BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1742 (Mark Stone) - CalWORKs: eligibility ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 31, 2016 |Policy Vote: HUMAN S. 5 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Debra Cooper | | | | ----------------------------------------------------------------- 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) AB 1742 (Mark Stone) Page 1 of ? 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% AB 1742 (Mark Stone) Page 2 of ? ($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. -- END -- AB 1742 (Mark Stone) Page 3 of ?