Welfare Reform
Fact: California's Welfare Caseload Highest in the Nation
CalWORKs is the state's welfare program that provides cash grants and job training to low-income Californians. According to the non-partisan Legislative Analyst, General Fund spending in CalWORKs would grow from $1.1 billion in the 2011-12 budget year to $1.5 billion in 2012-13 absent Governor Brown's budget proposals. This 37% increase in welfare spending is primarily the result of caseload growth and the fact that last year's spending reductions were short-term in nature.3
In addition to the $1.1 billion in General Fund spending on welfare, the state funds $1.1 billion of the welfare costs that were shifted to counties as part of the 2011-12 realignment program. This $1.1 billion cost is funded by a portion of the 1.065% of the state sales tax shifted to local governments under realignment.
The state has made some modest welfare reforms over the years - such as blocking the use of welfare cards from casinos - but they have done little to dent the distinction that California's welfare caseload is the highest in the nation. According to the U.S. Department of Health and Human Services, California has 1.5 million welfare recipients, or 33% of the national caseload,1 even though the state has only 12 percent of the nation's population. The next closest state, New York has only 275,000 recipients.2
Fact: 10% of Families Have Been On Welfare for More Than 5 Years
According to the Administration, more than 10% of families have been on welfare for longer than the five years allowed under federal law.4 Current CalWORKs families have been on aid for an average of 53 months.
More than half of the caseload consists of child-only cases, where the parent does not receive a grant because they have reached their time limit, are ineligible because of legal status or other reasons, or are being sanctioned for refusing to meet the work requirement. In California, children continue to receive grants, even if the parent is ineligible, until the child reaches 18. California is one of only 15 states that provide a child-only grant to families where the adult has timed out, is in sanction status, or is otherwise ineligible for cash aid.5 Families that receive child-only grants have been on aid an average of six years and one month.
Fact: California at Risk of Being Sanctioned By the Federal Government for Failing to Meet Federal Work Requirements
Federal law and CalWORKs require that 50% of adults participate in Welfare-to-Work activities, such as job training, job search, parenting classes and educational classes including classes toward earning a 4-year college degree. The federal government can sanction states for failing to meet Welfare-to-Work requirements, up to 5 percent of its federal block grant. California, which currently receives $3.7 billion annually from the federal government for welfare services, has failed to meet the work requirement since 2007.
The Brown Administration proposes to redefine caseload in its effort to create a program that reduces the state's exposure to potential federal sanctions for failing to meet federal work requirements.
Fact: Without Governor's Proposed Welfare Cuts, Welfare Spending Grows 37%
The first legislative committee that considered the Governor's welfare cuts voted to reject it, instead voting to increase spending by $1 billion. According to the Legislative Analyst, without many of the reductions identified in the Governor's budget proposal, spending in 2012-13 will increase 14%. This double-digit growth is fueled by programs such as the state's welfare program which is slated to grow 37% in 2012-13 if no changes are made.
The Governor's proposed reforms to the CalWORKs program, discussed below, will both make budget savings and provide additional incentives to encourage Californians to move from welfare to work. This reform will restore California's welfare program to a program that promotes self-sufficiency consistent with federal welfare reforms enacted during the Clinton Administration.
Governor's Proposal Rewards Families Meeting Work Requirements
Under existing law, California welfare recipients that fail to meet the state work requirements or who have reached the federal time limits on aid receive the same welfare grant level for their children as families that do comply with program requirements. The Governor proposes to reorganize the state's welfare program into three categories to reward those who are meeting the state's work requirement and to reduce the grants for those who are not meeting work requirements.
Based on the Governor's proposal, families that meet federal work requirements who are on aid for less than four years will be able to retain more of their pay as a reward for meeting the federal work requirements.
Concerns with CalWORKs Restructuring
The goal of refocusing the program on work by imposing tougher work standards for recipients fulfills the intention of federal welfare reform. However, there is one major concern with the restructuring as proposed. The Administration intends to eventually move child-only cases out of CalWORKs and fund a new Child Maintenance Program with strictly General Fund dollars. This is problematic because it creates a new General Fund-only program with potential costs exceeding $1 billion.
Promoting Waste, Fraud and Abuse?
Given these difficult budget times, preventing the waste, fraud and abuse of welfare dollars is of even greater importance. Yet there are proposals in Sacramento that would have the unintended effect of promoting more fraud.
One bill, Assembly Bill 2352, would repeal the vehicle asset limit for welfare recipients. Currently, families with vehicles worth more than $4,650 are prohibited from receiving welfare. Yet if AB 2352 becomes law, families could drive around in luxury cars and still receive benefits. Measures like these would likely cost the state more in the long run and take dollars away from those truly in need.
Bottom line - Failure to Find Savings in Welfare Programs Means Deeper Education Cuts
The Administration has proposed significant changes to the CalWORKs program. The restructuring is estimated to save $879.9 million, with $400 million of the proposed cuts necessary to offset the projected 37% of growth in the program absent the Governor's proposals. Recent federal court rulings and the failure to get numerous federal waivers make it unlikely that any additional savings could be found in other health and welfare programs. This means that the remaining $500 million in cuts necessary to balance the budget would have to be found elsewhere, such as from our schools, if savings are not found in the state's welfare program.
In addition, recent efforts by the Legislature to also reduce safeguards, such as the elimination of the Statewide Fingerprint Imaging System from the Cal Fresh or food stamp application process, could lead to more waste, fraud and abuse. In light of the state's significant budget problems, reforming welfare to make it less costly to taxpayers must be part of any long-term budget solution.