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
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<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.
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<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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