BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1182 (Hernandez)
Hearing Date: 08/25/2011 Amended: 08/22/2011
Consultant: Jolie Onodera Policy Vote: Human Services 4-3
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BILL SUMMARY: AB 1182 would exclude the value of a motor vehicle
from consideration when determining or redetermining CalWORKs
eligibility. This bill deletes existing requirements on county
welfare departments for assessing the value of a motor vehicle
for the purposes of CalWORKs eligibility.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Increased CalWORKs $885 $6,100 $9,600 General
caseload*
Federal**
Reduced county Potential significant future
savingsGeneral
administrative duties or cost savings in excess of
$5,000 Federal
annually
Increased Medi-Cal Potential costs in the low hundreds
ofGeneral
caseload*** thousands of dollars through 2013Federal
*Includes projected increase in grants, services, and child care
costs.
**To the extent the CalWORKs budget exceeds available TANF/MOE
funds, any increased costs above the base MOE requirement would
be funded with General Fund.
***Dependent upon the degree to which this population is already
served by the Medically Needy program, for which almost all are
likely eligible.
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STAFF COMMENTS: SUSPENSE FILE.
AB 1182 (Hernandez)
Page 1
This bill will incur state costs by removing an eligibility
requirement for CalWORKS, which will result in an increase of
CalWORKs cases and cash grants, services, and child care. This
bill will also result in savings over time by substantially
reducing the duties of county eligibility workers. Both the
potential costs and potential savings to the state hinge on the
deletion of the "Vehicle Asset Test" as a condition of CalWORKs
eligibility.
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 residence that the family lives in; and, 3) one
car with a fair-market value of $4,650. Existing law requires
county welfare departments to verify that families do not exceed
these asset limits (as well as meeting other eligibility
requirements) both when they initially apply for CalWORKs and
upon redetermination every six months while receiving CalWORKs
assistance to verify continued eligibility. This bill would
remove a motor vehicle's value from the conditions of
eligibility, while leaving the other asset requirements intact.
The cost of the likely increase in CalWORKs cases cannot be
known with certainty, because the data is limited and the actual
increase and grant amounts rely on multiple factors. Although
approximately 9,500 CalWORKs applications are denied annually
because a family's resources exceed the asset ceiling for the
program, this number does not represent the number of families
that would become newly eligible under this bill as the
available statewide information is not sufficiently
disaggregated to account for:
The number of distinct applicants. The data reflects all
denied applications, including applications filed by the
same families after being previously denied.
Families specifically denied for owning a vehicle worth
more than $4,650. The data reflects all excess resources,
including savings of more than $2,000. The data also
includes families who were denied for both possessing
excess resources and one or more additional disqualifiers.
In Los Angeles County, between March and October 2009, an
average of 11 cases per month were denied CalWORKs benefits
AB 1182 (Hernandez)
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solely for exceeding the vehicle asset limit, which represents
about 0.16 percent of the approximately 6,800 CalWORKs
applications denied monthly in that county. Since Los Angeles
County comprises approximately one third of the total CalWORKs
caseload in California, it is estimated that approximately 396
families annually could be newly eligible for CalWORKs under the
provisions of this bill. It is also assumed that in the absence
of the vehicle asset test, a small number of families will
remain eligible for CalWORKs who would have otherwise been
denied during their six-month eligibility redetermination.
It is possible that more families with motor vehicles worth more
than $4,650 will apply for CalWORKs than have previously because
of the recent increase in unemployment. Families that, in the
past few years, had the income to be able to afford a more
expensive car may have lost those income sources, and be
applying for CalWORKs. That number is unknown, but it should
be noted that CalWORKs applications are increasing and have
increased significantly in the past year.
Because an entire family is excluded from CalWORKs cash aid if
it is determined to have excess resources, the exact cost of the
new and retained families to CalWORKs is unknown. Cash grants
are determined by the size of the family and the county in which
the family resides. Based on the May Revision of the Governor's
Budget for 2011-12, the average CalWORKs grant is estimated at
$451 per month. Services and child care costs are based on the
percentage of cases that include an adult, the cost per case,
and utilization rates for each component. For 2011-12, 2012-13,
and ongoing, the estimated cost of providing the vehicle
exemption to applicants and recipients is $0.9 million, $6.1
million, and $9.6 million, respectively.
This bill may incur additional state costs to the degree that
the Medi-Cal caseload is increased as a result. Existing law
links Medi-Cal income and asset eligibility to CalWORKs
eligibility, providing that Medi-Cal asset ceilings can be no
more restrictive
than CalWORKs. By removing the vehicle asset test for CalWORKs,
it is also removed for Medi-Cal, which could result in newly
eligible Medi-Cal recipients. The increase, however, is
mitigated by the likelihood that the state is already providing
medical coverage to a portion of the newly eligible individuals
under the Medically Needy program. Individuals in the Medically
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Needy program do not receive cash assistance through CalWORKs,
but meet other low-income thresholds and/or other specified
requirements under federal law. The extent to which eligible
individuals are currently enrolled and accessing services in the
Medically Needy program, however, is unknown. Participation in
Medi-Cal for those who are eligible under CalWORKs is much
higher because applying to Medi-Cal occurs at the same time as
the CalWORKs application. Staff notes that effective January 1,
2014, the asset test in Medi-Cal will be eliminated for certain
groups under federal health care reform. As a result, costs for
additional Medi-Cal cases as a result of this bill would likely
be mitigated even further after December 2013.
This bill is likely to produce substantial long term savings due
to reduced county administrative duties. It is estimated that a
county eligibility worker spends approximately 15 to 30 minutes
per case on average determining the value of a vehicle. The
scope of this task varies by county, largely because some
counties use computers and others use an actual Kelley Blue Book
to review the specifications of a vehicle that determines its
value. This process, in either form, takes a substantial amount
of time considering that it must be completed for every CalWORKs
case both during initial determination and every six months
after. The administrative cost at redetermination is likely much
less time consuming to the extent that the family has the same
vehicle. At a cost of $60 per hour, the time saved per CalWORKs
case that involves the valuation of a vehicle at initial
application and redetermination would result in potential
savings of more than $5 million annually.
Counties receive a single allocation to administer their
CalWORKs programs. Currently, this work is underfunded, and
counties have sustained hundreds of millions of dollars in cuts
over the past several years. While this bill will save time and
reduce workload for county eligibility workers, the state will
only achieve actual savings if a county's single allocation is
further reduced. This action is unlikely given the recent
reductions county welfare departments have sustained over the
past several years, including the $375 million reduction to the
single allocation as approved by the Legislature for 2011-12.
This bill will, however, potentially result in substantial
future and indirect savings. The aggregate amount of time saved
by eligibility workers will be substantial and could result in
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fewer new eligibility workers being hired in the future, even as
the population increases. County savings could also be
redirected to increasing welfare-to-work programs, which have
been the most impacted by budget reductions, to increase
employment of CalWORKs recipients and move them off of aid more
quickly. Even in the short term, this bill could sufficiently
reduce county workload to allow these employees to be redirected
to providing employment services, resulting in transitioning
recipients to work more quickly, thereby potentially reducing
grant costs and time on aid, resulting in significant future
CalWORKs cost savings.
Prior Legislation. AB 1058 (Beall) 2010 was virtually identical
to this measure and was held on the Suspense File of this
Committee.