Countdown to 2011-12: Deep Cuts to CalWORKs on the Horizon

In recent weeks, we’ve released a series of fact sheets documenting the deep cuts that have been made to a range of state services in the wake of the Great Recession, which caused a steep and sudden drop-off in state tax revenues and opened up a cavernous hole in the state budget. Those fact sheets were prompted, in part, by public opinion research showing that many Californians aren’t aware of the depth of recent cuts. An April 2011 USC/Los Angeles Times poll, for example, found that nearly half (48 percent) of Californians think the state budget has gotten larger in recent years. In fact, the opposite is true – the Legislature reduced General Fund spending from $103.0 billion in 2007-08 to $87.3 billion in 2009-10, and state spending is estimated to remain below $90 billion in 2011-12 under the budget passed by the Legislature last week.

In order to further underscore the depth and breadth of recent cuts, California Budget Bites will highlight several reductions that take effect in 2011-12 as we count down to the July 1 start of the new fiscal year. Today we’ll focus on the CalWORKs welfare-to-work program, which provides cash assistance, employment services, and child care for 1.5 million low-income Californians, more than three-quarters (76.8 percent) of whom are children. In actions taken in March and subsequently revised last week, the Legislature reduced CalWORKs funding by nearly $940 million in 2011-12, a cut of approximately 16 percent compared to typical annual funding. For example, the Legislature:

  • Cut CalWORKs cash assistance by 8 percent. The Legislature reduced the maximum monthly grant for a family of three in high-cost counties – where more than half (55.4 percent) of CalWORKs families live – from $694 to $638, approximately the same amount that the state provided in 1987, without adjusting for inflation. As a result of this cut, which comes on top of a 4 percent reduction implemented in 2009, 590,000 low-income families will have a harder time keeping a roof over their heads and making ends meet in a tough economy.
  • Reduced the earnings limit for CalWORKs below the federal poverty line. Many CalWORKs parents work in low-wage jobs and rely on cash assistance to supplement their modest incomes and help provide for their children. By cutting maximum grants and making a related change to how families’ earnings are counted, the Legislature has significantly reduced the amount of earnings a family can have and still remain eligible for CalWORKs. In June 2008 – the end of the 2007-08 fiscal year – a family of three in a high-cost county could earn up to $1,651 per month (112.6 percent of the federal poverty line) and continue to receive a small grant. Beginning July 1, the limit will be reduced to $1,369 per month (88.7 percent of the poverty line). As a result, working families will lose CalWORKs cash assistance at a significantly lower income compared to prior years – and well before their income reaches the poverty line.
  • Rolled back the CalWORKs time limit for adults. Lawmakers reduced the lifetime limit on CalWORKs cash assistance for adults from five years to four years. This change is retroactive and will apply, effective August 1, to adults who have received cash assistance for at least 48 months. The Department of Social Services estimates that 22,500 adults will hit the new 48-month time limit in 2011-12 and lose an average of $122 per month, further reducing their families’ incomes.
  • Reduced funding for CalWORKs employment services and child care. Counties provide a range of services to help parents move from welfare to work, including job training, job search assistance, and child care. The Legislature reduced funding for these services by $377 million in 2011-12 – equivalent to the cuts implemented in 2009-10 and 2010-11. Roughly 12,600 CalWORKs families could lose “Stage 1” child care in 2011-12 as a result of this cut.

In short, the Legislature has made deep and unprecedented cuts to CalWORKs in order to help close the state’s budget shortfall. These reductions have left the program ill-equipped to cope with the ongoing impact of the Great Recession and the challenges of rising inequality and a growing population. California’s remaining $9.6 billion budget gap should be closed not with more cuts, but with a balanced approach that includes additional revenues in order to preserve the public structures essential to California’s prosperity.

—Scott Graves