BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 1373 (Stone) - CalWORKs: welfare-to-work: supportive services ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: March 31, 2016 |Policy Vote: HUMAN S. 4 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: April 18, 2016 |Consultant: Jolie Onodera | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 1373 would require a standard allowance of $100 per month for transportation costs to be advanced to CalWORKs welfare-to-work (WTW) participants at the beginning of each month, as specified. This bill would additionally require a standard allowance of $500 for books and supplies to participants assigned to an educational activity full time, and would require the standard allowance to be adjusted annually for inflation, as specified. Fiscal Impact: Transportation standard allowance : Major ongoing increase in CalWORKs supportive services expenditures in the tens of millions of dollars annually from the CalWORKs Single Allocation (Federal Funds/General Fund) for transportation costs, based on the difference between the $100 monthly SB 1373 (Stone) Page 1 of ? standard allowance and the average monthly transportation cost of $87 for 66,000 current participants, as well as an estimated increase in the current utilization rate of 57 percent under advance payment in lieu of reimbursement for these costs. To the extent the Single Allocation would not have been fully expended, the costs imposed by this bill would be funded by a combination of unspent federal TANF funds that otherwise would have been reallocated and carried forward to future years, and unspent funds that would have reverted to the General Fund. Any costs expended above the Single Allocation would be borne entirely by the General Fund. Book/supplies standard allowance : Future ongoing increase in CalWORKs supportive services expenditures for the specified ancillary services in the millions of dollars annually from the CalWORKs Single Allocation (Federal Funds/General Fund). While the average cost of books and supplies is estimated to be comparable to the proposed standard allowance, to the extent the requirement to provide a standard allowance in advance results in greater utilization (current rate is less than 12 percent) of this supportive service currently serving 15,000 participants than through the existing reimbursement process, could result in additional increases in expenditures. Annual adjustment by the California CPI : Ongoing future annual increases potentially in the millions of dollars. As drafted, it is unclear whether the annual adjustment is to be applied only to the standard allowance for books/supplies or additionally to the transportation allowance. For context, a 2 percent adjustment on the existing transportation standard allowance of $100 would increase costs at the current utilization rate by nearly $1.6 million. CalWORKs program impact : Potential reduction in sanction rates and improvement in work participation rates to the extent the provision of necessary supportive services are made available and provided timely to a greater number of CalWORKs WTW participants. County administration : Potentially significant increase in county administration costs, potentially state-reimbursable (General Fund) to the extent the mandate imposed on counties to provide advance payment to all participants, irrespective of need, as well as to allow participants to choose the method of submitting reimbursement claims results in additional workload, resource needs, and changes to existing reimbursement claim processes. As there is currently no statewide standard for accepting, processing, and issuing advance payments, the administrative impact to each county could vary widely. SB 1373 (Stone) Page 2 of ? Background: Existing state law establishes the California Work Opportunity and Responsibility to Kids (CalWORKs) program to provide cash assistance and other social services to low-income families through the federal Temporary Assistance for Needy Families (TANF) program. CalWORKs program costs are funded through a combination of federal TANF block grant funds, state, and county funds. Under existing law, necessary supportive services are required to be made available to participants engaged in welfare-to-work activities, including transportation costs and ancillary expenses, which include the cost of books, tools, clothing specifically required for the job, fees, and other necessary costs, as provided in the welfare-to-work plan entered into between the county and the participant. (WIC § 11323.2(a)(2)-(3).) Existing law requires payments for supportive services to be advanced to a participant wherever necessary, and when desired by the participant, so the participant need not use his or her own funds to pay for these services. (WIC § 11323.4(a).) Proposed Law: This bill would require a county to provide a standard allowance of $100 per month for transportation costs to be advanced to CalWORKs welfare-to-work participants at the beginning of each month. Additionally, this bill: Allows a participant to opt out of the standard allowance for transportation costs at any time and make a reimbursement claim for the actual costs of transportation, and may submit this claim to the county by mail, in person, or if the county already has the technological capacity to do so, via the county's internet website. Requires a participant who has been assigned to an educational activity full time, as defined by the postsecondary school, to receive a standard allowance of $500 per semester for ancillary expenses. For participants assigned to educational activities part time, as defined by the secondary school, the bill requires a standard allowance of $250 per semester to the SB 1373 (Stone) Page 3 of ? participant. Requires the ancillary expenses standard allowance to be paid no later than 15 days before the start of the semester to ensure the participant has the funds necessary to purchase books and supplies required by the educational institution. Allows a participant to opt out of the standard allowance for books and supplies at any time and make a reimbursement claim for the actual costs of books and supplies, and may submit the claim to the county by mail, in person, or, if the county already has the technological capacity to do so, via the county's internet website. Requires the standard allowance to be adjusted annually for inflation by the California Consumer Price Index. Authorizes the Department of Social Services (DSS) to implement the provisions of the bill through an all-county letter or similar instructions, and requires the letter or instruction to be issued no later than April 1, 2017. Staff Comments: By advancing a standard allowance for transportation costs and for ancillary services to CalWORKs WTW participants assigned to educational activities, as well as adjusting the standard allowances annually for inflation, this bill could result in significant increases in CalWORKs employment services expenditures in the tens of millions of dollars annually. Within the Single Allocation, counties have the discretion to expend funds as they deem necessary to best meet the needs of their CalWORKs participants and are not required to spend a specified amount for services, child care and administration. To the extent the Single Allocation would not have been fully expended under the provisions of this bill, the additional costs imposed by this bill would be funded by a combination of unspent federal TANF funds that otherwise would have been reallocated and carried forward to future years, and a portion would be funded with unspent funds that would have reverted to the SB 1373 (Stone) Page 4 of ? General Fund. Alternatively, to the extent counties fully expend their allocations, any additional costs would be borne by the General Fund. CalWORKs employment services are administered locally by county welfare departments and funded through the CalWORKs Single Allocation. The Quarterly CalWORKs Report, State Fiscal Year 2015-16, July-September, released in March 2016, indicates the Single Allocation for FY 2015-16 of $2.02 billion. CalWORKs employment services serve individuals in the CalWORKs WTW program, and include a variety of work, educational, and training activities, including the transportation and ancillary services addressed in this measure. Based on prior fiscal year 4th quarter data from Quarterly CalWORKs Reports, unspent funds from the Single Allocation ranged from $286 million in FY 2013-14 to $679 million in FY 2014-15. There is currently no specified process mandated on counties for accepting, processing, and issuing advance payments for supportive services. Additionally, the number of participants that request advance payment and the amount of advance payments issued to participants is not tracked. By requiring counties to provide advance payment to all participants, irrespective of need, within specified time periods, as well as requiring counties to allow participants to choose the method of submitting reimbursement for claims, this bill could potentially result in significant increases in county administration costs, which are potentially state-reimbursable (General Fund), for additional workload and/or resources or other operational needs to accommodate changes to existing reimbursement claim processes. As there is currently no statewide standard for the processing of these payments, the administrative impact to each county could vary widely. Recommended amendments: As drafted, it is unclear whether the bill requires the annual adjustment for inflation based on the California CPI to apply solely to the standard allowance for books and supplies, or if the annual adjustment is to be applied to the standard allowance for transportation costs as well. Staff recommends clarifying language to clearly identify to which standard allowance the CPI is to be applied: ancillary services, transportation costs, or both. SB 1373 (Stone) Page 5 of ? -- END --