BILL ANALYSIS Ó AB 1809 Page 1 ASSEMBLY THIRD READING AB 1809 (Lopez) As Amended April 6, 2016 Majority vote ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Human Services |5-1 |Bonilla, Calderon, |Maienschein | | | |Lopez, | | | | | | | | | | | | | | |Mark Stone, Thurmond | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |14-6 |Gonzalez, Bloom, |Bigelow, Chang, | | | |Bonilla, Bonta, |Gallagher, Jones, | | | |Calderon, Daly, |Obernolte, Wagner | | | |Eggman, Eduardo | | | | |Garcia, Roger | | | | |Hernández, Holden, | | | | |Quirk, Santiago, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------ AB 1809 Page 2 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. 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 United States Code Section (U.S.C.) 601 et seq., Welfare and Institutions Code Section (WIC) 11200 et seq.) AB 1809 Page 3 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: According to the Assembly Appropriations Committee, this bill may result in the following costs: 1)Increased CalWORKs grants, services, child care, and administrative costs potentially in the millions of dollars (TANF/MOE [Maintenance of Effort]) 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 General Fund) in Fiscal Year 2016-17 and $6.3 million ($0.4 million General Fund) in Fiscal Year 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 AB 1809 Page 4 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. COMMENTS: 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 AB 1809 Page 5 100% 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 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 AB 1809 Page 6 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." PRIOR LEGISLATION: AB 197 (Stone), of 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), of 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), of 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), of 2009, would have eliminated the use of a motor vehicle valued at more than $4,500 when determining AB 1809 Page 7 eligibility for CalWORKs. This bill died in the Senate Appropriations Committee. AB 2368 (Fuentes), of 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), of 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. Analysis Prepared by: Kelsy Castillo / HUM. S. / (916) 319-2089 FN: 0003208