BILL ANALYSIS Ó
AB 1182
Page 1
ASSEMBLY THIRD READING
AB 1182 (Roger Hernández)
As Introduced February 18, 2011
Majority vote
HUMAN SERVICES 4-2 APPROPRIATIONS 11-6
-----------------------------------------------------------------
|Ayes:|Beall, Ammiano, Hall, |Ayes:|Fuentes, Blumenfield, |
| |Portantino | |Bradford, Charles |
| | | |Calderon, Campos, Davis, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Jones, Grove |Nays:|Harkey, Donnelly, Gatto, |
| | | |Nielsen, Norby, Wagner |
-----------------------------------------------------------------
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
(CalWORKs) program.
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 : According to the Assembly Appropriations
Committee,
AB 1182
Page 2
1)On-going savings in the CalWORKs program of $4 million
(TANF/MOE) per year.
a) Grant cost of $800,000 (TANF/MOE) for 2011-2012,
increasing to $5.7 million (TANF/MOE) in 2012-13 onward due
to an increased CalWORKs caseload.
b) Savings of $5 million (TANF/MOE) in 2011-2012, growing
to $9.7 million (TANF/MOE) in 2012-2013 and beyond due to
reduced administrative workload.
2)Actual administrative savings would likely be less as the
CalWORKs program has not received funding increases to keep
pace with actual operations costs since 2001. In addition,
county welfare departments have sustained hundreds of millions
of dollars of cuts over the last several years, including a
cut of $425 million to CalWORKs administration and services
for the coming year alone. However, reducing the workload
associated with CalWORKs eligibility could help relieve the
funding pressures faced by county welfare departments.
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
CalWORKs state eligibility rules by
eliminating the requirement that each family 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
AB 1182
Page 3
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."
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 : The vehicle test was
last increased 15 years ago. 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:
1) Twelve states exclude all vehicles owned by the
household.
2) Fifteen exclude at least one vehicle per household.
AB 1182
Page 4
3) 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.
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.
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.
Analysis Prepared by : Frances Chacon / HUM. S. / (916)
319-2089
FN: 0000554