HB4147 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 46, chapter 2, article 2, Arizona Revised Statutes, is amended by adding sections 46-232, 46-233, 46-234 and 46-235, to read:

START_STATUTE46-232. Supplemental nutrition assistance program fund; expenditure authority

The supplemental nutrition assistance program fund is established consisting of monies collected by the department of economic security from federal deposits as authorized by 7 Code of Federal Regulations parts 271 through 285. The department of economic security shall administer the fund. Monies in the fund are continuously appropriated. The department of economic security shall deposit all federal monies received under the supplemental nutrition assistance program, including the federal administrative share and the federal benefit share, in the fund before expenditure. END_STATUTE

START_STATUTE46-233. Supplemental nutrition assistance program; categorical eligibility; gross income limit

The department of economic security may not establish a gross income limit of more than one hundred eighty-five percent of the federal poverty level for supplemental nutrition assistance program recipients who are categorically eligible pursuant to 7 Code of Federal Regulations section 273.2(j)(2). END_STATUTE

START_STATUTE46-234. Supplemental nutrition assistance program; eligibility evaluations; public posting; definitions

A. To determine or evaluate SNAP eligibility, the department of economic security shall:

1. Enter into a data matching agreement with the department of Revenue to identify households with lottery or gambling winnings of $3,000 or more and, to the extent permissible under federal law, to treat the data obtained as verified on receipt. To the extent the data may not be verified on receipt, the department of economic security shall refer those households with lottery or gambling winnings that are equal to or greater than the resource limit for elderly or disabled households as defined in 7 Code of Federal Regulations section 273.8(b) to the department of economic security for further investigation.

2. On at least a monthly basis, review information that is provided by the department of health services and that identifies individuals who have had a change in circumstances that may affect SNAP eligibility.

3. On at least a quarterly basis, review the department'S information that identifies individuals who have had a change in circumstances that may affect SNAP eligibility, including a CHANGE in unemployment benefits, employment status or wages.

4. On at least a monthly basis, review the department's information that identifies individuals who have had a change in circumstances that may affect SNAP eligibility, including potential changes in residency as identified by out-of-state electronic benefit transfer card transactions.

5. On at least a monthly basis, review information that is provided by the state DEPARTMENT of corrections and that identifies individuals who have had a change in circumstances that may affect SNAP eligibility.

6. On at least a quarterly basis, review information that is provided by the department of revenue and that identifies households that have had a change in circumstances that may affect SNAP eligibility, including potential changes in income, wages or residency as identified by tax records.

7. On at least a quarterly basis, post on the department's public website the following aggregated amounts that were obtained from noncompliance and fraud investigations related to SNAP, excluding confidential and personally identifiable information:

(a) The number of SNAP cases that were investigated for intentional program violations or fraud.

(b) The number of SNAP cases that were referred to the attorney general's office for prosecution.

(d) The amount of monies recovered.

(e) The amount of monies spent for improper payments and ineligible RECIPIENTS as a percentage of cases that were investigated and reviewed.

(f) The amount of monies spent by electronic benefit card transactions that occurred outside of this state, categorized by state.

B. On at least a monthly basis, the department of health services and the department of economic security shall review the following information from federal sources to assess a recipient's continued eligibility for SNAP:

1. Earned income information, death register information, incarceration records, supplemental security income information, beneficiary records, earnings information and pension information that is maintained by the United States social security administration.

2. Income and employment information that is maintained in the national directory of new hires database and child support enforcement data that is maintained by the united states department of health and human services.

3. Payment and earnings information that is maintained by the united states department of housing and urban development.

4. National fleeing felon information that is maintained by the United States federal bureau of investigation.

C. If the department receives information that identifies an individual who is enrolled in SNAP and that indicates a change in circumstances that may affect that individual's SNAP eligibility, the department shall review that individual's case.

D. For the purposes of this section:

1. "Department" means the department of economic security.

2. "SNAP" means the supplemental nutrition assistance program. END_STATUTE

START_STATUTE46-235. Payment error rate; reduction; quarterly reports; requirements; auditor general

A. On or before December 30, 2030, the department of economic security shall reduce the supplemental nutrition assistance program's payment error rate as reported by the United States department of agriculture to not more than three percent.

B. Beginning in fiscal year 2026-2027 and each fiscal year thereafter, the department shall submit a quarterly report to the legislature within thirty days after the end of the quarter that details the department's monthly progress towards reducing the payment error rate and that includes strategies and barriers that may be present in reducing the payment error rate.

C. If the department fails to meet annual interim targets established by rule or the final target as prescribed in subsection A of this section, the department shall:

1. Submit a corrective action plan to the legislature within sixty days that includes an analysis of why the targets were not met and timelines for correcting the payment error rate.

2. Pay fifty percent of any federal liabilities that may be imposed due to the excess payment error rates. The remaining federal liabilities shall be paid from the state general fund.

3. Implement a corrective plan. If the department fails to comply with the corrective plan, the department's administrative funding shall be reduced by ten percent until resolved.

D. On or before November 15, 2027, The auditor general shall complete a special audit. the special audit shall determine what factors contributed to the payment error rate and shall include recommendations to reduce the payment error rate. The department shall implement the recommendations within twelve months after receiving the recommendations from the auditor general unless the recommendations are waived by the joint legislative audit committee. The auditor general may request that the department submit a written status report on the department's implementation of the special audit recommendations.

E. If the department corrects the payment error rate ahead of schedule, the legislature may allocate additional funding for program improvements. END_STATUTE

Sec. 2. Delayed repeal

Section 46-235, Arizona Revised Statutes, as added by this act, is repealed from and after December 31, 2032.

Sec. 3. Section 46-297.01, Arizona Revised Statutes, is amended to read:

START_STATUTE46-297.01. Electronic benefit transfer cards; replacements; out-of-state spending; fraud investigation

A. The department shall send each recipient who requests two replacement cards within a twelve-month period a letter informing the recipient that another request will initiate an investigation by the department to determine whether there is fraud. If a third-party vendor is administering replacement cards directly to recipients, the vendor shall notify the department after a recipient requests a second replacement card in a twelve-month period and makes any subsequent request thereafter.

B. After a recipient's request for a third replacement card within any twelve-month period, and any subsequent request thereafter, the department shall schedule an interview with the recipient and, if the department has been granted a waiver, determine whether there is fraud before issuing a new card. The recipient's request for a fourth replacement card requires the department to schedule an interview with the recipient to determine whether there is fraud before issuing a new card. The department shall request any necessary federal waivers to comply with this section.

C. If a recipient uses more than ten percent of the recipient's electronic benefit transfer card balance in a six-month period on out-of-state purchases, the department shall schedule an interview with the recipient to determine whether there is fraud.

D. On at least a monthly basis, the department shall use the data from an electronic benefit transfer card to identify any individual who has made purchases exclusively out-of-state over a ninety-day period. The department shall contact the individual who is identified within thirty days to determine whether that individual resides in this state. If the individual does not reside in this state, the department shall terminate assistance, including supplemental nutrition assistance program benefits, to the individual within thirty days after contacting the individual. Within fifteen days after the individual's assistance has been terminated, the department shall refer the individual to the United States attorney's office for the district of arizona. END_STATUTE

Sec. 4. Department of economic security; drug testing; TANF cash benefits recipients

During fiscal year 2026-2027, the department of economic security shall screen and test each adult recipient who is otherwise eligible for temporary assistance for needy families cash benefits and who the department has reasonable cause to believe engages in the illegal use of controlled substances. Any recipient who tests positive for the use of a controlled substance that was not prescribed for the recipient by a licensed health care provider is ineligible to receive benefits for a period of one year.