Rescinded 1984

SSR 79-9: Title XVI: Extension of Food Stamps Cash-out Status for California

SSR 79-9


To establish new policy mandated by passage of Public Law (P.L. 94-379 enacted August 10, 1976, which provides that California be permitted to retain food stamps cash-out status upon condition that it pass through Federal cost-of-living increases and must provide State cost-of-living increases.


Sections 215(i), 1611, and 1617 of the Social Security Act as amended; the Food Stamps Act of 1964 (7 U.S.C. 2012), as amended; section 401 of P.L. 92-603; section 212 of P.L. 93-66, as amended; section 4 of P.L. 93-86; section 8 of P.L. 93-233, as amended; and P.L. 94-379; Regulations No. 16, sections 416.2050, 416.2085, and 416.405.


Generally, supplemental security income (SSI) recipients may participate in the food stamp and surplus commodities programs if they qualify under regulations promulgated by the Secretary of the Department of Agriculture. However, SSI recipients in the States of California, Massachusetts, Nevada (aged and blind only), New York and Wisconsin were originally precluded from participating in these programs because their State supplementary payments included the cash equivalent of the food stamp bonus, and the State elected a food stamp "cash-out."

A State can choose to "cash-out" only if it meets the requirements of "hold-harmless." The hold-harmless provision of the law guarantees that if a State provides payments that are in supplementation of the Federal SSI payments and these payments are administered by the Federal Government, the State will not have to spend more than the amount of its total expenditures for cash public assistance payments to aged, blind, or disabled individuals during calendar year 1972. This guarantee applies only to the extent that the Federal payment and the State supplementary payments to recipients do not exceed the payment levels in effect under the public assistance programs in the State for January 1972, plus certain adjustments, e.g., the bonus value of food stamps for those States electing not to allow SSI recipients to receive food stamps. The bonus value of food stamps is the redemption value of the stamps reduced by the cost to the purchaser.

As of June 30, 1976, the States of Nevada, New York, and California were determined to no longer meet the criteria for hold-harmless and cash-out status (Wisconsin, although still a hold-harmless State, had already given up cash-out status and the situation in Massachusetts remained unchanged). Nevada and New York subsequently elected (as had Wisconsin) to permit SSI recipients to participate in the food stamp program. California decided that it was to its financial or administrative disadvantage to relinquish its cash-out status. Instead, California was willing to give up its option with respect to any pass through of Federal SSI cost-of-living increases and provision of State cost-of-living increases. (See Further Information section.) Thus, that State encouraged the introduction and passage of P.L. 94-379.

While providing generally for full Federal and State cost-of-living increases, P.L. 94-379 also specified pass-through amounts ($3 or $4.50) whereby California would be deemed to pass through the July 1976 Federal increase.


The State of California, although no longer qualifying for hold-harmless treatment under the SSI program, may elect to remain a food stamp cash-out State upon condition that it has in effect a law which provides that the State pass through a part of the 1976 cost-of-living increase in SSI benefits; i.e., no less than $3 for an individual, $4.50 for a couple, and all of any subsequent Federal cost-of-living increases in such benefits, and in addition provide State cost-of-living increases under California law as in effect on June 1, 1976, to all recipients of optional State supplementary payments in California. If the State elects to retain cash-out status under these conditions, California recipients will continue to be precluded from participating in the food stamp and surplus commodities programs and the adjusted payment levels for California and the mandatory supplementary payments made to California recipients will continue to include the bonus value of food stamps.


Prior to the enactment of the "pass-along" amendment of P.L. 94-585, whenever the Federal SSI 94-585, whenever the Federal SSI benefit level was increased, the States which made supplementary payments to SSI recipients had the option of either reducing their payment levels and using the additional Federal money to reduce State costs or maintaining their payment levels thereby "passing through" the Federal increases in benefit to the recipients. The foregoing State option has been constrained by the enactment of P.L. 94-585 on October 21, 1976, which provides a sanction (i.e., loss of Federal matching funds for Medicaid) to be applied against States which do not have in effect an agreement to continue making supplementary payments at prescribed levels. P.L. 94-585 will be the subject of another Program Policy Directive.


Claims Manual Sections 12930 and 12932.

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