Amended  IN  Assembly  March 22, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 605

Introduced by Assembly Member Arambula
(Principal coauthor: Assembly Member Mathis)
(Principal coauthor: Senator Wiener)

February 09, 2023

An act to add Article 5 (commencing with Section 10085) to Chapter 3 of Part 1 of Division 9 of the Welfare and Institutions Code, relating to CalFresh.


LEGISLATIVE COUNSEL'S DIGEST


AB 605, as amended, Arambula. California CalFresh Fruit and Vegetable Supplemental Benefits Expansion Program.
Existing federal law establishes the federal Supplemental Nutrition Assistance Program (SNAP), known in California as CalFresh, under which supplemental nutrition assistance benefits allocated to the state by the federal government are distributed to eligible individuals by each county. Existing law establishes a statewide electronic benefits transfer (EBT) system, administered by the State Department of Social Services, for the purpose of providing financial and food assistance benefits, including CalFresh benefits.
Existing law establishes the California Fruit and Vegetable EBT Pilot Project and requires the department, in consultation with the Department of Food and Agriculture and specified stakeholders, to include within the EBT system a supplemental benefits mechanism that allows an authorized retailer to deliver and redeem supplemental benefits. Existing law defines the term “supplemental benefits” for these purposes to mean additional funds delivered to a CalFresh recipient’s EBT card upon purchase of California-grown fresh fruits and vegetables using CalFresh benefits. Existing law requires the department, upon the deposit of sufficient moneys into the California Fruit and Vegetable EBT Grant Fund, and upon the appropriation of moneys from the fund by the Legislature for this purpose, to provide a minimum of 3 grants to nonprofit organizations or governmental agencies for pilot projects to implement and test the supplemental benefits mechanism, as specified.
This bill would establish the California CalFresh Fruit and Vegetable Supplemental Benefits Expansion Program and create the California CalFresh Fruit and Vegetable EBT Expansion Fund in the State Treasury. The program would include a process and guidelines for the State Department of Social Services to, upon the deposit of sufficient moneys in the fund, enroll authorized retailers to enable those authorized retailers to provide supplemental benefits to CalFresh recipients who purchase fresh fruits and vegetables. The bill would authorize the department to initially allocate from any appropriation made for the purposes of the program, $140,000,000 $40,000,000 for large authorized retailers that are not direct farm-to-consumer authorized retailers to provide supplemental benefits, $40,000,000 $20,000,000 for small authorized retailers that are not direct farm-to-consumer authorized retailers to provide supplemental benefits, and $60,000,000 $30,000,000 for direct farm-to-consumer authorized retailers to provide supplemental benefits. The bill would also require the department to provide grants to small authorized retailers that are not direct farm-to-consumer authorized retailers to offset the cost of technological upgrades required to offer supplemental benefits and would authorize the department to allocate up to $1,000,000 from any appropriation made for the purposes of the program to provide those grants. The bill would authorize the department, 6 months or later after the enrollment of authorized retailers as a result of the first round of application solicitation, to reallocate those funds. The bill would require supplemental benefits to be provided using the EBT system supplemental benefits mechanism established for purposes of the California Fruit and Vegetable EBT Pilot Project.
The bill would also require the department, as part of the program, to contract with one or more vendors to develop at least 2 technology solutions that allow authorized retailers to wirelessly accept EBT CalFresh benefits and offer supplemental benefits, to develop marketing materials that authorized retailers that have been enrolled in the program and community groups can use for outreach efforts to promote supplemental benefits, and to submit specified reports to the Legislature. The bill would require, if the department fails to submit one of the reports, if the report recommends stopping further expansion of supplemental benefits programs, or if supplemental benefits are not distributed pursuant to the California Fruit and Vegetable EBT Pilot Project, all unencumbered state funds in the California CalFresh Fruit and Vegetable EBT Expansion Fund to revert to the General Fund.
The bill would require the Department of Food and Agriculture to develop a grant program to award funds to nonprofit organizations to recruit, train, and support authorized retailers participating in supplemental benefit programs.
The bill would require the State Department of Social Services to seek any necessary federal waivers or approvals to implement these provisions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) Despite California’s wealth and agricultural abundance, millions of Californians struggle daily to make ends meet and provide their families with enough food. This food insecurity has only worsened since the onset of the COVID-19 pandemic.
(b) This inequity has deeply negative impacts on the health of California families, contributing to high levels of food insecurity and diet-related disease.
(c) Clear evidence indicates that increasing consumption of fruits and vegetables can help improve health outcomes, yet millions of low-income Californians report that they cannot consistently afford to purchase fruits and vegetables.
(d) Numerous studies and evaluations have found that the CalFresh benefit amount, which is set by the federal government, is inadequate to support the purchase of nutritious foods that support a healthy diet, particularly fruits and vegetables.
(e) Studies also indicate that older adults, in particular Black older adults, report eating far less fruits and vegetables than their peers.
(f) During the COVID-19 pandemic, most CalFresh households have received a temporary boost in CalFresh benefits through federally authorized emergency allotments. When those expire, most households will face drastic reductions in their monthly benefits. The state should act to mitigate further spikes in hunger and hardship.
(g) In the past decade, programs piloted by numerous organizations in California and nationwide have demonstrated that when families with a low income have additional money for fruits and vegetables, they buy and consume more fruits and vegetables. These supplemental benefit programs, also known as healthy food incentive programs, have been funded with grants from the Specialty Crop Block Grant Program, California’s Nutrition Incentive Matching Grant Program, the United States Department of Agriculture’s Food Insecurity Nutrition Incentive Grant Program, and Gus Schumacher Nutrition Incentive Program, private philanthropy, and other sources.
(h) In California, these nutrition incentive programs were pioneered by certified farmers’ markets and have been adopted in a diverse geography at more than 250 direct-to-consumer locations across the state. Small and large grocery retailers now also offer these programs at more than 50 locations throughout California.
(i) These CalFresh nutrition incentive programs support California’s farmers and agricultural sector by increasing sales of California-grown produce. Research published by agricultural economists in 2021 estimates that the economic multiplier of these supplemental benefits is higher than most other government spending programs, with the California economy seeing a $1.70 to $3 in economic contribution each time a CalFresh household spends $1 in supplemental benefits.
(j) This same research demonstrates that supplemental benefit programs have the greatest multiplier and economic impact to the state economy when provided by farmers’ markets and other direct farm-to-consumer outlets.
(k) In terms of broad reach, nationally over 90 percent of Supplemental Nutrition Assistance Program (SNAP) benefits are spent at grocery stores, supermarkets, and superstores, which provides an opportunity to deliver supplemental benefits to hundreds of thousands of CalFresh families via these brick-and-mortar locations.
(l) Supplemental benefit programs should expand the purchasing power of Californians with low incomes and the Legislature does not intend for this program to be paired with any proposal that would restrict what food, or categories of food, can be purchased with standard CalFresh benefits.
(m) The expansion of California CalFresh Fruit and Vegetable Supplemental Benefits to more retail locations throughout the state will further help the state reduce hunger, improve public health, and support California agriculture.
(n) It is the intent of the Legislature in enacting this act to do all of the following:
(1) Broaden both the number and geographic diversity of individuals and families participating in CalFresh that can access supplemental benefits through participating food retailers, thereby increasing the program’s positive impacts in reducing hunger and improving health.
(2) Further support the state’s farming economy by increasing the purchasing power of CalFresh participants for California-grown fruits and vegetables vegetables, often and sometimes solely grown by California farmers, through both direct-to-consumer marketing channels, such as farmers’ markets, where the state sees the greatest economic multipliers, as well as through traditional grocery stores that source fresh fruits and vegetables from California farmers through wholesale channels.
(3) Build the foundation for the state, in the future, to make supplemental benefits available to CalFresh participants throughout California as a permanent supplement to the CalFresh program.

SEC. 2.

 Article 5 (commencing with Section 10085) is added to Chapter 3 of Part 1 of Division 9 of the Welfare and Institutions Code, to read:
Article  5. California CalFresh Fruit and Vegetable Supplemental Benefits Expansion Program

10085.
 This article shall be known, and may be cited, as the California CalFresh Fruit and Vegetable Supplemental Benefits Expansion Program.

10086.
 For the purposes of this article, the following definitions apply:
(a) “Authorized retailer” means any retail establishment that is authorized to accept CalFresh benefits, including, but not limited to, grocery stores, corner stores, farmers’ markets, farm stands, and mobile markets.
(b) “Direct farm-to-consumer outlet” means a certified farmers’ markets, farmers, community supported agriculture (CSA), and mobile markets and farm stands that source directly from farmers, as those terms are defined in Chapter 10.5 (commencing with Section 47000) of Division 17 of the Food and Agricultural Code, and approved third-party EBT operators operating at any of these locations.
(c) “Fresh fruits and vegetables” means any variety of whole or cut fruits and vegetables without added sugars, fats, oils, or salt and that have not been processed with heat, drying, canning, or freezing.
(d) “Supplemental benefits” means additional funds delivered to a CalFresh recipient’s EBT card upon purchase of fresh fruits and vegetables using CalFresh benefits, and to be redeemed only for purchases allowed under the CalFresh program at an authorized retailer.

10087.
 (a) There is hereby created in the State Treasury the California CalFresh Fruit and Vegetable EBT Expansion Fund. The fund shall consist of moneys from state, federal, and other public and private sources.
(b) Upon the deposit of sufficient moneys into the California CalFresh Fruit and Vegetable EBT Expansion Fund, as determined by the department, and upon the appropriation of moneys from the fund by the Legislature for this purpose, the department shall enroll authorized retailers into the California CalFresh Fruit and Vegetable Supplemental Benefits Expansion Program and provide the grants described in this article.

10088.
 (a) There is hereby established the California CalFresh Fruit and Vegetable Supplemental Benefits Expansion Program. As part of the program, the department shall enroll authorized retailers into the California CalFresh Fruit and Vegetable Supplemental Benefits Expansion Program to enable those authorized retailers to provide supplemental benefits to CalFresh recipients.
(b) The department, in consultation with the Department of Food and Agriculture, shall develop and adopt guidelines for enrolling authorized retailers, which shall include, at a minimum, all of the following:
(1) A competitive application process for those authorized retailers described in paragraph (1) of subdivision (c).
(2) An application process for those authorized retailers described in paragraph (2) of subdivision (c). The application process may be competitive if the department determines that budgetary or other considerations require a competitive selection process.
(3) At least two rounds of application solicitation.
(c) The department shall enroll authorized retailers that reflect a diversity of sizes and types, including both grocery stores and direct farm-to-consumer authorized retailers, consistent with both of the following:
(1) (A) Among authorized retailers that are not direct farm-to-consumer authorized retailers, the department shall prioritize enrolling those that can demonstrate that their participation will expand the geographic availability of supplemental benefits to communities and counties where retailers are not currently offering supplemental benefits.
(B) For authorized retailers described in this paragraph that have more than 50 retail locations in California, including all retail locations under common ownership, or that redeem more than fifty million dollars ($50,000,000) in CalFresh benefits annually across all retail locations under common ownership in California, both of the following apply:
(i) Of any appropriation by the Legislature for the purposes of this article, the department shall initially allocate no more than one hundred forty million dollars ($140,000,000) ($40,000,000) for authorized retailers described in this subparagraph to provide supplemental benefits.
(ii) An authorized retailer described in this subparagraph shall not be eligible to receive funding to offset the cost of any technological upgrades required to offer supplemental benefits.
(C) For authorized retailers described in this paragraph that have 50 or fewer retail locations in California, including all retail locations under common ownership, and that redeem 50 million dollars ($50,000,000) or less in CalFresh benefits annually across all retail locations under common ownership in California, both of the following apply:
(i) Of any appropriation by the Legislature for the purposes of this article, the department shall initially allocate no more than forty million dollars ($40,000,000) twenty million dollars ($20,000,000) for authorized retailers described in this subparagraph to provide supplemental benefits.
(ii) (I) The department shall provide grants to authorized retailers described in this subparagraph to offset the cost of technological upgrades required to offer supplemental benefits.
(II) In selecting grantees to receive technological upgrade funding, the department shall prioritize those that propose using technological upgrades that have a large market share and those that are in a region of California with a high proportion of CalFresh beneficiaries and no other authorized retailers offering incentives or supplemental benefits.
(III) Of any appropriation by the Legislature for the purposes of this article, no more than one million dollars ($1,000,000) shall be spent to provide funding for technological upgrades for authorized retailers described in this subparagraph.
(2) A direct farm-to-consumer outlet shall only be eligible for enrollment if it sells fresh fruits and vegetables. Of any appropriation by the Legislature for the purposes of this article, the department shall initially allocate no more than sixty million dollars ($60,000,000) thirty million dollars ($30,000,000) for authorized retailers described in this paragraph to provide supplemental benefits.
(d) The department shall ensure that authorized retailers who were enrolled as a result of the first round of application solicitation are distributing supplemental benefits no later than April 1, 2024.
(e) Six months or later after the enrollment of authorized retailers as a result of the first round of application solicitation, the department may reallocate remaining funds initially allocated to each category of authorized retailers in subdivision (c) if the department determines that there is a lack of acceptable applications for a particular category of authorized retailers and there is unlikely to be sufficient acceptable applications for a particular category of authorized retailers in a second or subsequent round of applications. If the department reallocates funds pursuant to this subdivision, the department shall seek to maximize the number of retail locations offering supplemental benefits or the number of CalFresh recipients who would have access to supplemental benefits.
(f) The department shall provide supplemental benefits to CalFresh recipients who have purchased fresh fruits and vegetables through authorized retailers once the department has certified that the authorized retailers can process supplemental benefits. The department shall use the EBT system supplemental benefits mechanism established for purposes of the California Fruit and Vegetable EBT Pilot Project, which shall continue to allow an authorized retailer to deliver and redeem supplemental benefits, to be compatible with operational procedures at farmers’ markets with centralized point-of-sale terminals and at grocery stores with integrated point-of-sale terminals, and ensure all of the following:
(1) Supplemental benefits can be transferable across any authorized retailer.
(2) Supplemental benefits can be accrued, tracked, and redeemed by CalFresh recipients in a seamless, integrated process through the EBT system.
(3) Supplemental benefits can only be accrued by CalFresh recipients through the purchase of fresh fruits and vegetables from an authorized retailer.
(4) Supplemental benefits can only be redeemed to make eligible purchases under the CalFresh program from an authorized retailer.
(5) The supplemental benefits mechanism complies with all applicable state and federal laws governing procedures to ensure privacy and confidentiality.
(6) Authorized retailers that use EBT-only point-of-sale terminals, such as farmers’ markets, and those that use integrated point-of-sale terminals, such as grocery stores, shall be able to integrate the new supplemental benefits mechanism into their existing systems, including the free state-issued hardware provided to certified farmers’ markets and farmers.
(7) The supplemental benefits mechanism provides a CalFresh benefits to supplemental benefits match ratio of at least 1:1.
(8) A CalFresh household may only accrue up to a limited amount of supplemental benefits, as determined by the department.
(9) There shall be no expiration date for use of supplemental benefits, but the benefits may be expunged in accordance with federal Supplemental Nutrition Assistance Program (SNAP) regulations.

10089.
 The department shall, as part of the California CalFresh Fruit and Vegetable Supplemental Benefits Expansion Program, contract with one or more vendors to develop at least two technology solutions, which may include a mobile application, such as software that works on an existing mobile phone or tablet operating system, or a mobile point-of-sale system, such as a combination of hardware and software provided by a single vendor, that allows authorized retailers to wirelessly accept EBT CalFresh benefits and offer supplemental benefits. These technology solutions shall be in addition to the mobile EBT device the state currently provides farmers’ markets free of charge. The technology solutions shall be developed in consultation with the department, the Department of Food and Agriculture’s Office of Farm to Fork, and stakeholders that would like to use the resultant technology solution, including, but not limited to, farmers’ market vendors and corner stores. Of any appropriation by the Legislature for the purposes of this article, no more than seven hundred fifty thousand dollars ($750,000) shall be allocated for the purposes of this section.

10090.
 (a) The department shall, as part of the California CalFresh Fruit and Vegetable Supplemental Benefits Expansion Program and through the CalFresh Healthy Living Program, develop marketing materials that authorized retailers that have been enrolled pursuant to Section 10088 and community groups can use for outreach efforts to promote supplemental benefits. In developing the materials, the department shall ensure that the materials include information targeted to those populations that, on average, receive a low amount of CalFresh benefits, including, but not limited to, older adults, and that the materials are made available in a diverse range of languages and reflect the diverse cultural identities found in California.
(b) The materials described in subdivision (a) shall be made available to participating retailers that have received a grant pursuant to Section 10088 at no cost.

10091.
 The Department of Food and Agriculture shall develop a grant program to award funds to nonprofit organizations to recruit, train, and support authorized retailers participating in supplemental benefit programs. Of any appropriation by the Legislature for the purposes of this article, no more than one million dollars ($1,000,000) shall be allocated to the Department of Food and Agriculture for the purposes of this section.

10092.
 (a) (1) The department shall submit a report to the Legislature with an initial progress report two months after the first supplemental benefits are distributed pursuant to the California Fruit and Vegetable EBT Pilot Project, or March 1, 2024, whichever comes first. The department shall include in the report recommendations regarding both of the following:
(A) Whether the technology used to provide supplemental benefits can support further expansion.
(B) Whether any aspects of the program design should be changed as part of the program expansion.
(2) If the department fails to submit the report required pursuant to paragraph (1), if the report includes a recommendation to stop further expansion of supplemental benefits programs, or if supplemental benefits are not distributed pursuant to the California Fruit and Vegetable EBT Pilot Project, the unencumbered state funds in the California CalFresh Fruit and Vegetable EBT Expansion Fund shall revert to the General Fund.
(b) Beginning three months after an authorized retailer first provides supplemental benefits after being enrolled pursuant to Section 10088, the department shall quarterly publish, on its internet website, data on program utilization, including, but not limited to, the number of CalFresh households and individuals who have received supplemental benefits, the average amount of supplemental benefits earned by each CalFresh household each month, and the amount of supplemental benefits earned at each category of authorized retailers.
(c) Within nine months after an authorized retailer that has been enrolled pursuant to Section 10088 first provides supplemental benefits, the department shall submit a report to the Legislature examining what could be improved in expanding access to supplemental benefits, implementing technological upgrades to provide supplemental benefits, communications and marketing regarding supplemental benefits, CalFresh participant experience accessing and using supplemental benefits, and retailer experience providing supplemental benefits.
(d) A report to be submitted pursuant to this section shall be submitted in compliance with Section 9795 of the Government Code.

10093.
 The department shall seek any necessary federal waivers or approvals to implement this article.