The Cost of Asset Testing for the CalWORKs Program

Transcription

1 The Cost of Asset Testing for the CalWORKs Program PRESENTED BY EARN AND THE HOWARD UNIVERSITY CENTER ON RACE AND WEALTH 10:00AM (PT) WEDNESDAY, MARCH 23, 2016

2 Presenters Lorena Briseño Language Access & Asset Building Coordinator, Alameda County Social Services Agency Dr. LaTanya Brown- Robertson Research Associate, Howard University Center on Race and Wealth Sheryl E. Lane Director of Public Policy, EARN 2

3 Agenda CalWORKs Program and Asset Tests Research Findings: The Cost of Asset Testing for the CalWORKs Program Asset Verification and Social Services Agencies Policy Recommendations 3

4 CalWORKs Program and Asset Tests SHERYL E. LANE EARN 4

5 CalWORKs a Safety Net for Families The California Work Opportunity And Responsibility to Kids (CalWORKs) programs provides timelimited cash assistance to families with children and focuses on getting adults back to work. CalWORKs has a 4-year lifetime limit for adults receiving cash assistance. To be eligible for CalWORKs, a family of three cannot have a gross non-exempt income above $1,633. The maximum grant for a family of three living in high cost counties is $704 which is below half of the federal poverty line. The average grant amount received is $512. Californians and Economic Instability California has the highest number of low-income adults in the U.S. One in five California children live in poverty. The majority of poor people in California live in working families. 5

6 What are Asset Limits Families and individuals participating in some public benefit programs must pass an asset test which sets a limit on how many assets a person can own up to a certain dollar amount. To receive CalWORKs assistance, a family cannot own more than $2250 in a checking or savings account at any one time and cannot own a vehicle with an equity value of more than $9500. Assets excluded from the CalWORKs asset limit are: Individual Development Accounts (IDAs) Education savings accounts (ie. 529s and Coverdells) Retirement Plans (401ks, 403(b)s, and 457 plans) Earned Income Tax Credit (EITC) only up to 12 months 6

7 History and Purpose of Asset Limits Before the 1996 welfare reforms and the implementation of the Personal Responsibility and Work Opportunity Act, asset limits served to limit welfare to those most in need. The adoption of the Temporary Aid for Needy Families (TANF) program created strict work requirements and lifetime limits focused on moving low-income families from welfare-towork and promoting self-sufficiency. States were given the power to set eligibility standards, including creating an asset test. Program TANF SNAP LIHEAP (energy assistance) Federally-Authorized State Flexibility What States have Done 8 states have eliminated the asset test entirely. Not California. 36 states including California (CalFresh) have eliminated the asset test 40 states including California have eliminated or refrained from setting asset limits 7

8 Research Findings DR. LATANYA BROWN-ROBERTSON HOWARD UNIVERSITY CENTER FOR RACE ON WEALTH 8

9 Research Study Purpose Quantify the overall administrative cost that the State of California incurs due to asset test regulations. Estimate the cost savings potential resulting from elimination of the CalWORKs asset test requirements Present qualitative findings of the asset testing intake oversight processes 9

10 Data Analyzed To estimate the administrative costs associated with asset testing the following were analyzed: State and county level data on acceptance, denial, and discontinued caseload from CalWORKs data tables from April 2012-March Salary and vehicle asset data from Los Angeles County Department of Public Social Services Five Alameda County caseworkers, managers, and appeals officers were interviewed to gain insight in the asset testing process and time allocated to verify assets. 10

11 Methodology Total administrative cost of asset testing was derived by: Administrative cost per case [Caseworkers average salary (per minute)] x [average time to verify assets] Total administrative cost of asset testing [Administrative cost per case] x [Total # CalWORKs cases] 11

12 Findings: Overall Administrative Cost The State of California spends an estimated $6,400,815 per year on cash and vehicle asset test verification From April 2012-March 2013, the $6.4 million allocated to asset testing involved the verification of 1,034,074 CalWORKs cases. During the application process: Only 2% of intake cases exceeded the cash asset limit Only.001 percent violated the vehicle asset limit (when vehicle asset limit was $4650 prior to 2014) Of the reevaluated cases, only 1% were discontinued after asset test verification 12

13 Intake and Continued Caseload Data CalWORKs Intake and Continued Caseload (April 2012-March 2013) CalWORKs Caseload Denied or Discontinued Cases Total Intake Cases 555,980 9,487 2% Continued caseload excluding new applications 478,094 3,604 1% Total Caseload 1,034,074 13,091 1% Percent Denied or Discontinued Source: CalWORKs data 13

14 States see little to no increase in caseloads Eight states have eliminated asset tests entirely Asset Test Elimination Year Before the elimination of asset testing After the elimination of the asset testing Difference in caseloads Virginia ,177 25,163-11,013-44% Alabama ,000 20, % Louisiana ,948 9,036-15, % Maryland ,270 23,345-4,925-21% Colorado ,119 14, % Hawaii ,824 9,019-1,804-20% Illinois ,755 20,535-41, % Ohio eliminated their asset test in 1997 and experienced a 55% decline from Source: US Department of Health and Human Services Caseload Data Available at: Percentage Change 14

15 Findings: Overall Cost Savings A regression analysis was implemented to evaluate the specific effect of the elimination of TANF asset testing on the 8 state caseloads that underwent this policy. The regression results revealed: The elimination of asset test guidelines decreased the number of TANF cases in almost all states. Virginia and Louisiana experienced a statistically significant decline in cases due to the elimination of asset guidelines. The results are consistent with research that finds asset-based test guidelines create a disincentive to save (Chen and Lerman, 2005; Covington and Edwards, 2013; Sprague and Black, 2012). 15

16 Predict the elimination of asset testing guidelines will lead to a 5% reduction in the CalWORKs caseload within the first year. This will result in a reduction of 26,145 cases and $163,286,694 in cost savings to the State. Net effect of removing asset limits: if there was an increase of 2% in existing caseload (denied or existing cases), there would be a 3% reduction and $97,972,069 cost-saving to the state. Estimated CalWORKs Caseload Cost Savings due to Asset Test Elimination Average continued caseload per month 522,890 Estimated decline in CalWORKs caseload of 5% due to asset testing removal 26,145 CalWORKs Case Grant Yearly average 2013 $ 6, Cost savings due to the elimination of Asset Testing $163,286,694 Source: California Department of Social Services, Public Assistance Facts and Figures 16

17 Research Conclusion The CalWORKs asset test verification process is not cost effective. The additional savings in administrative cost and overall cost savings can be allocated to allow for better monitoring and oversight of CalWORKs applicants and recipients economic status and progress under the program. 17

18 Asset Verification and Social Service Agencies LORENA BRISEÑO ALAMEDA COUNTY SOCIAL SERVICES AGENCY 18

19 County Caseworker Insight and Perspectives Alameda County Social Services Agency Staff: Eligibility Services Technicians Intake Case Managers Interview Results: A small portion of cases are denied or lose continued CalWORKs eligibility due to assets exceeding the limits. It takes an Eligibility Services Technician an average of 15 minutes per case to review documentation and determine if the CalWORKs applicant or recipient meets the assets limits for CalWORKs eligibility. Administrative time could increase 1 to 10 hours per month if the appropriate documentation is not provided; or, is not current or accurate. Removing CalWORKs asset limits would allow staff more time to monitor the economic status and progress of applicants and recipients. 19

20 County Caseworker Insight and Perspectives Alameda County Social Services Agency Staff: Appeals Officers Interview Results: On average 10 cases per year file an appeal based on denial or discontinuance due to excess assets. It costs the County between $2,000 to $3,000 to hear a case. 20

21 Policy Recommendations SHERYL E. LANE EARN 21

22 Asset Tests Discourage and Penalize Savings Asset tests are a deterrent to save Recipients believe that even a small amount of emergency savings will make them appear less in need of assistance. Asset tests are punitive. Low-income families are prevented from receiving assistance if they have more than $2250. The current threshold is not enough for a family to survive outside of the CalWORKs program for more than one or two months. Forces families to choose between keeping their vehicle or receiving temporary cash benefits. Asset tests promote spending and not saving. To become eligible, for public assistance, families are forced to spend down savings. Mariana Aboyme EARN Saver Alum Mom, College Graduate, Home Owner, Former CalWORKs Recipient While on CalWORKs, I knew that I couldn t save and so I didn t save. I used my credit card as a savings account instead of tapping into a savings account. I was just recently able to pay off all of my credit card debt. 22

23 Eliminate the CalWORKs Asset Test AB 1809, introduced by Assembly member Patty Lopez will eliminate the CalWORKs asset test Benefits of removing CalWORKs asset test verification: Caseworkers will have more time and attention for other case management duties Greater administrative efficiency will result in administrative cost savings Send a clear message that saving money is important and encouraged, and in turn allows families to save and have greater financial stability 23

24 Call to Action Send Support Letters to Assembly Human Services Committee Members The first committee to hear AB 1809 will be the Assembly Human Services Committee on Tuesday, March 29th. Visit to download and send our sample letter to the Assembly Human Services Committee. Attend the Assembly Human Services Hearing Join us on Tuesday, March 29 th at 1:30 PM in Sacramento to attend the hearing in person and show your support. 24

25 Thank you for joining us! Download the webinar slides and the report at: For more information: contact Sheryl E. Lane at 25