BILL ANALYSIS
SB 1084
Page 1
Date of Hearing: June 22, 2010
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Perez, Chair
SB 1084 (Liu) - As Amended: June 1, 2010
SENATE VOTE : 22-13
SUBJECT : California Economic Security Task Force
SUMMARY : Authorizes the establishment of the 13-member
California Economic Security Task Force (Task Force) for the
purpose of analyzing and developing a strategy to increase self
sufficiency and reduce poverty in California by 50% by 2020.
Specifically, this bill :
1)Authorizes, based on sufficient private funds becoming
available, the establishment of the Task Force, which shall
undertake the development of an interim (July 1, 2012) and
final report (July 1, 2013) that includes the following:
a) A review of current rates of economic security, as
defined.
b) An inventory and prescribed assessment of state programs
targeted at increasing individual and family economic
security and reducing poverty.
c) Recommendations on how to:
i) Maximize the effectiveness of state programs and
services with the objective of reducing poverty in the
state by 50% by 2020; and
ii) Create a self-sustaining entity to lead and
coordinate the state's efforts to reduce poverty
including providing detail on its structure, funding and
needed statutory changes.
2)Requires that the recommendations be politically viable,
fiscally responsible, and contain an implementation strategy,
a cost/savings estimate and a quantification of the number of
individuals that would benefit.
3)Defines economic security to mean having the income necessary
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to cover basic needs using the California Family Economic
Self-Sufficiency Standard Index and the California Elder
Economic Security Standard Index.
4)Specifies that the Task Force include the following members or
their designee:
a) Two State Senators appointed by the Senate Rules
Committee, one of whom must be a member of the minority
party;
b) Two Assembly Members appointed by the Speaker of the
Assembly, one of whom must be a member of the minority
party;
c) A representative from the County Welfare Directors
Association;
d) A large business representative appointed by the Senate
Rules Committee;
e) A small business representative appointed by the Speaker
of the Assembly;
f) Four individuals, appointed by the Governor,
representing nongovernmental entities that provide
benefits, services or advocacy to people living in poverty
including women, children, youth, seniors, working families
and the homeless;
g) A rural resident appointed by the Speaker of the
Assembly and an urban resident appointed by the Senate
Rules Committee. Both of these individuals shall have
household incomes below the federal poverty threshold; and
h) The Secretary of the California Health and Human
Services Agency, who shall be a nonvoting member.
5)Specifies that the members of the Task Force serve without
compensation, however, to the extent funding is available,
members may be reimbursed for Task Force expenses.
6)Sunsets the Task Force on July 1, 2013.
EXISTING LAW :
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1)Establishes various federal and state social service programs
that provide cash assistance, training and other benefits to
qualified low-income families and individuals, including but
not limited to the Supplemental Nutrition Assistance Program,
National Food Lunch Program, National School Breakfast
Program, Child and Adult Care Food Programs, Healthy Families,
McKinney-Vento Homeless Assistance Grants, Head Start, and
CalWORKS.
2)Establishes various federal, state and local education,
training and related workforce development programs that
provide basic education, skill assessment, employment
training, and job placement services to qualified individuals
and businesses including the Employment Training Panel,
California Workforce Investment Board, local workforce
investment boards, Jobs Services Program, Community Colleges,
and the K-12 school system.
3)Establishes the biennial California Economic Strategy Panel
(Panel), chaired by the Labor and Workforce Development Agency
(L&WD) Secretary, for the purpose of developing an overall
state economic vision and state economic development strategic
plan (Plan) that can guide public policy, including the
examination of the state's economic regions, industry
clusters, and cross-regional economic issues.
FISCAL EFFECT : According to the Senate Appropriations
Committee analysis, implementation of this bill would have no
cost to the General Fund. The bill provides that it will be
funded through private donations.
COMMENTS :
1)Author's purpose : Poverty threatens the state's economic
health by reducing the tax base, impeding the growth of an
educated workforce, and increasing costs for health care,
criminal justice, and social services programs. Currently, the
state dedicates significant resources to many programs aimed
at reducing poverty and increasing economic security among
residents. Yet, these programs are spread across many state
and county agencies, limiting coordination and overall
efficiency. SB 1084 would establish a task force with the
purpose of compiling an inventory of statewide antipoverty
programs and creating a comprehensive statewide plan to reduce
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poverty and increase economic security.
Any effort to improve the economic status of Californians
cannot just be focused on government programs alone.
Therefore, overcoming poverty requires the collaboration of
multiple sectors and stakeholders, including legislators,
public agencies, businesses, and nonprofit organizations all
of which will participate in the Task Force.
In addition, this bill does not require the state to fund the
Task Force or any of its operations. Instead, the Task Force
will be funded and will receive in-kind contributions from
philanthropic and private donors.
2)The California economy and the working poor : California is
one of the largest and most diversified economies in the world
with a state gross domestic product of over $1.8 trillion in
2008. The efforts of its 38 million people resulted in having
the eighth largest economy in the world, ahead of such
countries as Spain ($1.4 trillion), Canada ($1.3 trillion),
and Brazil ($1.3 trillion).
Historically, the state's businesses and workers have played
significant roles in the global marketplace. Some of
California's strongest economic qualities include its
strategic west coast location; its economically diverse
regional economies; its access to a wide variety of venture
and other private capital; its broad base of small- and
medium-sized businesses; its culture of innovation and
entrepreneurship; and its large, ethnically diverse
population, representing both a ready workforce and
significant consumer base.
The chart to the left, prepared by the California Employment
Development Department, provides detail on California's
largest industry sectors in 2008 including the total number of
jobs and percentage of state employment.
Businesses in this century face increasing challenges to
maintaining global and domestic competitiveness, including
providing a skilled workforce to support the changing needs of
business and maintaining cost-effective productivity in the
face of lower safety and wage standards in emerging foreign
markets.
Workers and communities are being affected from both the
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direct and indirect impact of loss of jobs and, in some
instances, the total shift of an industry sector out of
California, as in the 18,800 jobs at-risk with the closure of
NUMMI automotive assembly plant in May 2010.
In 2008, 14.6% of the population lived in a household with an
income below the federal poverty line of $22,000 a year. This
reflects a statistically significant increase from 2007 when
12.7% of Californians were reported to be living in poverty.
The chart to the left further illustrates the change in job
growth between certain industry sectors and the relevance of
those shifts to worker wage rates since the beginning of the
century.
Significant drops in consumer spending during the recession
have also led to greater workforce reductions and business
bankruptcies across the state. For much of 2009, the number
of unemployed workers rose 40,000 to 60,000 per month, and the
year ended with 2.25 million people officially identified as
unemployed (excludes those that have stopped looking for work,
among others). In May 2010 the seasonally adjusted state
unemployment rate was 12.4%, a slight improvement over April's
unemployment rate of 12.5%, but still representing 2.27
million unemployed California workers.
While some economists believe California may have emerged from
the recession, there is little disagreement among economic
forecasters that unemployment in the state is expected to
remain above double digits throughout 2010, 2011 and into the
first quarter of 2012. Jobs are expected to recover to their
pre-recession peak in the first half of 2013; however,
unemployment rates are likely to remain above 8% in the state
through much of 2014.
The recession has impacted and will likely continue to impact
most Californians for the next few years as unemployment and
related consumer spending result in a slow flat recovery.
Individuals and families living on combined household incomes
below $22,000, the federal poverty threshold, will have been
and will be especially hard hit in the coming years.
For perspective, consider that a person working full time at a
minimum wage job makes an annual gross income of less than
$17,000 a year. In 2008, of the 5.3 million Californians
living on incomes below the federal poverty line, over 80% of
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the family households had at least one member working a
portion of the year. This is why individuals living on
poverty level incomes are increasingly called the working
poor.
A Duke University study released in January 2010 projected
that 2.7 million children, or 27% of California's youth
population, are living in poverty. For children in Los
Angeles, the estimate is 35% of all children. Similar to the
estimates on the state's macro economy, the study estimates
that childhood poverty rates will peak in the next 12 months
and then slowly start to recede by 2012 (but remaining higher
than they were pre-recession).
3)Defining a framework for increasing self sufficiency in the
next economy : In defining the post-recession economy, think
tanks, such as the Brookings Metropolitan Policy Program,
encourage policy makers to recognize that coming out of the
recession does not mean a return to the past economic
structures. The post-recession economy, they say, will be
fundamentally different in four key ways. First, the next
economy will be led by metropolitan areas - not nations and
not states. The economy is expected to be more export
oriented and driven by new, lower-carbon energy sources.
Lastly, the post-recession economy will be based on a high
level of global innovation, which will require "a relentless
pace of innovation, adaptation, and embracement of new markets
and processes." California metropolitan areas must have the
ability to compete within a network of more sophisticated,
digitally linked, and globally-connected metropolitan
economies.
In designing the ways in which government can help to support
the post-recession economy, it may be important that the
framework include a process whereby those that currently live
in poverty have a clearer path toward self sufficiency.
Failing to address the growing number of individuals living
below federal poverty thresholds, especially children who will
be the leaders and workers of the future, could impair the
global competitiveness of the state's metropolitan areas as
resources continued to be diverted to the secondary impacts of
poverty, such as poor health outcomes, increased crime rates,
and an inadequately prepared workforce. Further, given the
greater importance of metropolitan areas and regions in the
state's overall global competitiveness, policy makers may need
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to develop strategies and provide resources to strengthen the
local capacity.
This bill, as proposed to be amended, would be the first to
comprehensively link poverty alleviation with workforce
development and entrepreneurship. [A similar public policy,
although more limited in scope, was pursued in AB 2004 (Beall)
as it applies to the use of Department of Social Services
moneys and workforce training.] SB 1084 calls for a Task
Force to develop a specific set of recommendations to move
individuals and families out of poverty and toward self
sufficiency.
In moving forward in the new community development-based self
sufficiency paradigm, the state would be working in tandem
with changes in the private sector. As an example, the
financial sector has already begun to shift some of its
investments toward products and companies that provide triple
bottom line benefits (economic, social, and environmental).
This move among investors is not because they have become
philanthropic organizations; rather new research has
empirically demonstrated that fundamental interconnections
between people, business, and the environment can lead to
wealth creation. The nation's two largest public pension
funds, the California Public Employees Retirement System and
the California State Teachers Retirement System, both have
targeted investment policies for historically financially
underserved areas, representing hundreds of millions of
dollars in annual new investments. The state can play an
important role in setting policies and supporting programs
that lead to greater private sector investment in poor
communities and increasing access to education and training
that can lead to greater individual self sufficiency.
The persistent poverty in many metropolitan regions and the
growing number of working poor challenge traditional models of
community development. SB 1084 proposes a new path guided by
the goal of self sufficiency and designed to provide lasting
benefits for all Californians.
4)Moving toward self sufficiency : Sometimes definitions can
stand in the way of good public policy. In this case, the
federal definition of poverty, used by a broad variety of
public programs, routinely underestimates the number of
individuals and families who live on incomes that are clearly
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insufficient to cover minimal costs of survival. The federal
formula is based on a 1963 methodology used by the U.S. Census
to determine the cost of a "minimal food diet" multiplied by
three. This methodology grew out of a 1950's notion that a
typical household spends approximately one-third of the
household income on food.
Moving forward to our modern day, it is likely that many
families spend more than one-third of their monthly income on
food, especially in the case of lower income households.
Underestimations of what constitutes "poverty" hinder policy
makers' ability to grasp the depth and breadth of the income
gap in California, which then limits the ability of policy
makers to propose realistic steps to alleviate poverty and
maximize human resources.
SB 1084, as proposed to be amended, addresses this issue by
setting a target that moves beyond the issue of poverty and
looks towards a goal of self sufficiency. A key tool
identified in the bill is the California Family Economic
Self-Sufficiency Standard Index and the California Elder
Economic Security Standard Index. These indices measure how
much income is actually needed, on a per-county level, for an
individual and family to adequately meet its minimal basic
needs. The index builds on a more comprehensive, locally
relevant, set of costs including the cost of housing, food,
child care, out-of-pocket medical expenses, and
transportation, among others.
As a comparison, the federal poverty limits exclusively use
food costs as a determinant of whether household income is
sufficient and does not include the other elements contained
in the California indices described above. Federal poverty
limits are also nationally based; only Hawaii and Alaska have
their own poverty limits. Clearly, it does not cost the same
to live in California as Iowa, nor are the minimal living
costs the same in San Francisco as in Calexico. SB 1084
proposes the state use the more refined set of data from the
California indices in addressing the needs of people living in
lower income households and developing a set of
recommendations to move them out of poverty, including actions
related to employment development and entrepreneurship.
5)Potential impact of the Task Force : When new task forces
and/or commissions are recommended, there is sometimes a
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concern that the expected outcomes are unclear and the
measurement of success has not been defined. This is not a
concern with SB 1084.
SB 1084 sets a clear goal of reducing poverty in California by
50% by 2020 and requires the recommendations put forward be
politically viable, fiscally responsible, contain an
implementation strategy, a cost/savings estimate, and a
quantification of the number of individuals that would
benefit.
Practical examples of what could be an outcome from the bill
would be a recommendation on how the state can better assist
currently qualified individuals to access $3.7 million in food
stamps, schools to receive $600 million to provide hot lunches
and breakfasts to currently eligible students, or $500 million
to currently eligible low-income families from the federal
Earned Income Tax Credits. Another recommendation could
address barriers faced by youth from lower income households
to prepare for and attend institutions of higher education and
workplace training programs, as well as gaining the skills
necessary to start and be successful in their own business.
6)Potential amendments : Staff understands the author will be
offering a number of amendments to clarify the purpose of the
measure. Among other items, the amendments:
a) Add legislative intent relating to state poverty and
goal to reduce current poverty rates by 50%.
b) Clarify that only the Legislative members may send
designees.
c) Revises the process for establishing the chairperson of
the Task Force.
d) Adds the Secretary of Labor and Workforce Development
Agency as an advisor to the Task Force.
e) Expands the types of materials to be considered while
developing the recommendations including materials related
to workforce development and entrepreneurship.
f) Requires state departments to provide information to the
Task Force in electronic form, to the extent it is
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available.
g) Expands the mandatory elements of the reports to include
each recommendation's impact on regional economies.
h) Expands the types of information to be included in the
inventory of programs by requiring information on how the
poverty alleviation and self sufficiency programs link to
create a cost effective and comprehensive network and how
each of the programs measures success.
i) Limits Task Force member reimbursements to actual travel
expenses.
j) Makes other related and conforming changes.
7)Related legislation and other legislative actions : The
following is a list of bills that passed in a prior session or
were introduced in this session.
a) AB 56 (Ma) - Secretary to End Poverty : This bill would
have created a cabinet-level Secretary to End Poverty who
had the responsibility to review all anti-poverty programs
within the state and determine whether or not they were
operating in an efficient and effective manner. Status:
The bill was held in Assembly Appropriations Committee in
2007-08 Legislative Session.
b) AB 690 (Jones) - 2007 Child Poverty Reduction Goal :
This bill would have declared that it is the goal of the
Legislature to reduce childhood poverty by one half by
January 1, 2018 and to eliminate it entirely by January 1,
2028. The bill would have required the Department of
Finance to report, as part of the annual budget process, on
how the Governor's Budget proposal would impact the state's
goal of reducing childhood poverty and required the
Legislative Analyst to analyze the report. Status: The
bill was held in Senate Appropriations Committee in 2007-08
Legislative Session.
c) AB 1118 (Jones) - California Child Poverty Council :
This bill would have created the California Child Poverty
Council for the purpose of developing a comprehensive plan
for reducing child poverty in California by 50% by January
1, 2017 and eliminate it completely by January 1, 2027.
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Status: The bill was held in Assembly Appropriations
Committee in 2007-08 Legislative Session.
d) AB 2004 (Beall) - Social Services Funds to Support
Workforce Training : The bill would have instructed the
Department of Social Services to provide guidelines to the
counties on how they may spend the $1.2 billion in federal
relief that had not yet gone out to the counties.
Requirements for the funds were limited to reductions in
CalWorks caseload. The bill proposed training joint powers
agencies for small counties, providing technical
assistance, and supporting youth programs with the funds
which were not counted against the parents CalWorks grant.
Status: The bill was held in Assembly Appropriations
Committee in 2009-10 Legislative Session.
e) AB 2556 (Jones) - 2006 Child Poverty Reduction Goal :
This bill would have declared that there is a legislative
goal to eliminate child poverty by January 1, 2026 and
required the Department of Finance and the Legislative
Analysts to report on the impact of the Governor's proposed
budget on the goal of reducing child poverty. Status: The
bill was vetoed by the Governor in the 2005-06 Legislative
Session.
f) SJR 15 (Alarc?n) - Revise Calculation of Federal Poverty
Levels : This resolution memorialized the President and
Congress to establish a better calculation for determining
the federal poverty level. The new model was required to
be built upon existing models which better
reflect geographic costs of housing, child care, health
care and transportation. Status: The resolution was
adopted in the 2009-10 Legislative Session.
8)Double Referral : The Assembly Committee on Rules has referred
this measure to both the Assembly Committee on Jobs, Economic
Development and the Economy and the Assembly Human Services
Committee (HS). Should this measure pass JEDE, it will be
referred to HS for further policy consideration.
REGISTERED SUPPORT / OPPOSITION :
Support
California Welfare Directors Association (joint sponsor)
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Insight Center for Community Economic Development (joint
sponsor)
Western Center on Law and Poverty (joint sponsor)
The Women's Foundation of California (joint sponsor)
American Academy of Pediatrics-California
Asset Building Strategies
Aging Services of California
Board of Supervisors - County of Sacramento
Board of Supervisors - County of San Luis Obispo
Board of Supervisors- County of Yolo
Butte County Department of Social Services
California Alliance for Retired Americans
California Church IMPACT
California Partnership
California Small Business Association
California State Association of Counties
California/Nevada Community Action Partnership
Catholic Charities of California United
Center on Policy Initiatives
Central California Area Social Service Consortium
Children's Defense Fund - California
City Council of San Luis Obispo
Community Coalition
Congress of California Seniors
Chair of Contra County Board of Supervisors, John Gioia
First 5 San Luis Obispo County
Food Bank Coalition of San Luis Obispo County
Fremont Family Resource Center
Grassroots Leadership Network of Marin
Jericho
Jewish Family Service
La Hermandad Hank Lacayo Youth & Family Center
Long Beach Community Action Partnership
Lutheran Office of Public Policy - California
MomsRising
National Association of Social Workers-California
National Senior Citizens Law Center
Parent Voices
Riverside County Department of Public Social Services
San Luis Obispo County Department of Social Services
Santa Barbara County Department of Social Services
Santa Barbara Women's Political Committee
Senior Community Centers
Stanislaus County Community Services Agency
St. Mary's Center
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United Way of California
United Way of the Bay Area
Wider Opportunities for Women
Women at Work
Women's Initiative - East Bay
Women's Initiative - North Bay
Women's Initiative - Silicon Valley
Opposition
None received
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090