SB 1418: MAKING AN EMERGENCY APPROPRIATION TO THE DEPARTMENT OF HUMAN SERVICES.

A BILL FOR AN ACT

MAKING AN EMERGENCY APPROPRIATION TO THE DEPARTMENT OF HUMAN SERVICES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  This Act is recommended by the governor for immediate passage in accordance with section 9 of article VII of the Constitution of the State of Hawaii.

     SECTION 2.  The legislature finds that the department of human services administers the supplemental nutrition assistance program (SNAP) for eligible households that meet income and other program requirements.  The legislature further finds that during the COVID-19 pandemic, the department of human services requested and received approval from the federal government to waive numerous requirements related to the processing of SNAP benefits.  These waivers allowed the department to quickly respond to an increased demand for benefits while maintaining a safe working environment for staff and the public.

     Following the end of the COVID-19 pandemic, the United States Department of Agriculture Food and Nutrition Service required states to end waivers and resume normal benefits processing requirements.  From approximately October 2021 through September 2023, Hawaii and other states experienced increased payment error rates in processing SNAP benefits.  The increased error rates were related to the changes in requirements during and following the COVID-19 pandemic, as well as the high vacancy and turnover rates for eligibility worker staff.

     In June 2024, the United States Department of Agriculture Food and Nutrition Service assessed the department of human services a penalty of $10,934,327 for having a SNAP payment error rate above the national average for two consecutive federal fiscal years.  However, in lieu of paying the total penalty, the United States Department of Agriculture Food and Nutrition Service provided the option to the State to reinvest fifty per cent of the penalty amount in program improvements that would reduce the payment error rate.

     The State is pursuing the reinvestment option to resolve the penalty.  The department of human services plans to reinvest fifty per cent of the assessed penalty to complete the development of a new eligibility system, which is anticipated to be completed in late 2025.  Notably, under the terms of the reinvestment option, if the reinvestment results in the payment error rate falling under and remaining below the national average, which is currently 11.68 per cent, the State will not be required to pay the remaining fifty per cent of the penalty.

     Failure to reinvest fifty per cent of the penalty amount will result in the total penalty amount needing to be paid.  Additionally, failure to improve error rates may result in increased financial penalties for the State.

     Funding for this reinvestment option is required in fiscal year 2024-2025 to make necessary modifications to the ongoing development of the department of human services' new eligibility system to specifically support automation of eligibility worker tasks that will increase efficiency, and which are designed to reduce worker errors.  Reinvestment funding is required in fiscal year 2024-2025 to avoid project delays and ensure that the new system includes the technical capabilities required to reduce the payment error rate.

     Therefore, the purpose of this Act is to make an emergency appropriation to the department of human services to support the necessary modifications to reinvest in the ongoing development of a new eligibility system for the supplemental nutrition assistance program.

     SECTION 3.  There is appropriated out of the general revenues of the State of Hawaii the sum of $5,467,164 or so much thereof as may be necessary for fiscal year 2024-2025, which is fifty per cent of the payment error penalty assessed by the United States Department of Agriculture Food and Nutrition Service, to be used to reinvest in the ongoing development of a new eligibility system for the supplemental nutrition assistance program that will result in reduced payment error rates.

     The sum appropriated shall be expended by the department of human services for the purpose of this Act.

     SECTION 4.  In accordance with section 9 of article VII of the Hawaii State Constitution and sections 37-91 and 37-93, Hawaii Revised Statutes, the legislature has determined that the state general fund expenditure ceiling for fiscal year 2024-2025 has already been exceeded by $8,551,795 or 1 per cent.  In addition, the appropriation contained in this Act will cause the state general fund expenditure ceiling for fiscal year 2024-2025 to be further exceeded by $5,467,164 or 1 per cent.  The reasons for exceeding the general fund expenditure ceiling are that:

     (1)  The appropriation made in this Act is necessary to serve the public interest; and

     (2)  The appropriation made in this Act meets the needs addressed by this Act.

     SECTION 5.  This Act shall take effect upon its approval.

Report Title:

DHS; Supplemental Nutrition Assistance Program; Emergency Expenditure Ceiling; Appropriation

Description:

Provides an emergency appropriation for the Department of Human Services to reinvest in the ongoing development of a new eligibility system for the Supplemental Nutrition Assistance Program.  Makes an emergency appropriation for fiscal year 2024-2025.  Declares that the general fund expenditure ceiling for fiscal year 2024-2025 has been exceeded.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

MAKING AN EMERGENCY APPROPRIATION TO THE DEPARTMENT OF HUMAN SERVICES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  This Act is recommended by the governor for immediate passage in accordance with section 9 of article VII of the Constitution of the State of Hawaii.

     SECTION 2.  The legislature finds that the department of human services administers the supplemental nutrition assistance program for eligible households that meet income and other program requirements.  The legislature further finds that during the coronavirus disease 2019 pandemic, the department of human services requested and received approval from the federal government to waive numerous requirements related to the processing of supplemental nutrition assistance program benefits.  These waivers allowed the department to quickly respond to an increased demand for benefits while maintaining a safe working environment for staff and the public.

     Following the end of the coronavirus disease 2019 pandemic, the United States Department of Agriculture Food and Nutrition Service required states to end waivers and resume normal benefits processing requirements.  From approximately October 2021 through September 2023, Hawaii and other states experienced increased payment error rates in processing supplemental nutrition assistance benefits.  The increased error rates were related to the changes in requirements during and following the coronavirus disease 2019 pandemic, as well as the high vacancy and turnover rates for eligibility worker staff.

     In June 2024, the United States Department of Agriculture Food and Nutrition Service assessed the department of human services a penalty of $10,934,327 for having a supplemental nutrition assistance program payment error rate above the national average for two consecutive federal fiscal years.  However, in lieu of paying the total penalty, the United States Department of Agriculture Food and Nutrition Service provided the option to the State to reinvest fifty per cent of the penalty amount in program improvements that would reduce the payment error rate.

     The State is pursuing the reinvestment option to resolve the penalty.  The department of human services plans to reinvest fifty per cent of the assessed penalty to complete the development of a new eligibility system, which is anticipated to be completed in late 2025.  Notably, under the terms of the reinvestment option, if the reinvestment results in the payment error rate falling under and remaining below the national average, which is currently 11.68 per cent, the State will not be required to pay the remaining fifty per cent of the penalty.

     Failure to reinvest fifty per cent of the penalty amount will result in the total penalty amount needing to be paid.  Additionally, failure to improve error rates may result in increased financial penalties for the State.

     Funding for this reinvestment option is required in fiscal year 2024-2025 to make necessary modifications to the ongoing development of the department of human services' new eligibility system to specifically support automation of eligibility worker tasks that will increase efficiency, and which are designed to reduce worker errors.  Reinvestment funding is required in this fiscal year to avoid project delays and ensure that the new system includes the technical capabilities required to reduce the payment error rate.

     The department of human services requires an emergency appropriation of $5,467,164 for fiscal year 2024-2025 to support the necessary modifications to the ongoing development of a new eligibility system.

     SECTION 3.  There is appropriated out of the general revenues of the State of Hawaii the sum of $5,467,164 or so much thereof as may be necessary for fiscal year 2024-2025, which is fifty per cent of the payment error penalty assessed by the United States Department of Agriculture Food and Nutrition Service, to be used to reinvest in the ongoing development of a new eligibility system that will result in reduced payment error rates.

     The sum appropriated shall be expended by the department of human services for the purpose of this Act.

     SECTION 4.  This Act shall take effect upon its approval.

Report Title:

Department of Human Services; Supplemental Nutrition Assistance Program; Emergency Appropriation

Description:

Provides an emergency appropriation for fifty percent of the penalty assessed by the United States Department of Agriculture Food and Nutrition Service.  The funds will be reinvested in the continued development of a new eligibility system that will assist in reducing the State's supplemental nutrition assistance program payment error rate, which, if successful, may result in the State's not being required to pay the remaining fifty percent of the penalty.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 329

Honolulu, Hawaii

RE:    S.B. No. 1418

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Health and Human Services, to which was referred S.B. No. 1418 entitled:

"A BILL FOR AN ACT MAKING AN EMERGENCY APPROPRIATION TO THE DEPARTMENT OF HUMAN SERVICES,"

begs leave to report as follows:

     The purpose and intent of this measure is to provide an emergency appropriation for the Department of Human Services to reinvest in the ongoing development of a new eligibility system for the Supplemental Nutrition Assistance Program (SNAP).

     Your Committee received testimony in support of this measure from the Department of Human Services, Department of Budget and Finance, Hawaii Primary Care Association, Hawaiʻi Appleseed Center for Law and Economic Justice, and Hawaiʻi Public Health Institute.

     Your Committee finds that in June 2024, the United States Department of Agriculture Food and Nutrition Service assessed the Department of Human Services a penalty of $10,934,327 for having a SNAP payment error rate above the national average for two consecutive federal fiscal years, which resulted from changes to SNAP requirements during and following the COVID-19 pandemic, as well as the high vacancy and turnover rates in the Department's SNAP eligibility staff.  Your Committee further finds that in lieu of paying the total penalty, the United States Department of Agriculture Food and Nutrition Service provided the option to the State to reinvest fifty per cent of the penalty amount in program improvements that would reduce the payment error rate.  Under the terms of the reinvestment option, if the reinvestment results in the payment error rate falling under and remaining below the national average, the State will be relieved of the obligation to pay the remainder of the penalty.  The Department of Human Resources is in the process of developing a new SNAP eligibility system which is anticipated to be completed in late 2025.  This measure provides the urgent funding needed to pursue the reinvestment option, avoid project delays, and ensure that the Department of Human Services' new eligibility system for SNAP includes the technical capabilities required to reduce the payment error rate.

     Your Committee has amended this measure by:

     (1)  Inserting language to declare that the expenditure ceiling for fiscal year 2024-2025 has been exceeded; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Health and Human Services that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1418, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1418, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Health and Human Services,