BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON HUMAN SERVICES
                               Senator McGuire, Chair
                                2015 - 2016  Regular 

          Bill No:              AB 1809
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          |Author:   |Lopez                                                 |
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          |Version:  |June 15, 2016          |Hearing    | June 28, 2016   |
          |          |                       |Date:      |                 |
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          |Urgency:  |No                     |Fiscal:    |Yes              |
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          |Consultant|Taryn Smith                                           |
          |:         |                                                      |
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                    Subject:  CalWORKs eligibility:  asset limits


            SUMMARY
          
          This bill repeals the asset limitations for CalWORKs  
          eligibility, which eliminates the consideration of an  
          individual's or family's assets as a condition of eligibility  
          for CalWORKs, and makes conforming changes.  

            ABSTRACT
          
          Existing law:

          1)Establishes the federal Temporary Assistance for Needy  
            Families (TANF) program, which permits states to implement the  
            program under a state plan. (42 USC § 601 et seq.)





          2)Establishes in state law the CalWORKs program to provide cash  
            assistance and other social services for low-income families  
            through the federal TANF program. Under CalWORKs, each county  
            provides assistance through a combination of state, county and  
            federal TANF funds. (WIC 10530)











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          3)Establishes income, asset and real property limits used to  
            determine eligibility for the program, 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 11150 to 11160, 11450 et seq.)


          4)Imposes limits on the amount of income and personal and real  
            property an individual or family may possess in order to be  
            eligible for aid under the CalWORKs program, as specified.   
            (WIC 11155 et seq.)


          5)Provides that receipt of aid shall not impose limitations or  
            restrictions on recipient's right to sell, exchange, or chance  
            the form of property holdings. (WIC 11157.5)


          6)Provides that no aid shall be paid to a family with real or  
            personal property valued at $1,000 or more, as specified. (WIC  
            11257)

          7)Provides that a CalFresh recipient family may retain real  
            property for nine months if they make good faith effort to  
            sell the real property. (WIC 11257.5) 

          8)Provides that a child's share of any estate which has not been  
            distributed and of which he has no present economic use, does  
            not constitute property for purposes of determining CalWORKs  
            eligibility. (WIC 11260)
          9)Establishes legislative intent regarding CalWORKs recipients'  
            eligibility and participation in the federal Earned income Tax  
            Credit. (WIC 11322.5)


          10)Establishes the California Savings and Asset Project and  
            provides for CalWORKs recipients to participate in the  
            program, as specified. (GOV 95504)


          This bill:

          1)Makes Legislative findings and declarations relating to the  
            establishment of CalWORKs, the asset test as a requirement for  









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            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 aligning program rules with Medi-Cal  
            and CalFresh, making the program more efficient 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)Amends legislative intent regarding CalWORKs recipients'  
            eligibility and participation in the federal Earned income Tax  
            Credit to delete outdated language.


          5)Makes technical conforming changes.


          
            FISCAL IMPACT
          
          According to an analysis prepared by the Assembly Appropriations  
          committee, this bill may result in increased CalWORKs grants,  
          services, child care, and administrative costs potentially in  
          the millions of dollars (TANF/MOE) for increased CalWORKs  
          caseload, and 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 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.

          The analysis also notes 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  









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          amount of time because it must be completed for every CalWORKs  
          case. Counties receive a single allocation to administer  
          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. 





          Per the Appropriations' analysis, there may be potentially  
          substantial future and indirect savings as a result of this  
          bill. 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. 



            BACKGROUND AND DISCUSSION
          
          Purpose of the bill:
          
          According to the author, the  CalWORKs asset limit forces  
          families with modest savings who are working their way off of  
          public assistance to stop saving, and punishes families that do  
          save any savings amount over $2,000. On rare occasions, some  
          families lose their benefits if they accrue savings beyond  
          $2,000, per the author.  The author also states that by  
          inhibiting low-income families from accumulating and maintaining  
          savings and assets, California is preventing families from  
          achieving economic self-sufficiency. And yet, according to the  
          author, the current $2,000 threshold is not enough for a family  
          to survive outside of the CalWORKs program for more than one or  
          two months.  

          According to the author, this bill gives families a meaningful  









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          and more realistic financial foundation needed for survival  
          within CalWORKs and better ensures economic mobility after they  
          leave the program. The author also states that AB 1809 is a  
          cost-effective way to streamline the CalWORKs application  
          process, achieve an estimated $6.4 million in administrative  
          savings and subsequently realize a decrease in cases, which  
          would be similar to other states.

          Poverty

          California has the highest poverty rate in the nation - just  
          under one-quarter of residents are living at or below the  
          federal poverty level (FPL) according to the national  
          Supplemental Poverty Measure.  According to California Public  
          Policy Institute, 23.9 percent of California's children were  
          living in poverty in 2013. These families earn no more than  
          $20,160 per year for a family of three.  During and after the  
          Great Recession, California saw growing rates of childhood deep  
          poverty - those living below 50 percent of the federal poverty  
          line.  According to the Public Policy Institute of California,  
          the 2014 poverty rate in the state is 16.4 percent a 4 percent  
          increase from the pre-recession levels of 2007. 

          Recovery from the recession has been unequally distributed, with  
          Black and Latino communities living in poverty at higher rates  
          than the total state population. About 78 percent of  
          impoverished families have an adult working full time.

          CalWORKs 

          CalWORKs implements the federal TANF program in California.  The  
          California Department of Social Services (CDSS) is charged with  
          program supervision at the state level.  The counties are  
          responsible for administering the caseloads at the local level.   
          The CalWORKs program is funded with a mix of federal, state and  
          counties funds. According to data from CDSS, about 497,000  
          families rely on CalWORKs, including more than one million  
          children.  Nearly 60 percent of CalWORKs cases include children  
          under 6 years of age.  

          CalWORKs seeks to address poverty through an array of services  
          designed to assist families in various states of need and to  
          address the facets of need for each family.  CalWORKs provides  
          temporary cash assistance to help qualified low income families  









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          meet their basic needs, such as rent, clothing, utility bills,  
          food and other items needed to ensure children are cared for at  
          home and safely remain with their families.  In addition to cash  
          assistance, CalWORKs provides education, employment and training  
          programs for adult CalWORKs recipients that are designed to help  
          remove barriers to work.  

          State law provides for a cumulative 48-month lifetime limit on  
          CalWORKs cash aid for adults.  During those 48 months, adults  
          may receive a total of 24 months of Welfare-to-Work (WTW)  
          services, which are intended to help adult CalWORKs recipients  
          address issues that may prevent or make it difficult to obtain  
          employment.  These WTW activities include subsidized and  
          unsubsidized employment, community service, adult basic  
          education, job skills, training, mental health counseling,  
          substance abuse treatment and other activities necessary to  
          assist recipients in obtaining employment. Once the 24 months of  
          WTW activities have been exhausted, adults must meet stricter  
          federal work participation requirements that may include  
          increased weekly hours and participation in fewer qualifying  
          activities.  For example, substance abuse treatment is not a  
          qualifying activity under the federal requirements. 

          Children of adults who exhaust the 48-month lifetime limit may  
          continue to receive cash aid, if otherwise eligible, until they  
          reach 18 years of age. However, if an adult CalWORKs recipient  
          who is not exempt from participation does not meet his or her  
          welfare-to-work requirements, the recipient is sanctioned for  
          noncompliance, and that recipient's portion of the family's  
          grant subtracted from the amount provided to the family to meet  
          basic needs.

          CalWORKs Asset Test 

          California's CalWORKs asset test requires families to have no  
          more than $2,000 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.  The asset test for CalFresh eligibility was  
          eliminated in July 2009. 

          Eight states (Ohio, Virginia, Hawaii, Louisiana, Alabama,  
          Maryland, Illinoi, and Colorado) have completely eliminated  
          their TANF asset tests and have seen very minimal or no increase  









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          in TANF cases.  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<1>  
          eliminated asset tests for TANF did not result in an increase in  
          caseload, except in Alabama and Colorado, states in which the  
          study did not have enough data to be conclusive. 

          The same report found that California spends an estimated $6.4  
          million per year on cash and vehicle-asset test verification of  
          about one million CalWORKs cases. Furthermore, during the  
          initial intake application process, only 2 percent of the intake  
          cases exceeded the cash asset limit and only .001% exceeded the  
          vehicle asset limit. Of reevaluated cases, only 1 percent was  
          discontinued after asset test verification.  The report also  
          predicts that asset accumulation due to the elimination of asset  
          testing guidelines will lead to a reduction in the CalWORKs  
          caseload within the first year by an estimated 5 percent, or  
          about 26,000 cases. 

          According to the Howard University report, interview results  
          with case managers and workers in California revealed that if  
          they were not allocating their time to the asset testing  
          verification process, they would have more time to dedicate to  
          other duties required of their position. The asset verification  
          time could be allocated to clearing reports and system alerts,  
          reviewing cases for unreported income, reviewing previous cases  
          to determine if any changes occurred with clients' employment  
          status, and adhering to other verification requirements needed  
          during the intake and renewal processes. Overall, the interviews  
          revealed that freeing up case manager and worker time by  
          removing asset test verification would allow better monitoring  
          and more oversight of CalWORKs' applicants and recipients in  
          their progress under the program.

          Savings 

          According to the Corporation for Enterprise Development, a  
          household of one in California with less than $2,943 on hand is  
          asset poor and doesn't have enough money saved to get by at the  
          poverty level in the event that an emergency left them without  
          income.  Additionally, lack of savings is a problem for 46  

          ---------------------------
          <1>  
          http://coas.howard.edu/centeronraceandwealth/reports&publications 
          /CalWORKs%202015%20Revised.pdf








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          percent of California' households that do not have sufficient  
          liquid assets to subsist at the poverty level for three months  
          in the absence of income.<2>

          According to a report issued by the Upward Mobility Project of  
          the Pew Charitable Trust, "people who have higher savings  
          experience greater upward mobility. In particular, the results  
          show that savings is potentially an important factor in  
          advancing one's children and oneself up the income ladder,  
          especially for those households who start at the bottom of the  
          income distribution ? Using public policy to promote savings,  
          then, would appear to be a potentially beneficial strategy for  
          enhancing upward economic mobility, especially among low-income  
          families and households."<3>

          Related 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  
          was held 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 was held 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 was held in the Senate Appropriations  
          Committee.

          ---------------------------
          <2> http://assetsandopportunity.org/
          <3>  
          http://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/ 
          2009/empsavingsreportpdf.pdf








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          AB 2368 (Fuentes, 2008) would have eliminated the vehicle asset  
          test as a condition of eligibility for CalWORKs.  This bill was  
          held 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 was  
          aged or has a disability.  This bill was held in the Senate  
          Appropriations Committee.




            COMMENTS
          
          This bill seeks to eliminate the CalWORKs asset test and to  
          allow recipients and applicants to maintain modest savings that  
          will help them gain greater financial stability. The CalWORKs  
          asset test can prevent families from being able to save  
          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.  Studies have indicated that discouraging asset  
          development is counter to core goals of CalWORKs aimed at  
          offering short-term aid and services to facilitate long-term  
          self-sufficiency.
          
          Modernizing the asset test for the CalWORKs program aligns  
          program rules with Medi-Cal and CalFresh, making the program  
          more efficient, and increasing the capacity of poor families to  
          exit poverty.
          
          
            PRIOR VOTES
          
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          |Assembly Floor:                                            |52 - |
          |                                                           |28   |
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          |Assembly Appropriations Committee:                         |14 - |
          |                                                           |6    |
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          |Assembly Human Services Committee:                         |5 -  |









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            POSITIONS
                                          
          Support:       
               EARN (Sponsor)
               Western Center on Law and Poverty (Sponsor)
               2 Gen Equity
               2 Individuals
               Alameda County Board of Supervisors
               Alameda County Community Asset Network
               Alameda County Social Services Agency
               Asset Building Strategies 
               Brighter Beginnings
               California Alternative Payment Program Association
               California Asset Building Coalition
               California Catholic Conference
               California Community College CalWORKs Association
               California Food Policy Advocates
               California Immigrant Policy Center
               California Reinvestment Coalition
               California Urban Partnership
               CFED
               Children's Defense Fund
               California Immigrant Policy Center
               Community Financial Resources
               County of Alameda
               County Welfare Directors Association of California
               Courage Campaign 
               Family Economic Security Partnership
               Family Paths, Inc.
               First 5 Association of California
               Fremont Family Resource Center
               Hunger Action LA
               Koreatown Youth and Community Center
               Lift-Los Angeles
               MidPen Housing
               Mission Asset Fund
               Mission Economic Development Agency
               National Association of Social Workers
               National Council of La Raza
               Non-Profit Housing Association of California
               Opportunity Fund









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               PolicyLink 
               Santa Clara County Board of Supervisors
               St Anthony Foundation
               The California Catholic Conference
               The City and County of San Francisco
               The City and County of San Francisco Human Services Agency
               The Coalition of Welfare Rights Organizations
               The Ella Baker Center for Human Rights
               Treasure Island Homeless Development Initiative
               United Way Capitol Region Assets & Opportunity 
               United way of the Bay Area
               United Ways of California 
               Urban Strategies Council
               2 Individuals
          
          Oppose:
               None.

                                          

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