Existing federal law provides for the allocation of federal funds through the federal Temporary Assistance for Needy Families (TANF) block grant program to eligible states. Existing law provides for the California Work Opportunity and Responsibility to Kids (CalWORKs) program under which, through a combination of state and county funds and federal funds received through the TANF program, each county provides cash assistance and other benefits to qualified low-income families. Existing law provides that a parent or caretaker relative shall not be eligible for CalWORKs aid when he or she has received aid for a cumulative total of 48 months. Under existing law, certain amounts are exempt from the calculation of income of the family for purposes of determining the amount of a grant under the CalWORKs program, including specified amounts of disability-based unearned income and earned income.

This bill would instead provide that a parent or caretaker relative shall not be eligible for CalWORKs aid when he or she has received aid for a cumulative total of 60 months. This bill would increase the amount of exempted disability-based unearned income and other earned income, as specified. The bill would also make other, conforming changes. By increasing county administrative duties relating to the CalWORKs program, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Existing law continuously appropriates moneys from the General Fund to defray a portion of county costs under the CalWORKs program.

This bill would instead provide that the continuous appropriation would not be made for purposes of implementing the bill.

Existing federal law provides for the allocation of federal funds through the federal Temporary Assistance for Needy Families (TANF) block grant program to eligible states. Existing law provides for the California Work Opportunity and Responsibility to Kids (CalWORKs) program under which, through a combination of state and county funds and federal funds received through the TANF program, each county provides cash assistance and other benefits to qualified low-income families. Existing law provides that a parent or caretaker relative shall not be eligible for CalWORKs aid when he or she has received aid for a cumulative total of 48 months. Under existing law, certain amounts are exempt from the calculation of income of the family for purposes of determining the amount of a grant under the CalWORKs program, including specified amounts of disability-based unearned income and earned income.

This bill would instead provide that a parent or caretaker relative shall not be eligible for CalWORKs aid when he or she has received aid for a cumulative total of 60 months. This bill would increase the amount of exempted disability-based unearned income and other earned income, as specified. The bill would also make other, conforming changes. By increasing county administrative duties relating to the CalWORKs program, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Existing law continuously appropriates moneys from the General Fund to defray a portion of county costs under the CalWORKs program.

This bill would instead provide that the continuous appropriation would not be made for purposes of implementing the bill.

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1742 (Mark Stone) - CalWORKs: eligibility

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 1742 would increase the amount of exempted income when calculating CalWORKS eligibility and benefit amounts, as specified.

Fiscal Impact:

• Significant costs of $141.6 million in fiscal year 2016-17 and ongoing costs of $281.6 million per year due to increased caseload and associated grant and supportive service costs. (TANF/GF)
• An estimated $3.6 million in fiscal year 2016-17 and $12.6 million in fiscal year 2017-18 in additional grant amounts to accommodate for statutory minimum wage increases. (see Staff Comments)
• One-time costs of $0.8 million for sending mailers to each CalWORKs household and eligibility workers contacting safety net cases informing CalWORKs recipients of changes to eligibility associated with the bill.
• Approximately $1 million in costs to the Department of Social Services (DSS) for automation changes to the Statewide Automated Welfare System

Background:

According to the national Supplemental Poverty Measure, just under a quarter of Californians are living at or under the federal poverty level (FPL). The CalWORKs program, which implements the federal TANF program, is a welfare program that gives cash aid and employment-related services to eligible California families. The average monthly cash grant for a family of three on CalWORKs (one parent and two children) for 2016-17 is $497.35 and the maximum monthly grant if the family has no other income and lives in a high-cost county is $704. According to recent data from DSS, approximately 497,000 families rely on CalWORKs.

The Earned Income Disregard (EID) is the amount subtracted from a CalWORKs recipients’ income to determine eligibility for assistance and monthly grant amounts. Assistance grants are calculated based on household size and income, some of which is not counted per the EID. In 2011, the Legislature enacted a number of cuts to the state’s safety net programs, including CalWORKs grant reductions and reductions in EID. SB 72 (Budget and Fiscal Review Committee, Chapter 8, Statutes of 2011) reduced the EID from $225 to $112 plus 50% of the remaining earned income. The following year, SB 1041 (Budget and Fiscal Review Committee, Chapter 47, Statutes of 2012) restored the EID to the first $225 plus 50% of remaining countable income.

Under current law, the first $225 of an adult CalWORKs gross income is disregarded from CalWORKs grant calculations, then 50% of the remaining income is disregarded. The other 50% directly reduces the grant amount that the recipient would otherwise receive. For example, a recipient with a monthly income of $800 will have the first $225 disregarded, leaving $575. Another 50% ($287.50) will be disregarded from that amount, leaving $287.50 in countable income subtracted from the Maximum Aid Payment.

Based on the FFY 2013 Research and Development Enterprise Project (RADEP) sample data, approximately 4.7% of the CalWORKs caseload left aid due to exceeding the CalWORKs earned/disability-based income limit and would have remained eligible due to an increase in EID.

Proposed Law:

This bill would increase the income disregarded when calculating CalWORKs eligibility and aid amounts from $225 plus 50% of the remaining earned income to $450 plus 70% of the remaining earned income, as specified.

Related Legislation:

SB 3 (Leno, Chapter 4, Statutes of 2016) increases the state’s minimum wage year-over-year reaching $15 per hour in 2023.

Staff Comments:

The new minimum wage has the potential to impact the amount of aid that families receive from CalWORKs; however increasing the EID would allow more recipients to remain eligible and would allow recipients to keep more of their earnings before the CalWORKs grant is reduced based on the increased income. According to DSS, the minimum wage increase to $10.50 per hour on January 1, 2017, would potentially decrease the number of CalWORKs recipients who are no longer eligible for CalWORKs benefits from 2,036 to 458. Similarly, the minimum wage increase to $11 per hour starting January 1, 2018 would result in a decrease from 2,035 to 259.

-- END --

SENATE COMMITTEE ON HUMAN SERVICES

Senator McGuire, Chair

2015 - 2016 Regular

Bill No: AB 1742

Subject: CalWORKs: eligibility

SUMMARY

This bill increases the amount of exempted disability-based unearned income and other earned income in calculating CalWORKs eligibility and benefit amounts, as specified.

ABSTRACT

Existing law:

1. Establishes the federal Temporary Assistance for Needy Families (TANF) program, which permits states to implement the program under a state plan. (42 USC § 601 et seq.)
2. Establishes in state law the CalWORKs program to provide cash assistance and other social services for low-income families through the federal TANF program. Under CalWORKs, each county provides assistance through a combination of state, county and federal TANF funds. (WIC 10530)
3. Establishes income, asset and real property limits used to determine eligibility for the program, including net income below the Maximum Aid Payment (MAP), based on family size and county of residence, which is around 40 percent of the Federal Poverty Level. (WIC 11150 to 11160, 11450 et seq.)
4. Exempts the following when calculating a family’s income for the purpose of determining CalWORKs eligibility. If the family’s disability-based unearned income does not exceed $225, both of the following amounts are exempt:
   1. All disability-based unearned income, plus any amount of not otherwise exempt earned income equal to the amount of the difference between the amount of disability-based unearned income and $225
   2. Fifty percent of all not otherwise exempt earned income in excess of the amount applied to the difference between the amount of disability-based income and $225.

If the family's disability-based unearned income exceeds $225, both of the following amounts are exempt:

• 1. All of the first $225 in disability-based unearned income.
  2. Fifty percent of all earned income. (WIC 11451.5 (a))

1. Defines earned income as gross income received as wages, salary, employer-provided sick leave benefits, commissions, or profits from activities such as a business enterprise or farming in which the recipient is engaged as a self-employed individual or as an employee. (WIC 11451.5 (b)(1))
2. Defines disability-based unearned income, within the CalWORKs program, to include state disability insurance benefits, private disability insurance benefits, temporary workers' compensation benefits, social security disability benefits, and any veteran’s disability compensation. (WIC 11451.5 (b)(2))
3. Defines unearned income to mean any income not described in WIC 11451.5 (b)(1) or (b)(2). (WIC 11451.5 (b) (3))

This bill:

1. Increases the income disregarded when calculating CalWORKs eligibility and aid amounts from $225 plus 50% of the remaining earned income to $450 and 70% of the remaining earned income, as specified.

FISCAL IMPACT

According to the Assembly Appropriations Committee, this bill may result in an estimated overall cost of approximately $151 million ($7.8 million General Fund) in Fiscal Year (FY) 2016-17 and approximately $292.9 million ($15.8 million General Fund) in FY 2017-18 and $287.4 million ($15.7 million General Fund) on-going, based on an average monthly CalWORKs caseload of just under 500,000.

There also likely will be automation costs in the hundreds of thousands of dollars to the California Department of Social Services (CDSS) resulting from required changes to the Statewide Automated Welfare System.

BACKGROUND AND DISCUSSION

Purpose of the bill:

According to the author, while California as a whole has recovered from the Great Recession, the recovery has been uneven, and many impoverished Californians continue to struggle. According to the Public Policy Institute of California, the 2014 post-recession poverty rate in the state was 16.4 percent, a 4 percent increase from the prerecession levels of 2007. The author states that poverty, particularly childhood poverty, results in a variety of negative short- and long-term outcomes for families. It is in the state's interest to pursue a multi-pronged approach to reduce poverty amongst Californians and an EID increase is a necessary strategy to pursue in the fight against poverty, per the author.

Poverty

California has the highest poverty rate in the nation – just under one-quarter of residents are living at or below the federal poverty level (FPL) according to the national Supplemental Poverty Measure. According to California Public Policy Institute,^[1] 23.9% of California’s children were living in poverty in 2013. These families earn no more than $20,160 per year for a family of three. During and after the Great Recession, California saw growing rates of childhood deep poverty – those living below 50 percent of the federal poverty line.

Recovery from the recession has been unequally distributed, with Black and Latino communities living in poverty at higher rates than the total state population. In addition, 78 percent of impoverished families have an adult working full time, indicating that having a job does not ensure economic security.

CalWORKs

CalWORKs implements the federal TANF program in California.  CDSS is charged with program supervision at the state level.  The counties are responsible for administering the caseloads at the local level.  The CalWORKs program is funded with a mix of federal, state and county funds. According to data from CDSS, around 497,000 families rely on CAlWORKs, including more than one million children.  Nearly 60 percent of CalWORKs cases include children under 6 years of age.  

CalWORKs seeks to address poverty through an array of services designed to assist families in various states of need and to address the facets of need for each family. CalWORKs provides temporary cash assistance to help qualified low income families meet their basic needs, such as rent, clothing, utility bills, food and other items needed to ensure children are cared for at home and safely remain with their families.  In addition to cash assistance, CalWORKs provides education, employment and training programs for adult CalWORKs recipients that are designed to help remove barriers to work.  

State law provides for a cumulative 48-month lifetime limit on CalWORKs cash aid for adults.  During those 48 months, adults may receive a total of 24 months of Welfare-to-Work (WTW) services, which are provided to help adult CalWORKs recipients address issues that may prevent or make it difficult to obtain employment.  These WTW activities include subsidized and unsubsidized employment, community service, adult basic education, job skills, training, mental health counseling, substance abuse treatment and other activities necessary to assist recipients in obtaining employment. Once the 24 months of WTW activities have been exhausted, adults must meet stricter federal work participation requirements that may include increased weekly hours and participation in fewer qualifying activities.  For example, substance abuse treatment is not a qualifying activity under the federal requirements. 

Children of adults who exhaust the 48-month lifetime limit may continue to receive cash aid, if otherwise eligible, until they reach 18 years of age. However, if an adult CalWORKs recipient who is not exempt from participation does not meet his or her welfare-to-work requirements, the adult recipient is sanctioned for noncompliance, and that recipient’s portion of the family's grant subtracted from the amount provided to the family to meet basic needs.

Earned Income Disregard (EID)

The EID is the amount subtracted from a CalWORKs recipients’ income in order to determine eligibility for assistance and monthly grant amounts. Assistance grants are calculated based on household size and income, and, per the EID, some income is not counted for this purpose. The EID allows working adults' to work more hours and seek higher wages without offsetting the grant amount they could otherwise receive without any income.

During the Great Recession, the Legislature enacted a number of cuts to the state's safety net programs, including CalWORKs grant reductions and reductions in the EID. SB 72 (Budget and Fiscal Review Committee, Chapter 8, Statutes of 2011) reduced the EID from $225 to $112 plus 50 percent of the remaining earned income, causing more of a family's monthly income to count against the maximum grant amount and thereby reducing a family's total monthly income. A year later, when other changes were enacted within the CalWORKs program, the EID was restored to the first $225 and 50 percent of remaining countable income.

Under current law, $225 is disregarded (subtracted) from an adult CalWORKs recipient’s gross income. Then, 50 percent of the remaining income is disregarded (subtracted). The remaining 50 percent is subtracted from the Maximum Aid Payment, which determines the recipients’ actual monthly grant amount.

CalWORKs Family of Three (one adult and two children)

Region 1^[2] Region 2^[3]

Gross Earned Income $ 800 $800

EID - 225 - 225

Subtotal 575 575

Less 50% - 287.50 - 287.50

Total Countable Income $ 287.50 $ 287.50

Maximum Aid Payment $ 704 $ 670

Total Countable Income -287.50 - 287.50

Monthly Grant Amount $416.50 $ 382.50

As shown above, the maximum monthly grant for a family of three, if the family has no other income and resides in a high cost county, is $704. The maximum grant for the same family living in Region 2 would receive $670. However, the average monthly cash grant for a family of three on CalWORKs (one parent and two children) is $497.35. The difference between the maximum cash grant and the average cash grant is due to the fact that grant amounts are reduced per the EID. The EID facilitates and encourages paid employment by allowing a certain amount of income to be retained and excluded from grant calculations.

Related legislation:

AB 371 (Mullin, Statutes of 2015) would have streamlined California Work Opportunity and Responsibility to Kids (CalWORKs) eligibility standards for two-parent families, as specified. The bill was vetoed by the Governor.

AB 1094 (Brown, Chapter 554, Statutes of 2013) expanded the definition of disability-based unearned income to include veteran’s disability compensation for purposes of the income disregard under CalWORKs.

COMMENTS

Per SB 3 (Leno, Chapter 4, Statutes of 2016), the state’s minimum wage is scheduled to increase year-over-year topping out at $15 per hour in 2023. The new minimum wage has the potential to seriously impact the amount of aid that families receive from CalWORKs, meaning that they would receive less support on their way to exiting poverty. Increasing the EID would allow recipients to keep more of their earnings before the CalWORKs grant is reduced based on the increased income.

PRIOR VOTES

POSITIONS

Support:

Western Center on Law and Poverty (co-sponsor)

Coalition of California Welfare Rights Organizations (co-sponsor)

Alameda County Board of Supervisors

American Heart Association/American Stroke Association

California Alternative Payment Program Association

California Association of Food Banks

California Catholic Conference

California Food Policy Advocates

California Immigrant Policy Center

Children’s Defense Fund

City and County of San Francisco

County Welfare Directors Association

Courage Campaign

Feeding America San Diego

Hunger Action Los Angeles

iFoster

National Association of Social Workers

Santa Clara County Board of Supervisors

St Anthony’s Foundation

The Ella Baker Center

1 individual

Oppose:

None.

-- END --

1. http://www.ppic.org/main/publication_show.asp?i=261 ↑

2. Region 1 Counties: Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma and Ventura. ↑

3. Region 2 Counties: Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Fresno, Glenn, Humboldt, Imperial, Inyo, Kern, Kings, Lake, Lassen, Madera, Mariposa, Mendocino, Merced, Modoc, Mono, Nevada, Placer, Plumas, Riverside, Sacramento, San Benito, San Bernardino, San Joaquin, Shasta, Sierra, Siskiyou, Stanislaus, Sutter, Tehama, Trinity, Tulare, Tuolumne, Yolo and Yuba ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 1742

Author:(Mark Stone)

As Amended Ver:May 31, 2016

Majority vote

SUMMARY: Increases the CalWORKs earned income disregard to support employment. Specifically, this bill:

1. Increases the amount of income disregarded when calculating CalWORKs eligibility and aid amounts from $225 plus 50% of the remaining earned income to $450 and 70% of the remaining earned income, as specified.
2. Provides that no appropriation shall be made to implement the provisions of this bill.

EXISTING LAW:

1. Establishes under federal law the Temporary Assistance for Needy Families (TANF) program to provide aid and welfare-to-work services to eligible families and, in California, provides that TANF funds for welfare-to-work services are administered through the CalWORKs program. (42 United States Code 601 et seq., Welfare and Institutions Code Section (WIC) 11200 et seq.)
2. Establishes income, asset and real property limits used to determine eligibility for the program, including net income below the Maximum Aid Payment (MAP), based on family size and county of residence, which is around 40% of the Federal Poverty Level. (WIC 11150 to 11160, 11450 et seq.)
3. Defines disability-based unearned income, within the CalWORKs program, as state disability insurance benefits, private disability insurance benefits, temporary workers' compensation benefits, social security disability benefits, and any veteran’s disability compensation. (WIC 11451.5)
4. Defines earned income as gross income received as wages, salary, employer-provided sick leave benefits, commissions, or profits from activities such as a business enterprise or farming in which the recipient is engaged as a self-employed individual or as an employee. (WIC 11451.5)
5. Exempts the following when calculating a family’s income for the purpose of determining CalWORKs eligibility:

If the family’s disability-based unearned income does not exceed $225

1. All disability-based unearned income, plus any amount of not otherwise exempt earned income equal to the amount of the difference between the amount of disability-based unearned income and $225.
2. Fifty percent of all not otherwise exempt earned income in excess of the amount applied to the difference between the amount of disability-based income and $225.

If the family's disability-based unearned income exceeds $225

1. All of the first $225 in disability-based unearned income.
2. Fifty percent of all earned income. (WIC 11451.5)

FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill may result in the following costs:

1. Estimated overall total cost of approximately $151 million ($7.8 million General Fund) in Fiscal Year (FY) 2016-17 and approximately $292.9 million ($15.8 million General Fund) in FY 2017-18 and $287.4 million ($15.7 million General Fund) on-going, based on an average monthly CalWORKs caseload of just under 500,000.
2. Automation costs in the hundreds of thousands of dollars to the Department of Social Services resulting from required changes to the Statewide Automated Welfare System.

COMMENTS:

CalWORKs: The CalWORKs program provides monthly income assistance and employment-related services aimed at moving children out of poverty and helping families meet basic needs. Federal funding for CalWORKs comes from the TANF block grant. The average 2016-17 monthly cash grant for a family of three on CalWORKs (one parent and two children) is $497.35, and the maximum monthly grant amount for a family of three, if the family has no other income and lives in a high-cost county, is $704. According to recent data from the California Department of Social Services, around 497,000 families rely on CalWORKs, including over one million children. Nearly 60% of cases include children under 6 years old.

Maximum grant amounts in high-cost counties of $704 per month for a family of three, with no other income, means $23.46 per day, per family, or $7.82 per family member, per day to meet basic needs, including rent, clothing, utility bills, food, and anything else a family needs to ensure children can be cared for at home and safely remain with their families. This grant amount puts the annual household income at $8,448 per year, or 42% of poverty. Federal Poverty Guidelines for 2016 show that 100% of poverty for a family of three is $20,160 per year.

Earned Income Disregard (EID): While the maximum CalWORKs grant amounts for high-cost counties and low-cost counties are $704 and $670, respectively, the average monthly grant amount across the state is much lower at $497 per month, as it reflects a reduction in the maximum grant due to other income in a recipient family's household. By allowing a certain amount of income to be retained and excluded from grant calculations, the EID plays a major role in facilitating and encouraging paid employment.

Among adults who are living with their families in poverty and applying for CalWORKs assistance due to unemployment or underemployment, the EID also facilitates working adults' ability to work more hours and seek higher wages that don't fully offset the grant amount they could otherwise receive without any income. Under current law, the first $225 of an adult recipient's gross earned income is disregarded from CalWORKs grant calculations, then 50% of the remaining income is disregarded, with the other 50% constituting the first portion of what would otherwise be the recipient’s grant amount based on the maximum amount allowed. For example, a recipient with a monthly income of $700 will have the first $225 disregarded, leaving $475 from which another 50% will be disregarded. This will leave $237.50 in income that will be counted when calculating the family’s grant amount; the grant amount in a high-cost county would be $466.50 ($704 - $237.50), and the grant in a low-cost county would be $432.50 ($670 - $237.50).

Need for this bill: During the Great Recession, the Legislature enacted a number of cuts to the state's safety net programs, including CalWORKs grant reductions and reductions in the EID. The 2011 Human Services Budget Trailer Bill, SB 72 (Budget and Fiscal Review Committee), Chapter 8, Statutes of 2011, reduced the EID to $112 plus 50% of the remaining earned income, causing more of a family's monthly income to count against the maximum grant amount and thereby reducing a family's total monthly income. A year later, when numerous other changes were enacted within the CalWORKs program, the EID was restored to the first $225 and 50% of remaining countable income. The author of this bill is seeking to continue the trend of increasing the EID in order to facilitate families’ ability to increase earnings and build financial stability as they participate in education programs and transition to work.

The author states: "According to the Federal Supplemental Poverty Measure, nearly a quarter of Californians live in poverty. While California as a whole has recovered from the Great Recession, the recovery has been uneven, and many impoverished Californians continue to struggle. According to the Public Policy Institute of California, the 2014 post-recession poverty rate in the state was 16.4%, a 4% increase from the prerecession levels of 2007. Poverty, particularly childhood poverty, results in a variety of negative short- and long-term outcomes for families. It is in the state's interest to pursue a multi-pronged approach to reduce poverty amongst Californians. An EID increase is a necessary strategy to pursue in the fight against poverty."

Analysis Prepared by: Daphne Hunt / HUM. S. / (916) 319-2089 FN: 0003310

Date of Hearing: April 27, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1742

Author:(Mark Stone) – As Introduced Ver:February 1, 2016

Urgency: No State Mandated Local Program: Yes Reimbursable: Yes

SUMMARY: This bill increases the time limit for cash aid to adults through the California Work Opportunity and Responsibility to Kids (CalWORKs) program from 48 months to 60 months and increases the CalWORKs earned income disregard (EID). Specifically, this bill:

1. Increases the time limit on aid for CalWORKs recipient parents and caretaker relatives from a cumulative total of 48 months to 60 months, thereby aligning with federal time limits for the federal Temporary Assistance for Needy Families (TANF) program.
2. Increases the amount of income disregarded when calculating CalWORKs eligibility and aid amounts from $225 plus 50% of the remaining earned income to $450 and 70% of the remaining earned income, as specified.
   

FISCAL EFFECT:

1. Estimated overall total cost of approximately $264.9 million ($13.7 million GF) in FY 2016-17 and approximately $513.9 million ($27.8 million GF) in FY 2017-18 and $504.2 million ($27.6 million GF) on-going, based on an average monthly CalWORKs caseload of just under 500,000. Increasing the time limit to 60 months accounts for approximately 43% of the total cost increase, while increasing the EID limit accounts for approximately 57%.
2. Automation costs of approximately $1 million to the Department of Social Services (DSS) resulting from required changes to the Statewide Automated Welfare System.

COMMENTS:

1. Purpose. The author states: “According to the Federal Supplemental Poverty Measure, nearly a quarter of Californians live in poverty. While California as a whole has recovered from the Great Recession, the recovery has been uneven, and many impoverished Californians continue to struggle. According to the Public Policy Institute of California, the 2014 post-recession poverty rate in the state was 16.4%, a 4% increase from the prerecession levels of 2007. Poverty, particularly childhood poverty, results in a variety of negative short- and long-term outcomes for families. It is in the state’s interest to pursue a multi-pronged approach to reduce poverty amongst Californians. A restoration of the CalWORKs lifetime limit to its pre-recession level and an EID increase are necessary strategies to pursue in the fight against poverty.”
2. Background. The CalWORKs program provides monthly income assistance and employment-related services for qualified families. The average 2016-17 monthly cash grant for a family of three on CalWORKs (one parent and two children) is $497.35, and the maximum monthly grant amount for a family of three, if the family has no other income and lives in a high-cost county, is $704. According to recent data from DSS, around 497,000 families rely on CalWORKs, including over one million children. Nearly 60% of cases include children under 6 years old.

Under the federal TANF program, an adult may receive aid for 60 months in a lifetime, but the program provides flexibility to states in implementing their respective programs, including the ability to establish more truncated time limits than the 60-month lifetime limit. In 1997, when the federal TANF program was created, California adopted the 60-month lifetime limit. As of January 1, 2013, adult CalWORKs recipients are limited to 48-month lifetime aid.

In 2011, the Legislature enacted a number of cuts to the state’s safety net programs, including CalWORKs grant reductions and reductions in the EID. The 2011 Human Services Budget Trailer Bill, SB 72 (Chapter 8, Statutes of 2011), reduced the EID to $112 plus 50% of the remaining earned income, causing more of a family’s monthly income to count against the maximum grant amount and thereby reducing a family’s total monthly income. A year later, SB 1041 (Committee on Budget and Fiscal Review) Chapter 47, Statutes of 2012, another Budget Act trailer bill, restored the EID to the first $225 and 50% of remaining countable income.

This bill seeks to restore the 60-month lifetime aid limit and to further increase the EID in order to facilitate families’ ability to increase earnings and build financial stability.

1. Earned Income Disregard (EID). By allowing a certain amount of income to be retained and excluded from grant calculations, the EID is intended to facilitate and encourage paid employment. The EID facilitates working adults’ ability to work more hours and seek higher wages that don’t fully offset the grant amount they could otherwise receive without any income. Under current law, the first $225 of an adult recipient’s gross earned income is disregarded from CalWORKs grant calculations, then 50% of the remaining income is disregarded, with the other 50% directly reducing the grant amount the recipient would otherwise receive. For example, a recipient with a monthly income of $700 will have the first $225 disregarded, leaving $475 from which another 50% will be disregarded. This will leave $237.50 in income that will be counted toward reducing the family’s grant amount.

In 2013, approximately 4.7 percent of the CalWORKs caseload left aid due to exceeding the EID limit and would have remained eligible due to the increase in the income disregard.

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: March 29, 2016

ASSEMBLY COMMITTEE ON HUMAN SERVICES

Susan Bonilla, Chair

ABPCA Bill Id:AB 1742 (

Author:Mark Stone) – As Introduced Ver:February 1, 2016

SUBJECT: CalWORKs: eligibility

SUMMARY: Increases the time limit for cash aid to adults through the California Work Opportunity and Responsibility to Kids (CalWORKs) program from 48 months to 60 months and increases the CalWORKs earned income disregard to support employment.

Specifically, this bill:

1. Increases the time limit on aid for CalWORKs recipient parents and caretaker relatives from a cumulative total of 48 months to 60 months, thereby aligning with federal time limits for the federal Temporary Assistance for Needy Families (TANF) program.
2. Increases the amount of income disregarded when calculating CalWORKs eligibility and aid amounts from $225 plus 50% of the remaining earned income to $450 and 70% of the remaining earned income, as specified.
   
3. Makes conforming changes to other statutory provisions that include the current 48-month CalWORKs time limit and provides that no appropriation shall be made to implement the provisions of this bill.
   

EXISTING LAW:

1. Establishes under federal law the Temporary Assistance for Needy Families (TANF) program to provide aid and welfare-to-work services to eligible families and, in California, provides that TANF funds for welfare-to-work services are administered through the CalWORKs program. (42 U.S.C. 601 et seq., WIC 11200 et seq.)
2. Establishes income, asset and real property limits used to determine eligibility for the program, including net income below the Maximum Aid Payment (MAP), based on family size and county of residence, which is around 40% of the Federal Poverty Level. (WIC 11150 to 11160, 11450 et seq.)
3. Establishes a 48-month lifetime limit of CalWORKs benefits for eligible adults, including 24 months during which a recipient must meet federal work requirements in order to retain eligibility. (WIC 11454, 11322.85)
4. Requires all individuals over 16 years of age, unless they are otherwise exempt, to participate in welfare-to-work activities as a condition of eligibility for CalWORKs. (WIC 11320.3, 11322.6)
5. Establishes the number of weekly hours of welfare-to-work participation necessary to remain eligible for aid, including requirements for an unemployed parent in a two-parent assistance unit, as specified. (WIC 11322.8)
6. Defines disability-based unearned income, within the CalWORKs program, as state disability insurance benefits, private disability insurance benefits, temporary workers’ compensation benefits, social security disability benefits, and any veteran’s disability compensation. (WIC 11451.5)
7. Defines earned income as gross income received as wages, salary, employer-provided sick leave benefits, commissions, or profits from activities such as a business enterprise or farming in which the recipient is engaged as a self-employed individual or as an employee. (WIC 11451.5)
8. Exempts the following when calculating a family’s income for the purpose of determining CalWORKs eligibility:

If the family’s disability-based unearned income does not exceed $225

1. All disability-based unearned income, plus any amount of not otherwise exempt earned income equal to the amount of the difference between the amount of disability-based unearned income and $225.
2. Fifty percent of all not otherwise exempt earned income in excess of the amount applied to the difference between the amount of disability-based income and $225.

If the family’s disability-based unearned income exceeds $225

1. All of the first $225 in disability-based unearned income.
2. Fifty percent of all earned income. (WIC 11451.5)

FISCAL EFFECT: Unknown.

COMMENTS:

CalWORKs: The CalWORKs program provides monthly income assistance and employment-related services aimed at moving children out of poverty and helping families meet basic needs. Federal funding for CalWORKs comes from the TANF block grant. The average 2016-17 monthly cash grant for a family of three on CalWORKs (one parent and two children) is $497.35, and the maximum monthly grant amount for a family of three, if the family has no other income and lives in a high-cost county, is $704. According to recent data from the California Department of Social Services, around 497,000 families rely on CalWORKs, including over one million children. Nearly 60% of cases include children under 6 years old.

Maximum grant amounts in high-cost counties of $704 per month for a family of three, with no other income, means $23.46 per day, per family, or $7.82 per family member, per day to meet basic needs, including rent, clothing, utility bills, food, and anything else a family needs to ensure children can be cared for at home and safely remain with their families. This grant amount puts the annual household income at $8,448 per year, or 42% of poverty. Federal Poverty Guidelines for 2016 show that 100% of poverty for a family of three is $20,160 per year.

Welfare-to-Work requirements: Welfare-to-work activities within the CalWORKs program include public or private sector subsidized or unsubsidized employment; on-the-job training; community service; secondary school, adult basic education and vocational education and training when the education is needed for the recipient to become employed; specific mental health, substance abuse, or domestic violence services if they are necessary to obtain or retain employment; and a number of other activities necessary to assist a recipient in obtaining unsubsidized employment.

Unless they are exempt, single parent adults must participate for at least 30 hours per week in welfare-to-work activities, whereas the minimum participation requirement for two-parent families is 35 hours per week. After receiving aid for up to a maximum of 24 months, adults without an exemption must meet federal work requirements, with more restrictive employment settings and allowable employment activities. If a CalWORKs recipient who is not exempt from participation does not meet his or her welfare-to-work requirements, the recipient is sanctioned for noncompliance, and that recipient’s portion of the family’s grant subtracted from the amount provided to the family to meet basic needs.

CalWORKs time limits: Passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), which was the final piece of federal welfare reform legislation, marked the end of the previous Aid to Families with Dependent Children (AFDC) program and the beginning of the block-granted TANF program, under which CalWORKs was established in California state law. Among the numerous programmatic changes included within the TANF program was a requirement that eligible parents work or participate in work training or other activities that lead to employment. The TANF program provides a great deal of flexibility in how states implement their respective programs, including the ability for states to establish more truncated time limits than the 60-month lifetime limit on aid for adult recipients authorized within it. As of 2011, California has limited aid to adult CalWORKs recipients to a lifetime limit of 48 months.

Earned Income Disregard (EID): While the maximum CalWORKs grant amounts for high-cost counties and low-cost counties are $704 and $670, respectively, the average monthly grant amount across the state is much lower at $497 per month, as it reflects a reduction in the maximum grant due to other income in a recipient family’s household. By allowing a certain amount of income to be retained and excluded from grant calculations, the EID plays a major role in facilitating and encouraging paid employment.

Among adults who are living with their families in poverty and applying for CalWORKs assistance due to unemployment or underemployment, the EID also facilitates working adults’ ability to work more hours and seek higher wages that don’t fully offset the grant amount they could otherwise receive without any income. Under current law, the first $225 of an adult recipient’s gross earned income is disregarded from CalWORKs grant calculations, then 50% of the remaining income is disregarded, with the other 50% constituting the first portion of what would otherwise be the recipient’s grant amount based on the maximum amount allowed. For example, a recipient with a monthly income of $700 will have the first $225 disregarded, leaving $475 from which another 50% will be disregarded. This will leave $237.50 in income that will be counted when calculating the family’s grant amount; the grant amount in a high-cost county would be $466.50 ($704 - $237.50), and the grant in a low-cost county would be $432.50 ($670 - $237.50).

Need for this bill: During the Great Recession, the Legislature enacted a number of cuts to the state’s safety net programs, including CalWORKs grant reductions and reductions in the EID. The 2011 Human Services Budget Trailer Bill, SB 72 (Chapter 8, Statutes of 2011), reduced the EID to $112 plus 50% of the remaining earned income, causing more of a family’s monthly income to count against the maximum grant amount and thereby reducing a family’s total monthly income. A year later, when numerous other changes were enacted within the CalWORKs program, the EID was restored to the first $225 and 50% of remaining countable income. The author of this bill is seeking to continue the trend of increasing the EID in order to facilitate families’ ability to increase earnings and build financial stability as they participate in education programs and transition to work.

SB 1041 (Committee on Budget and Fiscal Review) Chapter 47, Statutes of 2012, which was the Budget Act trailer bill that restored the EID, was also the trailer bill that created the Welfare-to-Work 24-Month Time Clock, thereby requiring aided adults, once the 24 months of increased flexibility in required activities runs out, to meet federal work requirements, with more restrictive employment settings and allowable employment activities, in order to continue to receive aid and services. While this bill will not abolish this requirement, it does seek to provide adults expanded opportunities to transition to employment and better support their families by increasing the overall maximum time on CalWORKs aid to the 60 months allowed by the federal TANF program.

The author states: “According to the Federal Supplemental Poverty Measure, nearly a quarter of Californians live in poverty. While California as a whole has recovered from the Great Recession, the recovery has been uneven, and many impoverished Californians continue to struggle. According to the Public Policy Institute of California, the 2014 post-recession poverty rate in the state was 16.4%, a 4% increase from the prerecession levels of 2007. Poverty, particularly childhood poverty, results in a variety of negative short- and long-term outcomes for families. It is in the state’s interest to pursue a multi-pronged approach to reduce poverty amongst Californians. A restoration of the CalWORKs lifetime limit to its pre-recession level and an EID increase are necessary strategies to pursue in the fight against poverty.”

REGISTERED SUPPORT / OPPOSITION:

Support

California Alternative Payment Program Association (CAPPA)

California Association of Food Banks

California Catholic Conference

California Food Policy Advocates (CFPA)

California Immigrant Policy Center (CIPC

Children’s Defense Fund - California

Coalition of California Welfare Rights Organizations, Inc.

County Welfare Directors Association of CA (CWDA)

Courage Campaign

Ella Baker Center for Human Rights

Hunger Action Los Angeles

National Association of Social Workers, CA Chapter (NASW-CA)

Saint Anthony’s Foundations

Western Center on Law and Poverty – sponsor

Opposition

None on file.

Analysis Prepared by: Myesha Jackson/Daphne Hunt / HUM. S. / (916) 319-2089