BILL ANALYSIS Ó AB 1742 Page 1 Date of Hearing: April 27, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1742 (Mark Stone) - As Introduced February 1, 2016 ----------------------------------------------------------------- |Policy |Human Services |Vote:|6 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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: AB 1742 Page 2 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. AB 1742 Page 3 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 AB 1742 Page 4 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 AB 1742 Page 5