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Description: Proposal: The City urges Congress to increase funding for LIHEAP in FY 2002 to at least $1.7 billion, so that the State of New York may provide automatic heat subsidy payments to all eligible

Proposal: The City urges Congress to increase funding for LIHEAP in FY 2002 to at least $1.7 billion, so that the State of New York may provide automatic heat subsidy payments to all eligible renters and homeowners. The City also urges Congress to allocate to states a portion of the $300 million LIHEAP contingency funding at the beginning of the LIHEAP program year along with the base LIHEAP funding.

Background: LIHEAP provides assistance to low-income households for home energy costs. LIHEAP grants are targeted to areas and households with the greatest need, including large urban areas like New York City. In FY 2001, Congress provided $1.4 billion for LIHEAP and an additional $300 million for emergency funding.

Prior to FY 1995 reductions in LIHEAP funding, New York State automatically paid grants to all eligible renters and homeowners. In 1994-1995, when funding became insufficient to cover the entire eligible population, New York State created new state implementation criteria, which require certain eligible populations to fill out applications in order to receive LIHEAP grants. Currently, households with vulnerable, disabled members, or with members over age 60 or under age eight, receive their LIHEAP grants automatically through the LIHEAP program. Those households that are still eligible, but do not fit into the criteria above, must fill out an application in the local LIHEAP office.

In the past several years, LIHEAP contingency funds have been distributed to states too late for states to respond in a timely fashion to an energy crisis. By the time the contingency funding is released and the states develop and implement an expenditure plan, the critical need in individual households may have diminished. The City strongly believes that allocating a portion of the contingency fund at the beginning of the program year would be more efficient. It would allow states the opportunity to plan and to hasten response time because states would be aware of contingency funding levels at the beginning of the LIHEAP year.

Proposal: The City strongly urges Congress to restore the Social Service Block Grant funding to $2.8 billion for FY 2002.

Background: The Social Services Block Grant (SSBG), also known as Title XX of the Social Security Act, is a flexible block grant to states. The City primarily uses its share of SSBG funds to provide childcare and child welfare services. The value and importance of the SSBG, however, is that jurisdictions have the flexibility to use it for a wide range of vital social services. In fact, the City has used it and will continue to use it to support services for victims of domestic violence, protective services for adults, and senior centers. The City also uses SSBG funding for childcare services. This flexibility enables states and localities to provide services to the most vulnerable and needy populations. There are few funding streams available to support these populations other than SSBG. Over the years, SSBG has become an integral and critical source of funding to the City and, therefore, it must be maintained.

When the 1996 federal welfare law was enacted, funding for SSBG was authorized at $2.4 billion annually through FY 2002. This funding level was agreed to in order to ensure that states would be able to continue providing critical services. In FY 1998, however, SSBG received only $2.3 billion, $1.9 billion in FY 1999, and $1.8 billion for FY 2000, and $1.7 billion in FY 2001 -- all of which fall significantly below the level authorized in the 1996 law.

In FY 1996, the City received $127 million in SSBG funds, but the City's allocation has steadily decreased over the years to an estimated $73 million in FY 2001. This is a loss of $50 million, or a 39 percent drop in the funding level promised when welfare reform was enacted. The City strongly urges Congress to restore SSBG funding to the 1996 level of $2.4 billion.

Proposal: The City urges Congress to provide additional child care funding for families moving from welfare to work

Background: For welfare reform to be successful, sufficient stable, good quality child care must be made available to parents receiving welfare who are engaged in work activities and to those leaving welfare who are engaged in work in programs created by the Child Care and Development Fund (CCDF). While the welfare law appropriated funding in two of the three CCDF categories through FY 2002, the third category, the Child Care Development Block Grant (CCDBG), remains subject to annual congressional appropriations.

For FY 2001, Congress provided $2 billion for the CCDBG. Although this includes a slight increase of $817 million over the FY 2000 level of $1.2 billion, the City estimates that this amount is inadequate to meet the anticipated child care expenses of TANF families, recipients transitioning to work, and working families eligible for child care subsidies.

As more families enter the workforce, the need for additional resources will continue to grow. For example, during calendar year 2000, the City's welfare to work program achieved over 132,954 job placements. This overall achievement is 88 percent higher than the 67,000 reported jobs in 1999. This represents clients who either obtained jobs that increased their income by at least $100 a week if they continued to receive welfare, or those recipients whose state public assistance or non public-assistance Food Stamp cases were able to be closed. Starting in calendar year 2001, the job placement number also includes applicants who do not open a welfare case because they find employment during their application period. The City is concerned that inadequate funding for child care will diminish the effect of successful welfare reform efforts. In addition, the City believes that child care funds should go directly to the City rather than through the state, given the size and complexity of the City's child care system. Other large municipalities could be funded similarly to ensure the best and most efficient use of child care funds.

The City urges Congress to maintain child care funding at $2 billion for the CCDBG portion of the CCDG in FY 2002, and to provide additional funding for the construction of child care facilities.

Proposal: The City proposes that the Secretary of the U.S. Department of Agriculture be permitted to grant waivers of regulations, and authorize pilot or experimental projects with respect to every aspect of the Food Stamp Program, except eligibility criteria.

Background: Presidential Executive Order No. 13132 was signed on August 4, 1999, and filed with the Federal Register on August 9, 1999. Under the Executive Order, it is stated that "with respect to federal statutes and regulations administered by the states, the federal government shall grant states the maximum administrative discretion possible. Intrusive federal oversight of state administration is neither necessary nor desirable."

Furthermore, with respect to increasing flexibility for state and local waivers, Executive Order 13132 provides that "each agency shall, to the extent practicable and permitted by law, consider any application by a state for a waiver of statutory or regulatory requirements in connection with any program administered by that agency with a general view toward increasing opportunities for utilizing flexible policy approaches at the state or local level in cases in which the proposed waiver is consistent with applicable federal policy objectives and is otherwise appropriate."

The federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) reauthorized and reformed the Food Stamp program allowing states to establish operating procedures that vary for local Food Stamp offices to reflect regional and local differences. In addition, PRWORA revised existing waiver authority such that the Secretary is permitted to conduct projects that: will improve administration of the program; increase self-sufficiency of Food Stamp participants; test innovative welfare reform strategies; and allow greater conformity among public assistance programs.

Federal law currently prohibits waivers of regulations and pilot or experimental projects where payment of Food Stamps would be given in cash rather than through coupons. It also removes a local district's ability to offer to provide cash as opposed to Food Stamps as an incentive to recipients who are engaged in work.

In addition, federal law also prohibits the Agriculture Secretary from approving a waiver or pilot or experimental project that would have the effect of substantially transferring funds from the Food Stamp program to another public assistance program or using the funds for other than purchase of food, program administration or an employment and training program. We believe that if there are savings resulting from such a program that it should be permitted to be used for any welfare initiative that would enable persons to become self-sufficient. This is the case for the use of block grant funds under Temporary Assistance to Needy Families. As PRWORA has been in effect for more than three years and is being implemented effectively, these types of restrictions should no longer stand.

Proposal: The City urges Congress to enact legislation to simplify the eligibility determinations under the Food Stamp program to be in conformance with the TANF program.

Background: Although the goal of the PRWORA is to help people reach self-sufficiency through work, federal Food Stamp Program policies have remained largely the same. Food Stamp rules and regulations generally have little in common with the goals of welfare reform. The City supports changes in Food Stamp eligibility determination rules and regulations, which would work in tandem with welfare reform policy.

Most importantly, the Simplified Food Stamp Program (SFSP) needs to be modified. PRWORA authorized the states to establish SFSP's to enable them to simplify their administration of the TANF and Food Stamp programs by developing and implementing a common set of eligibility and benefit rules for TANF and Food Stamps. The present statute, however, contains so many obstacles to meeting this objective that only one state has made full use of it.

An amendment to the statute is necessary in several areas. First, the SFSP presently allows only limited conformity with TANF. An amendment to the law is needed to make clear that the SFSP is applicable to all households requesting assistance, not just households in which all members are already receiving TANF benefits. Second, to simplify administration, the statute should be amended to allow states to maintain the SFSP rules for households that leave TANF for up to one year.

Third, the SFSP statute should be amended to mandate that the USDA approve applications that seek to include "mixed" TANF households in an SFSP (where not all household members receive TANF). Present law leaves this determination to the discretion of the USDA. States do not have to get the approval of the USDA to operate an SFSP where all members of a household receive assistance under TANF. The USDA has issued final regulations on this matter. They provide that no more than 5 percent of mixed households can have benefits reduced by 10 percent or more and no mixed household can have its benefits reduced by 25 percent or more (excluding reductions of $10 or less). This standard is unduly restrictive (it is more restrictive than the statutorily imposed limits on benefits reductions under Food Stamp waiver authority) and limits the ability of states to adopt comprehensive SFSPs that provide standardized deductions.

Fourth, the strict cost neutrality provisions of present law should be revised to allow states flexibility in meeting the cost of neutrality requirements over an extended period of time through state reimbursements, funding from TANF savings, or other programs. The existing strict cost neutrality requirement severely limits state flexibility in developing appropriate SFSPs that seek to conform TANF and Food Stamp eligibility and benefit requirements. Finally, to encourage implementation of SFSPs, and in acknowledgement of the difficulty in making a transition to a Food Stamp program that will have one set of rules for TANF participants and one for non-TANF participants, the SFSP statute should be amended to provide for a grace period in which increased error rates would be exempted from financial penalty.

Legislation is also needed to clarify that PRWORA anticipates that states will help applicants find immediate employment at the time of application so as to avoid the use of food stamps. To facilitate this, one-time diversion payments to families should be permitted. The Food Stamp Program should be in conformance with other programs in significant areas to streamline administration and help working families.

The City believes that all applicants for and recipients of Food Stamps within a household, whether or not the household includes persons in receipt of TANF, should be subject to TANF rules. These would include Work-First diversion procedures, employment related activities, substance abuse assessment and treatment, and the elimination of the work exemption for families with dependent children under six years of age. In addition, the provision that does not permit Food Stamp recoupments at a rate of greater than ten percent of the monthly allotment should be eliminated, or if not, increased substantially to at least 40 percent. In particular, this should be the case where the overpayment is a result of incorrect or incomplete information supplied by the recipient. Under these circumstances the recipient should bear responsibility for prompt and full correction of the error through a short recoupment process.

Finally, the Food Stamp Act should be amended to make clear that eligibility verification review (EVR) designed to address fraud and to improve program integrity, is an essential part of the Food Stamp application process, and that failure of an applicant to comply with EVR requirements should therefore result in the denial of the Food Stamp application. The legislation should specifically authorize a second "review" of the application following an initial interview and allow EVR interviews of applicants and recipients at EVR offices and/or home visits. Final USDA regulations prohibit this process for Food Stamps, even where the applicant is applying for both cash assistance and Food Stamps. In particular, the USDA has questioned whether an applicant's failure to comply with the City's EVR process is an appropriate basis for denial of a Food Stamp application under applicable law. EVR is an essential part of the City's efforts to evaluate eligibility for Food Stamps, and legislation is therefore needed to clarify that such fraud prevention application requirements are permissible and eligible for federal cost sharing. These fraud prevention procedures are minimally intrusive and would not discourage eligible persons from applying for Food Stamps. Moreover, under this proposal Food Stamps would still be issued on an expedited basis to applicants eligible for such service even though eligibility verification may not have been completed.

6. STATES SHOULD HAVE THE OPTION TO PAY FOOD STAMP BENEFITS TO A PROTECTIVE PAYEE APPOINTED FOR A SUBSTANCE ABUSER

Proposal: The City recommends that states have the option to provide Food Stamp benefits to a protective appointed payee if the recipient is in need of treatment for alcohol or substance abuse.

Background: A household containing a person with a substance abuse problem should not receive Food Stamp benefits directly. Such a recipient should be assigned a protective payee who would manage the recipient's Food Stamp benefits. This would not be unlike programs such as New York State Welfare Reform that specify that individuals who are unemployable because of the disabling effects of alcohol or drug abuse will be provided public assistance benefits in the form of non-cash safety net assistance. This feature of the program protects the family by ensuring that public assistance benefits are spent for maintenance of the household, and not diverted to purchase drugs or alcohol. There is precedent for this policy. Under the federal Supplemental Security Income (SSI) program, an individual who is eligible solely on the basis of disability where drug addiction or alcoholism is a contributing factor must have payments made to a representative payee.

The ability to divert public assistance benefits to purchase drugs does not depend on whether an individual is employable or whether the individual brings cash into the household. This proposal would extend the protection of a protective payee for Food Stamp purposes, to all families that include an individual who is an alcohol or drug abuser. All Food Stamp households containing an individual who abuses alcohol or drugs would receive food stamp benefits via a protective payee, even if that individual is employable, and even if that individual is not the member of the household who is actually receiving a public assistance or food stamp benefit.

Substance abuse is a problem that affects many public assistance and Food Stamp recipients and families. Research and experience indicate that for persons with a serious substance abuse problem, much or most of these benefits are used to purchase illegal drugs and supports the illegal drug economy. In order to remove these public funds from the illegal drug company, and to have the substance abuser confront his or her addiction, the City recommends that such individuals not receive their Food Stamp benefits directly, but that they be sent to a representative payee.

Proposal. The City of New York proposes that food vendors be required to obtain a fidelity bond in order to participate initially in the food stamp program. We further propose that the bonding requirement for readmission into the program be required and generally be higher than currently required. Finally, we suggest that USDA have the flexibility to determine the amount of these fidelity bonds.

Background. Currently, food retailers are not required to post a bond upon acceptance into the food stamp program. However, if a vendor is sanctioned, and applies to be readmitted to the food stamp program, the U.S. Department of Agriculture (USDA) may require the vendor to post a bond. The bond is usually set at $1,000. But it may differ depending upon the extent of the violations and the dollar value of improperly redeemed food stamps.

The City feels that the current bonding requirements do not provide a sufficient deterrent to discourage distributors from participating in fraudulent food stamp activities, and do not provide adequate coverage for losses incurred due to food stamp fraud. Studies conducted by the USDA have shown that greater vigilance of new vendor applications has increased the denial of vendors ineligible to participate in the food stamp program. In addition, studies suggest that vendors more likely to traffic in food stamps tend to be small retail outlets located in poor neighborhoods, stores which are likely to be deterred if the cost of participating in the food stamp program were higher. Increasing the cost of the fidelity bond while maintaining bonding flexibility could thus further discourage illegal activity while ensuring an adequate number of vendors.

This proposal, if enacted, could deter fraudulent activity on the part of vendors by increasing the cost of participation in the food stamp program for those most likely to commit further fraud due to their past history. Allowing flexibility on the part of the USDA to require greater or lesser bonding requirements would serve to ensure that a sufficient number of food vendors would be available to meet the needs of food stamp users in their localities. Increasing the amount of the required bond from the relatively nominal $1,000 for vendors to be re-admitted into the program would provide a more substantial motivation for these vendors to comply with food stamp regulations. Vendors who might be pre-disposed to illegal activity, particularly those who have been sanctioned for violating food stamp regulations might find the increased bonding cost prohibitive. The reduced illicit vendor activity could, in turn, dampen the effect on individual traffickers in food stamps.

Proposal: The City of New York supports an increase in the frequency of audits of Food Stamp vendors and the flexibility by which they could be conducted.

Background: The intent of the more frequent audits that would be required by this proposal would be to determine whether food vendors are complying with applicable laws and regulations and with the provisions of their agreements relating to the food stamp program. The City recommends that the federal law be amended to allow for increased flexibility on the part of states and localities to conduct frequent audits of food vendors and wholesalers. With regard to the integrity of the Food Stamp program, studies conducted by the USDA have shown the effectiveness of coordinated investigations, with particularly effective results when investigating retailers and individuals suspected of purchasing Food Stamps. Although the USDA and states have cooperated in investigating Food Stamp fraud, extensive cooperation is often hindered by jurisdictional boundaries where one entity's -- the USDA -- primary mission is to investigate food retailers and another entity's -- the locality -- mission is to investigate individual Food Stamp users. Generally, unless fraud is suspected, the federal government does not review each vendor once initial authorization is granted to participate in the Food Stamp program.

Due to an insufficient number of staff to cover all retailers, the USDA reauthorizes a fraction of food stores each year. In New York City and the immediate surrounding counties, there are approximately 10,000 outlets participating in the Food Stamp program.Federal law provides for the disqualification of retailers and wholesalers participating in the Food Stamp program for failing to comply with provisions of the Food Stamp Act. Penalties are graduated in severity. They range from six months to five years for the first sanction, from one year to ten years for the second sanction, and permanent disqualification for a third sanction or disqualification based on trafficking.

The ability to zero in on suspected patterns of abuse and fraud could greatly mitigate the incidence of trafficking in Food Stamps conducted by food vendors. Such trafficking is the major source of Food Stamp fraud. A USDA study estimated between 1996 and 1998 that trafficking diverted about $660 million per year from Food Stamp benefits. The uses of computer matches and the evaluation of masses of data provide by the electronic benefits transfer (EBT) system have enhanced the abilities of Food and Nutrition Service, and states and localities to detect potential fraud in these areas. The ability of states and localities to conduct more frequent on-site audits would allow states and localities to fully pursue these leads. These audits would complement and supplement investigations undertaken by the USDA. States and localities would be encouraged to enter into agreements with other jurisdictions to conduct joint audits and investigations. In addition, states and localities would be permitted to contract with organizations in the private sector to conduct audits.

Proposal. To amend the confidentiality requirements under Medicaid to allow local social services districts to access the complete Medicaid records of public assistance applicants and recipients for the purpose of developing treatment and service plans that will enable individuals to become alcohol-free, drug-free, and self-sufficient without obtaining consent.

Background. Federal and state laws and regulations protect the confidentiality of medical records. In general, as provided under Medicaid, an individual's diagnosis or treatment may not be disclosed unless that individual consents to that disclosure in writing. Federal and state laws also place limits on the length of time an individual can receive public assistance. Under federal law, recipients may not receive Temporary Assistance to Needy Families (TANF) beyond a lifetime limit of 60 months. In addition, recipients who exceed the New York State two-year time limit are not eligible for cash assistance. Federal and state laws also require individuals who receive public assistance or Food Stamps to participate in work and work-related activities as conditions of eligibility. Those who do not meet these conditions may lose their public assistance and Food Stamp benefits. Recipients who lose public assistance also lose their eligibility for Medicaid. However, recipients are eligible for Medicaid-only eligibility and recertification.

Many individuals in New York City who apply for or receive state public assistance have certain health-related problems that make it difficult for them to conform to program requirements and to move from welfare to work. These problems may include medical conditions, psychological disorders, alcohol and drug abuse, and other conditions that interfere with meeting program requirements and moving toward self-sufficiency. Public assistance recipients may be unaware of or unwilling to disclose information about such conditions that may limit their ability to meet program requirements. As a result, City agency caseworkers are unable to develop comprehensive rehabilitation plans.

Modifying confidentiality statutes to assure the City's access to information in a recipient's Medicaid files will provide the agency with reliable information about clinical conditions that need to be addressed through further evaluation, ongoing treatment, or special accommodations. Disclosure of medical assistance records will both ensure that recipients receive appropriate treatment and increase the likelihood of recipients making a successful transition from welfare to work.

Proposal. The City urges Congress to provide adequate funding for the Older Americans Act (OAA) in FY 2002.

Background. The OAA is the largest federal funding source for senior services, and has proven to be an extremely successful and cost-effective way of assisting seniors at the local level. The City is the largest provider of senior services in the country.

In FY 2001, Congress passed an OAA reauthorization bill which makes several major changes to the Act. Most critical are changes to the funding formula, which replaces the previous "hold harmless" formula with one that emphasizes senior population growth. The new OAA also establishes a National Family Caregiver Support Program, providing $125 million in FY 2001.

The OAA funding allows the City to serve over 14 million congregate and home-delivered meals to older New Yorkers, and to provide countless hours of social services including counseling, education, recreation, legal services, health promotion, and transportation. At a time when the City is experiencing tremendous growth in the number of seniors who are frail and over age 85, increased funding is essential.

Despite an increase in funding in FY 2001, funding for the OAA has not kept pace with inflation, and the City has had to make up for the reduced buying power of OAA dollars through local funding increases. Additionally, changes in the funding formula mean that any increases to New York State will be minimal. In order to meet the rising need for senior services, Congress must provide adequate funding for the OAA.

Proposal. The City urges Congress to increase funding for the U.S. Department of Agriculture (USDA) Nutrition Program for the elderly by $20 million.

Background. The USDA Nutrition Program for the elderly is a program of the Older Americans Act, that reimburses states for OAA-funded congregate and home-delivered meals. Funding for the program in FY 2001 was $140 million. This funding enables service providers to offer many additional meals to seniors each year. While the OAA authorizes a per meal reimbursement rate of $.61, the actual reimbursement rate has steadily declined since 1993. Currently, programs receive only $.54 per meal in reimbursements. The decline in buying power of the USDA Nutrition Program is compounded by a 13 percent increase in the cost of food during the past five years. An amendment to the FY 2001 Agriculture Appropriations bill, the Boehler-Stupak amendment, would have added $20 million to the Nutrition Program for the Elderly. However, this increase was not included in the final FY 2001 Agriculture Appropriations bill. The City urges Congress to increase funding by $20 million as part of the FY 2001 Agriculture Appropriations bill.






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