BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1742


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          Date of Hearing:  April 27, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          1742 (Mark Stone) - As Introduced February 1, 2016


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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          Yes


          SUMMARY: This bill increases the time limit for cash aid to  
          adults through the California Work Opportunity and  
          Responsibility to Kids (CalWORKs) program from 48 months to 60  
          months and increases the CalWORKs earned income disregard (EID).  
          Specifically, this bill:









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          1)Increases the time limit on aid for CalWORKs recipient parents  
            and caretaker relatives from a cumulative total of 48 months  
            to 60 months, thereby aligning with federal time limits for  
            the federal Temporary Assistance for Needy Families (TANF)  
            program.



          2)Increases the amount of income disregarded when calculating  
            CalWORKs eligibility and aid amounts from $225 plus 50% of the  
            remaining earned income to $450 and 70% of the remaining  
            earned income, as specified.

          FISCAL EFFECT:


          1)Estimated overall total cost of approximately $264.9 million  
            ($13.7 million GF) in FY 2016-17 and approximately $513.9  
            million ($27.8 million GF) in FY 2017-18 and $504.2 million  
            ($27.6 million GF) on-going, based on an average monthly  
            CalWORKs caseload of just under 500,000. Increasing the time  
            limit to 60 months accounts for approximately 43% of the total  
            cost increase, while increasing the EID limit accounts for  
            approximately 57%.



          2)Automation costs of approximately $1 million to the Department  
            of Social Services (DSS) resulting from required changes to  
            the Statewide Automated Welfare System.
          COMMENTS:


          1)Purpose.  The author states: "According to the Federal  
            Supplemental Poverty Measure, nearly a quarter of Californians  
            live in poverty.  While California as a whole has recovered  
            from the Great Recession, the recovery has been uneven, and  
            many impoverished Californians continue to struggle.   








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            According to the Public Policy Institute of California, the  
            2014 post-recession poverty rate in the state was 16.4%, a 4%  
            increase from the prerecession levels of 2007.  Poverty,  
            particularly childhood poverty, results in a variety of  
            negative short- and long-term outcomes for families.  It is in  
            the state's interest to pursue a multi-pronged approach to  
            reduce poverty amongst Californians.  A restoration of the  
            CalWORKs lifetime limit to its pre-recession level and an EID  
            increase are necessary strategies to pursue in the fight  
            against poverty." 


          2)Background. The CalWORKs program provides monthly income  
            assistance and employment-related services for qualified  
            families.  The average 2016-17 monthly cash grant for a family  
            of three on CalWORKs (one parent and two children) is $497.35,  
            and the maximum monthly grant amount for a family of three, if  
            the family has no other income and lives in a high-cost  
            county, is $704.  According to recent data from DSS, around  
            497,000 families rely on CalWORKs, including over one million  
            children.  Nearly 60% of cases include children under 6 years  
            old.

            Under the federal TANF program, an adult may receive aid for  
            60 months in a lifetime, but the program provides flexibility  
            to states in implementing their respective programs, including  
            the ability to establish more truncated time limits than the  
            60-month lifetime limit.  In 1997, when the federal TANF  
            program was created, California adopted the 60-month lifetime  
            limit. As of January 1, 2013, adult CalWORKs recipients are  
            limited to 48-month lifetime aid.

            In 2011, the Legislature enacted a number of cuts to the  
            state's safety net programs, including CalWORKs grant  
            reductions and reductions in the EID.  The 2011 Human Services  
            Budget Trailer Bill, SB 72 (Chapter 8, Statutes of 2011),  
            reduced the EID to $112 plus 50% of the remaining earned  
            income, causing more of a family's monthly income to count  
            against the maximum grant amount and thereby reducing a  








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            family's total monthly income. A year later, SB 1041  
            (Committee on Budget and Fiscal Review) Chapter 47, Statutes  
            of 2012, another Budget Act trailer bill, restored the EID to  
            the first $225 and 50% of remaining countable income.  

            This bill seeks to restore the 60-month lifetime aid limit and  
            to further increase the EID in order to facilitate families'  
            ability to increase earnings and build financial stability.

          3)Earned Income Disregard (EID). By allowing a certain amount of  
            income to be retained and excluded from grant calculations,  
            the EID is intended to facilitate and encourage paid  
            employment.  The EID facilitates working adults' ability to  
            work more hours and seek higher wages that don't fully offset  
            the grant amount they could otherwise receive without any  
            income.  Under current law, the first $225 of an adult  
            recipient's gross earned income is disregarded from CalWORKs  
            grant calculations, then 50% of the remaining income is  
            disregarded, with the other 50% directly reducing the grant  
            amount the recipient would otherwise receive.  For example, a  
            recipient with a monthly income of $700 will have the first  
            $225 disregarded, leaving $475 from which another 50% will be  
            disregarded.  This will leave $237.50 in income that will be  
            counted toward reducing the family's grant amount.


            In 2013, approximately 4.7 percent of the CalWORKs caseload  
            left aid due to exceeding the EID limit and would have  
            remained eligible due to the increase in the income disregard.








          Analysis Prepared by:Jennifer Swenson / APPR. / (916)  
          319-2081








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