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Overpayments and Referral to Collections
CalSAWS Interfaces with VACS
No referral is required while the CalWORKs program is active since CalSAWS automatically initiates recoupment once an overpayment claim is established.
If the CalWORKs program discontinues prior to complete adjustment of the overpayment, the active/open claim balance is automatically referred to the Collection’s system, VACS, and the Public Assistance Collections Department will pursue collection of the overpayment balance.
Tax Intercept
Collections is working with the Controller's Office and the Franchise Tax Board to intercept state tax refunds and deduct delinquent welfare overpayments from them. All CalWORKs overpayments and all fraudulently obtained Food Stamp overissuances are subject to interception.
The intercept process does not apply if the client is still eligible for grant adjustment, allotment reduction, or is making regular restitution payments.
Questions regarding incorrect tax interceptions must be referred to the Supervisor of the Collection Unit for resolution.
CalWORKs Overpayment Discharge
In addition to the increase from $35 to $250 CalWORKs overpayment threshold, Senate Bill (SB) 726 introduced a new CalWORKs discharge process for non-fraudulent overpayments. For purposes of the CalWORKs program, “discharge” means the overpayment has been end-dated without the possibility of further collection.
A CalWORKs overpayment shall be deemed uncollectible and discharge the overpayment if the individual(s) liable for the overpayment has not received aid in California under the CalWORKs program for 36 consecutive months or longer. This will be applicable to all closed CalWORKs cases with non-fraudulent overpayment claims, including non-fraudulent overpayment claims related to WTW supportive services. If a former client with an outstanding overpayment claim, regardless of the amount, reapplies and becomes a recipient of CalWORKs within the 36-month timeframe, collection of the overpayment will resume by grant adjustment. The overpayment discharge process also applies to cases where the former client is in a voluntary repayment agreement or is in a civil judgement agreement as long as the overpayment is not fraudulent.
Similar to the CalWORKs overpayment threshold for collection, the CalWORKs overpayment discharge process applies to each CalWORKs overpayment claim, rather than the total overpayment figure resulting from multiple overpayment claims. When the overpayment has been discharged, a notice to all formally liable individuals that they are no longer liable for the overpayment amount that has been discharged. In CalWORKs cases where there is more than one individual liable for the overpayment claim, the overpayment claim will not be discharged until the case has been closed and both liable individuals have been off aid for 36 consecutive months in California.
The discharge process shall be applied retroactively to any nonfraudulent outstanding TANF or CalWORKs overpayment claims established on or after December 1, 1996, where the former client has been off aid for at least 36 consecutive months. Federal law precludes overpayment claims established prior to December 1, 1996, under the former Aid to Families with Dependent Children (AFDC) program to be discharged.
CalWORKs $250 Overpayment Threshold and Discharge Example:
A CalWORKs case consisting of a single mother and two children is discontinued on March 31, 2020, with multiple open overpayment claims. The overpayment claims were established prior to the case being discontinued.
Claim #1: Client error overpayment established July 2019 in the amount of $200;
Claim #2: Administrative error overpayment established August 2019 in the amount of $300;
Claim #3: Client error overpayment established September 2019 in the amount of $100;
Claim #4 (referred to SIU): Client error overpayment established October 2019 in the amount of $200, and a SIU investigation was not yet able to determine if fraud was committed; and
Claim #5 (referred to SIU): Client error overpayment established November 2019 in the amount of $400 and found to be an IPV.
Action on these overpayments will be taken in the following manner:
Claim #1: While the case is still active, collection on the overpayment should begin or continue through grant adjustment. However, once the case is closed and the adult is no longer receiving aid, collection will be placed in suspense status because it is under the overpayment threshold of $250. The remaining amount will be discharged if the case remains closed and the liable adult has been off aid for a total of 36 consecutive months.
Claim #2: Collection will continue as the amount of $300 exceeds the overpayment threshold. If the overpayment is being reduced through installments, collection will continue for 36 months or until the outstanding balance falls under $250. The remaining overpayment will be discharged once the case is closed and the liable adult is off aid for a total of 36 consecutive months.
Claim #3: Collection will not be pursued because the $100 is under the overpayment threshold of $250. The overpayment will be discharged once the case is closed and the liable adult is off aid for a total of 36 consecutive months.
Claim #4: Collection will not be pursued because the $200 is under the overpayment threshold of $250 but will not discharge the overpayment after the 36th month. Once the overpayment is determined to be non-fraudulent or an IPV, the appropriate action will be taken (start collecting or discharge).
Claim #5: Collection will be pursued as the $400 exceeds the overpayment threshold and it has been found to be fraudulent. Since the overpayment is fraudulent, it cannot be discharged even after the liable adult has been off aid for 36 consecutive months, even if the overpayment falls under the overpayment threshold of $250.
CalWORKs Overpayment Discharge and Fraud
Per SB 726, the CalWORKs overpayment discharge process is not applicable to overpayment claims involving fraud or an investigation into suspected fraud. Therefore, overpayments that have been referred to the county SIU are prohibited from being discharged unless the investigation is inconclusive or determines no fraud was committed, and the former client has been off aid for 36 consecutive months or longer. The collection on overpayment claims must be suspended on claims under the $250 CalWORKs collection threshold when an Intentional Program Violation (IPV) is not imposed. As a reminder, an IPV can only result from an administrative disqualification hearing (ADH), a signed administrative disqualification hearing waiver, criminal prosecution, or a signed disqualification consent agreement.
The scenarios below provide guidance on how the discharge process and the higher overpayment threshold would apply to overpayments that have been referred to the SIU for fraud investigation.
Scenario #1: Overpayments referred to SIU under $250
A former client has an overpayment claim under the $250 CalWORKs threshold that has been referred to the local SIU for fraud investigation. There will be no pursuit of the collection on the overpayment while the SIU investigates.
The following action will be taken based on the final determination of the investigation:
• If the SIU investigation is inconclusive or determines fraud was not committed, the overpayment shall be discharged if the liable individual(s) has been off aid for 36 consecutive months. In CalWORKs cases where there is more than one individual liable for the overpayment claim, the overpayment claim will not be discharged until the case has been closed and both liable individuals have been off aid for 36 consecutive months in California.
• If an IPV is imposed on the overpayment, collection efforts will be pursued immediately to recoup the full overpayment amount.
• If the SIU investigation was not able to make a final determination by the 36th month, the overpayment shall not be discharged and collection efforts will not be pursued on the overpayment. Appropriate action once the investigation is complete will be taken (resume collection or discharge).
Scenario #2: Overpayments referred to SIU totaling $250 or more
A former client has an overpayment claim exceeding the $250 CalWORKs overpayment collection threshold that has been referred to the local SIU for investigation into suspected fraud. The collection on the overpayment(s) will be pursued. If the overpayment(s) is being reduced by installments, collection will stop when the outstanding balance falls under $250 while the SIU investigates.
After the 36th month, the following action will be taken based on the final determination of the investigation:
• If the SIU investigation is inconclusive or determines fraud was not committed, the remaining amount of the overpayment shall be discharged if the liable individual(s) was off aid for 36 consecutive months. In CalWORKs cases where there is more than one individual liable for the overpayment claim, the overpayment claim will not be discharged until the case has been closed and both liable individuals have been off aid for 36 consecutive months in California.
• If the SIU investigation determines fraud was committed and an IPV is ultimately imposed, collection efforts shall resume until the full amount has been recouped.
• If the SIU investigation was not able to make a final determination by the 36th month, collection efforts shall be suspended but the overpayment shall not be discharged. Appropriate action once the investigation is complete will be taken (resume collection or discharge).
Civil or Criminal Prosecution for CalWORKs Overpayments
Effective July 1, 2019, a civil or criminal action must not be commenced against any individual based on alleged unlawful application for or receipt of public social services if the case record, or any consumer credit report used in the civil or criminal case for the purpose of determining the overpayment, has not been made available to the individual or has been destroyed after the required three-year retention period. When there is an active investigation on a CalWORKs overpayment claim, case files should be kept beyond the required retention period.
Related Topics
Overpayment Due to Need, Income or Other Circumstance
Computing the Correct Grant Amount Under Semi-Annual Reporting (SAR)
Inter-County Collections (ICC)
Supportive Services (CWES) Overpayments