House Bill 3 would use tens of millions of public dollars to erect barriers to nutrition, health care and other vital assistance for low-income Kentuckians. While a fiscal note for the bill has not yet been posted, experiences with similar proposals in other states give us an idea of how expensive components of the bill would be.
Research shows creating these ineffective barriers would be a wasteful and expensive use of state dollars, and when many thousands of families and children lose assistance, the state will fail to save state money as these are overwhelmingly federal funds.
Workfare for parents receiving SNAP would cost the state millions of dollars and wouldn’t lead to economic security for low-income Kentuckians
“Workfare” is an unpaid internship, usually with a nonprofit organization, which HB 3 requires for SNAP (Supplemental Nutrition Assistance Program) recipients with children over the age of five if they are not participating in paid work or an employment and training program. The program is costly for the state, which has to recruit community organizations, supervise placements, implement complex tracking systems to keep up with participants, conduct background checks for “volunteers” and cover worker’s compensation for these individuals – even as participants earn no income.
Meanwhile, many Kentucky nonprofit organizations have expressed that they don’t need — or are not interested in making use of — a large number of “volunteers” for up to 20 hours a week. Hosting volunteers costs nonprofits as they must train, manage and coordinate them. From the perspective of those who must “volunteer” to keep food assistance, opportunities to do workfare with nonprofits are typically especially scare in rural areas, where employment is also difficult to find.
A fiscal note for a proposed workfare program in Montana for 17,576 people estimates the program will cost the state $8.2 million, which is likely a modest estimate given it doesn’t include the cost of background checks, for instance. The number of Kentuckians participating in a workfare program through HB 3 would be much greater – as many as 95,000 people.
In order to implement the workfare program proposed by HB 3, Kentucky would need to set up expensive new systems and hire new personnel. The state would have to:
- Screen and assess each participant to identify federally-required exemptions. The Montana fiscal note includes hiring 25 service coordinators and a policy specialist, purchasing computer equipment and office furniture, and leasing additional office space— and Kentucky’s workfare program as proposed in HB 3 would likely be much larger than Montana’s.
- Ensure there is a workfare slot for each person throughout the state required to comply. The state would have to identify workfare sites, oversee and supervise these programs, and track participation. Such accounting is especially complex as it must calculate and track how many hours a person needs to work to keep the specific benefit amount for which they are eligible; for example, if a household’s SNAP benefit is $290 per month and the minimum wage is $7.25 per hour, the adult could not be required to work more than 40 hours per month. While Kentucky already has a computer system with such capabilities in place, the state would need to hire additional people to monitor these placements, issue reimbursement payments for supports such as transportation and audit documents verifying hours of workfare activities.
- Provide some reimbursement for individuals who need support services such as child care and transportation in order to participate in the program. The state would not be able to take food assistance away from someone who was unable to meet the workfare requirement because they were not provided such reimbursements. In the Montana fiscal note, reimbursements by the state are estimated to be $5.3 million a year.
- Cover workers’ compensation costs and background checks for volunteers. The Montana fiscal note does not include the cost of background checks, but the workers’ compensation costs would be $1.9 million a year.
Even with some matching federal dollars, the workfare program proposed in HB 3 would be very expensive for Kentucky. The cost estimate in Montana’s fiscal note (likely low) scaled up to the number of Kentucky adults receiving SNAP who have children ages 6 to 17 (likely higher than the impacted population as many are already working) comes to an estimated cost in Kentucky of as much as $44 million.
So what does the state get in exchange for such a significant expense? There is no meaningful evidence that unpaid work experience leads to consistent employment, has an impact on earnings or leads to reductions in public benefit receipt.
SNAP and TANF ID cards with photos could cost more than $10 million the 1st year, would not impact fraud
When Massachusetts began issuing new SNAP EBT cards with photo IDs, the cost was $8.4 million just for startup costs that did not even include the printing of ID cards or the digital storage required to securely maintain the data. And a fiscal note from Pennsylvania estimated the cost of printing a photo ID is $8 per card. Given Kentucky has 261,676 households receiving SNAP and approximately 10,315 receiving TANF (Temporary Assistance for Needy Families) who do not also receive SNAP, the cost of printing cards the first year could be approximately $2.2 million. Moving forward, with a new card required each year, costs for printing the photo IDs would likely grow over time given inflation and other potential cost increases.
Meanwhile, it is unlikely that such a costly expense would reduce trafficking in SNAP benefits, which is already low among food assistance recipients. This was the goal in Massachusetts, but because trafficking did not decline, the state stopped issuing photo IDs for a number of years. SNAP benefit trafficking that does occur is typically committed by unscrupulous retailers who take advantage of people in difficult economic situations. An estimated 11.8 percent of participating stores nationally trafficked SNAP benefits at least once between 2012 and 2014, with only 1.5 percent of SNAP benefits redeemed being trafficked. Fraud by individuals selling SNAP benefits to other individuals is considered to be rare, and so a photo requirement would be ineffective for this purpose.
Missouri enacted a state law mandating photo EBT in 2000, and after evaluating the program’s first year the state discontinued it due to the high cost and no impact on fraud. Similarly, Georgia passed a photo EBT bill in 2014 but did not end up implementing it due to cost; the Division of Family and Children’s Services estimated it would cost $7.8 million. In addition, more than a dozen other states have considered legislation to mandate a photo EBT but ultimately abandoned these proposals, often due to cost estimates.
Drug testing in bill is wasteful and could cost the state millions of dollars
While there are many questions about the legality of HB 3’s proposal to require drug testing in order to receive TANF, SNAP or Medicaid, if implemented as outlined in the bill there would be considerable cost to the state. In addition, few individuals would test positive based on the experience with TANF drug testing in other states; in most cases less than one percent of applicants tested positive, which makes sense given that individuals receiving public assistance are not more likely than the general population to have drug problems. The costs of such a program could be anywhere from hundreds to thousands of dollars per person for testing as well as related staff expenses and other operating costs. If even 2 percent of adults receiving SNAP in Kentucky (385,000 people) were subject to a drug test, that amounts to 7,700 drug tests, potentially costing the state $7.6 million; this is based on the average cost per person tested of TANF drug testing programs in other states.
Two percent of Kentucky SNAP recipients is a very low estimate of who would be tested given how broadly HB 3 casts the net for who would be subject to this requirement — anyone with a “felony or misdemeanor history of substance abuse” applying for or receiving TANF, SNAP or Medicaid.
The high financial costs of HB 3 are troubling for so many reasons. There are no positive outcomes for families and children associated with the policy changes proposed in HB 3. These costly strategies do not improve employment or economic stability and instead push many deeper into poverty. They also do not reduce fraud or save the state money in any way; what is being proposed would cost the state tens of millions of dollars in order to lose federal funds when fewer Kentuckians receive assistance. And these wasteful strategies are being proposed at the same time the state cannot afford to pay for things that actually do work to address poverty and improve the health and quality of life of people across Kentucky.
