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The value of CalWORKs – the state’s primary poverty-reducing program – has become even more apparent in an economic crisis like the one California is experiencing. In times of significant economic distress and high unemployment, it’s difficult to move people back into the workforce. But providing a basic level of subsistence for children, as California does, while giving their parents the opportunity to improve their skills or take some classes – that’s how children and families across the state avoid falling into abject poverty.
Children and Families in Poverty is a Growing Crisis in California
• • • 23% of California children live in poverty. It’s safe to say nearly 100% of the children receiving aid from CalWORKs live in poverty, or very close to it. California’s unemployment rate remains in the double digits – 10.9%. (December 2011) Children who fall into poverty during economic recessions will earn less themselves, achieve lower levels of education, and report poorer health – and these differences will exist for decades, well into their adult lives, according to a 2009 study by the bipartisan children and families 1 advocacy organization First Focus.
The Basics About CalWORKs
• CalWORKs is a successful model for increasing work and self-sufficiency, while maintaining a safety-net for low-income children. Prior to the recession, more than 400,000 families across the state (almost half the caseload) had left aid and become self-sufficient since welfare reform began in 1997. CalWORKs was enacted on a bipartisan basis in response to federal welfare reform. Research 2 proves CalWORKs is best model to improve earnings and child well-being. The thoughtfully constructed program balances work requirements, sanctions for non-compliance and time limits on aid for parents, with a safety net that preserves a basic level of subsistence for children when their parents fail to comply with program requirements and/or reach their 48-month time limits on aid. California’s program is responding to the recession and serving as a critical safety net to help families avoid homelessness. From December 2007 to November 2011, the number of unemployed workers increased 96.3%, and Temporary Assistance for Needy Families (TANF) cases increased 24.3%. Even in the worst recession, 20,000 people were put to work across the state with subsidized employment – a partnership between counties and employers, nonprofits, and local public agencies to match unemployed, low-income parents with employers. Wages were fully or partly subsidized, and employers provided supervision and training. Since its inception, CalWORKs has contributed more than $12 billion to the state General Fund, since significant amounts of federal TANF and state maintenance-of-effort (MOE) funds have been shifted to other, non-CalWORKs programs, enabling the state to spend less General Fund.
Turning Point: The Long Term Effects of Recession-Induced Child Poverty, May 2009 www.firstfocus.net/sites/default/files/r.2009-5.12.ff_.pdf 2 MDRC: Making Welfare Work and Work Pay, January 1997 www.mdrc.org/publications/120/execsum.html
1 – February 2012
Work Participation – Most Adults are Participating
• Most adults in the CalWORKs program are participating in work activities, and welfare reform has transformed CalWORKs to a temporary assistance program, where the average time on aid is less than two years. In 2011: o o • 74% of work-required adults are participating in work, training or other activities. 50% of work-required families have employment earnings.
The federal work participation rate (WPR) is a flawed measure that does not reflect client participation or program success. Among its many flaws: o WPR excludes part-time work, and ignores the reality of low-wage jobs. The WPR is an “all-or-nothing” measure that does not give any credit for partial participation. Many clients work part time, and have little control over work hours and schedules. They may not get enough hours to consistently meet WPR every month. WPR is only a point-in-time measurement; viewing participation over time shows the overwhelming majority of clients are engaged. Just because a client is not participating in a given month does not mean they are disengaged; that client could be employed the very next month. For example, over a nine-month period Riverside County found 87% of clients participated.
Budget Cuts in Recent Years have Hurt Children and Families
• • • • Since mid-2008, more than $3 billion has been sliced from CalWORKs. A family of three now receives just $638 a month for basics such as rent, food and transportation. Just six years ago, grant levels were at $752. As of July 2011, the average CalWORKs grant represented just 29.1% of the federal poverty level, the lowest level in more than 20 years. It is difficult to nearly impossible for homeless people to get jobs. The purchasing power of CalWORKs grants in 2011-12 is less than 50 percent of what it was in 1989-90 – covering less than half of fair market rent. The $1 billion in 2011-12 budget cuts enacted to CalWORKs are causing real and substantial pain to people across our communities. o 1.1 million low-income children have fallen deeper into poverty because of the last round of cuts to CalWORKs. Most recently, children and families saw grants reduced by 8% effective July 1, 2011 – the largest grant cut in state history. The time they could receive assistance was shortened from 60 months to 48 months. In Los Angeles County, the total number of families receiving CalWORKs assistance grew 18% from July 2006 to August 2011. During that same time, the number of families receiving CalWORKs assistance who were homeless rose by 98% – likely a result of severe cuts to grants, which help families pay for housing, and the reduction in time limit from 60 to 48 months, which pushed families out of the program.
2 – February 2012
Governor’s Proposal Would Cause More Pain
• As a result of the proposed lower grant levels, 63,000 recipient families with 125,000 children would lose all aid because their incomes would be too high for the resulting new eligibility thresholds. o • About 42,000 of these cases (about 85,000 children) would lose eligibility on a single day.
Nearly 260,000 cases (more than 500,000 children) would see a 27% cut to their already paltry grant. o This would drop child-only grants to 29.7% of the federal poverty level for a family of 2.
Almost 110,000 cases, including more than 200,000 children, would see an even deeper 41% cut because of a combined cut to the child-only grant and a total loss of assistance for their parents. The amount of time children and families could receive assistance would be reduced from 48 months to just 24 months, and the policy would be applied retroactively. o This means if a family previously used CalWORKs, secured an adequate job and left aid for several years, but then lost that job in the economic downturn and needs assistance again, the family would have just six months of support.
Ensuring a Return on Valuable Investment
• With more than 10 years of experience in providing a safety net for children and helping families move back into the workforce, it’s a good idea to evaluate welfare reform. But it’s challenging to do so in a meaningful way amidst of deep cuts in recent years and the ongoing state budget crisis. California cannot afford the long-term costs of making hundreds of thousands of children destitute because of further cuts to CalWORKs. At a minimum, current grant levels must be maintained to help families and children stave off absolute poverty. In addition to maintaining current support levels, California should look at strategic investments in CalWORKs that best serve children and families – subsidized employment is one of those areas. Subsidized Employment is a “win-win-win,” getting unemployed families back to work, enabling businesses to expand capacity in a difficult economic environment, and helping local economies cope with the recession, while helping counties and the state meet federal work requirements for families in the welfare-to-work program.
3 – February 2012