BILL ANALYSIS Ó AB 1809 Page 1 Date of Hearing: March 29, 2016 ASSEMBLY COMMITTEE ON HUMAN SERVICES Susan Bonilla, Chair AB 1809 (Lopez) - As Amended March 28, 2016 SUBJECT: CalWORKs eligibility: asset limits SUMMARY: Eliminates the asset limit test as a requirement for California Work Opportunity and Responsibility to Kids (CalWORKs) program eligibility and participation. Specifically, this bill: 1)Makes a number of Legislative findings and declarations relating to the establishment of CalWORKs, the asset test as a requirement for eligibility, and estimated cost savings to the State if it were to repeal the CalWORKs asset limit. 2)States Legislative intent to repeal the asset test for the CalWORKs program, thereby, among other things, improving program efficiency and increasing the capacity of poor families to exit poverty. 3)Repeals various sections of the Welfare and Institutions Code that stipulate the allowable value and nature of personal property, savings, and motor vehicles for purposes of determining eligibility for CalWORKs, as specified. AB 1809 Page 2 4)Makes technical changes. 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 U.S.C. 601 et seq., WIC 11200 et seq.) 2)Establishes income, asset, and real property limits used to determine eligibility for the CalWORKs, 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 11454, 11322.85) 3)Imposes limits on the amount of income and personal and real property an individual or family may possess in order to be eligible under aid for the CalWORKs program, as specified. (WIC 11155 et seq.) FISCAL EFFECT: Unknown. COMMENTS: AB 1809 Page 3 CalWORKs: The California Work Opportunity and Responsibility to Kids (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 Temporary Assistance for Needy Families (TANF) block grant. The average 2015-16 monthly cash grant for a family of three on CalWORKs (one parent and two children) is $506.55, 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, over 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. Asset tests for CalWORKs: In the early 1980s, social welfare policy shifted towards the elimination of wealth accumulation while on public assistance. However, in the last decade, there has been increased attention given to the role that assets development plays in facilitating the improved economic security of low-income individuals and their families. Asset limits in public assistance have been associated with low savings rates among low-income families, which may hinder families seeking to transition off of public assistance. Currently California's asset test for CalWORKs requires families to have no more than $2,250 in specified assets ($3,250 if there AB 1809 Page 4 is a person over 60 years old in the household), and requires a family's vehicle, if they have one, to have a value of no more than $9,500. Eight states, including Ohio, Virginia, Hawaii, Louisiana, Alabama, Maryland, Illinoi, and Colorado, have eliminated asset tests for TANF in order to reduce administrative costs. The elimination of asset tests was initially met with concerns about increases in caseload to unmanageable levels. However, according to data presented in a 2015 report prepared by the Howard University Center on Race and Wealth in collaboration with Californians for Shared Prosperity, "The Cost of Asset Testing for the CalWORKs Program," states that eliminated asset tests for TANF did not experience an increase in caseload, with the exception of Alabama, for which the study did not have enough data to be conclusive. Need for this bill: The CalWORKs asset limits currently in place can cause some families to be dependent on less-reliable modes of transportation, and prevent them from being able to save up sufficient funds to cover important and common costs such as paying the deposit and the first month's rent on an apartment, making necessary car repairs, or dealing with unforeseen emergencies. Indeed, the discouragement of asset development is arguably counter to core goals of CalWORKs aimed at offering short-term aid and services to facilitate long-term self-sufficiency. According to the author, "[This bill] gives families a meaningful and more realistic financial foundation needed for survival within CalWORKs and better ensures economic mobility after they leave CalWORKs. [This bill] is a cost effective way to streamline the CalWORKs application process and achieve an estimated $6.4 million in administrative savings and subsequently realize a decrease in cases, which would be similar to other states." AB 1809 Page 5 Suggested amendments: For matters of clarification, and to ensure consistency with the intent of the bill, committee staff recommends the following amendments: 1) On page 6, strike lines 5-21, inclusive. PRIOR LEGISLATION: AB 197 (Stone), 2013, would have eliminated the requirement that county welfare departments assess the value of a vehicle when determining eligibility for CalWORKs participation. This bill died in the Assembly Appropriations Committee. AB 2352 (Hernández), 2012, would have eliminated the requirement that county welfare departments assess the value of a vehicle when determining eligibility for CalWORKs participation. This bill died in the Assembly Appropriations Committee. AB 1182 (Hernández), 2011, would have eliminated the requirement that county welfare departments assess the value of a vehicle when determining eligibility for CalWORKs participation. This bill was vetoed by the Governor. AB 1058 (Beall), 2009, would have eliminated the use of a motor vehicle valued at more than $4,500 when determining eligibility for CalWORKs. This bill died in the Senate Appropriations AB 1809 Page 6 Committee. AB 2368 (Fuentes), 2008, would have eliminated the vehicle asset test as a condition of eligibility for CalWORKs benefits. This bill died in the Assembly Appropriations Committee. AB 167 (Bass), 2007, would have repealed the asset test for CalWORKs eligibility if a household contained a member who is aged or has a disability. This bill died in the Senate Appropriations Committee. REGISTERED SUPPORT / OPPOSITION: Support 2Gen Equity 2.11 Alameda County Social Services Agency Asset Building Strategies Brighter Beginning California Alternative Payment Program Association (CAPPA) California Asset Building Coalition AB 1809 Page 7 California Catholic Conference California Community College CalWORKs Associates California Immigrant Policy Center (CIPC) California Reinvestment Coalition California Urban Partnership (CUP) Capital Region Assets & Opportunity (A&O) CFED (Corporation for Enterprise Development) Children's Defense Fund - CA (CDF-CA) Coalition of California Welfare Rights Organizations, Inc. Community Financial Resources County of Alameda County Welfare Directors Association of CA (CWDA) Courage Campaign AB 1809 Page 8 EARN - sponsor Ella Baker Center for Human Rights Family Paths, Inc. First Place for Youth Hunger Action Los Angeles Koreatown Youth and Community Center (KYCCL) LIFT-Los Angeles MidPen Housing Mission Asset Fund Mission Economic Developer Agency (MEDA) National Council of La Raza (NCLR) Non-Profit Housing Association of Northern CA (NPH) Opportunity Fund AB 1809 Page 9 PolicyLink St. Anthony Foundation Treasure Island Homeless Development Initiative United Way of California United Way of the Bay Area Urban Strategies Council Western Center on Law and Poverty 1 individual Opposition None on File. Analysis Prepared by:Kelsy C. Castillo / HUM. S. / (916) 319-2089 AB 1809 Page 10