First Impressions

January 9, 2012

Governor Brown released his Proposed 2012-13 Budget a full five days early after budget documents were inadvertently posted on a public website. The CBP will be delving into the budget in detail over the upcoming weeks and months, and will release our signature “chartbook” in early February. In the meantime, here are some first impressions:

  • The Governor’s proposal highlights the importance of significant additional revenues that help close the budget gap. As we’ve blogged before, the various tax measures pending “title and summary” have differing impacts on the state’s bottom line. Absent additional revenues that help fill the budget gap, even deeper cuts are likely to occur in 2012-13 and future years. While the Governor’s revenue forecast shows a modestly smaller deficit – $9.2 billion over the next 18 months – than prior forecasts and somewhat stronger revenue collections, California still faces a significant “structural” gap between revenues and expenditures due to the lingering impact of the economic downturn and the massive corporate tax breaks approved by lawmakers in recent years.
  • The proposed cuts to and redesign of the CalWORKs Program will put tens of thousands of children at serious risk of homelessness. When evaluating proposed CalWORKs policy changes, it is critical to remember that more than three-quarters of the Californians who receive cash assistance through the CalWORKs program are children. The Governor’s proposals come at a time when job prospects for single mothers – who make up most of the adults on CalWORKs – remain grim. The employment rate for California’s unmarried mothers dropped by 10.4 percentage points from a recent peak of 69.2 percent in 2007 to 58.8 percent in 2010. In fact, in just three years, the downturn erased all of the employment gains single mothers made following the enactment of welfare reform in the late 1990s. Fewer than six out of 10 unmarried mothers had jobs in 2010 – the smallest share since 1996. Women, nationally and here in California, are recovering from the recession more slowly than men, with the share of California’s working-age women with jobs declining 1.2 percentage points between November 2010 and November 2011.
  • Overall, $2.5 billion of the proposed $4.2 billion in spending cuts target Health and Human Services programs and child care. These programs – which accounted for approximately one-third of 2011-12 General Fund spending – are slated to receive nearly 60 percent of the proposed cuts. The proposed policy changes would deny an estimated 62,000 children access to safe, affordable childcare; would limit services received by over 250,000 low-income seniors and individuals with severe disabilities in the In-Home Supportive Services Program; and limit cash assistance and welfare-to-work services for families at a time when jobs are scarce.

Budgets, as we frequently note, are about values and choices. We would urge lawmakers seeking to balance the budget to look first to eliminate programs that don’t work – such as the state’s failed enterprise zone program  – before slashing those that do.

– Jean Ross

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Assembly Committee Assesses CalWORKs in Wake of Recent Budget Cuts

November 7, 2011

CalWORKs, the state’s welfare-to-work program, has been battered by budget cuts in recent years. Last Thursday, Assembly Budget Subcommittee No. 1 on Health and Human Services held an overview hearing to assess what those cuts mean for the 1.5 million Californians – including 1.1 million children – who rely on CalWORKs to help keep a roof over their heads, afford other necessities, and move toward self-sufficiency. The CBP provided testimony on the state’s discouraging jobs picture and recent trends in the CalWORKs Program. Our presentation described the impact of years of cuts to CalWORKs cash assistance and highlighted the fact that California now has a grant level lower than 27 other states, after adjusting for housing costs. Video of the hearing is here.

– Scott Graves

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Governor Acts on Key Bills

October 10, 2011

Governor Brown completed action this weekend on the roughly 600 bills that the Legislature sent him before adjourning last month. The Governor signed a significant budget-related bill, SB 202 (Hancock), which moves a state spending cap measure from the June 2012 primary election ballot to the November 2014 general election ballot. The spending cap measure – ACA 4 – was placed on the ballot as part of the October 2010 budget agreement. SB 202 also requires future initiatives and referenda to be placed on November general election ballots.

The Governor also signed AB 6 (Fuentes), which eliminates the fingerprinting requirement for CalFresh – formerly food stamp – applicants, although not for CalWORKs welfare-to-work applicants. AB 6 also cuts red tape by shifting from a quarterly to a six-month reporting system for CalFresh and CalWORKs recipients. These changes, which the CBP recommended back in 2009, are expected to increase program efficiencies and boost the CalFresh participation rate, which ranks near the bottom among the 50 states’ food assistance programs. Unfortunately, the Governor vetoed AB 1182 (Hernández), which would have further simplified CalWORKs by eliminating California’s restrictive “vehicle asset test.” Families who apply for CalWORKs generally cannot have a car worth more than $4,650, a limit that has not been adjusted since the mid-1990s. California has one of the strictest limits in the nation despite the fact that Californians rely heavily on their cars to get to work, and in today’s market a car worth less than $4,650 is not likely to be very reliable, to say the least. Let’s hope the Legislature gives the Governor an opportunity to reconsider his veto next year.

– Scott Graves

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Countdown to 2011-12: Deep Cuts to CalWORKs on the Horizon

June 22, 2011

In recent weeks, we’ve released a series of fact sheets documenting the deep cuts that have been made to a range of state services in the wake of the Great Recession, which caused a steep and sudden drop-off in state tax revenues and opened up a cavernous hole in the state budget. Those fact sheets were prompted, in part, by public opinion research showing that many Californians aren’t aware of the depth of recent cuts. An April 2011 USC/Los Angeles Times poll, for example, found that nearly half (48 percent) of Californians think the state budget has gotten larger in recent years. In fact, the opposite is true – the Legislature reduced General Fund spending from $103.0 billion in 2007-08 to $87.3 billion in 2009-10, and state spending is estimated to remain below $90 billion in 2011-12 under the budget passed by the Legislature last week.

In order to further underscore the depth and breadth of recent cuts, California Budget Bites will highlight several reductions that take effect in 2011-12 as we count down to the July 1 start of the new fiscal year. Today we’ll focus on the CalWORKs welfare-to-work program, which provides cash assistance, employment services, and child care for 1.5 million low-income Californians, more than three-quarters (76.8 percent) of whom are children. In actions taken in March and subsequently revised last week, the Legislature reduced CalWORKs funding by nearly $940 million in 2011-12, a cut of approximately 16 percent compared to typical annual funding. For example, the Legislature:

  • Cut CalWORKs cash assistance by 8 percent. The Legislature reduced the maximum monthly grant for a family of three in high-cost counties – where more than half (55.4 percent) of CalWORKs families live – from $694 to $638, approximately the same amount that the state provided in 1987, without adjusting for inflation. As a result of this cut, which comes on top of a 4 percent reduction implemented in 2009, 590,000 low-income families will have a harder time keeping a roof over their heads and making ends meet in a tough economy.
  • Reduced the earnings limit for CalWORKs below the federal poverty line. Many CalWORKs parents work in low-wage jobs and rely on cash assistance to supplement their modest incomes and help provide for their children. By cutting maximum grants and making a related change to how families’ earnings are counted, the Legislature has significantly reduced the amount of earnings a family can have and still remain eligible for CalWORKs. In June 2008 – the end of the 2007-08 fiscal year – a family of three in a high-cost county could earn up to $1,651 per month (112.6 percent of the federal poverty line) and continue to receive a small grant. Beginning July 1, the limit will be reduced to $1,369 per month (88.7 percent of the poverty line). As a result, working families will lose CalWORKs cash assistance at a significantly lower income compared to prior years – and well before their income reaches the poverty line.
  • Rolled back the CalWORKs time limit for adults. Lawmakers reduced the lifetime limit on CalWORKs cash assistance for adults from five years to four years. This change is retroactive and will apply, effective August 1, to adults who have received cash assistance for at least 48 months. The Department of Social Services estimates that 22,500 adults will hit the new 48-month time limit in 2011-12 and lose an average of $122 per month, further reducing their families’ incomes.
  • Reduced funding for CalWORKs employment services and child care. Counties provide a range of services to help parents move from welfare to work, including job training, job search assistance, and child care. The Legislature reduced funding for these services by $377 million in 2011-12 – equivalent to the cuts implemented in 2009-10 and 2010-11. Roughly 12,600 CalWORKs families could lose “Stage 1” child care in 2011-12 as a result of this cut.

In short, the Legislature has made deep and unprecedented cuts to CalWORKs in order to help close the state’s budget shortfall. These reductions have left the program ill-equipped to cope with the ongoing impact of the Great Recession and the challenges of rising inequality and a growing population. California’s remaining $9.6 billion budget gap should be closed not with more cuts, but with a balanced approach that includes additional revenues in order to preserve the public structures essential to California’s prosperity.

– Scott Graves

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Assembly, Senate Budget Committees Take Back Some Recent Cuts to Children’s Programs

June 10, 2011

The Assembly and Senate Budget committees took action Wednesday to rescind or reduce several cuts to children’s programs that were passed in March and were set to take effect in 2011-12. The committees’ actions mitigate the impact of deep cuts to child care and the CalWORKs welfare-to-work program that have been made in recent years. The Assembly Budget Committee and the Senate Budget and Fiscal Review Committee voted to:

  • Rescind the cut to CalWORKs “child-only” grants. In March, the Legislature voted to reduce child-only grants – those provided on behalf of children in a household, not adults – by up to 15 percent for kids who have received cash assistance for more than five years. This cut was expected to reduce cash assistance for more than 325,000 children in 2011-12. The Budget committees repealed the child-only grant cut, but left in place a separate 8 percent reduction to cash assistance that will affect all CalWORKs families beginning July 1, 2011.
  • Restore $50 million in funding for CalWORKs employment services and Stage 1 child care. Counties provide a range of services to help parents move from welfare to work, including job training, job search assistance, and child care. In March, the Legislature reduced funding for these services by $427 million in 2011-12. This cut was expected to cause more than 15,200 CalWORKs families to lose Stage 1 child care. The Budget committees restored $50 million, reducing the 2011-12 cut to $377 million – equivalent to the cuts implemented in 2009-10 and 2010-11. Roughly 12,600 CalWORKs families could lose Stage 1 child care in 2011-12 under the smaller reduction approved by the Budget committees.
  • Restore child care for 11- and 12-year-olds during traditional work hours. In March, the Legislature voted to restrict child care to children age 10 or younger during traditional work hours – Monday through Friday, 6 a.m. to 6 p.m. This change was expected to cause 5,500 11- and 12-year-olds to lose child care in 2011-12. The Budget committees repealed the cut.
  • Reduce funding for preschool and most child care programs by 11 percent rather than by 15 percent. The 15 percent cut to slots approved in March – which did not apply to CalWORKs Stages 1 and 2 child care – was projected to cause more than 35,000 children to lose access to child care and preschool in 2011-12. The 11 percent cut adopted by the Budget committees would cause a smaller number of children – roughly 25,500 – to lose access to child care and preschool in 2011-12.
  • Rescind the 10 percent rate cut for “Title 5” child care and preschool providers. Title 5 child care and preschool providers – those who contract directly with the California Department of Education – receive a “standard reimbursement rate” (SRR) to support their operations. The SRR, which was last increased in 2007-08, is a statewide fixed rate per child that is set at $34.38 per day for child care programs and $21.22 per day for part-day preschool programs. In March, the Legislature voted to reduce those rates by 10 percent in 2011-12, a cut that came on top of the separate 15 percent funding reduction described above. Many providers suggested that the combined impact of these cuts would lead to layoffs or the closure of child care and preschool centers. The Budget committees repealed the SRR cut, effectively freezing the SRR at the current level in 2011-12.
  • Rescind the cost-shift to families. In March, the Legislature increased the fees that families pay for child care and preschool by 10 percent in 2011-12. The Budget committees repealed that increase.

No agreement has been announced on a 2011-12 spending plan, so it is uncertain whether all of these restorations will remain part of the final budget package. However, the Assembly and Senate have moved in the right direction by mitigating deep cuts to key public structures for low-income children and their families – CalWORKs, child care, and preschool – which will help keep more parents working and more children in good hands.

– Scott Graves

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