BILL ANALYSIS
AB 1058
Page 1
Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Jim Beall, Jr., Chair
AB 1058 (Beall) - As Amended: April 23, 2009
SUBJECT : CalWORKs: asset reform.
SUMMARY : Reforms the CalWORKs' asset tests that county welfare
workers use to determine benefit eligibility. Specifically,
this bill :
1)Eliminates the requirement that each family have a vehicle
worth no more than $4,650.
2)Eliminates the requirement that recipients have no more than
$2,000 in savings.
3)Increases, from $2,000 to $7,000, the requirement that limits
applicants to no more than $2,000 in savings, and adjusts
that amount annually according to the CA Necessities Index.
4)Deletes obsolete code sections that would no longer be
relevant under the provisions of this bill.
5)Makes findings and declarations regarding the negative effect
that asset tests have on low-income families' ability to save
and become self sufficient.
EXISTING LAW
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, including that
assets shall not exceed the following:
a) $2,000 in savings and $3,000 for a family with a member
age 60 or above;
b) One house that the family lives in;
c) One car with a value of $4,650 or less;
d) Savings and interests in restricted federally qualified
accounts for the purpose of saving for college, retirement,
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starting a business, purchasing a home, or overcoming an
episode of homelessness.
FISCAL EFFECT : Unknown
COMMENTS : The author seeks to encourage CalWORKs families to
build their personal savings and asset accumulation in order to
become self-reliant and end their dependence on government
assistance. An additional goal is to reduce the administrative
burden on local welfare agencies by streamlining the application
process, simplifying the program rules, decreasing paperwork and
cutting down on county time that would be better served on the
other human services programs it is entrusted by the state to
administer.
To accomplish this, this bill would modify the following
CalWORKs state eligibility rules:
1)Eliminate the requirement that each family have a vehicle
worth no more than $4,650.
2)Eliminate the requirement that recipients have no more than
$2,000 cash.
3)Increase, from $2,000 to $7,000, the requirement that
applicants have no more than $2,000 cash, and adjusts it
annually according to the CA Necessities Index.
Background : The Temporary Assistance for Needy Families (TANF)
was created by a massive bi-partisan federal Welfare Reform
effort in 1996. The intent was to get needy families with
children from welfare to work and end the welfare entitlement
program as we knew it. The four stated goals of the TANF
legislation are to:
1)End a needy family's dependence on government assistance by
preparing them for a job and marriage;
2)Help families so that children are cared for in their own
homes or in those of relatives;
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3)Prevent out-of-wedlock pregnancies; and
4)Encourage the formation of two-parent families.
Despite its lauded overhaul in 1996, thirteen years after
welfare reform, it is clear that many families are still
struggling to move from welfare to work due to specific policies
built into California Work Opportunity and Responsibility to
Kids (CalWORKs), the TANF program as it is known in this state.
These policies are hampering the primary goals of welfare reform
from being achieved: economic independence and personal
responsibility.
In the 1980s and '90s, the federal government started to shift
program and financial responsibility to states, in large part to
reduce federal spending for open-ended programs (i.e.
entitlements). TANF allowed states the flexibility to continue
and to start programs that had previously required federal
waivers, but also capped federal spending on welfare by creating
fixed funding in the form of block grants for each state. This
shift allowed California to customize its program to fit the
varying needs of its needy family population while adhering to
the federal statutory and regulatory requirements.
In particular, TANF allowed significant state flexibility on
eligibility rules for families applying to CalWORKs for cash and
employment assistance. Specifically, states can decide the
income level and property or asset levels that an applicant or
recipient must meet in order to be eligible. In California, an
applicant and recipient, both, must have a vehicle worth no more
than $4,650, and cash on hand of no more than $2,000.
Asset Building for CalWORKs : The sponsor of this bill, the New
America Foundation (New America), has an "Asset Building"
program that seeks to encourage savings for low-income working
families. In the following paragraph, New America speaks to the
tension between ensuring that only needy families are accessing
public services and forcing an applicant to "spend down" all of
their assets before they can seek help. "For families making
the difficult transition from welfare-to-work, developing assets
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is critical to achieving true economic independence. In order
to prevent a complete backslide to public assistance, low income
working families must begin to develop their own safety nets
through personal saving for use in the event of an unexpected
income shock due to illness or temporary employment. As
personal saving is essential to achieving self-sufficiency, the
stated goal of the CalWORKs program, saving should be
encouraged, not penalized , by welfare policy and social service
agencies." At present, applicants and recipients of the
CalWORKs program find their progress restricted by an asset
limit which restricts families to no more than $2,000 in savings
and one car with a value of no more than $4,650.
New America believes that asset limits are doing more harm than
good for three reasons: 1) Inefficient: because counties are
forced to administer a complex asset test on low-income
households that studies have shown are without assets; 2)
Counterproductive: because achieving economic security requires
the accumulation of savings; and, assets limits discourage
families from building their savings; and 3) Inequitable:
because they completely exclude families who have only slightly
more economic resources from participation than families who are
currently eligible for the benefits.
Similarly, Michael Sherraden writes in his 1991 book, Assets and
the Poor , "For the vast majority of households, pathway out of
poverty is not through consumption, but through savings and
accumulation. Simply stated, not many people manage to spend
their way out of poverty."
This bill would eliminate the vehicle asset test in its entirety
from consideration for eligibility into the CalWORKs program.
Case for eliminating the vehicle test : The vehicle test was
last increased thirteen years ago.
According to the sponsor, California is currently tied with
Texas and Idaho in having the most restrictive asset test for
vehicles of any state in the country. The following is the
vehicle asset policy of the rest of the nation:
1)Twelve states exclude all vehicles owned by the household;
2)Fifteen exclude at least one vehicle per household; and
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3)Twenty have substantially increased the value of the vehicle
exclusion.
In comparison, California employs a much more restrictive
vehicle asset test. The sponsor states that this policy
undermines a worker's ability to gain and maintain employment,
thereby encouraging continued reliance on public assistance.
Additionally, California requires no vehicle test for the Food
Stamp Program or MediCal, weakening the rationale for a vehicle
test under CalWORKs. Lastly, a recent report by the County of
Los Angeles on the transportation barriers faced by low-income
families concludes that "car ownership is strongly correlated
with employment status, and increases the likelihood of
employment." Sixty percent of welfare-to-work job seekers
relying on transit indicated they had transportation
difficulties in seeking work compared with only 29% of welfare
to work job seekers who owned welfare-to-work participants who
had unlimited access to a car were gainfully employed, compared
with only 44% who relied on public transit or sharing rides.
Case for changing the $2,000 resource test : The resource test
was last increased in 1985, twenty-four years ago.
For any publicly funded service, the policy should be to ensure
that the only eligible persons receive services. For CalWORKs
applicants, the need to ensure eligibility seems reasonable, but
can the same case be made for recipients? Recipients have
already passed the "gatekeeper," proving that they are asset
poor and therefore needy for services. The Committee may wish
to consider whether the resource test for recipients is actually
a disincentive to work. The state's policy should be, if you
want to work longer hours or apply for your Earned Income Tax
Credit (EITC), then you should be able to keep it and save it.
The author argues that under this type of rewards system
recipients may even exit CalWORKs early. This bill would
eliminate the resource test for recipients.
For applicants, the author wishes to increase the resource test
from $2,000 to $7,000. At this level, a balance is struck
between ensuring neediness for the programs grants and services
while ensuring that the applicant can withstand and overcome a
financial challenge. Indeed, the industry-wide savings standard
is three to six months worth of living expenses in the event of
a job loss, medical emergency, or vehicle breakdown.
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Added eligibility protections : Overall, the nature of the
CalWORKs' 60-month lifetime limit on cash aid and the fact that
recipients must comply with the lengthy and cumbersome
application requirement, weeks of "job club," federally-mandated
work-hour requirements, quarterly reporting of income and
assets, and annual eligibility recertifications make it
undesirable and highly unlikely that any undeserving person
would apply to or remain on CalWORKs.
Related legislation :
AB 2368 (Fuentes), 2008 would have eliminated the vehicle asset
test for CalWORKs applicants and recipients.
AB 2480 (S. Runner), 2007-2008 would have amended the CalWORKs
eligibility vehicle asset limit by adding leased vehicles to the
list of countable resources.
AB 1078 (Lieber), Chapter 622, Statutes of 2007, in addition to
EITC awareness provisions, excluded funds in specified
retirement and educational accounts authorized under federal law
from being considered as income or resources for purposes of
CalWORKs benefits for applicants.
AB 167 (Bass), 2007 would have eliminated the CalWORKs asset
test for applicants and recipients.
AB 2466 (Daucher and Arambula), Chapter 781, Statutes of 2006
excluded funds in specified retirement and educational accounts
authorized under federal law from being considered as income or
resources for purposes of CalWORKs benefits for current
recipients, not for new applicants. In addition, it added
financial management education as an allowable welfare-to-work
activity for adults receiving CalWORKs benefits.
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REGISTERED SUPPORT / OPPOSITION :
Support
New America Foundation (Sponsor)
Catholic Charities of California
California Catholic Conference of Bishops
State of California, Commission on the Status of Women
Opposition
None on file
Analysis Prepared by : Frances Chacon / HUM. S. / (916)
319-2089