#TANFat20: How Can We Better Support Very-Low-Income Families in California?

Today marks the 20th anniversary of the federal Temporary Assistance for Needy Families (TANF) block grant, often referred to as “welfare reform.” The California TANF program, known as California Work Opportunity and Responsibility to Kids (CalWORKs), provides modest cash assistance to families with children while helping parents overcome barriers to work and find jobs. After two decades, many are questioning the efficacy of the block grant program in helping families meet basic needs. #TANFat20 provides an opportunity to reflect on what TANF has meant for our state by examining the status of CalWORKs as well as highlighting future opportunities to better support families with very low incomes.

#TANFat20 Current Conditions: A Critical Component of California’s Safety Net Has Weakened

CalWORKs is a core piece of the safety net and primarily serves kids.
CHART #1 CalWORKs Adults and Children Caseload Pie-01

In 1996, TANF replaced the Aid to Families with Dependent Children (AFDC) program, which had provided cash assistance to poor families with children since 1935. Because of the focus on families with children, TANF, like its predecessor AFDC, primarily serves children. In January of 2016 (the most recent date for which data are available), 4 out of every 5 individuals served by the CalWORKs program were kids (79.7%), up from 73% in October 1999 (the earliest date for which data are available). Given that California has the highest child poverty rate in the nation, it is important that CalWORKs is an effective safety net for families with children who are struggling to get by.

CalWORKs reaches fewer struggling families today.

Chart #2 CalWORKS Families v. Families in Poverty, 89-90 to 13-14-01

Unfortunately, under TANF the safety net has weakened over time and reaches far fewer families. For example, in 2013 and 2014 on average, only 65 families with children received CalWORKs benefits for every 100 families with children in poverty. In the mid-1990’s, prior to the implementation of TANF in California, these numbers were roughly equal. Nationally, the share of children living in deep poverty — defined as 50 percent of the poverty line — increased during this period, a rise that is a result of the weakened safety net. We know that poverty has detrimental effects on children, especially young children, affecting their educational achievement, physical and mental health, and future job prospects. An ineffective safety net severely limits children’s potential and puts the future of our state at risk, too.

CalWORKs grants have lost ground as costs rise.

Chart #4 CalWORKs Lost Purchasing Power of Grants (98-99 to 16-17)-01

Not only is the CalWORKs program reaching fewer families living in poverty, but also cash assistance has lost nearly one-third of its purchasing power since 1998. In fact, state policymakers frequently suspended and ultimately eliminated the cost-of-living adjustment for CalWORKs grants since the implementation of TANF.  If the maximum monthly grant for a family of three in a high-cost county had been adjusted for inflation each year beginning in 1998, the grant would be $1,052 – $338 higher than the current value of $714.* This represents lost support that families could use to cover the cost of diapers, provide food for the family, pay utilities, or avoid an eviction.

CalWORKs grants fail to lift families out of deep poverty.

Chart #3 CalWORKs Grants as a % of FPL-01

Finally, because CalWORKs grants have lost value, they now fail to lift families out of deep poverty. For example, the annualized maximum grant for a family of three in a high-cost county is just 42.1 percent of the federal poverty line. This means that a single mother with two kids must makes ends meet on about $700 per month. This is tough to do given that the CalWORKs grant for a family of three in a high-cost county is over $160 dollars less than the amount needed to pay the monthly rent on low-cost housing in California in 2016. Inadequate cash assistance puts families with children at risk of becoming homeless. Along with the many risk factors homelessness creates for children, it also can undermine parents’ ability to find jobs — a main goal of the CalWORKs program.

#TANFat20 Future Opportunities: By Strengthening CalWORKs, California Can Increase Families’ Economic Security

Despite having taken steps in recent years to make the CalWORKs program more effective, such as repealing punitive family caps and providing support to families that are homeless or at-risk of becoming homeless, the choices policymakers made during and after the Great Recession continue to hold back families participating in the program. To improve the effectiveness of the CalWORKs program and bolster the economic security of very-low-income families with children, California could:

  • Develop a multiyear plan for raising CalWORKs grants, including restoring the annual cost-of-living increases. Policymakers significantly reduced the maximum CalWORKs grants during and after the recession. Even with recent modest increases to cash assistance, CalWORKs grants continue to leave families in deep poverty. Incrementally increasing grant levels and indexing grants to inflation will ensure that support for very-low-income families does not fall further below the deep poverty line.
  • Eliminate the CalWORKs asset test. Low-income families cannot benefit from CalWORKs if they have more than $2,250 in savings or certain other resources, which is only slightly higher than the limit in place from the mid-1990’s to 2014 ($2,000). (Policymakers did increase the motor vehicle asset limit to $9,500 in 2014, which allows families to own safe vehicles that reliably transport them to and from work.) Eliminating asset tests would allow very-low-income families to save for unexpected financial setbacks and may even reduce their time on public assistance. As of 2014, eight states have eliminated the TANF asset test. Research demonstrates that removing asset limits does not affect caseloads and can even reduce state administrative costs.
  • Restore the CalWORKs time limits for adults. In 2011, policymakers reduced the lifetime limit for adults from 60 months (the federal limit) to 48 months. The following year, policymakers also imposed a 24-month limit on the amount of time CalWORKs parents can access the full array of welfare-to-work activities available under state law before having to meet less flexible federal work participation requirements. Restoring the CalWORKs lifetime limit and extending the amount of time adults can access state welfare-to-work activities could boost parents’ chances of securing stable employment.
  • Direct funding to strengthen CalWORKs supports and services. Welfare reform provided states a great deal of flexibility in implementing TANF, including in using TANF funds for other programs and priorities. California policymakers have taken advantage of this flexibility and limited TANF funding for CalWORKs by at least $1.1 billion in General Fund spending every fiscal year since the state implemented the program in 1998, after adjusting for inflation. This provides a huge annual benefit to the State’s General Fund, but does nothing to boost the economic security of very-low-income families with children. Policymakers should use these dollars to strengthen CalWORKs supports and services.

#TANFat20 provides policymakers the opportunity to reflect on the current state of CalWORKs, a critical safety-net program for very-low-income families with children. Poverty imposes steep costs on children, families, and the state. California policymakers can take steps to curb these effects by raising the incomes for CalWORKs families and boosting the life chances for nearly 1 million children enrolled in the program.

— Kristin Schumacher

*As part of the 2016-17 budget act, CalWORKs grants will increase by 1.43% on October 1, 2016. This figure includes this grant increase.

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