percent in 2004-05 and 2.9 percent in 2005-06.

Savings Estimate. Based on our forecasted growth rate, the budget overstates the General Fund cost of CAPI by $2 million in 2004-05 and $3.5 million in 2005-06. Accordingly, we recommend that the Legislature reduce the budget for CAPI by $3.5 million for 2005-06, and recognize additional savings of $2 million in 2004-05.