BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 2352 (Hernandez) - CalWORKs eligibility - asset limits:
vehicles.
Amended: As Introduced Policy Vote: Human Services 4-3
Urgency: No Mandate: Yes
Hearing Date: August 16, 2012
Consultant: Jolie Onodera
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: AB 2352 would exclude the value of a motor vehicle
from consideration as property 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.
Fiscal Impact:
Increased CalWORKs grants, services, child care, and
administrative costs potentially in the millions of dollars
(TANF/MOE) for increased CalWORKs caseload, both new as well
as existing cases that would have otherwise become
ineligible. 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.
Potentially significant state-reimbursable county
administrative workload costs to determine if a vehicle is
"essential for the employment of a family member" and to
monitor participants to ensure weekly mandatory work
participatory hours are met.
Potential increased costs to Medi-Cal in the low hundreds
of thousands of dollars (Federal/General) through 2013.
Background: 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 years or above; 2) one residence in which the family resides;
and, 3) one car with a fair-market value of $4,650.
Existing law requires county welfare departments to verify that
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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.
Proposed Law: This bill would delete the existing requirements
for assessing the value of a motor vehicle for purposes of
CalWORKs program eligibility.
Related Legislation: AB 1182 (Hernandez) 2011 was virtually
identical to this measure and was vetoed by the Governor with
the following message:
I am returning Assembly Bill 1182 without my signature. This
bill would allow a person applying for welfare to have one car,
or possibly more, of any value, rather than a maximum value of
$4,650 under current law.
In the last year, the state has been forced to make steep
reductions in many programs, including the state's
welfare-to-work program. As we go into the new year, we may have
to make additional cuts. Until we better understand the fiscal
outlook, we should not be making changes of this kind.
AB 1058 (Beall) 2010 was virtually identical to this measure and
was held on the Suspense File of this Committee.
AB 2368 (Fuentes) 2008 would have exempted motor vehicles from
assets that must be considered by county welfare departments
when determining a family's eligibility for CalWORKs. This bill
was held on the Suspense File of this Committee.
Staff Comments: 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.
The cost of the likely increase in CalWORKs cases cannot be
known with certainty, because the data is limited and the actual
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increase and grant amounts rely on multiple factors. Although
over 9,800 CalWORKs applications were denied in the past twelve
months ending March 2012 because a family's resources exceeded
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 following:
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 (LA) County, between July 2010 and June 2011, an
average of 23 cases per month were denied CalWORKs benefits
solely for exceeding the vehicle asset limit, which represents
about 0.45 percent of the approximately 5,200 CalWORKs
applications denied monthly in that county over the same period.
Since LA County comprises approximately one third of the total
CalWORKs caseload statewide, it is estimated that approximately
828 families annually could be newly eligible for CalWORKs under
the provisions of this bill. Additional data from LA County
indicates that approximately 17.7 percent (147 families) of the
of the previously denied applicants would have reapplied and
successfully been determined eligible after four months,
resulting in a lower estimated statewide annual CalWORKs
caseload increase of 681 families after accounting for those
cases that would have entered the program in the absence of the
removal of the vehicle asset test. It should be noted this
figure does not account for an estimated increase in CalWORKs
caseload associated with applicants who withdraw their
applications each month due to self-screening of excess
resources or those who currently do not apply for CalWORKs due
to the existence of the vehicle asset test. As a result, the
caseload impact is potentially larger, although the extent of
the increase is unknown but could likely more than offset the
17.7 percent adjustment noted above.
Data from March to June 2011 from LA County for CalWORKs
terminations reflects that families with a vehicle at any point
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in the history of the case stay on aid on average four months
less than terminated CalWORKs cases without a vehicle. It is
unknown at this time if the shorter length of time on aid is
representative of families moving to self sufficiency sooner due
to the use of a vehicle, as the reason for termination of the
cases with a vehicle is unknown and could potentially be due to
other causes such as program termination for excess resources
due to the vehicle asset limit. In this case, the four month
variance could be representative of the additional amount of
time existing recipients would stay on aid in the absence of the
vehicle asset test.
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 at their six-month
eligibility redetermination.
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 2012-13, the average CalWORKs grant is estimated at
$471 per month. Services and child care costs are based on the
percentage of cases that include an adult, the cost per case,
and estimated utilization rates for each component. For 2012-13,
2013-14, 2014-15, and ongoing, the estimated cost of providing
the vehicle exemption to applicants and recipients is $1.2
million, $8.0 million, $14.2 million, and $14.9 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 significant portion of the newly eligible
individuals under the Medically Needy program. Individuals in
the Medically Needy program do not receive cash assistance
through CalWORKs, but meet other low-income thresholds and/or
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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 workload. 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 while others use a 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 six months later at
redetermination. 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 $4 million to $8 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. County
single allocation funding was reduced for the CalWORKs program
by $376.9 million in TANF funds in 2009-10, 2010-11, and
2011-12.
This bill will, however, potentially result in substantial
future and indirect savings. The aggregate amount of time saved
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by eligibility workers will be substantial and could result in
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.
Proposed Author Amendments:
Deletes the provision excluding the value of a vehicle
from consideration as property when determining eligibility
and instead provides that the value of licensed vehicles be
based off of the Cost of Living Adjustment set forth by the
California Consumer Price Index for All Urban Consumers, as
published by the Department of Industrial Relations,
Division of Labor Statistics and Research, or its successor
index.
Provides that CaWORKs recipients and applicants are
permitted to retain a vehicle if it is essential for the
employment of a family member and if the weekly mandatory
work participatory hours are met.
Makes other technical changes.