BILL NUMBER: AB 1078 AMENDED
BILL TEXT
AMENDED IN SENATE SEPTEMBER 7, 2007
AMENDED IN SENATE SEPTEMBER 5, 2007
AMENDED IN SENATE JULY 17, 2007
AMENDED IN SENATE JULY 2, 2007
AMENDED IN ASSEMBLY APRIL 12, 2007
AMENDED IN ASSEMBLY APRIL 9, 2007
INTRODUCED BY Assembly Member Lieber
(Principal coauthor: Senator Alquist)
(Coauthor: Assembly Member Swanson)
FEBRUARY 23, 2007
An act to amend Sections 11155.2, 11155.4, 11155.6, 11322.6, and
15204.6 of, and to add Section 11322.5 to, the Welfare and
Institutions Code, relating to CalWORKs.
LEGISLATIVE COUNSEL'S DIGEST
AB 1078, as amended, Lieber. CalWORKs: eligibility: income and
assets.
Existing federal law provides for allocation of federal funds
through the federal Temporary Assistance for Needy Families (TANF)
block grant program to eligible states, with California's version of
this program being known as the California Work Opportunity and
Responsibility to Kids (CalWORKs) program.
Existing law provides for the CalWORKs program, under which each
county provides cash assistance and other benefits to qualified
low-income families and individuals who meet specified eligibility
criteria.
Existing law imposes limits on the amount of income and personal
and real property, including savings accounts, that an individual or
family may possess in order to be eligible for aid under the CalWORKs
program. Under existing law, principal and interest in designated
federally created retirement or college savings plans held by
existing CalWORKs recipients, but not new applicants, are excluded as
property for purposes of redetermining eligibility and the amount of
assistance.
This bill would delete the maximum amount of savings and interest
that a CalWORKs recipient would be permitted to retain. The bill
would extend the provisions excluding from income the principal and
interest in the designated federal savings plans to CalWORKs
applicants.
By increasing duties of counties administering the CalWORKs
program, this bill would impose a state-mandated local program.
Federal income tax laws allow a refundable federal Earned Income
Tax Credit (EITC) for low-income individuals that meet specified
requirements.
This bill would declare the intent of the Legislature to maximize
the abilities of CalWORKs recipients to benefit from, and be educated
about, the EITC, as specified. The bill would impose various duties
on the State Department of Social Services in this regard, and would
authorize counties administering the CalWORKs program that choose to
participate to take specified actions, in order to carry out this
intent.
Existing law, contingent on a Budget Act appropriation, provides
for a Pay for Performance Program to provide additional funding for
counties that meet specified welfare-to-work improvement standards.
This bill would revise the Pay for Performance Program to include,
only if and to the extent that a specified determination is made by
the department, an improvement standard for counties with a
percentage of county CalWORKs cases with earned income that equals or
exceeds a specified income level, as provided.
Existing law continually appropriates money from the General Fund
to pay for a share of aid grant costs under the CalWORKs program.
The bill would declare that no appropriation would be made for
purposes of the bill pursuant to the provision continuously
appropriating funds for the CalWORKs 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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 11155.2 of the Welfare and Institutions Code is
amended to read:
11155.2. (a) In addition to the personal property permitted by
this part, recipients of aid under CalWORKs shall be permitted to
retain savings and interest thereon for specified purposes. Interest
earned from these savings and deposited into a restricted account
shall be considered exempt as income for purposes of determining
eligibility for aid and grant amounts if the interest is retained in
the account. If the interest is not deposited by the financial
institution into the account, the interest shall be treated as a
nonqualifying withdrawal of funds from the account as specified in
subdivision (b). This section shall not apply to applicants. Funds
may be used by the family for education or job training expenses for
the accountholder or his or her dependents, for starting a business,
or for the purchase of a home. Recipients who wish to retain savings
for these purposes shall enter into a written agreement with the
county to establish a separate account with a financial institution,
with the account to be used solely for the purpose of accumulating
funds for later withdrawal for a qualifying expenditure. A qualifying
expenditure shall be defined by department regulations and shall be
verified by the recipient. The recipient shall agree to provide
periodic verification of account activity, as required by department
regulations. The agreement shall notify the recipient of the penalty
for nonqualifying withdrawal of funds.
(b) Any nonqualifying withdrawal of funds from the account shall
result in a calculation of a period of ineligibility for all persons
in the assistance unit, to be determined by dividing the balance in
the account immediately prior to the withdrawal by the minimum basic
standard of adequate care for the members of the assistance unit, as
set forth in Section 11452. The resulting whole number shall be the
number of months of ineligibility. The period of ineligibility may be
reduced when the minimum basic standard of adequate care of the
assistance unit, including special needs, increases.
(c) If the California Savings and Asset Project is established
pursuant to Chapter 17 (commencing with Section 50897) of Part 2 of
Division 31 of the Health and Safety Code, then to the extent
permitted by federal law, a recipient shall be eligible to receive
matching funds derived from federal contributions for the purpose of
establishing an individual account in an amount not to exceed three
thousand dollars ($3,000) in addition to the amounts specified in
subdivision (a) and a fiduciary organization may provide amounts in
excess of the first three thousand dollars ($3,000) limitation if
contributed solely through private sources.
SEC. 2. Section 11155.4 of the Welfare and Institutions Code is
amended to read:
11155.4. The principal and interest in an individual development
account established in accordance with the federal requirements of
Section 604(h) of Title 42 of the United States Code or established
by a statewide individual development account program shall be exempt
from consideration when determining or redetermining eligibility and
the amount of CalWORKs assistance.
SEC. 3. Section 11155.6 of the Welfare and Institutions Code is
amended to read:
11155.6. (a) (1) The principal and interest in a 401(k) plan, 403
(b) plan, or 457 plan shall be excluded from consideration as
property when determining eligibility and the amount of assistance
with respect to an applicant for benefits who is not a recipient of
CalWORKs benefits.
(2) The principal and interest in a 401(k) plan, 403(b) plan, IRA,
457 plan, 529 college savings plan, or Coverdell ESA, shall be
excluded from consideration as property when redetermining
eligibility and the amount of assistance for recipients of CalWORKs
benefits.
(b) For purposes of this section, the following terms have the
following meanings:
(1) "401(k) plan" means a deferred compensation plan that
satisfies the requirements of Section 401(k) of the Internal Revenue
Code.
(2) "403(b) plan" means a qualified annuity plan that satisfies
the requirements of Section 403(b) of the Internal Revenue Code.
(3) "IRA" means an individual retirement account that satisfies
the requirements of Section 408 of the Internal Revenue Code.
(4) "457 plan" means a deferred compensation plan that satisfies
the requirements of Section 457 of the Internal Revenue Code.
(5) "529 college savings plan" means a qualified tuition program
that satisfies the requirements of Section 529 of the Internal
Revenue Code.
(6) "Coverdell ESA" means an education savings account that
satisfies the requirements of Section 530 of the Internal Revenue
Code.
SEC. 4. Section 11322.5 is added to the Welfare and Institutions
Code, to read:
11322.5. (a) It is the intent of the Legislature to do each of
the following:
(1) Maximize the ability of CalWORKs recipients to benefit from
the federal Earned Income Tax Credit (EITC), including retroactive
EITC credits and the Advance EITC, take advantage of the
earned-income disregard to increase their federal Food Stamp Program
benefits, and accumulate credit toward future social security income.
(2) Educate and empower all CalWORKs participants who receive the
federal EITC to save or invest part or all of their credits in
instruments such as individual development accounts, 401(k) plans,
403(b) plans, IRAs, 457 plans, Coverdell ESA plans, restricted
accounts pursuant to subdivision (a) of Section 11155.2, or 529
plans, and to take advantage of the federal Assets for Independence
Program and any other matching funds, tools, and training available
from public or private sources, in order to build their assets.
(b) It is the intent of the Legislature that counties encourage
CalWORKs recipients to participate in activities that will maximize
their receipt of the EITC. To this end, counties may do all of the
following:
(1) Structure welfare-to-work activities pursuant to subdivisions
(a) to (j), inclusive, of Section 11322.6 to give recipients the
option of maximizing the portion of their CalWORKs benefits that
meets the definition of "earned income" in Section 32(c)(2) of the
Internal Revenue Code.
(2) Inform CALWORKS recipients of each of the following:
(A) That earned income, either previous or future, may make them
eligible for the federal EITC, including retroactive EITC credits and
the Advance EITC, increase their federal Food Stamp Program
benefits, and accumulate credit toward future social security income.
(B) That recipients, as part of their welfare-to-work plans, have
the option of engaging in subsidized employment and grant-based
on-the-job training, as specified in Section 11322.6, and that
participating in these activities will increase their earned income
to the extent that they meet the requirements of federal law.
(C) That receipt of the federal EITC does not affect their
CalWORKs grant and is additional tax-free income for them.
(D) That a CalWORKs recipient who receives the federal EITC may
invest these funds in an individual development account, 401(k) plan,
403(b) plan, IRA, 457 plan, 529 college savings plan, Coverdell ESA,
or restricted account, and that investments in these accounts will
not make the recipient ineligible for CalWORKs benefits or reduce the
recipient's CalWORKs benefits.
(3) At each regular eligibility redetermination, the county shall
ask each recipient whether the recipient is eligible for and takes
advantage of the EITC. If the recipient may be eligible and does not
participate, the county shall give the recipient the federal EITC
form and encourage and assist the recipient to take advantage of it.
(c) (1) No later than December 1, 2008, the State Department of
Social Services shall develop guidelines that counties may adopt to
carry out the intent of this section and shall present options to the
Governor and Legislature for any legislation necessary to further
carry out the intent of this section.
(2) In developing the guidelines and legislative options, the
department shall consult and convene at least one meeting of
subject-matter experts, including representatives from the Assembly
and Senate Human Services Committees, Assets for All Alliance, Asset
Policy Initiative of California, California Budget Project,
California Catholic Conference, California Council of Churches,
California Family Resource Association, California State Association
of Counties, CFED, County Welfare Directors Association of
California, Federal Reserve Bank of San Francisco, Legislative
Analyst's Office, Lifetime, National Council of Churches, National
Economic Development and Law Center, New America Foundation, Public
Policy Institute of California, University of California at Los
Angeles Law School, United States Internal Revenue Service, and
Western Center on Law and Poverty. Nothing in this section requires
the department to compensate or pay expenses for any person it
consults or invites to the meeting or meetings.
SEC. 5. Section 11322.6 of the Welfare and Institutions Code is
amended to read:
11322.6. The welfare-to-work plan developed by the county welfare
department and the participant pursuant to this article shall
provide for welfare-to-work activities. Welfare-to-work activities
may include, but are not limited to, any of the following:
(a) Unsubsidized employment.
(b) Subsidized private sector employment.
(c) Subsidized public sector employment.
(d) Work experience, which means public or private sector work
that shall help provide basic job skills, enhance existing job skills
in a position related to the participant's experience, or provide a
needed community service that will lead to employment. Unpaid work
experience shall be limited to 12 months, unless the county welfare
department and the recipient agree to extend this period by an
amendment to the welfare-to-work plan. The county welfare department
shall review the work experience assignment as appropriate and make
revisions as necessary to ensure that it continues to be consistent
with the participant's plan and effective in preparing the
participant to attain employment.
(e) On-the-job training.
(f) (1) Grant-based on-the-job training, which means public or
private sector employment or on-the-job training in which the
recipient's cash grant, or a portion thereof, or the aid grant
savings resulting from employment, or both, is diverted to the
employer as a wage subsidy to partially or wholly offset the payment
of wages to the participant, so long as the total amount diverted
does not exceed the family's maximum aid determination
payment .
(2) The county may, at its discretion, increase the grant
of a participant engaging in grant-based on-the-job training by a
monthly work allowance of ninety ($90) to offset the participant's
employee taxes and other costs associated with working and thus
prevent the participant's disposable income from decreasing as a
result of working. The work allowance shall be 100 percent state
funded, with no county share of cost.
(3)
(2) A county shall not assign a participant to
grant-based on-the-job training unless and until the participant has
voluntarily agreed to participate in grant-based on-the-job training
by executing a voluntary agreement form, which shall be developed by
the department. The agreement shall include, but not be limited to,
information on the following:
(A) The work allowance, pursuant to paragraph (2).
(B)
(A) How job termination or another event will not
result in loss of the recipient's grant funds, pursuant to department
regulations.
(C)
(B) (i) How to obtain the federal Earned Income Tax
Credit (EITC), including the Advance EITC, and increased Food Stamp
Program benefits, which may become available due to increased earned
income.
(ii) This subparagraph shall only become operative when and to the
extent that the department determines that it reflects current
federal law and Internal Revenue Service regulations.
(D)
(C) How these financial supports should increase the
participant's current income and how increasing earned income should
increase the recipient's future social security income.
(4)
(3) Grant-based on-the-job training shall include
community service positions pursuant to Section 11322.9.
(5)
(4) Any portion of a wage from employment that is
funded by the diversion of a recipient's cash grant, or the grant
savings from employment pursuant to this subdivision, or both, shall
not be exempt under Section 11451.5 from the calculation of the
income of the family for purposes of subdivision (a) of Section
11450.
(g) Supported work or transitional employment, which means forms
of grant-based on-the-job training in which the recipient's cash
grant, or a portion thereof, or the aid grant savings from
employment, is diverted to an intermediary service provider, to
partially or wholly offset the payment of wages to the participant.
(h) Workstudy.
(i) Self-employment.
(j) Community service.
(k) Adult basic education, which shall include reading, writing,
arithmetic, high school proficiency, or general educational
development certificate of instruction, and
English-as-a-second-language. Participants under this subdivision
shall be referred to appropriate service providers that include, but
are not limited to, educational programs operated by school districts
or county offices of education that have contracted with the
Superintendent of Public Instruction to provide services to
participants pursuant to Section 33117.5 of the Education Code.
() Job skills training directly related to employment.
(m) Vocational education and training, including, but not limited
to, college and community college education, adult education,
regional occupational centers, and regional occupational programs.
(n) Job search and job readiness assistance, which means providing
the recipient with training to learn job seeking and interviewing
skills, to understand employer expectations, and learn skills
designed to enhance an individual's capacity to move toward
self-sufficiency, including financial management education.
(o) Education directly related to employment.
(p) Satisfactory progress in secondary school or in a course of
study leading to a certificate of general educational development, in
the case of a recipient who has not completed secondary school or
received such a certificate.
(q) Mental health, substance abuse, and domestic violence
services, described in Sections 11325.7 and 11325.8, and Article 7.5
(commencing with Section 11495), that are necessary to obtain and
retain employment.
(r) Other activities necessary to assist an individual in
obtaining unsubsidized employment.
Assignment to an educational activity identified in subdivisions
(k), (m), (o), and (p) is limited to those situations in which the
education is needed to become employed.
SEC. 6. Section 15204.6 of the Welfare and Institutions Code is
amended to read:
15204.6. (a) Contingent upon a Budget Act appropriation, a Pay
for Performance Program shall provide additional funding for counties
that meet the standards developed according to subdivision (c) in
their welfare-to-work programs under Article 3.2 (commencing with
Section 11320) of Chapter 2. The state shall have no obligation to
pay incentives earned that exceed the funds appropriated for the year
in which the incentives were earned.
(b) To the extent that funds are appropriated, the maximum total
funds available to each county each year under the Pay for
Performance Program shall be 5 percent of the funds the county
receives that year, less the amount for child care, from the single
allocation under Section 15204.2. If funds appropriated for this
section are less than the incentives earned under this subdivision,
each county's allocation under this section shall be prorated based
on the amount of funds appropriated for that year.
(c) The funds available to each county under the Pay for
Performance Program shall be divided each year into as many equal
parts as there are measures established for the year under this
subdivision. A county shall earn payment of one equal part for each
improvement standard that it achieves for the year or by ranking in
the top 20 percent of all counties in a measure identified in
paragraphs (1), (2), (3), (4), and (5), except as provided in
subparagraph (B) of paragraph (4). Counties may receive a pro rata
share of incentive funds for each improvement standard. The
department shall consult with the County Welfare Directors
Association, legislative staff, and other stakeholders, when
developing improvement standards and the methodology for earning and
distributing incentives for each of the following measures:
(1) The employment rate of county CalWORKs cases.
(2) The federal participation rates of county CalWORKs cases,
calculated in accordance with Section 607 of Title 42 of the United
States Code, but excluding individuals who are exempt in accordance
with Section 11320.3 and including sanctioned cases and cases
participating in activities described in subdivision (q) of Section
11322.6. If valid data does not exist to measure this outcome, the
funds for this measure shall be made available for the Pay for
Performance Program in the following fiscal year.
(3) The percentage of county CalWORKs cases that have earned
income three months after ceasing to receive assistance under Section
11450.
(4) (A) The percentage of county CalWORKs cases, including cases
that have ceased receiving assistance in the previous two quarters,
with earned income that equals or exceeds the income level for the
maximum EITC amount available to a household, as determined under
Section 22 of the Internal Revenue Code.
(B) This paragraph shall only become operative if the department,
in consultation with the County Welfare Directors Association,
legislative staff, and other stakeholders, determines that
implementing its provisions will not create a substantial risk of
California failing to meet federal welfare-to-work participation
goals, and shall remain operative for so long as the department does
not reverse that determination.
(C) The term "EITC outreach plan" means a county plan that is
approved by the department and designed to maximize the number of
CalWORKs participants enrolled in the EITC program.
(D) The term "federal credit amount" means the amount determined
under Section 32 of the Internal Revenue Code.
(5) Any additional measures that the department may establish in
consultation with the County Welfare Directors Association,
legislative staff, and other stakeholders.
(d) Performance measures, standards, outcomes, and payments to
counties under subdivisions (a), (b), and (c) shall be based on the
following schedule:
(1) For the performance measure described in paragraph (2) of
subdivision (c), payments in fiscal year 2007-08 shall be based on
outcomes for the period of July 1, 2006, through December 31, 2006,
compared to outcomes for the period of January 1, 2007, through June
30, 2007, and payments in each subsequent fiscal year shall be based
on outcomes for the fiscal year prior to payment, compared to
outcomes for the fiscal year two years prior to payment.
(2) For all other performance measures, payments shall be based on
outcomes for the fiscal year prior to payment, compared to outcomes
for the fiscal year two years prior to payment.
(e) The department may make further adjustments to any of the
performance measures listed under subdivision (c), in consultation
with the County Welfare Directors Association, legislative staff, and
other stakeholders. The act that both amends subdivision (c) and
enacts this sentence in the 2007--08 Regular Session of the
Legislature shall not limit the department's authority under this
subdivision.
(f) The funds paid in accordance with this section may only be
used in accordance with subdivisions (f) and (g) of Section 10544.1
and only for the purpose of enhancing family self-sufficiency. Funds
earned by a county in accordance with this section shall be available
for expenditure in the fiscal year that they are received and the
following two fiscal years. Following the period of availability, and
notwithstanding any provisions of subdivision (f) of Section 10544.1
to the contrary, any unspent balance shall revert to the Temporary
Assistance for Needy Families (TANF) block grant.
(g) Any funds appropriated by the Legislature for the Pay for
Performance Program, but not earned by a county, shall revert to the
TANF block grant at the end of the fiscal year for which the funds
were appropriated.
(h) The department shall periodically publish the outcomes
measured by the Pay for Performance Program, identified by county.
(i) Notwithstanding the rulemaking provisions of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code, the department may implement this section
through all-county letters throughout the duration of the Pay for
Performance Program.
SEC. 7. No appropriation pursuant to Section 15200 of the Welfare
and Institutions Code shall be made for the purposes of this act.
SEC. 8. If the Commission on State Mandates determines that this
act contains costs mandated by the state, reimbursement to local
agencies and school districts for those costs shall be made pursuant
to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of
the Government Code.