Supplemental Security Income/State Supplementary Program

The administration’s budget plan proposes to achieve General Fund savings in the SSI/SSP budget by (1) reducing SSI/SSP grants for individuals, and (2) eliminating the state–only CAPI. We describe the Governor’s proposals below and present other budget solutions for the Legislature to consider.

Grant Reduction Proposals

As described earlier, California supplements the federal SSI grant with a state–funded SSP grant. Federal law requires that the state SSP portion of the grant be “maintained” at or above its 1983 level. Failure to comply with the MOE requirement would result in the loss of all federal Medicaid health care program funding (the program is known as Medi–Cal in California).

Governor’s Proposal: Reduce SSI/SSP Grants to Federal Minimum. The Governor’s plan would reduce SSP grants to the minimum levels required by federal law. Specifically, the grants would be reduced to a maximum of $156 per month for individuals and $396 per month for couples, effective May 2009. This proposal is estimated to save $178 million General Fund in 2008–09 and over $1.1 billion General Fund in 2009–10. Below, we present two alternative approaches the Legislature could consider for reducing grants.

LAO Option 1: No Pass–Through of Federal COLA. As we previously noted, the federal government applies a COLA to the federal SSI portion of the grant each January. This option would reduce the state SSP portion of the grant by the dollar amount that the SSI portion of the grant increased due to the January 2009 federal COLA. This option is referred to as “not passing through the federal COLA.” This would reduce SSP monthly grants for individuals by $37 to $196 and couples by $57 to $513. This returns the total maximum monthly grants to the level in place during 2008. Assuming a May 1, 2009 implementation date, this would save about $79 million in 2008–09 and about $479 million in 2009–10.

LAO Option 2: Reduce Grants for Couples. Another option to consider is to reduce the maximum SSI/SSP couples grants to 125 percent of the 2009 federal poverty guideline (as estimated by the LAO). The maximum grants for couples are currently at 133 percent of the poverty guideline. Grants for individuals, which are at about 100 percent of the poverty guideline, would be unaffected by this option. Even with this reduction, SSI/SSP couples would remain well above the federal poverty guideline. This proposal would reduce SSP monthly grants for couples by $88, from $568 to $480, a level that would still be well above the federal MOE requirement. Couples would continue to receive the federal COLA in January 2010, and would be entitled to future federal and state COLAs when they are provided. This option saves about $21 million in 2008–09 and $135 million in 2009–10.

Comparing SSI/SSP Grant Levels. Figure 6 shows SSI/SSP average grant levels for individuals and couples under the Governor’s proposal and our two LAO options discussed above. The figure also compares grant levels to the federal poverty guideline.

Conclusion. Because all of the options above only impact the state–funded, SSP portion of the grant, they do not result in the loss of federal funds. We note that these options may be combined to achieve higher levels of savings. For example, the Legislature could opt to reduce the grants for couples to 125 percent of the poverty guideline and not pass through the January 2009 federal COLA for combined savings of $86 million in 2008–09 and $530 million in 2009–10. The SSI/SSP program represents over one–third of the total social services budget. Due to the state’s severe fiscal problems, we recommend the Legislature adopt one or a combination of the above proposals to achieve budget solution.

Restaurant Meal Allowance

Under current law, individuals who self–certify that their living arrangement prevents the preparation of meals at home receive a state–funded supplement to their SSP grant. This supplement, known as a restaurant meal allowance, is currently provided to over 39,000 SSI/SSP recipients at a cost of $84 for individuals and $168 for couples per month. The annual budget for this supplement is approximately $39 million General Fund.

Allowance Should Be Eliminated. We have two major concerns about the restaurant meal allowance. There is currently no verification process to ensure that this grant supplement is paid only to the SSI/SSP recipients who actually qualify for it. Moreover, no time limit is placed on the receipt of this benefit. Because of these problems, we recommend eliminating the SSI/SSP restaurant meal allowance, an action that would result in annual General Fund savings of about $35 million. We note that our estimate of the savings associated with the proposal is not equivalent to the total present cost of the program. This is because we have allowed for some erosion in the savings to account for the likelihood that some SSI/SSP recipients who lost the allowance would apply for and receive a similar supplement available to those who qualify for the IHSS program. Finally, the Legislature could establish a program to assist in one–time purchases by recipients of cooking equipment, such as a microwave oven.

Proposals Affecting Cash Assistance Program for Immigrants

Governor’s Proposal. The Governor proposes to eliminate CAPI to achieve General Fund savings of $20 million in 2008–09 and $130 million in 2009–10. Below, we present alternatives to the Governor’s proposal.

LAO Option 1: Eliminate CAPI Prospectively. One option would be to halt any further enrollment in the CAPI program. This option would essentially stop growth in the program and allow those already receiving benefits to remain on the program. We estimate that it would result in savings of about $20 million in 2009–10, and greater annual savings in future years as current CAPI recipients exit the program.

LAO Option 2: Make Some CAPI Recipients Eligible for Federal Funds. On September 30, 2008 the President signed in to law the SSI Extension for Elderly and Disabled Refugees Act (P.L. 110–328). We are advised that this legislation makes certain refugees eligible for federal SSI benefits for an additional two years beyond the seven years previously authorized. Some current recipients of CAPI are refugees. However, DSS is not able to estimate the number of CAPI recipients statewide who are considered to be refugees. Our discussions with counties suggest that there are about 2,000 current CAPI recipients potentially eligible for the SSI extension. Under current law, counties with a CAPI caseload of 70 or more recipients are already required to establish advocacy programs to assist CAPI recipients and applicants in applying for federal SSI. The goal of the advocacy program is to reduce state–only CAPI costs by facilitating recipients’ transition to the federally supported SSI/SSP.

We recommend instructing counties to focus their existing advocacy efforts on the CAPI cases most likely to be eligible for this federal SSI extension. To further encourage counties to focus on these cases, we recommend establishing an incentive payment to counties for each case transferred to federal eligibility. We would suggest the payment be equal to one month of the individual CAPI grant. We estimate that the savings from the transition of these recipients from the state–only CAPI to federal and state–funded SSI/SSP would result in net state savings of $17 million in 2009–10. This results in state savings because the state would no longer fund the entire CAPI grant ($897 for individuals and $1,559 for couples), but would instead fund only the SSP portion of the SSI/SSP grant ($233 for individuals and $568 for couples).