BILL ANALYSIS Ó
AB 1182
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Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Jim Beall Jr., Chair
AB 1182 (Roger Hernandez) - As Introduced: February 18, 2011
SUBJECT : CalWORKs: asset limits: vehicles
SUMMARY : Deletes the requirement that county welfare
departments assess the value of a vehicle when determining and
re-determining eligibility for applicants and recipients of
California Work Opportunity and Responsibility to Kids program
(CalWORKs). Specifically, this bill :
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:
1)$2,000 in savings and $3,000 for a family with a member age 60
or above;
2)One house that the family lives in;
3)One car with a value of $4,650 or less; and,
4)Savings and interests in restricted federally qualified
accounts for the purpose of saving for college, retirement,
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. Indeed, since 2001, counties have been underfunded
for their cost of doing business by $1.2 billion.
To accomplish this, this bill would modify the following
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CalWORKs state eligibility rules by
eliminating the requirement that each family have a vehicle
worth no more than $4,650.
Background : The Temporary Assistance for Needy Families (TANF)
was created by a 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;
3) Prevent out-of-wedlock pregnancies; and,
4) Encourage the formation of two-parent families.
Despite its overhaul in 1996, fifteen 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
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 1990s, 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
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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 or recipient may have a vehicle worth no more than
$4,650.
Asset Building for CalWORKs : According to the New America
Foundation, a think tank that advances policy initiatives such
as asset building for low-income families, "For families making
the difficult transition from welfare-to-work, developing assets
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.
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.
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."
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This bill would eliminate the vehicle asset test in its entirety
from consideration for eligibility into the CalWORKs program and
at annual redeterminations.
Case for eliminating the vehicle test :
1)The vehicle test was last increased 15 years ago.
Other states : According to the author, 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:
a) Twelve states exclude all vehicles owned by the
household;
b) Fifteen exclude at least one vehicle per household; and
c)Twenty have substantially increased the value of the vehicle
exclusion.
In comparison, California employs a much more restrictive
vehicle asset test. The author states that this policy
undermines a worker's ability to gain and maintain employment,
thereby encouraging continued reliance on public assistance.
1)Streamlining and program alignment
Counties administer the CalFresh, MediCal, and CalWORKs programs
and most, if not all, of those programs serve the same client.
Despite the obvious streamlining that could occur by
eliminating the vehicle test, it has remained a part of
CalWORKs eligibility.
2)Transportation is a primary barrier to employment
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." The
study found that welfare-to-work recipients without a vehicle
were 31% more likely to indicate that they face difficulty in
seeking work, while those with a vehicle were 20% more likely
to be gainfully employed.
Historical arguments against eliminating the vehicle test
While this legislation does not have any formal opposition, in
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the past, those who oppose the elimination of the vehicle test
do so based on perception. A frequent argument is that parking
lots of welfare offices contain expensive looking cars and that
the owners are defrauding taxpayers because if they can afford a
nice car then CalWORKs assistance is not needed. This argument
is not evidence-based. It is not possible to determine from
observation whether a car is owned by a CalWORKs applicant for
many reasons. It could be borrowed since many applicants do not
own one. Moreover, the Great Recession of 2007-09 was marked by
many middle-class layoffs, including families who owned cars
worth substantially more than the CalWORKs-allowed maximum of
$4,650. Many of these families applied to CalWORKs as they had
lost their jobs and were looking for income and employment
assistance to make ends meet. The requirement that they sell
their vehicle in order to receive assistance does not make
financial or public policy sense. Families would be required
to sell their vehicle and presumably purchase one worth less
than $4,650, which would be less reliable. Furthermore, the
loss of money already invested in a depreciating asset would be
another financial setback.
Related legislation :
AB 1058 (Beall), 2009-10 would have deleted the requirement that
county welfare departments assess the value of a vehicle when
determining a CalWORKs' application or recertification. Died in
Senate Appropriations suspense file.
AB 2368 (Fuentes), 2007-08 would have eliminated the vehicle
asset test for CalWORKs applicants and recipients. Died in the
Senate Appropriations suspense file.
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. Failed passage in the Assembly
Human Services Committee.
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), 2007-08 would have eliminated the CalWORKs asset
test for applicants and recipients. Died in the Senate
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Appropriations suspense file.
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.
REGISTERED SUPPORT / OPPOSITION :
Support
California Catholic Conference, Inc.
California Commission on the Status of Women
California Communities United Institute (CalComUI)
California State Association of Counties (CSAC)
Coalition of California Welfare Rights Organizations
County Welfare Directors Association
East Bay Community Law Center
New America Foundation
Urban Counties Caucus
Western Center on Law and Poverty
Opposition
None on file.
Analysis Prepared by : Frances Chacon / HUM. S. / (916)
319-2089