BILL ANALYSIS Ó
AB 1742
Page 1
ASSEMBLY THIRD READING
AB
1742 (Mark Stone)
As Amended May 31, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Human Services |6-0 |Bonilla, Calderon, | |
| | |Lopez, Maienschein, | |
| | |Mark Stone, Thurmond | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |15-2 |Gonzalez, Bloom, |Bigelow, Gallagher |
| | |Bonilla, Bonta, | |
| | |Calderon, Chang, | |
| | |Daly, Eggman, Eduardo | |
| | |Garcia, Roger | |
| | |Hernández, Holden, | |
| | |Quirk, Santiago, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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SUMMARY: Increases the CalWORKs earned income disregard to
support employment. Specifically, this bill:
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1)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.
2)Provides that no appropriation shall be made to implement the
provisions of this bill.
EXISTING LAW:
1)Establishes under federal law the Temporary Assistance for
Needy Families (TANF) program to provide aid and
welfare-to-work services to eligible families and, in
California, provides that TANF funds for welfare-to-work
services are administered through the CalWORKs program. (42
United States Code 601 et seq., Welfare and Institutions Code
Section (WIC) 11200 et seq.)
2)Establishes income, asset and real property limits used to
determine eligibility for the program, including net income
below the Maximum Aid Payment (MAP), based on family size and
county of residence, which is around 40% of the Federal
Poverty Level. (WIC 11150 to 11160, 11450 et seq.)
3)Defines disability-based unearned income, within the CalWORKs
program, as state disability insurance benefits, private
disability insurance benefits, temporary workers' compensation
benefits, social security disability benefits, and any
veteran's disability compensation. (WIC 11451.5)
4)Defines earned income as gross income received as wages,
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salary, employer-provided sick leave benefits, commissions, or
profits from activities such as a business enterprise or
farming in which the recipient is engaged as a self-employed
individual or as an employee. (WIC 11451.5)
5)Exempts the following when calculating a family's income for
the purpose of determining CalWORKs eligibility:
If the family's disability-based unearned income does not
exceed $225
a) All disability-based unearned income, plus any amount
of not otherwise exempt earned income equal to the amount
of the difference between the amount of disability-based
unearned income and $225.
b) Fifty percent of all not otherwise exempt earned
income in excess of the amount applied to the difference
between the amount of disability-based income and $225.
If the family's disability-based unearned income exceeds $225
a) All of the first $225 in disability-based unearned
income.
b) Fifty percent of all earned income. (WIC 11451.5)
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill may result in the following costs:
1)Estimated overall total cost of approximately $151 million
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($7.8 million General Fund) in Fiscal Year (FY) 2016-17 and
approximately $292.9 million ($15.8 million General Fund) in
FY 2017-18 and $287.4 million ($15.7 million General Fund)
on-going, based on an average monthly CalWORKs caseload of
just under 500,000.
2)Automation costs in the hundreds of thousands of dollars to
the Department of Social Services resulting from required
changes to the Statewide Automated Welfare System.
COMMENTS:
CalWORKs: The CalWORKs program provides monthly income
assistance and employment-related services aimed at moving
children out of poverty and helping families meet basic needs.
Federal funding for CalWORKs comes from the TANF block grant.
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 the California Department
of Social Services, around 497,000 families rely on CalWORKs,
including over one million children. Nearly 60% of cases
include children under 6 years old.
Maximum grant amounts in high-cost counties of $704 per month
for a family of three, with no other income, means $23.46 per
day, per family, or $7.82 per family member, per day to meet
basic needs, including rent, clothing, utility bills, food, and
anything else a family needs to ensure children can be cared for
at home and safely remain with their families. This grant
amount puts the annual household income at $8,448 per year, or
42% of poverty. Federal Poverty Guidelines for 2016 show that
100% of poverty for a family of three is $20,160 per year.
Earned Income Disregard (EID): While the maximum CalWORKs grant
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amounts for high-cost counties and low-cost counties are $704
and $670, respectively, the average monthly grant amount across
the state is much lower at $497 per month, as it reflects a
reduction in the maximum grant due to other income in a
recipient family's household. By allowing a certain amount of
income to be retained and excluded from grant calculations, the
EID plays a major role in facilitating and encouraging paid
employment.
Among adults who are living with their families in poverty and
applying for CalWORKs assistance due to unemployment or
underemployment, the EID also 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% constituting the first portion
of what would otherwise be the recipient's grant amount based on
the maximum amount allowed. 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 when
calculating the family's grant amount; the grant amount in a
high-cost county would be $466.50 ($704 - $237.50), and the
grant in a low-cost county would be $432.50 ($670 - $237.50).
Need for this bill: During the Great Recession, 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 (Budget and
Fiscal Review Committee), 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 family's total monthly
income. A year later, when numerous other changes were enacted
within the CalWORKs program, the EID was restored to the first
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$225 and 50% of remaining countable income. The author of this
bill is seeking to continue the trend of increasing the EID in
order to facilitate families' ability to increase earnings and
build financial stability as they participate in education
programs and transition to work.
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. 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. An EID increase is a necessary
strategy to pursue in the fight against poverty."
Analysis Prepared by:
Daphne Hunt / HUM. S. / (916) 319-2089 FN:
0003310