BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 1742 (Mark Stone) - CalWORKs:  eligibility
          
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          |Version: May 31, 2016           |Policy Vote: HUMAN S. 5 - 0     |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: August 1, 2016    |Consultant: Debra Cooper        |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  AB 1742 would increase the amount of exempted income  
          when calculating CalWORKS eligibility and benefit amounts, as  
          specified.


          Fiscal  
          Impact:  
           Significant costs of $141.6 million in fiscal year 2016-17 and  
            ongoing costs of $281.6 million per year due to increased  
            caseload and associated grant and supportive service costs.  
            (TANF/GF)


           An estimated $3.6 million in fiscal year 2016-17 and $12.6  
            million in fiscal year 2017-18 in additional grant amounts to  
            accommodate for statutory minimum wage increases. (see Staff  
            Comments)









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           One-time costs of $0.8 million for sending mailers to each  
            CalWORKs household and eligibility workers contacting safety  
            net cases informing CalWORKs recipients of changes to  
            eligibility associated with the bill. 


           Approximately $1 million in costs to the Department of Social  
            Services (DSS) for automation changes to the Statewide  
            Automated Welfare System




          Background:  According to the national Supplemental Poverty Measure, just  
          under a quarter of Californians are living at or under the  
          federal poverty level (FPL). The CalWORKs program, which  
          implements the federal TANF program, is a welfare program that  
          gives cash aid and employment-related services to eligible  
          California families. The average monthly cash grant for a family  
          of three on CalWORKs (one parent and two children) for 2016-17  
          is $497.35 and the maximum monthly grant if the family has no  
          other income and lives in a high-cost county is $704. According  
          to recent data from DSS, approximately 497,000 families rely on  
          CalWORKs. 
          The Earned Income Disregard (EID) is the amount subtracted from  
          a CalWORKs recipients' income to determine eligibility for  
          assistance and monthly grant amounts. Assistance grants are  
          calculated based on household size and income, some of which is  
          not counted per the EID. In 2011, the Legislature enacted a  
          number of cuts to the state's safety net programs, including  
          CalWORKs grant reductions and reductions in EID. SB 72 (Budget  
          and Fiscal Review Committee, Chapter 8, Statutes of 2011)  
          reduced the EID from $225 to $112 plus 50% of the remaining  
          earned income. The following year, SB 1041 (Budget and Fiscal  
          Review Committee, Chapter 47, Statutes of 2012) restored the EID  
          to the first $225 plus 50% of remaining countable income. 


          Under current law, the first $225 of an adult CalWORKs gross  
          income is disregarded from CalWORKs grant calculations, then 50%  
          of the remaining income is disregarded. The other 50% directly  
          reduces the grant amount that the recipient would otherwise  
          receive. For example, a recipient with a monthly income of $800  
          will have the first $225 disregarded, leaving $575. Another 50%  








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          ($287.50) will be disregarded from that amount, leaving $287.50  
          in countable income subtracted from the Maximum Aid Payment. 


          Based on the FFY 2013 Research and Development Enterprise  
          Project (RADEP) sample data, approximately 4.7% of the CalWORKs  
          caseload left aid due to exceeding the CalWORKs  
          earned/disability-based income limit and would have remained  
          eligible due to an increase in EID.




          Proposed Law:  
            This bill would increase the income disregarded when  
          calculating CalWORKs eligibility and aid amounts from $225 plus  
          50% of the remaining earned income to $450 plus 70% of the  
          remaining earned income, as specified.


          Related  
          Legislation:  SB 3 (Leno, Chapter 4, Statutes of 2016) increases  
          the state's minimum wage year-over-year reaching $15 per hour in  
          2023. 


          Staff  
          Comments:  The new minimum wage has the potential to impact the  
          amount of aid that families receive from CalWORKs; however  
          increasing the EID would allow more recipients to remain  
          eligible and would allow recipients to keep more of their  
          earnings before the CalWORKs grant is reduced based on the  
          increased income. According to DSS, the minimum wage increase to  
          $10.50 per hour on January 1, 2017, would potentially decrease  
          the number of CalWORKs recipients who are no longer eligible for  
          CalWORKs benefits from 2,036 to 458. Similarly, the minimum wage  
          increase to $11 per hour starting January 1, 2018 would result  
          in a decrease from 2,035 to 259. 


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