BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular SB 23 (Mitchell) - CalWORKs: repeal of the maximum family grant rule Version: December 1, 2014 Policy Vote:Human Services 4-0 Urgency: No Mandate: Yes Hearing Date: April 7, 2015Consultant:Jolie Onodera This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 23 would expressly prohibit the denial of aid or the denial of an increase in the maximum aid payment for a child born into the family of a CalWORKs recipient, and would not entitle increased benefit payments for months prior to January 1, 2016. This bill would prohibit the conditioning of eligibility for CalWORKs aid based on an applicant's or recipient's disclosure of information about being a victim of rape, incest, or contraception failure, as specified. Fiscal Impact: Major increase in CalWORKs grant costs in the range of $188 million to $220 million (General Fund) annually based on data from county consortia indicating 13.3 percent of all children in CalWORKs households (134,900 children) are currently impacted by the MFG rule. Potential future additional CalWORKs grant costs of $3.5 million to $4.1 million (General Fund) for every 2,500 children born into CalWORKs families each year who otherwise would have been subject to the MFG rule, with annual costs cumulatively increasing in subsequent years. Potential reduction in CalFresh benefits (Federal Fund) for a percentage of families due to the increase in CalWORKs grant levels under the repeal of the MFG rule. While many families may not experience a reduction due to their limited or lack of income, for every 10 percent of families that are impacted, CalFresh benefits could decline by up to $5.6 million to $6.6 million annually. Ongoing potential cost savings in averted administrative hearings related to challenges to MFG determinations. At an SB 23 (Mitchell) Page 1 of ? estimated cost of $1,025 per hearing, elimination of 250 hearings per year would result in cost savings of over $250,000 (General Fund) per year. Potential minor offset to CalWORKs grant cost increases due to child support payments considered countable income in lieu of being provided to the CalWORKs family under the MFG rule. One-time costs likely significant and in excess of $150,000 (General Fund) for automation changes necessary to implement eligibility changes. Background: Existing law establishes guidelines for determining a family's maximum aid payment under the CalWORKs program, including all eligible family members, as well as the level of aid to be paid. Existing law under the maximum family grant (MFG) rule, which was established in California by AB 473 (Brulte) Chapter 196/1994, prohibits an increase in CalWORKs aid based on an increase in the number of needy persons in a family due to the birth of an additional child, if the family has received aid continuously for the 10 months prior to the birth of the child, as specified. Existing law exempts the following circumstances from this prohibition: Any child who was conceived as a result of an act of rape if the rape was reported to a law enforcement agency, medical or mental health professional or social services agency prior to, or within three months after, the birth of the child. Any child who was conceived as a result of an incestuous relationship if the relationship was reported to a medical or mental health professional or a law enforcement agency or social services agency prior to, or within three months after, the birth of the child, or if paternity has been established. Any child who was conceived as a result of contraceptive failure if the parent was using an intrauterine device, a Norplant, or the sterilization of either parent. If the family does not receive aid for two consecutive months during the 10 months prior to the child's birth. Children born on or before November 1, 1995. Any child who would qualify for the MFG cap if the family did not receive aid for 24 consecutive months while the child was living with the family. Any child conceived when either parent was a non-needy SB 23 (Mitchell) Page 2 of ? caretaker relative. Any child who is no longer living in the same home with either parent. According to the U.C. Berkeley Law Center on Reproductive Rights and Justice article, Bringing Families Out of 'Cap'tivity: The Need to Repeal the CalWORKs Maximum Family Grant Rule (April 2013), "Since the early 1990's, 24 states have implemented a child exclusion, or family cap, rule in their welfare programs, the majority of which exclude all cash benefits for a newborn. Today, California is one of 16 states where a family cap remains in place. Maryland and Illinois eliminated their programs in 2002 and 2003, respectively, leading the way for other states." Subsequent to the article's publication, legislation was enacted in Minnesota in May 2013, removing its family cap policy, thereby leaving California as one of 15 states to maintain such a policy. Proposed Law: This bill repeals Welfare and Institutions Code (WIC) § 11450.04, which establishes and defines the MFG rule, including exclusions for families in which a mother reports she is a victim of rape, incest, or specified methods of contraception failure. In addition, this bill: Prohibits an applicant for, or recipient of, CalWORKs aid from being required as a condition of eligibility to do any of the following: o Divulge any member of the assistance unit's (AU's) status as a victim of rape or incest. o Share confidential medical records related to any member of the AU's rape or incest. o Use contraception, choose a particular method of contraception, or divulge the method of contraception that any member of the assistance unit uses. Prohibits an applicant for or recipient of CalWORKs benefits from being denied aid, or denied an increase in the maximum aid payment, for a child born into the family during a period in which the family is receiving CalWORKs aid. Specifies that applicants for or recipients of aid are not entitled to increased benefit payments for any month prior to January 1, 2016, as a result of the repeal of the SB 23 (Mitchell) Page 3 of ? MFG rule. Makes uncodified legislative findings and declarations that this legislation is necessary to protect the reproductive and privacy rights of all applicants for, and recipients of, aid under CalWORKs. Prior Legislation: SB 899 (Mitchell) 2014 was virtually identical to this measure. This bill was held on the Suspense File of this Committee. AB 271 (Mitchell) 2013 was virtually identical to this measure. This bill was held on the Suspense File of this Committee. Elimination of the MFG rule was part of the 2013-14 Budget Conference Committee package of proposals that was ultimately rejected by the Legislature. AB 22 (Lieber) 2007 was substantially similar to this measure. This bill was held on the Suspense File of the Assembly Committee on Appropriations. AB 473 (Brulte) Chapter 196/1994 established California's MFG rule and required California to obtain a federal waiver to implement the rule. This bill was enacted prior to the establishment of the state's CalWORKs program which implemented the federal Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). Staff Comments: Based on information provided by the Department of Social Services (DSS) of data collected from the county consortia, 13.3 percent of total children in CalWORKs families are currently subject to the MFG rule. This equates to 134,900 children. Assuming a per child CalWORKs grant increase ranging from $116 to $136 per month, annual costs to provide CalWORKs grant payments to the 134,900 impacted children in existing CalWORKs families would be in the range of $188 million to $220 million (General Fund). Future annual costs for existing cases thereafter could potentially be greater due to increases in SB 23 (Mitchell) Page 4 of ? CalWORKs grant levels to the extent permitted under AB 85 (Committee on Budget) Chapter 24/2013, which specifies additional annual grant increases subject to projected expenditure and revenue thresholds. It is unknown how many additional children would be impacted prospectively under the provisions of this bill, as comprehensive statewide data was unavailable at the time of this analysis on the caseload trend of the number of children affected by the MFG rule. Based on point-in-time data for Los Angeles County, although the percentage of cases affected by the MFG rule has declined since 2006, the overall number of MFG children has increased and the percentage of MFG children to the total number of CalWORKs children has remained relatively stable. For every 2,500 children born into CalWORKs families each year that otherwise would have been subject to the MFG rule, additional annual costs in the range of $3.5 million to $4.1 million would be incurred, with annual costs cumulatively increasing in subsequent years. Some CalWORKs families would potentially experience a reduction in CalFresh benefits (Federal Funds) due to the higher CalWORKs grant payments received under the repeal of the MFG rule. Under federal SNAP benefit calculation formulas, for every $100 increase in a CalFresh household's monthly net income (after various deductions), the amount of the food benefit decreases by up to $30. While there are many CalWORKs families with little to no income that would still receive the maximum CalFresh benefit, there would likely be some percentage of families who would experience a CalFresh benefit reduction. For every 10 percent of CalWORKs families impacted, CalFresh benefits could decline by up to $5.6 million to $6.6 million annually. To the extent repealing the MFG rule results in the elimination of administrative hearings related to contested MFG determinations could result in administrative cost savings of over $250,000 per year, assuming approximately 250 MFG-related hearings conducted annually at a cost of $1,025 per hearing would no longer be required. Under existing law, child support collected on behalf of an excluded child is required to be paid entirely to the family, rather than to the state or county as reimbursement for public assistance, and is not considered income for purposes of public SB 23 (Mitchell) Page 5 of ? benefit calculations. To the extent the provisions of this bill decrease the number of child support payments paid directly to the family could result in a minor offset in CalWORKs program costs for a number of child support payments that would be counted as income in the absence of the MFG rule. According to the Urban Institute study, The Effect of Specific Welfare Policies on Poverty (McKernan and Ratcliffe, 2006), the family cap policy increases the deep poverty rate of mothers by 12.5 percent and increases the deep poverty rate of children by 13.1 percent. While the near-term costs of eliminating the MFG rule are significant, more broadly, the long-term effects of its repeal are unknown but could significantly reduce the costs of the projected lifetime physical, mental, and social impacts related to children raised in poverty and the long-term economic and societal effects linked to this policy. -- END --