Looming Cut to CalFresh Will Slash Households’ Food Budgets, Drain Millions of Dollars From California Economy

This Friday, November 1, all Californians who receive food assistance through the federal Supplemental Nutrition Assistance Program (SNAP, known in California as CalFresh) will see a significant drop in their already-modest benefits. Benefits will decline by 7 percent on average, or about $10 per person per month. The maximum monthly food benefit for a family of four, for example, will be cut by $36.

With the poverty rate in California still one-third above the pre-recession level, and many counties still struggling with double-digit unemployment, the deep cuts to households’ food budgets come at a terrible time.

By the Numbers…

Here’s a rundown — by the numbers — of what the SNAP/CalFresh cuts will mean for California:

• 4.2 million — The number of CalFresh recipients in California who will be affected by the cut.
• 67 percent — The share of CalFresh households affected by the cut that include children.
• $1.40 — The average CalFresh benefit per person, per meal after the cut.
• 21 — The number of meals lost in the course of a month for a family of four.
• $457 million — The federal dollars that will be lost in California due to SNAP benefit cuts in the coming federal fiscal year. The federal government pays the full cost of SNAP/CalFresh benefits for households.
• 8 in 10 — Share of the benefit dollars lost in California that would have gone to households with children.
• $1.79 — The boost to the economy provided by every additional dollar spent on SNAP benefits, according to the USDA’s Economic Research Service.

Deeper Cuts to Food Assistance Could Be on the Way

The sudden reduction in SNAP/CalFresh benefits is occurring because an increase provided in the 2009 American Recovery and Reinvestment Act (ARRA) — intended to spur economic growth and prevent hunger in low-income households — expires at the end of October. The higher benefit level was originally supposed to stay in place until annual inflation adjustments caught up, softening the transition for low-income households, but Congress later accelerated the sunset date.

Unfortunately, there is no sign that Congressional leaders plan to halt the SNAP benefit cut. In fact, when House and Senate members meet today to begin formal negotiations on the federal Farm Bill, they will be debating whether to make even deeper cuts to SNAP. The House recently passed legislation that would cut $39 billion from the program over the next decade, potentially eliminating assistance for nearly 4 million people nationwide in the first year alone. Even the Senate’s version of the Farm Bill would cut $4.1 billion from the program over the next 10 years.

In focusing on whether and how much to cut SNAP benefits, the debate in Congress ignores mounting evidence that SNAP is one of the most effective federal programs for fighting poverty and shielding children from the effects of hunger. According to the USDA, the ARRA increase in SNAP benefits cut the number of “food insecure” households — in which one or more persons had to skip meals or otherwise eat less — by half a million nationwide in 2009. In addition, recent research demonstrates that early childhood access to food assistance is associated with significantly better outcomes in terms of health, educational attainment, earnings, and self-sufficiency in adulthood.

The Case for Investing in — Rather Than Cutting — SNAP

What if, instead of debating how much to cut SNAP, policymakers were seeking ways to make SNAP dollars go even further toward fighting hunger, improving health, and stimulating local economies? Instead of undermining a program that was one of the strongest elements of the nation’s response to the recent recession, we could be deploying proven strategies to expand SNAP’s reach. For example, we could be ensuring that children get enough to eat when school’s out by providing a summertime benefit increase to families with kids, an innovation that has been shown to significantly increase children’s food security in preliminary studies. Or we could be encouraging healthy food choices by offering incentives for SNAP/CalFresh participants to buy nutritious foods (such as fruits and vegetables) and expanding capacity for the use of Electronic Benefits Transfer (EBT) cards at farmers’ markets.

Last year, SNAP lifted more Americans out of poverty than in any other year on record. At a time when many households in California and across the nation are still struggling to make ends meet, such a program is not just worth preserving — it’s worth strengthening.

— Hope Richardson

Federal Brinksmanship Threatens Economic Recovery

One year ago this week, I left Washington, DC, for California to join the CBP as its new executive director. As I shared the news of my impending departure with my friends in the state/local policy community in DC, many of them would say something like “Are you crazy? Things in California are so broken.”

Fast-forward a year. California’s economy is growing. California’s voters approved a set of temporary tax increases last November that are providing new revenues to a state budget that had been confronted by several years of severe shortfalls. State policymakers have approved a 2013-14 budget that reinvests in education, expands access to health insurance as part of federal health care reform, and begins to pay down state debt incurred amid the economic struggles of the past decade. More recently, state policymakers passed an increase in California’s minimum wage, providing a financial boost for low-wage workers, who have seen their earnings decline in recent years.

Meanwhile, back in Washington, federal policymakers have been playing political football with the nation’s economic recovery and the full faith and credit of the US government. They have yet to negotiate an agreement that funds the federal government, threatening a government shutdown if an agreement isn’t reached by the start of the new federal fiscal year tomorrow. Federal brinksmanship is also in play over whether to raise the federal debt ceiling or default on US debt – a prospect that would threaten economic performance and job creation in the midst of a fragile economic recovery. These debates follow closely on the heels of a vote in the House of Representatives a couple weeks ago that would slash funding for federal food assistance – the Supplemental Nutrition Assistance Program (SNAP) — eliminating benefits for 3.8 million people in 2014. This is about the same number of people that the program lifted above the federal poverty line in 2012, according to US Census figures. Federal policymakers will have another opportunity to make the wrong decision come December when, lacking federal action, emergency unemployment insurance benefits will expire.

Poor policy choices at the federal level hurt California workers and their families. And despite the strides made in California in the past year, our state’s continued economic recovery will depend, in part, on actions taken — or not taken — in Washington. Our latest analysis shows that despite a general upswing, California’s recovery has yet to reach large segments of workers and their families, and the job market remains deeply challenging. Federal policy will also have a profound effect on the state’s fiscal outlook, with federal dollars comprising the second-largest piece of the state budget. (A prior CBP report details how federal dollars are spent in California.) A federal government shutdown, a decision to make an increase in the debt ceiling contingent on another round of federal spending cuts, or a default on US debt will threaten the nation’s and California’s already-fragile economic recovery. Failure to extend federal emergency unemployment insurance in December would place additional strain on those in California and elsewhere who are seeking work amid a weak job market.

The economy in California and nationally is beginning to come back, but our prospects are threatened by federal politics that appear “crazy” and “broken,” where some members of the US Congress are willing to jeopardize the recovery and imperil families and communities for the sake of political gain. Smarter choices by policymakers at all levels — like those made by California’s voters and policymakers in the past year — present an alternative way forward.

— Chris Hoene

With Poverty Still Well Above Pre-Recession Levels, House Moves to Cut Critical Poverty-Fighting Program

Census data released Tuesday show that SNAP (the Supplemental Nutrition Assistance Program, known in California as CalFresh) lifted 4 million people nationwide above the federal poverty line in 2012.

Because SNAP benefits don’t come in the form of cash, they are not counted as income in the official poverty measure. However, the Census Bureau provides information on how much the official poverty statistics would change if these additional resources were counted as income. In 2012, the most recent year for which data are available, SNAP lifted more people out of poverty than in any other year on record.

Despite strong evidence of SNAP’s effectiveness at alleviating the worst effects of poverty and reducing hunger, the US House of Representatives is preparing to vote today on a bill that would slash funding for the program by $39 billion — 10 times the size of the SNAP cuts in the Senate’s version of the Farm Bill.

The new legislation, HR 3102, doubles down on cuts previously proposed by the House, in an earlier June version of the Farm Bill that failed to pass. After that attempt failed, the House passed a Farm Bill that left out the nutrition provisions altogether. HR 3102 is a new attempt to pass the nutrition provisions separately, keeping all the cuts to SNAP previously proposed, and adding more to the list.

For example, the new bill would block states’ flexibility to exempt high-unemployment areas from strict rules that limit benefits for jobless adults with no children. While proponents of the bill claim that any qualifying person willing to work or participate in a job training program will still have access to SNAP, most states and localities provide limited, if any, access to “workfare” programs. If state flexibility were eliminated, childless adults unable to find a job or get a spot in a job training program would only be able to receive benefits for three months in any three-year period — even in areas with the highest unemployment. Given that more than half of all California counties are still experiencing double-digit unemployment, this provision is cause for concern.

The Congressional Budget Office estimates that HR 3102 would eliminate SNAP benefits for about 3.8 million people — including seniors and low-income working families with children — in 2014. In addition, nearly 3 million people per year over the next 10 years would lose benefits. These cuts are on top of already-scheduled benefit reductions that will affect all SNAP households in a little over a month.

With poverty in California still stubbornly high — about one-third above the pre-recession level — deep cuts to SNAP/CalFresh would come at a terrible time, limiting one of the most effective tools the state has for fighting poverty. In order for low-income families to begin to see the gains that high-income earners have seen during the recovery, we need to strengthen and preserve the safety net for struggling families — not weaken it.

— Hope Richardson

Shrinking Support for California’s Unemployed

Beginning this Sunday, some of California’s job seekers will no longer be able to receive key emergency unemployment benefits, placing additional strain on workers who have already seen their benefits cut within the last year. These emergency benefits, called “Tier 4” benefits, are provided through the federal Emergency Unemployment Compensation (EUC) program, which provides different tiers of emergency benefits to workers based on the economic conditions of the state in which they work. This emergency aid program provides additional benefits to unemployed workers who have exhausted their regular state unemployment insurance, thus serving as a vital lifeline for the long-term unemployed and their families. Unemployment insurance benefits lifted nearly a million children out of poverty in 2009, at the height of the Great Recession.

As successful as the EUC program has been, it is designed to be temporary, with benefits phasing out when the economy improves. Tier 4 benefits give up to 10 weeks of additional unemployment benefits to job seekers in states where the unemployment rate averages 9 percent or higher for three months in a row, but eligibility ends when unemployment falls below that threshold.

The end of Tier 4 benefits for workers in California is a sign that our state’s economy is improving, but it isn’t exactly time to break out the champagne. The Employment Development Department estimates that thousands of unemployed workers in California will lose out on benefits because the state no longer qualifies for Tier 4. This is troubling given that California’s job market is still weak, especially for the long-term unemployed. This past June, nearly one-third of California’s unemployed workers had been out of work for at least a year, and more than 40 percent had been unemployed for at least six months. At no other point in nearly the past two decades has long-term unemployment been this common. For these workers, the economic recovery is not yet a reality, and they will continue to face a weak job market for months to come. At the current rate of job growth, California will not recover the jobs lost in the Great Recession until July 2015.

Furthermore, aid for unemployed workers has already been reduced because of the automatic cuts to federal programs that took effect on March 1. These cuts, known also as “sequestration,” reduced federal unemployment benefits for more than 400,000 jobless Californians by nearly 18 percent. While the economy is improving, services are being cut for precisely the group that is being left behind in this recovery.

Stay tuned for a deeper look at this and other challenges that California’s workers face as our state slowly emerges from the deepest economic downturn in generations. This Labor Day, we will release our annual analysis of the state’s economy and job market, examining where the state stands and what the current recovery means for California’s workers.

— Luke Reidenbach

Federal Dollars: The Second-Largest Slice of California’s State Budget Pie

Here’s a budget fact that may come as a surprise to many Californians: Federal dollars make up the second-largest piece of the state budget. California is expected to spend $87.6 billion in federal funds through the state budget in 2013-14, the current fiscal year. These federal dollars comprise more than one-third (37.6 percent) of the state’s total $232.9 billion budget for 2013-14, which also includes state spending from the General Fund (the biggest piece of the budget pie), special funds, and bond funds. (We highlighted these state dollars in a blog post last week.)

State budget documents show that:

• More than half (52.1 percent) of the federal dollars projected to be spent through the state budget in 2013-14 will flow through the Department of Health Care Services (DHCS). These funds — $45.6 billion — will primarily support the Medi-Cal Program, which provides health care coverage for well over 8 million low-income Californians and which the state will expand in January 2014 as authorized by federal health care reform.

• More than $11 billion in federal funds (12.8 percent) will support other health programs outside of DHCS as well as human services, including the CalWORKs welfare-to-work program and an array of services and interventions to protect children from neglect, abuse, or exploitation.

• More than $10 billion in federal funds (11.9 percent) will flow through the Employment Development Department, with most of these dollars supporting Unemployment Insurance (UI) benefits for jobless Californians.

• Other federal dollars spent through the state budget in 2013-14 will largely support K-12 schools, higher education, and transportation.

It’s important to remember that most federal dollars that come to California bypass the state budget and go directly to individuals, businesses, and others, as we explained in this report. These “off-budget” federal dollars include funding for Social Security benefits, the Earned Income Tax Credit, CalFresh food assistance, Supplemental Security Income cash assistance for low-income seniors and people with disabilities, payments to defense contractors, and the salaries and wages of federal employees.

Of course, not all is well on the federal funding front. Automatic cuts to both defense and nondefense programs took effect on March 1 of this year. Nationally, this so-called “sequestration” requires nearly $1 trillion in spending cuts through federal fiscal year 2021, including an $85 billion reduction in the current fiscal year, which ends on September 30. California’s precise share of these cuts is unknown, but it’s reasonable to assume the state and its residents could lose hundreds of millions of federal dollars — and possibly well over $1 billion — in the current fiscal year alone. Moreover, the impact of the cuts ranges far and wide. For example, more than 8,000 California children were expected to lose access to Head Start early education this year, and over 15,000 California families were estimated to lose federal rental assistance. Moreover, federal UI benefits for more than 400,000 jobless Californians were cut by nearly 18 percent in April as a result of sequestration.

Any way you look at it, these federal spending cuts make no sense and — as our colleagues at the Center on Budget and Policy Priorities have argued — should be replaced “with a balanced package of tax and spending measures that do not increase poverty or inequality or exert such a sharp, immediate drag on the recovery.” While the impacts of sequestration are not yet fully understood, it’s clear that federal dollars — whether they’re spent through the state budget or not — play a critical role in enhancing the state’s quality of life and improving the lives of low- and middle-income Californians.

— Scott Graves