California Department of Social Services - State Hearings Division
Notes from the Training Bureau - February 25, 1999

There may be instances where the county seeks to recoup a food stamp overissuance caused by recipient error, but where there has been no determination that the recipient has committed an IPV. If such overissuance occurred after November 12, 1996, but before August 22, 1997, judges should be aware of the following regulations:

When an FS household received a larger allotment than it was entitled to receive, the county shall establish a claim against the household equal to the difference between the benefits received and the benefits which should have been issued.

(c) When determining the amount of benefits the household should have received, the county shall not apply the 20% earned income deduction to that portion of earned income the household failed to report.

(§63-801.312, as amended by adding (c), effective November 12, 1996)

State regulations provide that §63-801.312(c) shall be implemented effective upon filing with the Secretary of State (November 12, 1996) for all new applicants, or at the next recertification, but no later than August 22, 1997 for all FS applicants or recipients. (§63-1434.3)

Effective August 22, 1997, the county is permitted to disallow the 20% earned income disregard for everyone.

When an individual has intentionally failed to report earned income, as determined by an administrative disqualification hearing (ADH), a court of appropriate jurisdiction, or by having signed an ADH waiver or a disqualification consent agreement, then the county shall not apply the 20 percent earned income deduction to that unreported income. (§63-801.323)

If the overissuance was caused by the claimant, it is necessary for the judge to determine the following:

1. Did the claimant first apply for food stamps before or after November 12, 1996?

2. If the claimant applied for food stamps before November 12, 1996, when was the claimant's next certification period?

3. Has there been a determination that the claimant committed an IPV for not reporting the income at issue?

If the claimant applied for food stamps before November 12, 1996 and had an overissuance caused by his/her failure to report income between November 12, 1996 and August 22, 1997, but there has been no IPV established, the county may not disallow the 20% earned income deduction for unreported income until the earlier of the month of recertification or August 22, 1997. The following examples illustrate how to evaluate overissuances for the relevant time period:

Example 1:

Claimant has been a food stamp recipient since April 1996. His next recertification is in April 1997. He fails to report half his income in several months resulting in an overissuance for each month from December 1996 through June 1997. The county discovers this failure to report income in January 1999 and computes an overissuance. In computing the overissuance, the county disallows the 20% earned income deduction on the unreported portion of income for each month.

The county action is only partially correct. Since the claimant was a food stamp recipient before welfare reform was made effective on November 12, 1996, the county is required to implement §63-801.312 effective with the claimant's next recertification. The claimant's next recertification would be in April 1997. Thus the county could not implement §63-801.312 before May 1997. The county thus could not disallow the 20% earned income deduction in computing the overissuance for December 1996 through April 1997. The county could disallow the 20% earned income deduction for May and June 1997.

Example 2:

Same facts as above except that the claimant applied for food stamps on November 29, 1996.

In this case, the county could disallow the 20% earned income deduction for all unreported income in each month from December 1996 through June 1997 since §63-1434.3 provides that §63-801.312(c) applies to all new food stamp applicants (after November 12, 1996) effective with the date of application.

Example 3:

Same facts as example 1 above, except that the claimant has been found to have committed an IPV for failing to report the income at issue.

The county may disallow the 20% earned income deduction for all unreported income even though the application was made before November 12, 1996 because §63-801.323 provides for such disallowance of the earned income deduction.