Budget Agreement Includes Some Advancements for Low-Income Families, but Greater Investments Are Needed

The 2014-15 budget agreement (read our initial analysis here) includes a number of investments and policy changes that will help alleviate economic hardship among California’s lowest-income residents, who suffered disproportionately during the recession and who have continued to be left behind in the economic recovery. However, given the magnitude and breadth of the cuts made to California’s core public services and systems — cuts which low-income families and children bore the brunt of even as the state’s poverty rate reached nearly 25 percent — much bolder action is needed to set California on a path toward more broadly shared prosperity. Here’s a quick assessment of how well the budget package addresses the needs of low-income Californians at a time when poverty and long-term unemployment remain high.

The budget agreement makes some advancements for low-income Californians. For example, it:

  • Increases the maximum grant for CalWORKs, which provides modest cash assistance and job-related services to low-income families with children, by 5 percent effective April 1, 2015. This increase, together with the 5 percent increase that took effect March 1, will restore most of the grant cuts made since 2008-09 and will help very-low-income parents with children make ends meet as they search for work or build skills to broaden their employment options.
  • Dedicates funds to help families participating in CalWORKs to obtain safe, affordable, and stable housing. This assistance is extremely important given that the maximum monthly CalWORKs grant for a family of three doesn’t even cover the average cost of a studio apartment priced at “fair market rent” in California.
  • Prevents a substantial reduction in CalFresh food assistance benefits that was slated to occur under recent changes in federal law. As we pointed out in a blog post earlier this year, more than 300,000 households would have lost an average of $62 per month in food assistance absent state action — a cut equal to nearly one-third of the average CalFresh household’s benefits.
  • Expands eligibility for CalFresh by taking advantage of a federal option called “broad-based categorical eligibility.” In a prior blog post, we detailed how this policy change would remove a significant barrier to food assistance access primarily for low-income working families who spend much of their incomes on necessities like child care and housing and thus have little left over for food.
  • Lifts the lifetime ban that prevents parents with certain drug felony convictions from receiving CalFresh food assistance and CalWORKs income support, job-related services, and child care. This change could benefit thousands of low-income children whose parents are currently prohibited from participating in these programs.
  • Provides funding to restore 13,000 child care and preschool “slots” for California children and includes provisions that would make these programs more affordable for some families. Watch for an upcoming blog post for more detail on these policy changes.

However, even with these advancements, the budget agreement places greater emphasis on paying down debt and saving for a rainy day than it does on reinvesting in our communities. Although state revenues are projected to increase more than previously anticipated, policymakers left in place deep cuts to many vital programs and services as well as policy changes that restrict economic opportunities for low-income Californians. For example, the budget package:

  • Does not fully address low-income families’ critical need for affordable, high-quality child care and preschool. The budget agreement restores only a fraction of the 110,000 child care and preschool slots eliminated since 2007-08. With potentially close to 200,000 children on waiting lists for slots, this level of investment doesn’t come close to meeting existing demand.
  • Does not reinstate the statutory cost-of-living adjustment (COLA) for CalWORKs grants that was eliminated in 2010-11. Without an annual COLA, CalWORKs grants have been gradually losing purchasing power, making it harder for families to afford basic necessities. Moreover, the grant increase included in the new budget agreement doesn’t go far enough to help low-income families with children escape poverty. Even after the increase takes effect, the maximum monthly grant for a family of three will be about $700 — equal to just 43 percent of the poverty line, well below the deep-poverty cut-off of half the poverty line.
  • Does not restore grant cuts or reinstate the annual COLA for the SSI/SSP Program, which provides modest cash assistance to 1.3 million low-income seniors and people with disabilities. Policymakers eliminated the COLA in 2010-11 after suspending it several times in prior years and reducing the state’s portion of the grant to the minimum level allowed under federal law. The amount of assistance individuals lose each month due these cuts is equivalent to more than three weeks of groceries – a significant loss, particularly given that SSI/SSP participants are not eligible for CalFresh.
  • Does not restore a 10 percent cut to payments for certain Medi-Cal providers that began to be implemented late last year. Maintaining this cut not only reduces the amount of federal Medicaid funds that flow into the state, but also could discourage some health care providers from participating in Medi-Cal, thus potentially impeding access to care for millions of low-income Californians as enrollment rises.
  • Does not restore a reduction in the total hours of care that In-Home Supportive Services (IHSS) consumers can receive. IHSS helps more than 450,000 low-income seniors and people with disabilities remain safely in their own homes, preventing the need for more costly out-of-home care. IHSS consumers were hit with an 8 percent across-the-board cut in total hours effective July 2013, and this reduction is scheduled to scale back to 7 percent effective July 1, 2014. The budget agreement leaves this cut in place.

With the highest poverty rate in the nation, California has much work to do to expand economic opportunity. This work is critical: our state’s future prosperity will be largely determined by the extent to which we invest in families, children, and communities today. Fortunately, with state revenues projected to continue their rebound, California should be well positioned to make those investments. We’ll look to policymakers to take advantage of this opportunity and present bolder strategies for leading our state toward long-term economic growth and more broadly shared prosperity. As debates on poverty and economic opportunity unfold in coming weeks and months, watch for additional CBP commentary and analysis on the key policy choices facing our state and what they mean for low-income families.

— Alissa Anderson