BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1233|
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THIRD READING
Bill No: AB 1233
Author: Aroner (D)
Amended: 8/18/00 in Senate
Vote: 21
SENATE HEALTH & HUMAN SERV. COMMITTEE : 5-0, 7/5/00
AYES: Escutia, Figueroa, Mountjoy, Polanco, Vasconcellos
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : Not relevant
SUBJECT : CalWORKs program
SOURCE : County of Los Angeles
City and County of San Francisco
DIGEST : This bill clarifies current law to provide
counties the option of implementing wage-paying community
service programs.
ANALYSIS : Existing law:
1.Establishes the California Work Opportunity and
Responsibility to Kids Program (CalWORKs) which provides
cash grants and welfare-to-work services to families
whose incomes are not adequate to meet their basic needs.
2.Establishes participation mandates and a five-year
lifetime limit of cash assistance as a condition of
receiving assistance.
CONTINUED
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3.Requires that parents who have received assistance for
that 18 or 24 months after signing a welfare-to-work plan
meet her or his weekly participation mandate through
unsubsidized employment, community service, or a
combination of the two.
4.Specifies that community service must be performed in the
public or private nonprofit sector, provide participants
with job skills that lead to unsubsidized employment, and
comply with specified anti-displacement provisions.
5.Requires counties to develop community service plans that
identify unmet community needs, and entities responsible
for the community service job development, as well as
fiscal administration and case management services, and
supportive efforts.
6.Establishes grant-based on-the-job training as an
allowable work activity defined as employment or
on-the-job training, including community service, in
which the recipient's cash grant or the aid grant savings
resulting from employment is diverted to the employer as
a wage subsidy to offset the payment of wages to the
participant.
7.Establishes an "earned income disregard" for recipients
who obtain unsubsidized employment as a work incentive
through which the first $225 of earnings and 50 percent
of each additional dollar of earnings is disregarded when
determining a family's CalWORKs grant.
8.Requires that total grant payments do not exceed
specified maximum aid payments.
This bill:
1.Establishes that the "earned income disregard" does not
apply to wages funded by the diversion of a recipient's
cash grant or grant savings from employment.
2.Specifies that both the recipient's cash grant and the
aid grant savings resulting from employment can be
diverted as a wage subsidy to employers providing
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grant-based on-the-job training.
3.Requires that the total amount diverted does not exceed
the family's maximum aid payment.
4.Prohibits a county from assigning a participant to
grant-based on-the-job training unless and until the
participant has voluntarily agreed to participate by
executing a voluntary consent form, to be developed by
the State Department of Social Services.
Comments
In 1997, the Legislature implemented federal welfare reform
legislation by creating the California Work Opportunity and
Responsibility to Kids program (CalWORKs). This program
provides cash grants and welfare-to-work services to
indigent families whose incomes are not adequate to meet
their subsistence needs. CalWORKs establishes
participation mandates and a five-year lifetime limit of
cash assistance as a condition of receiving assistance. It
also requires that 18 or 24 months after receiving
assistance and signing a welfare-to-work plan, the majority
of parents meet their participation mandate (32 hours per
week in an allowable welfare-to-work activity), through
unsubsidized employment, community service, or a
combination of the two.
Community service employment is work performed by
recipients in the public or private nonprofit sector that
provides participants with job skills conducive to
obtaining unsubsidized employment and does not result in
the displacement of other employees. There are two broad
approaches to community service: workfare and wage-based
community service. Under workfare, recipients participate
in community service as a condition of receiving their
grant. Under wage-based community service, the recipient's
grant is diverted to an employer and paid as wages to the
recipient.
Currently, counties are required to develop community
service plans that identify unmet community needs. Also
counties must identify entities responsible for the
community service job development, fiscal administration
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and case management services, and supportive efforts.
Counties can adopt a workfare or a wage-based community
service model. Counties can divert a community service
participant's grant to an employer to be used to pay the
recipient's wages. However, according to the Legislative
Analyst, the provision of current law permitting counties
to divert grants to employers for the purpose of funding
wages for community service participants conflicts with
other statutory provisions and effectively precludes
counties from providing wage-based community service. This
section, specifically as it interacts with the "earned
income disregard", conflicts with statutory requirements
that specify that total grant payments shall not exceed
specified maximum aid payments.
This bill clarifies current law and provides the option of
wage-based community service . AB 1233 clarifies CalWORKs
law to provide counties the option to implement wage-paying
community service program. Specifically, this measure
establishes that the "earned income disregard" does not
apply to wages funded by the diversion of a recipient's
cash grant or grant savings from employment. This bill
further specifies that both the recipient's cash grant and
the aid grant savings can be diverted as a wage subsidy to
employers providing grant-based on-the-job training and
requires that the total amount diverted does not exceed the
family's maximum aid payment.
Outcomes of wage-based community service programs . At
least six states currently operate wage-based community
service programs. According to the Welfare Information
Network, research suggests that publicly-funded jobs, such
as wage-based community service, are effective in
increasing future earnings of participants. In addition,
the Manpower Research Demonstration Project has found that
the benefits to taxpayers provided by participants in paid
and unpaid work experience usually outweigh the cost of
running the programs.
The City and County of San Francisco currently operates the
Community Jobs Initiative, a wage-based community service
program for TANF clients with multiple barriers to
employment. The program serves clients who have been
unsuccessful in other employment and training activities,
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and who are unemployed when they reach their 24-month time
limit. The Community Jobs Initiative offers clients
minimum wage jobs designed to teach marketable skills and
to address their interests and needs. According to the
City of San Francisco, 90 percent of clients who completed
the program workshop were placed in community service jobs
and 96 percent of clients who completed their community
service job have successfully transitioned to unsubsidized
employment.
The Legislative Analyst notes that wage-based community
service results in more income for participating families.
Program participants experience an increase in their income
since they are eligible for the federal earned income tax
credit and receive additional food stamps because of a food
stamp program earned income disregard. However, they
experience a decrease in their earning directly from their
cash grant due to the Federal Employee Payroll Insurance
Contribution Act taxes. The Legislative Analyst estimates
that participants in wage-based community service will
experience a net income gain of $255 per month. According
to the Legislative Analyst, participants also benefit from
being able to report to prospective employers that they
have received wages rather than welfare grants. This
generates a more formal work history and could increase the
recipient's self esteem and confidence in seeking a job.
The Analyst notes that wage based community service
benefits the State. Specifically, the expenditure of funds
from the Earned Income Tax Credit increases sales tax
revenues. In addition, to the extent that wage-based
community service is more effective than workfare in
assisting clients to obtain unsubsidized employment, the
State will experience increased savings from reduced
welfare payments.
Community Service and Employment Law . Implementation of
community service within the CalWORKs program raises
substantive policy issues as well as technical issues.
According to a "guide" issued by the United States
Department of Labor (DOL), federal employment laws, such as
the Fair Labor Standards Act (FLSA), the Occupational
Safety and Health Act, unemployment insurance and
anti-discrimination laws may apply to welfare recipients
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participating in community service activities. DOL
concludes that if welfare recipients are considered
"employees", they are entitled to the protection provided
by federal employment laws. DOL states that "If welfare
recipients are employees under the FLSA's broad definition,
they must be compensated at the applicable minimum wage.
Welfare recipients would probably be considered employees
in many, if not most, of the work activities described in
the new welfare law [TANF]. Exceptions are most likely to
include individuals engaged in activities such as
vocational education, job search assistance, and secondary
school attendance, because these programs are not
ordinarily considered employment under the FLSA." This DOL
determination applies regardless of whether recipients are
receiving a wage or a grant in exchange for their work.
The State Department of Social Services wrote to counties
in December of 1999, "The FLSA applies to CalWORKs
employment activities such as unsubsidized and subsidized
employment where an individual is receiving a wage. The
overall FLSA issue and its impact and implications for the
CalWORKs program are under review by the Administration,
and the Department will provide counties with the results
of this review as soon as they are available."
If the FLSA is applicable to welfare recipients, as the DOL
guidance suggests and the Legislative Analyst concludes, it
could have an effect on the weekly CalWORKs participation
requirement, as it relates to community service, regardless
of whether community service is wage or grant based.
Cost of implementing a community service program . The cost
of developing or creating a community service work slot is
common to both the wage paying and the workfare approaches.
Similarly, under either program there will be a cost for
providing supervision, which the employer usually absorbs.
An optional cost for both programs is supportive services.
Wage-based community service, unlike workfare, requires
that employers contribute for Federal Insurance
Contribution Act taxes and workers' compensation insurance.
The costs for documenting or monitoring the number of
hours worked differs according to each model.
The Legislative Analyst states that wage-based community
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service, when compared to workfare, results in
substantially higher incomes for participants, increases
the flow of federal funds into California, and may provide
a better bridge to unsubsidized employment. The Analyst
recommends that wage-based community service models be
evaluated to measure their cost-effectiveness.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/18/00)
County of Los Angeles (co-source)
City and County of San Francisco (co-source)
CP:kb 8/16/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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