BILL ANALYSIS Ó AB 1809 Page 1 Date of Hearing: April 27, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1809 (Lopez) - As Amended April 6, 2016 ----------------------------------------------------------------- |Policy |Human Services |Vote:|5 - 1 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: Yes SUMMARY: This bill eliminates the asset limit test as a requirement for California Work Opportunity and Responsibility to Kids (CalWORKs) program eligibility and participation. AB 1809 Page 2 FISCAL EFFECT: 1)Increased CalWORKs grants, services, child care, and administrative costs potentially in the millions of dollars (TANF/MOE) for increased CalWORKs caseload, both new as well as existing cases that would have otherwise become ineligible. To the extent the CalWORKs budget exceeds available TANF/MOE funds, any increased costs above the base MOE requirement would be funded with General Fund. For a caseload increase of 520 cases, the estimated total costs would be $3.1 million ($0.2 million GF) in FY 2016-17 and $6.3 million ($0.4 million GF) in FY 2017-18 and on-going. 2)Potential savings due to reduced county administrative workload. It is estimated that a county eligibility worker spends approximately 30 minutes per case on average determining the value of a family's assets. The scope of this task varies by county, but this process takes a substantial amount of time because it must be completed for every CalWORKs case. Counties receive a single allocation to administer their CalWORKs programs. While this bill will save time and reduce workload for county eligibility workers, the state will only achieve actual savings if a county's single allocation is further reduced. This action is unlikely given that this work is currently underfunded and county welfare departments have sustained hundreds of millions of dollars in cuts over the past several years. 3)Potentially substantial future and indirect savings. The aggregate amount of time saved by eligibility workers will be substantial. This bill could sufficiently reduce county workload to allow these employees to be redirected to providing employment services, resulting in transitioning recipients to work more quickly, thereby potentially reducing grant costs and time on aid, resulting in significant future CalWORKs cost savings. AB 1809 Page 3 COMMENTS: 1)Purpose. The primary goal of the CalWORKs program is to move families out of poverty toward self-sufficiency. 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 asset 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. 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." 2)Background. 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. 3)California Asset Rules. CalWORKs asset rules were enacted in 1997 when the state implemented the 1996 federal welfare reform act. Under California's asset test for CalWORKs, AB 1809 Page 4 families are limited in the value of assets or resources they may own. The program incorporates federal food stamp rules, which limits resources to $2,250 per household, or $3,250 if a family has a member who is aged or disabled. Some assets, such as the family's home are excluded from consideration in the determination of a family's resources. A family's vehicle, if they have one, can have a value of no more than $9,500. Also excluded are assets that are not available to a household, such as the cash value of life insurance policies and pension funds. 4)Prior legislation. a) AB 197 (Stone), 2013, AB 2352 (Hernández), 2012, and AB 1182 (Hernández), 2011, were all virtually identical to this bill. AB 197 was held in the Assembly Appropriations Committee, AB 2352 was held in the Senate Appropriations Committee and AB 1182 was vetoed by the Governor. b) AB 1058 (Beall), 2009, would have deleted the requirement that county welfare departments assess the value of a vehicle when determining a CalWORKs' application or recertification. That bill was held on the Senate Appropriations Committee Suspense File. c) AB 2368 (Fuentes), 2008, would have exempted motor vehicles from assets that must be considered by county welfare departments when they are determining a family's eligibility for CalWORKs. That bill was held on the Senate Appropriations Committee Suspense File. d) 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. That bill was held in the Senate Appropriations Committee. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081 AB 1809 Page 5