Health & Safety Net Archives

This report was co-authored by Amy M. Traub, Senior Researcher and Policy Analyst at the National Employment Law Project.

key takeaway

California’s Unemployment Insurance (UI) system is severely underfunded and outdated, leaving workers with inadequate benefits and excluding millions. To revitalize UI and ensure it supports both workers and the economy, the state must raise the taxable wage base and reform its financing structure to eliminate the $19.8 billion debt and stabilize the system for future economic downturns.

When Californians are out of work, unemployment insurance (UI) should help them make the rent, put food on the table, and cover other basic needs until they can find a new job. During the worst days of the pandemic, millions of jobless workers across the state relied on UI benefits to make ends meet, supporting both their families and California’s economy until it could thrive again. UI is also critical for jobless workers during periods of economic growth: In May 2024, 379,955 California workers — laid off from industries including manufacturing and information — counted on UI as they sought new employment.¹

Yet without the federal supplements that were available during the pandemic downturn, California workers received an average UI benefit of just $368.53 a week in 2023, less than the income needed to afford fair market rent in any county in the state.² At the same time, millions of California workers, including more than a million immigrant workers, are excluded from accessing unemployment insurance entirely.³

To strengthen and expand UI to adequately support workers and the economy, California must address the severe and chronic underfunding of the UI trust fund, which has created a structural deficit and $19.8 billion in debt for the state’s UI system. The underlying problem is California’s deficient UI financing: For decades policymakers have not required businesses to cover the true cost of the unemployment benefits their workers need. Instead, the state taxes employers on only the first $7,000 of each employee’s pay, a dramatically lower wage base than most other states.

This report details how workers, employers, and the economy as a whole are paying a steep price for California’s inadequate UI financing system. It explores how both raising the taxable wage base and changing the state’s experience rating system will be necessary to strengthen and stabilize UI to better serve workers, employers, and the economy.

Unemployment Insurance is a Lifeline for California, But Low Benefits and Exclusions Undermine Its Effectiveness

The joint federal-state UI system was established in the wake of the Great Depression to protect workers and their families against the loss of employment income, to bolster the economy during economic downturns by supporting consumer demand, and to ensure jobseekers are not forced into substandard jobs that could broadly depress wages and degrade working conditions.

Today, economists recognize that UI also plays an important role in improving job matches, enhancing the overall functioning of the labor market, and helping employers match with workers who have the right skills, improving their efficiency.⁴ By giving workers time to match with more suitable jobs, UI also contributes to higher wages and greater job satisfaction when they find new work.⁵ Yet UI’s ability to fulfill any of these functions is weakened by California policymakers’ failure to raise the state’s low benefit levels or to include the significant numbers of workers who are locked out of the system entirely.

Unemployment benefits remain critical to workers who receive them. In 2022, UI prevented more than 400,000 people nationwide, including 116,000 children, from experiencing poverty.⁶ Even for workers not facing poverty, receiving unemployment benefits reduces hardship and broadly improves the well-being of households, including recipients’ financial stability and mental health.⁷

Yet benefits in California have not been raised in nearly two decades. With an average benefit of just $368.53 a week in 2023⁸, UI benefits no longer provide enough money for Californians — particularly those with low incomes — to meet the rising cost of living while seeking employment. As the California Budget & Policy Center pointed out earlier this year, a worker who loses a full-time minimum wage job (at $16.90-per-hour in Los Angeles County) receives just $1,465 in monthly unemployment benefits, which falls $69 short of covering rent for a studio in Los Angeles priced at Fair Market Rent.⁹ California’s UI benefits are significantly lower than other Western states, including Washington ($703.79 per week on average), Oregon ($543.81 per week), Nevada ($450.70 per week), and Hawaii ($613.30 per week), as shown in the figure below. California’s low benefits are even more striking considering the state’s higher cost of living.

At just $40 per week, California’s minimum UI benefit — the payment provided to workers who earned the lowest wages before becoming unemployed — is also among the nation’s lowest, falling below the minimum benefits provided by 29 other states. For example, Washington’s minimum benefit is seven times greater than California’s ($295 per week), while Arizona’s minimum benefit is $200 per week, and Oregon’s is $171. In addition, 12 states offer dependent allowances, providing a weekly supplement to UI benefits so that workers with children and other dependents have an additional resource to make ends meet. Despite its low average and minimum benefits, California offers no additional support to unemployed parents and other workers supporting dependents.

Low Unemployment Insurance Benefits Exacerbate Racial and Gender Inequities

Low UI benefits can be especially harmful for workers of color, including American Indian, Black, Latinx, and Pacific Islander Californians — particularly women — who are overrepresented in low-paying jobs due to structural racism and sexism.¹⁰ Since benefit levels are based on prior wages, low-paid workers tend to receive lower UI benefits. Yet workers who lived paycheck-to-paycheck when they were employed face even greater hardship in trying to cover their expenses on benefits that are a small fraction of their paycheck. At the same time, workers of color typically have fewer financial resources other than UI benefits to draw on during unemployment compared to white workers, as a result of systematic exclusion from wealth-building opportunities over generations.¹¹

California’s low benefit levels also undercut UI’s ability to fight recessions. This is particularly troubling because a strong UI system is among the most effective tools available to promote economic recovery: According to the International Monetary Fund, each dollar paid in UI benefits during the pandemic generated $1.92 of economic growth as workers and their families were able to continue spending on basic necessities.¹² This powerful impact was achieved because the federal government expanded UI benefits during the pandemic: A $600 a week supplement to regular state UI benefits early in the pandemic (later $300 a week) ensured that unemployed workers could keep spending money, supporting local businesses across the state. The expanded federal benefits also ensured that California jobseekers and their families were able to meet expenses far better than they could by relying solely on the state’s regular UI benefits.

Federal pandemic programs also expanded eligibility for UI benefits to self-employed workers, caregivers, misclassified independent contractors, part-time workers, and many underpaid workers who are typically shut out of California’s regular UI system. By expanding the share of unemployed workers who received support, federal pandemic programs further improved the ability of UI to stabilize the economy.

More than 1 million undocumented workers, who represent over 6% of California's workforce, were, notably, not included in the UI benefit expansions.¹³California instituted a Disaster Relief Assistance for Immigrants (DRAI) program to provide limited, one-time financial assistance to unemployed immigrants who were not otherwise eligible for UI benefits. However, the amount of support was grossly inadequate to meet immigrant workers’ needs and fell far short of what other Californians received, with researchers finding that unemployed citizen workers in California were eligible for up to 20 times more aid than the state’s undocumented workers in the first year of the pandemic.¹⁴

Workers who are on strike are also excluded from UI benefits, even though they miss paychecks and risk hardship for exercising their right to collective action. California should consider expanding UI benefits to striking workers, as New York and New Jersey already do.

Now both federal and state emergency programs have expired, and Californians are left with a UI system that does not adequately support jobseekers and still excludes many of them. California’s UI system is not prepared for the next unexpected economic shock or crisis. At a moment when policymakers are increasingly worried that the use of artificial intelligence could push large numbers of workers out of a job, a strong UI system is needed more than ever to support Californians who could be displaced.

A Strong and Effective UI System Requires Adequate Financing: California Needs Major Reforms

Unemployment insurance is funded by state and federal payroll taxes. In general terms, the Federal Unemployment Tax Act (FUTA) funds UI administrative costs and certain special programs, while the State Unemployment Tax Act (SUTA) tax, imposed by states, pays for UI benefits and is used to repay any federal loans made to the state’s UI trust fund (more on this below). SUTA tax revenues are deposited into a trust fund held for each state by the US Treasury.

State unemployment insurance benefits are paid out of each state’s trust fund. If states don’t have sufficient money in the trust fund to pay UI benefits, they can take out a federal loan. That’s what California and 21 other states did as they struggled to pay out benefits to tens of millions of laid off workers in the early days of the COVID-19 pandemic.¹⁵ Although the federal government fully paid for expanded UI benefits during the pandemic economic crisis, California still faced a record $35 billion in costs for regular UI benefits. The state is still paying back those costs today, and currently faces a trust fund debt of $19.8 billion.¹⁶

Yet the extraordinary costs of the pandemic are only the latest and most dramatic manifestation of an ongoing structural deficit in California’s UI financing system. In January 2020, before the pandemic triggered record job loss, California already had the most underfunded UI system of any state.¹⁷ Even today, with a relatively low unemployment rate hovering around 5%, California does not raise enough revenue to pay for current UI benefits, much less pay down its trust fund debt.

In addition to regular SUTA taxes, California employers are paying a 15% tax surcharge to pay back the trust fund loan, but this additional revenue is still not sufficient to reduce the principal. The state Employment Development Department projects that at the current rate of repayment, the outstanding federal UI loan balance will grow to nearly $22 billion in 2025.¹⁸

California must overhaul its UI revenue system to adequately support unemployed workers and the economy, pay down its debt, and build a reserve for future economic downturns.

Failing to Modernize UI Financing Costs All Californians

California’s underfunded UI system imposes steep costs across the state. As described above, job seekers face hardship as they struggle to get by on low UI benefits, even as many jobless workers are excluded. At the same time, meager benefits may not be enough to power the state’s economic recovery in the next downturn. Yet the costs are even more widespread: Because the interest on the trust fund debt has traditionally been paid out of the state’s general fund, all California residents will ultimately pay a price.

Due to rising interest rates, California owed $484 million in interest on UI debt in 2024 at a time when the state was facing a significant, multi-year budget shortfall. Although California was able to use internal borrowing to cover the interest payment due in 2023, there were fewer such options available in 2024 and the state’s final budget agreement covered most of the interest payment ($384 million) with General Fund dollars, taking significant resources away from other priorities. Looking ahead to future years, California will continue to owe interest every year that it maintains trust fund debt, and these payments will significantly reduce funding available to invest in other critical priorities, including health care, child care, affordable housing, and environmental protection.

And while employers may express concern about increased UI taxes in a modernized system, they also face a direct tax penalty if no action is taken: In addition to the surcharge to pay back the loan, California employers will also face a reduction in the Federal Unemployment Tax Act (FUTA) tax credit, effectively hiking their taxes as long as the trust fund debt continues to go unpaid.

Raising and Indexing the Taxable Wage Base Is Critical to Improving UI Financing

Failure to raise revenue is at the heart of California’s UI financing crisis. State policymakers have been reluctant to mandate that employers contribute the funds needed to finance a strong and effective UI system. As a result, California taxes employers on only the first $7,000 of each employee’s pay.

What Is the Taxable Wage Base and Why Is It Important for Understanding How Unemployment Insurance Benefits Are Funded?

State unemployment benefits are financed through state payroll taxes paid by employers. There are two basic factors that determine how much employers pay in those taxes: the tax rate and the taxable wage base. The tax rate is determined for each employer based on tax rate schedules outlined in state law. The rate for a particular employer is then applied to a taxable wage base equal to each of their employee’s first $7,000 in annual earnings to determine how much tax the employer owes.

For example, new employers are assigned a state payroll tax rate of 3.4%. If a new employer has three employees all earning $40,000 annually, the employer would calculate the payroll tax they owe by multiplying 3.4% by $7,000 for each employee ($238), for a total annual tax of $714 for all three employees. If the taxable wage base were higher, say $21,000, the same amount of revenue could be raised with a much lower tax rate (1.1%) because a greater proportion of each worker’s wages would be subject to taxation. Alternatively, by maintaining a 3.4% tax rate, the higher taxable wage base would raise three times as much revenue ($2,142 for all three employees).

When comparing state payroll taxes across states, it’s important to consider both the tax rate and the taxable wage base to which that rate is applied. A state with relatively high tax rates does not necessarily result in employers in that state paying more in taxes than states with lower tax rates. For example, a 5.7% rate would generate a tax of $400 if applied to a base of $7,000. But a much lower rate of 3.8% would generate twice as much tax ($800) if applied to a base of $21,000.

This low fixed amount, known as the taxable wage base, not only raises inadequate revenue but raises it inequitably. The low taxable wage base means that California taxes a higher proportion of the wages of low-paid workers and imposes the highest effective tax rates on small businesses while failing to keep up with wage growth and taxing a far smaller share of wages than most other states. Raising the taxable wage base and indexing it to the state’s average wages is essential to strengthen the UI system.

Wages have increased significantly over the last 40 years, yet California’s taxable wage base has remained fixed, lagging further and further behind. While the state’s taxable wage base of $7,000 was equivalent to full-time wages at the federal minimum wage in 1982, it was less than three months of full-time work at the minimum wage in 2022 in California. By 2022, California’s effective UI tax rate was less than half of what it had been in 1980, as the figure below illustrates.

California’s UI financing system disproportionately taxes the employers of low-paid and part-time workers because the state’s taxable wage base is so low. Take, for example, employers subject to a state UI tax rate of 3.1%, which is the average rate paid by employers in 2023. Since most workers earn more than the state’s taxable wage base of $7,000, employers effectively pay $217 in state UI taxes per worker. But this represents a much larger share of employers’ labor costs for low-paid and part-time workers. For instance, $7,000 amounts to 1.3% of the earnings paid to half-time minimum wage workers, compared to 0.7% of the earnings paid to full-time minimum wage workers and just 0.2% of the earnings of workers paid three times the minimum wage, as the figure below shows. Researchers find that this creates disincentives to hire part-time workers in the first place, leading to fewer employment opportunities, which would impact workers who benefit from the flexibility of part-time work or who rely on additional earnings to make ends meet.¹⁹ Raising the taxable wage base would help to address these inequalities.

Small businesses also bear a disproportionate tax burden as a result of California’s low taxable wage base for UI.

Raising California’s taxable wage base is not a pie-in-the-sky idea. In fact, 94% of US states already have a higher taxable wage base than California, including Washington State with a taxable wage base of $68,500 in 2024, Oregon ($52,800), Nevada ($40,600) and Hawaii ($59,100).²⁰ These states not only tax a much higher share of payrolls than California, but their wage base is indexed to the state’s average weekly wage so that it adjusts automatically each year as wages rise, providing far more reliable financing than California’s low fixed rate. As the figure below shows, businesses in California actually pay taxes on a smaller share of wages than any other state, with just 8% of average annual earnings taxed. California’s low, fixed taxable wage base leads it to raise far less UI revenue than the state needs.

California Must Shift to Forward Financing of UI Benefits and Reform Experience Rating

Raising and indexing California’s taxable wage base is essential to ensuring adequate UI financing, but that alone will not be sufficient to sustainably fund the system because of the structurally flawed mechanism that determines UI tax rates in California.

California has seven employer contribution rate schedules that operate to increase state UI tax rates when the balance of the state’s UI trust fund is low and to reduce rates when the trust fund has more funding.²¹This “pay-as-you-go” mechanism is meant to increase revenues at the moment they are needed, but it produces two perverse outcomes. First, by hiking tax rates during economic downturns (when more workers are claiming UI benefits and the trust fund balance falls), the system compels businesses to pay higher taxes during the most difficult economic times, when their own resources are most depleted. Raising business costs during recessions undermines the ability of UI to promote economic recovery. Second, by lowering tax rates as the trust fund balance begins to recover, this system makes raising additional revenue difficult. If California were to increase its taxable wage base without fixing the “pay-as-you-go” mechanism, employer tax rates would automatically fall as soon as the trust fund balance began to improve, making it more difficult to reach and maintain solvency.

The weakness of pay-as-you-go financing is evident with a look at California’s history: As the figure below indicates, the state failed to raise sufficient revenue to fund UI benefits in every recession since 1980.

The alternative to California’s pay-as-you-go financing mechanism is a forward-funded system designed to take in more revenue than it pays out during periods of low unemployment. Forward funding enables state UI systems to build up sufficient reserves during periods of economic growth to pay benefits during economic downturns, when large numbers of workers are laid off and seeking unemployment benefits. The US Department of Labor’s UI Trust Fund solvency standards are designed to encourage this type of forward funding.²² Numerous other states, including Oregon, use a forward-funding mechanism to put their UI systems on more stable financial footing.²³

The mechanism for determining each individual employer’s UI tax rate is also flawed and needs to be reformed. In general, private employers are assigned a tax rate based on their experience with unemployment — that is, their history of laying off workers who then claim unemployment benefits.²⁴ This system, known as “experience rating,” is required by the federal government, but states have considerable flexibility in selecting specific experience rating methods. In California, an employer’s experience rating is determined by a formula that takes into account their contributions into the trust fund and the UI benefits paid to their former workers.

There are two unintended consequences of this approach to experience rating. First, because employers’ contribution rate increases when their former employees claim UI benefits, employers have an incentive to discourage workers from applying for benefits, provide misinformation about eligibility, and dispute UI benefit claims. Second, this approach to experience rating makes raising the taxable wage base, on its own, a less effective strategy for improving UI financing. This is because increasing the taxable wage base would improve employers’ experience rating and automatically decrease their contribution rates (all else being equal), effectively limiting the amount of revenue that could be raised.

One potential alternative to this system is an experience rating system based on quarterly changes in the hours employees work for a given employer, regardless of whether these workers claim UI benefits.²⁵ This would remove the incentive for employers to discourage or dispute benefit claims and would make increasing the taxable wage base more effective at shoring up the trust fund while supporting stronger benefits and broader eligibility.

Additionally, California could explore adopting this alternative experience rating system in combination with a method of assigning employer tax rates based on desired revenue targets, which researchers find is a highly effective strategy for improving UI financing.²⁶ Finally, California should consider how app corporations like Uber, Lyft, and DoorDash, which use technology to set and control working conditions, short-change California’s UI system by misclassifying employees as independent contractors, circumventing traditional labor laws and taxes. A study from the UC Berkeley Labor Center finds that If Uber and Lyft had treated workers as employees, these two corporations alone would have paid $413 million into the state’s UI trust fund between 2014 and 2019.²⁷

Conclusion

California’s UI system is a critical piece of social infrastructure and could become an engine of economic dynamism for the state, enabling workers, employers, and the economy to thrive. To achieve this vision, policymakers must stabilize the state’s UI finances by raising the taxable wage base and shifting to a forward-financing mechanism, providing the revenue needed to support California jobseekers with adequate benefits and expand assistance to workers who are currently shut out of the system.

Health & Safety Net

Poverty & Inequality

1
Employment Development Department, California Employers Gained 43,700 Nonfarm Payroll Jobs in May 2024, accessed June 21, 2024, https://edd.ca.gov/en/about_edd/news_releases_and_announcements/unemployment-may-2024/.
2
Average benefit amount based on US Department of Labor Employment and Training Administration, Unemployment Insurance Data, https://oui.doleta.gov/unemploy/data_summary/DataSum.asp; housing affordability based on National Low Income Housing Coalition, Out of Reach: The High Cost of Housing, 2023, https://nlihc.org/sites/default/files/oor/California_2023_OOR.pdf using an affordability standard of 30% of income for rent.
3
Legislative Analyst’s Office, Extending Unemployment Insurance to Cover Excluded Workers, (March 28, 2023), https://lao.ca.gov/handouts/state_admin/2023/Unemployment-Insurance-032823.pdf.
4
Ammar Farooq, Adriana D. Kugler, and Umberto Muratori, “Do Unemployment Insurance Benefits Improve Match Quality? Evidence From Recent US Recessions,” National Bureau of Economic Research (2020), https://www.nber.org/system/files/working_papers/w27574/revisions/w27574.rev0.pdf.
5
Nick Gwyn, State Cuts Continue to Unravel Basic Support for Unemployed Workers (Center on Budget and Policy Priorities, June 27, 2022), https://www.cbpp.org/research/state-budget-and-tax/state-cuts-continue-to-unravel-basic-support-for-unemployed-workers; Adriana D. Kugler, Umberto Muratori, and Ammar Farooq, The Impacts of Unemployment Benefits on Job Match Quality and Labour Market Functioning (Centre for Economic Policy Research, February 7, 2021), https://cepr.org/voxeu/columns/impacts-unemployment-benefits-job-match-quality-and-labour-market-functioning.
6
Amy Traub, Unemployment Insurance Had Less Capacity to Cut Poverty in 2022 (National Employment Law Project, 2023), https://www.nelp.org/insights-research/unemployment-insurance-had-less-capacity-to-cut-poverty-in-2022/.
7
Patrick Carey, et al., “Applying for and Receiving Unemployment Insurance Benefits During the Coronavirus Pandemic,” Monthly Labor Review, US Bureau of Labor Statistics, September 2021, https://doi.org/10.21916/mlr.2021.19.
8
US Department of Labor, Employment and Training Administration, Unemployment Insurance Data, https://oui.doleta.gov/unemploy/data_summary/DataSum.asp.
9
Alissa Anderson and Hannah Orbach-Mandel, California Should Increase Unemployment Benefits to Help Workers Meet Basic Needs (California Budget & Policy Center, January 2024), https://calbudgetcenter.org/resources/california-should-increase-unemployment-benefits-to-help-workers-meet-basic-needs/
10
Jasmine Tucker and Julie Vogtman, When Hard Work Is Not Enough: Women in Low-Paid Jobs (National Women’s Law Center, April 2020), https://nwlc.org/wp-content/uploads/2020/04/Women-in-Low-Paid-Jobs-report_pp04-FINAL-4.2.pdf.
11
Angela Hanks, Danyelle Solomon, and Christian E. Weller, Systemic Inequality (Center for American Progress, February 21, 2018), https://www.americanprogress.org/article/systematic-inequality/.
12
Klaus-Peter Hellwig, Supply and Demand Effects of Unemployment Insurance Benefit Extensions: Evidence from US Counties (International Monetary Fund, 2021), https://www.imf.org/en/Publications/WP/Issues/2021/03/12/Supply-and-Demand-Effects-of-Unemployment-Insurance-Benefit-Extensions-Evidence-from-U-S-50112.
13
University of California Merced Community and Labor Center, Worker Relief: Expanding the Safety Net to Excluded Workers, April 2023, https://clc.ucmerced.edu/sites/clc.ucmerced.edu/files/page/documents/worker_relief_2022_2.pdf.
14
University of California Merced Community and Labor Center, Essential Fairness: The Case for Unemployment Benefits for California’s Undocumented Immigrant Workers, March 2022, https://clc.ucmerced.edu/sites/clc.ucmerced.edu/files/page/documents/essential_fairness.pdf.
15
US Department of Labor, Office of Unemployment Insurance Division of Fiscal and Actuarial Services, State Unemployment Insurance Trust Fund Solvency Report 2021, March 2021,https://oui.doleta.gov/unemploy/docs/trustFundSolvReport2021.pdf.
16
US Department of Labor, Office of Unemployment Insurance Division of Fiscal and Actuarial Services, State Unemployment Insurance Trust Fund Solvency Report 2024, March 2024, https://oui.doleta.gov/unemploy/docs/trustFundSolvReport2024.pdf.
17
US Department of Labor, Office of Unemployment Insurance Division of Fiscal and Actuarial Services, State Unemployment Insurance Trust Fund Solvency Report 2020, March 2020, https://oui.doleta.gov/unemploy/docs/trustFundSolvReport2020.pdf.
18
Employment Development Department, May 2024 Unemployment Insurance (UI) Fund Forecast, May 2024, https://edd.ca.gov/siteassets/files/unemployment/pdf/edduiforecastmay24.pdf.
19
Mark Duggan, Audrey Guo, and Andrew C. Johnston, Would Broadening the UI Tax Base Help Low-Income Workers? (IZA Institute for Labor Economics, January 2022), https://docs.iza.org/dp15020.pdf; Po-Chun Huang, “Employment Effects of the Unemployment Insurance Tax Base,” The Journal of Human Resources, 59, no.4 (March 2022) https://doi.org/10.3368/jhr.0719-10316R2.
20
US Department of Labor, Employment and Training Administration, Significant Provisions of State Unemployment Insurance Laws Effective January 2024, https://oui.doleta.gov/unemploy/content/sigpros/2020-2029/January2024.pdf.
21
Employment Development Department, California System of Experience Rating, DE 231Z Rev. 17, (6-22), https://edd.ca.gov/siteassets/files/pdf_pub_ctr/de231z.pdf.
22
US Department of Labor, Office of Unemployment Insurance Division of Fiscal and Actuarial Services, State Unemployment Insurance Trust Fund Solvency Report 2024, March 2024, https://oui.doleta.gov/unemploy/docs/trustFundSolvReport2024.pdf.
23
State of Oregon Employment Department Oregon Employment Department Announces 2024 Rates for Paid Leave Oregon and Unemployment Insurance, November 2023, https://www.oregon.gov/employ/NewsAndMedia/Documents/2023-11-Tax-Contribution-Rate-Notice.pdf.
24
New employers are initially assigned a rate of 3.4%, which is then adjusted after 2-3 years based on their experience rating. Additionally, public and nonprofit employers may choose to finance UI benefits on a dollar-for-dollar reimbursement basis instead of being subject to experience rating. Employment Development Department, California System of Experience Rating, DE 231Z Rev. 17 (6-22), https://edd.ca.gov/siteassets/files/pdf_pub_ctr/de231z.pdf; Employment Development Department, 2024 California Employer’s Guide, DE 44 Rev. 50 (1-24), 9, https://edd.ca.gov/siteassets/files/pdf_pub_ctr/de44.pdf.
25
Josh Bivens et al., Reforming Unemployment Insurance (Center for American Progress, Center for Popular Democracy, Economic Policy Institute, Groundwork Collaborative, National Employment Law Project, National Women’s Law Center, and Washington Center for Equitable Growth, June 2021), 36, https://files.epi.org/uploads/Reforming-Unemployment-Insurance.pdf.
26
A comprehensive analysis of state UI financing systems prepared by the Urban Institute for the US Department of Labor concluded that this approach, called “array allocation,” in combination with indexing the taxable wage base to wage growth were two key factors supporting UI trust fund adequacy. The analysis also suggested that states using array allocation have more stability in tax rates from year to year, leading to more predictability for both employers and the UI trust fund. Wayne Vroman et al., A Comparative Analysis of Unemployment Insurance Financing Methods (Urban Institute, December 2017), xv, 20, 42-43, 46, https://www.dol.gov/sites/dolgov/files/OASP/legacy/files/A-Comparative-Analysis-of-Unemployment-Insurance-Financing-Methods-Final-Report.pdf.
27
Ken Jacobs and Michael Reich, What Would Uber and Lyft Owe to the State Unemployment Insurance Fund? (Institute of Research on Labor and Employment, University of California, Berkeley, May 2020), https://laborcenter.berkeley.edu/pdf/2020/What-would-Uber-and-Lyft-owe-to-the-State-Unemployment-Insurance-Fund.pdf.

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Explore More on Women’s Well-Being

Notes on Methodology

The California Women’s Well-Being Index (WWBI) is a county-level, composite index that shows how women are faring throughout California. The WWBI consists of 30 indicators of women’s well-being that are grouped into five dimensions: Health, Personal Safety, Employment and Earnings, Economic Security, and Political Empowerment. The methodology used to create the index is outlined in detail below.

Creating the Women’s Well-Being Index
In deciding which measures, or “indicators,” to include in the WWBI, the Budget Center first engaged in a thorough review of research on women and families as well as an evaluation of comparable projects at the national and state level.1 This review resulted in a wide-ranging list of potential indicators. Because this county-level index measures women’s well-being, potential indicators were limited to “outputs” – that is, those that measure attributes of the female population or reflect community characteristics. This standard eliminated “input” indicators, such as those that measure public spending or community resources, for example.

The Budget Center subsequently screened data sources to ensure that data for potential indicators were current, available from a reputable source, and based on sound research methods. Data also were screened to verify that they are updated on a regular basis in order to allow for updates to the WWBI in future years. This initial search resulted in a list of 50 potential indicators.

Next, the Budget Center, in cooperation with the Women’s Foundation of California, surveyed individuals who focus on issues of concern to women across the state. (See the Acknowledgments for a list of survey respondents.) The survey allowed respondents to rank the importance of potential indicators in measuring women’s well-being as well as to suggest alternative indicators. The initial survey was sent via email to approximately 200 individuals. Three follow-up emails were sent to the same individuals, yielding a response rate of approximately 30%. Based primarily on survey results, the initial list of 50 indicators was narrowed down to 30 indicators falling within five dimensions of women’s well-being.

Data Sources and Data Quality
The 30 indicators included in the WWBI are based on data from a variety of state and federal agencies as well as from universities. Data for 17 indicators come from surveys, including the US Census Bureau’s American Community Survey (ACS) and the California Health Interview Survey (CHIS) conducted by University of California, Los Angeles. The remaining data come from administrative sources, with this information collected by various agencies and organizations, such as the California Department of Justice or the California Department of Public Health. Data for most indicators reflect multi-year estimates. (Combining data from multiple years increases the reliability of the data.) These multi-year estimates reflect the average condition in each county during a specific time period.

For survey data, margins of error at the 95% confidence level are included in the WWBI whenever possible and applicable.2 In addition, margins of error at the 95% confidence level are included for some administrative data. While these data are not subject to sampling error – because they reflect a full “universe” of individuals rather than a sample – it is common to provide the margin of error for certain vital statistics because they are subject to random variation during any given period.

In some cases, due to data limitations, data for certain counties for specific indicators were deemed unreliable. The Budget Center used several common benchmarks to determine if a data point was unreliable. This includes an event count of less than 20 in a county for any given time period and/or a coefficient of variation greater than or equal to 30%. For the ACS data, a higher standard was applied: a coefficient of variation greater than or equal to 10%.

When data for one or more counties were determined to be unreliable, county groups were created by aggregating estimates. This was done in order to create a more stable estimate applicable to each county in the group. When creating county groups, several considerations were made. First, contiguous counties with unreliable estimates were often grouped together. However, if possible, county groups were created with the smallest number of counties to avoid unnecessary loss of detail. For example, if the data for four contiguous counties were deemed unreliable, ideally two county groups would be created instead of one large county group. In some cases, data for one or more counties were grouped with a county that had a reliable estimate in order to create a stable estimate.

In addition, indicator values were considered when aggregating counties. For example, if a county with an unreliable estimate needed to be grouped with another county, the indicator values were taken into account in order to avoid aggregating counties with disparate estimates. In some cases, groups do not consist of contiguous counties because the estimates for the contiguous counties were too different to be combined.

For some counties and racial/ethnic groups, the Budget Center chose to display the unreliable estimate. In these cases, the estimate is noted in the tool with an asterisk.

Calculating the Women’s Well-Being Index
The WWBI consists of a wide range of data reported in a variety of ways such as rates, ratios, or percentages. These data have varying ranges and scales. In order to construct a composite index, indicators within each dimension were standardized and aggregated to create a county-level value for each dimension and for the overall index. This section outlines the methodology used in standardizing and aggregating the data in the WWBI.

Data were standardized for each indicator by calculating the z-score. The z-score converts a value into units of measurement based on the standard deviation. The z-score is calculated using the 58-county averages and standard deviations for each indicator. This allows for comparing values across indicators with different formats and with varying ranges of data. The z-score is calculated for each county and indicator using the following formula:

In some instances, a higher z-score indicates greater well-being, such as the percentage of women with a bachelor’s degree. In other cases, a higher z-score indicates lesser well-being, such as the female unemployment rate. In order to ensure that higher scores consistently reflect greater well-being, a number of indicators were reverse-coded. This was done by multiplying the z-score by negative 1.

One disadvantage of using z-scores is that the value of the z-score is hard to interpret. In order to create a value that is easy to understand, the z-score for each indicator was converted into a 100-point scale using the following formula:

The highest scaled z-score for any given indicator has a value of 100, and the lowest scaled z-score has a value of 0, with higher scores indicating greater well-being. However, while a score of 100 reflects the best value across all counties, it is not indicative of maximum well-being. For example, a score of 100 for the voter registration indicator does not mean that all eligible women in that county are registered to vote. Likewise, a score of 0 does not indicate that no women in that county are registered to vote.

To calculate scores for each of the five dimensions, we averaged the scaled z-scores for each county within each dimension. We then calculated overall index scores by averaging each county’s five dimension scores. The indicators and dimensions were not weighted prior to aggregation (i.e., they have equal weights). This reflects the belief that each indicator within a dimension has equal bearing on the well-being of women. Likewise, equally weighting the five dimensions indicates that health, personal safety, employment and earnings, economic security, and political empowerment are all equally important in assessing how women are faring in California.3

Counties are ranked by indicator score, by dimension score, and by their overall index score. In general, the WWBI employs a “modified competition ranking system” to rank the counties. In a modified competition ranking system, ties are ranked with the lowest rank. For example, if three of California’s 58 counties are tied for last, they would have a rank of 58. Using the traditional ranking system, their rank would be 56. The exception to this rule is when two or more counties are tied for first. When this occurs, these counties are ranked first.

Updates Made to the Women’s Well-Being Index

The California Budget & Policy Center updated the Index in October 2020 and again in September 2024. The following changes were made across the versions.

2020
In 2020, eight indicators were altered based on feedback received by stakeholders. The following provides a list of the changes made to these indicators.

Economic Security Dimension

Cost of Housing: The Cost of Housing indicator provides data on housing affordability. The first version of the Women’s Well-Being Index measured housing affordability by using data from the US Housing and Urban Development’s calculation of Fair Market Rents and the US Census Bureau’s calculation of single mothers’ median income. The 2020 Index generalizes this measure of housing affordability by using median gross rent and women’s median annual income data from the US Census Bureau’s American Community Survey (2014-2018).

Employment & Earnings Dimension

Labor Force Participation: The Labor Force Participation indicator shows what share of the population is actively working or looking for work. The first version of the Index used the population ages 16 to 64. The 2020 Index uses the prime-age working population – ages 25 to 64 – in calculating the labor force participation rate. This age group would typically be expected to be working or looking for work.

Low-Wage Workers: The first version of the Index provided data on the percentage of women working in low-wage occupations. The 2020 Index refines this indicator, providing data on the percentage of women paid low wages.

Health Dimension

Health Care Coverage: The Health Care Coverage indicator provides data on the share of women without health insurance. The first version of the Index provided data for women ages 18 to 64. The 2020 Index provides data for women ages 19 to 64. This change is due to a modification made by the Census Bureau in the presentation of these data in their American Community Survey table (B27001).

Life Expectancy: The Life Expectancy indicator provides data on the estimated average lifespan of an individual at birth. This indicator replaces the Obesity indicator from the 2016 Index. Life expectancy is a more common measure of health and wellness.

Safety Dimension

Sexual Assault: Prior to 2014, the Federal Bureau of Investigation collected data on three types of sexual offenses: rape, sodomy, and sexual assault with an object. In 2014, the Federal Bureau of Investigation required reporting agencies in the US to aggregate data for these assaults into one offense: forcible rape. This is a broader definition of sexual assault that encompasses a wider range of offenses. The California Department of Justice implemented this change in the reporting of crime data in 2014, which resulted in an increase in the number of reported rapes.

Domestic Violence: The first version of the Index used the total population when calculating domestic violence rates for the population in each county. The 2020 Index uses the female population for all rates in the Personal Safety Dimension to be more consistent across indicators.

Assault: The first version of the Index the female population age 18 and over when calculating rates of assault for the population in each county. The 2020 Index uses the female population for all rates in the Personal Safety Dimension to be more consistent across indicators.

2024
In 2024, two indicators were altered based on recent economic security research and feedback received by stakeholders. The following provides a list of the changes made to these indicators.

Economic Security Dimension

Commuting Time/Digital Equity: The digital equity indicator replaced the commuting time variable as digital equity was determined to be a more relevant variable. Specifically, a series of literature points to challenges with economic security when adults do not have access to broadband or a computer. The racial digital divide is particularly stark. This indicator shows the number and percentage of adults (18 and over) with cable, modem, fiber optic or DSL service and a desktop, laptop, netbook, or netbook computer in the household. This indicator utilizes the US Census Bureau’s 2018-2022 five-year American Community Survey variables reflecting access to in-home internet and access to in-home computer/laptop.

High School Diploma/Bachelor’s Degree: The bachelor’s degree indicator replaced the high school diploma indicator. This change was made to reflect recent research showing that women without a bachelor’s degree were more likely to lose their jobs during the COVID-19 pandemic. The indicator shows the number and percentage of adults (25 and over) that have a bachelor’s degree. This indicator utilizes the US Census Bureau’s 2018-2022 five-year American Community Survey variables reflecting educational attainment.

Food Insecurity/Food Hardship: While the data source and analysis for this indicator remain the same across versions, the label for the food insecurity indicator changed to food hardship. This change was made given that the United States Department of Agriculture’s definition of food insecurity did not completely align with the measure used for this indicator.

Health Dimension

Life Expectancy: Prior to the 2019 dataset, the life expectancy data from the Institute for Health Metrics and Evaluation did not disaggregate life expectancy at birth by race/ethnicity. The 2019 dataset allowed for this disaggregation and is now included in the indicator.

Safety Dimension

Fatal Accidents: The fatal accidents racial/ethnic disaggregation now disaggregates between Asian and Pacific Islander identities. In previous versions, Asian and Pacific Islander were combined into one category.

Hospital Visits Due to Assault: The hospital visits due to assault now includes a racial/ethnic disaggregation for Multi-Race. Previous versions did not include this disaggregation.

Hospital Visits Due to Assault: The hospital visits due to assault indicator now includes a racial/ethnic disaggregation for Multi-Race. Previous versions did not include this disaggregation.

Suicide: The suicide indicator now includes a racial/ethnic disaggregation for Multi-Race. Previous versions did not include this disaggregation.

Endnotes

1 See for example, Helen Boutrous, et al., The Report on the Status of Women and Girls in California: 2015 (Mount Saint Mary’s University, Los Angeles: 2015); Anna Chu and Charles Posner, The State of Women in America: A 50-State Analysis of How Women Are Faring Across the Nation (Center for American Progress: September 2013); Cynthia Hess, et al., The Status of Women in the States 2015 (Institute for Women’s Policy Research: May 2015); Kristen Lewis and Sarah Burd-Sharps, Women’s Well-Being: Ranking America’s Top 25 Metro Areas (Measure of America: April 2012); University of Minnesota, Center on Women and Public Policy, and Women’s Foundation of Minnesota, Status of Women & Girls in Minnesota: Research Overview (June 2014); Wider Opportunities for Women, The Economic Security Scorecard: Policy and Security in the States (2013).
2 A 95% confidence level means that a researcher is 95% confident that the interval defined by the margins of error contains the true value for the population as a whole.
3 For more details on weighting within composite indexes and other methodological issues, see Organization for Economic Co-Operation and Development, Handbook on Constructing Composite Indicators: Methodology and User Guide (2008).

Acknowledgements

The California Women’s Well-Being Index is a project of the California Budget & Policy Center.

Laura Pryor (Research Director) and Hannah Orbach-Mandel (Policy Analyst) prepared the 2024 Women’s Well-Being Index (WWBI) with assistance from Nishita Nair (Research Associate) and other Budget Center staff. GreenInfo Network developed the data visualization, downloadable county fact sheets, and indicator fact sheets.

Kristin Schumacher, a former California Budget & Policy Center analyst, created the WWBI to help advocates and policymakers understand how women are faring in California. Since the WWBI was first published in 2016, the Index has been replicated in several states nationwide. Schumacher is a consultant to the 2024 update of the WWBI and continues to advance this work through her consulting firm, Aster Policy Analytics.

The 2024 Women’s Well-Being Index was updated in collaboration with the California Commission on the Status of Women and Girls, which provided funding, communications, outreach, and engagement support.

We are thankful to a number of individuals who have contributed to earlier work on the Women’s Well-Being Index.

For the 2024 Women’s Well-Being Index, the Budget Center consulted a number of individuals to help inform the tool’s updates. Additionally, in late 2017 and early 2018 a number of individuals shared their thoughts on policies to boost women’s economic security, employment, and earnings. These individuals helped to shape policy recommendations for women related to work supports, boosting income, building wealth, and improving programs and services that benefit women with low-incomes in California. (Organizational affiliation and title reflects position at time of interview.)

Dr. Fatima Alleyne, Black Women Organized for Political Action
Jasmine Amons, Program Associate, National Center for Youth Law, Women’s Policy Institute Fellow
Graciela Aponte-Diaz, Director of California Policy, Center for Responsible Lending
Sarah Arce, Senior Policy Director, The Campaign for College Opportunity
Elizabeth Ayala, Senior Program Associate, The Women’s Foundation of California
Barbara Baran, Co-Director, California EDGE Campaign
Alexandra Bastien, Senior Associate, Policy Link
Sarah Bohn, Research Fellow, Public Policy Institute of California
Christa Brown, Manager, Financial Justice Project, City and County of San Francisco
Lewis Brown, Jr., Senior Associate, Policy Link
Tyrone Buckley, Policy Director, Housing California
Maggie Cervantes, Executive Director, New Economics for Women
Elena Chávez Quezada, Senior Program Officer, Walter & Elise Hass Fund
Judy Darnell, Vice President of Public Policy United Ways of California
Melany de la Cruz-Viesca, Assistance Director, UCLA Asian American Studies Center
Rachel Deutsch, Supervising for Worker Justice, Center for Popular Democracy
Jodi Doane, Grants & Community Relations Manager, JVS SoCal, Women’s Policy Institute Fellow
Rosalyn Epstein, Financial Empowerment Program Manager, National Coalition for Asian Pacific American Community Development
Tania Flores, Senior Program Associate, The Women’s Foundation of California
Michelle Freridge, Executive Director, Asian Youth Center
Emily Gordon, Director of Strategic Research, Center for Popular Democracy
Sabrina Hamm, Statewide Managing Director, California Asset Building Coalition
Katie Hern, Co-Founder, California Acceleration Project
Dr. Hilary Hoynes, Haas Distinguished Chair in Economic Disparities, Goldman School of Public Policy, University of California Berkeley
Mary Ignatius, Statewide Organizer, Parent Voices
Jennifer Ito, Research Director, USC Program for Environmental and Regional Equity (PERE)
LaNiece Jones, Executive Director, Black Women Organized for Political Action
Rebecca Kauma, Director of Digital Equity, County of Los Angeles
Tatiana Larkin, Black Women Organized for Political Action
Anya Lawler, Policy Advocate, Western Center on Law & Poverty
Vihncent Le, Senior Legal Counsel of Tech Equity, The Greenlining Institute
Pete Manzo, President & CEO, United Ways of California
Amy Matsui, Senior Counsel and Director of Income Security, National Women’s Law Center
Heather McCulloch, Founder and Director, Closing the Women’s Wealth Gap
Krista Niemczyk, Public Policy Manager, California Partnership to End Domestic Violence
Marj Plumb, Chief Strategist, Policy Advocacy and Training, The Women’s Foundation of California
Anne Price, President, Insight Center
Patti Prunhuber, Senior Policy Attorney, Child Care Law Center
Aaron Schill, Director of Research and Programs, National Digital Inclusion Alliance
Katie Selenski, Executive Director, CalSavers (Formerly Secure Choice)
Donna Sneeringer, Director of Government Relations, Child Care Resource Center
Jessica Stender, Senior Counsel, Workplace Justice & Public Policy, Equal Rights Advocates
Adie Tomer, Senior Fellow, Brookings Metro
Marisabel Torres, Senior Policy Analyst, UnidosUS
Julie Vogtman, Director of Job Quality and Senior Counsel, National Women’s Law Center
Lisa Williams, Black Women Organized for Political Action
In addition, individuals who responded to our survey in summer 2015 on selecting indicators were instrumental in guiding the development of the initial version of the California Women’s Well-Being Index. (Organizational affiliation reflects position at time of survey.)
Dion Aroner, Partner, Aroner, Jewel and Ellis Partners
Marisol Aviña, Program Manager, The California Endowment
Barbara Baran, Co-Director, California EDGE Coalition
Jessica Bartholow, Legislative Advocate, Western Center on Law & Poverty
Rebecca Hamburg Cappy, Director, Northern California Office, Alliance for Justice
Krystle Contreras, Director of Outreach and Prevention, Central California Family Crisis Center
Betsy Cotton, Director, Close the Gap CA
Sarah Crow, Vice President, The Opportunity Institute
Cynthia Douglas, California Department of Social Services
Myra Duran, Policy Manager, California Latinas for Reproductive Justice
Stephanie Fajuri, Supervising Attorney, Disability Rights Legal Center – Cancer Legal Resource Center
Sequoia Hall, Leadership Council Member, East Oakland Building Health Communities
Marlene Christine Hurd, Human Resources Manager, Administrator, Healthy Communities Inc. dba Healthy Oakland
Jennifer Ito, Project Manager, University of Southern California, Program for Environmental and Regional Equity
Kate Karpilow, Executive Director, California Center for Research on Women & Families
Kimberly Kenny, Associate Vice President, Mount Saint Mary’s University, Los Angeles
Mari Lopez, Policy Director, Vision y Compromiso
Linda Meric, Executive Director, 9to5, National Association of Working Women
Ami Nagle, President, Nagle & Associates
Nikki Newsome, Program Manager, Reading and Beyond
Vanessa Perez, Civic Engagement Specialist, Time for Change Foundation
Mary L. Perry, Education Consultant
Vonya Quarles, Executive Director, Starting Over, Inc.
Maria Reyes, Bilingual Legal Services Specialist, YWCA Silicon Valley
Gabriela Sandoval, Director of Research and Chief Economic Security Officer, Insight Center for Community Economic Development
Diana Scott, Chief Human Resources Officer, Prologis
Laura Segura, Executive Director, Monarch Services, Santa Cruz County
Hillary Selvin, Executive Director, National Council of Jewish Women/Los Angeles
Cathy Senderling-McDonald, Deputy Executive Director, California Welfare Directors Association
Ann Stevens, Director, Center for Poverty Research, University of California, Davis
Nancy Strohl, Consultant, Office of Senator Holly J. Mitchell
Anne Stuhldreher, Senior Program Manager, The California Endowment
Jesse Torrey, Associate Director, RISE San Luis Obispo County
Francesca Vietor, Program Director, Environment, Public Policy, Civic Engagement, The San Francisco Foundation
Nancy Volpert, Director of Public Policy, Jewish Family Service of Los Angeles
Heather Warnken, Legal Policy Associate, Warren Institute on Law & Social Policy, University of California, Berkeley, School of Law
Deborah Peterson Small, Executive Director, Break the Chains: Communities of Color and the War on Drugs
Nicole D. Vick, Senior Health Educator, Los Angeles County Department of Public Health
Pete Woiwode, Director, California Partnership

Updates

The 2024 Women’s Well-Being Index was updated in collaboration with the California Commission on the Status of Women and Girls, which provided funding, communications, outreach, and engagement support.

Health & Safety Net

Poverty & Inequality

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key takeaway

California voters will decide on November 5th, 2024 whether to pass Proposition 35, which would 1) require the state to request federal approval for the Managed Care Organization tax on an ongoing basis and 2) allocate those dollars for certain health care investments.

Access to health care is essential for everyone to be healthy and thrive. In California, Medi-Cal, the state’s Medicaid program, provides free or low-cost health care to over one-third of the state’s population. Medi-Cal covers a wide range of services to Californians with modest incomes, and many children, seniors, people with disabilities, and pregnant individuals rely on it. About half of Medi-Cal beneficiaries are Latinx, highlighting Medi-Cal’s role in promoting health equity.

California’s shortage of health care workers undermines the availability and quality of care for communities across the state. When people can’t find a provider in their area or experience long wait times for appointments, they don’t have meaningful access to health care. Enrolling in Medi-Cal and navigating the health care system can also be difficult, underscoring the need to invest in outreach and enrollment supports. While state policymakers have made considerable investments in recent years to bolster the health care workforce, more progress is needed.

what is health equity?

When everyone has the opportunity to be as healthy as possible and no one is disadvantaged from achieving this because of their race, gender identity, sexual orientation, the neighborhood they live in, or any other socially defined circumstance.

This year, policymakers had to make challenging decisions about health care investments due to the state’s recent budget shortfall and resistance from some state leaders to raise ongoing revenues. This has led to debates over the allocation of revenue from the state’s recently approved Managed Care Organization (MCO) tax. In response, many representatives of the health care industry have proposed Proposition 35, which would:

Require the state to request federal approval for the MCO tax on an ongoing basis.
Allocate MCO tax revenue for certain health care investments.

There are merits to having dedicated funding to invest in the state’s health care system. However, this approach would reduce flexibility in the state budget and could negatively affect available funding for other key services that improve the lives of Californians. This Q&A provides a high-level overview of Prop. 35, including how Californians with low incomes might be impacted by its passage as well as implications for the state budget.

What is the Managed Care Organization (MCO) tax?
How do policymakers currently plan to use MCO tax dollars?
How does Prop. 35 differ from the current MCO tax plan?
Would Prop. 35 actually make the MCO tax permanent?
How would Prop. 35 impact the state budget?
How would Prop. 35 impact Californians?
What are arguments for and against Prop. 35?

What is the Managed Care Organization (MCO) tax?

Managed Care Organizations (MCOs), also known as health insurance plans, are responsible for managing health care services as a way to control costs, utilization, and quality of care. Anthem Blue Shield and Kaiser Permanente are two examples of MCOs in California. These health insurance plans oversee the health care benefits that people receive, often requiring prior authorization or referrals to ensure that people receive appropriate and cost-effective care.

MCOs manage health care services for people with private health insurance as well as Medi-Cal enrollees. They contract with Medi-Cal to receive payments based on the number of Medi-Cal recipients they serve. Medi-Cal is a joint federal-state program, with the federal government covering part of the cost and the state covering the rest.

Federal law allows states to impose a tax on MCOs and other health-related services to help cover the state share of Medicaid health care costs, but states must comply with federal regulations and receive federal approval for these taxes. Eighteen states reported having an MCO tax in place during the 2023 state fiscal year.

California’s MCO tax is a charge based on enrollment in Medi-Cal managed care plans and private health insurance plans. The MCO tax is distinct from other types of state taxes in that the primary state fiscal benefit comes from the additional federal dollars drawn down as a result of the tax. MCOs bear very little of the cost, as they receive Medi-Cal payments from state and federal funds that offset the portion of the tax levied on Medi-Cal enrollment. By drawing down additional federal funding, the MCO tax frees up state General Fund dollars that would otherwise have been used to support existing Medi-Cal services.

California’s MCO tax was most recently approved in December 2023, and it will expire at the end of 2026 unless it is renewed again. However, state leaders are seeking additional changes to the MCO tax structure to draw down more federal funding. These changes are still pending federal approval.

The state is expected to receive net revenues of $7 billion to $8 billion annually while the tax is in effect, assuming the federal government approves recent changes. Essentially, the net revenues are the additional federal funds the state is able to draw down minus the cost of the state’s portion of payments to MCOs to offset the cost of the tax. Under the enacted 2024-25 budget, most of that revenue will be used to offset state General Fund spending on existing Medi-Cal services, with a smaller portion going to increased provider rates and augmentations.

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How do policymakers currently plan to use MCO tax dollars?

Policymakers outlined a plan — which Prop. 35 would overturn — to use revenue from the MCO tax in the 2024-25 budget package, with the majority of dollars allocated to offset General Fund spending on Medi-Cal and maintain existing services in the program. Assuming that the federal government approves the changes to the MCO tax that state leaders are seeking, the budget includes the following MCO tax dollars to sustain existing services in Medi-Cal:

$6.9 billion in 2024-25
$6.6 billion in 2025-26
$5.0 billion in 2026-27

Policymakers also allocated funding from the MCO tax for new targeted Medi-Cal provider rate increases as well as other investments. These budget allocations include:

$133 million in 2024-25
$728 million in 2025-26
$1.2 billion in 2026-27

The rate increases from the current MCO tax spending plan are intended to build on investments that policymakers made in previous years. As shown below, the majority of funds for rate increases that will go into effect on January 1, 2025 will support emergency department physician services, abortion care and family planning, and ground emergency medical transportation.

The current MCO tax spending plan also includes additional rate increases and investments that would take effect on January 1, 2026, with the vast majority of dollars allocated to physician and non-physician professionals (e.g., physician assistants, nurse practitioners and certified nurse midwives).

Policymakers also allocated $40 million one-time MCO tax dollars in 2026-27 to strengthen and support the development and retention of the Medi-Cal workforce. This amount reflects a decrease in health care workforce investments that state leaders made in the past. More substantial and sustained investments are necessary to build a health care workforce that can better meet the needs of Californians.

This MCO tax spending plan would be overturned if voters approve Prop. 35.

How does Prop. 35 differ from the current MCO tax plan?

Prop. 35 proposes a major shift to how state policymakers have used MCO tax revenue to essentially reduce, or offset, General Fund spending on Medi-Cal. If passed, Prop. 35 would overturn the current MCO tax spending plan that policymakers agreed upon in the 2024-25 budget.

Prop. 35 would require the California Department of Health Care Services to request federal approval for the MCO tax on an ongoing basis in an attempt to make this funding stream more permanent. Federal approval is required for the state to levy health care taxes that draw down additional federal dollars.

While Prop. 35 provides some flexibility for the state to structure future versions of MCO tax proposals to comply with federal regulations and ensure federal approval, it does set limits to the tax on commercial enrollment. This limitation could affect the state's ability to secure future approval for a tax that generates the same level of revenue as the current tax. The measure also specifies that the MCO tax would not go into effect if the state does not receive federal approval and federal funding in the future.

Additionally, Prop. 35 would establish rules for how MCO tax revenue would be spent in the short term (2025 and 2026) and long term (2027 and beyond). The key difference is that policymakers would no longer be able to use the bulk of the dollars to offset General Fund spending in Medi-Cal. Another notable difference is that Prop. 35 would require funds to be spent by the end of each calendar year or fiscal year, beginning 2027. Currently, policymakers have the flexibility to save funds for future years to help cover costs if the MCO tax is not approved in the future.

If passed, funds would first cover a portion of MCOs’ cost of the tax as well as administrative costs.

For calendar years 2025 and 2026, $2 billion would be used to offset General Fund spending in Medi-Cal. Specifically, this amount would cover a portion of the non-federal share of Medi-Cal managed care rates for health care services for children, adults, seniors, and people with disabilities. This represents the majority of funds (about 43%), as shown below. MCO tax revenue would also support health workforce initiatives, including primary care, specialty care, and emergency care.

For calendar year 2027 and beyond, Prop. 35 would allocate revenue from the MCO tax differently. After covering a portion of MCOs’ cost of the tax as well as administrative costs, the next $4.3 billion collected from the tax would be allocated for specific purposes. The majority of funds (44%) would support access to primary care and specialty care. Specifically, it would increase reimbursement rates for primary care services and increase the number of specialty care service providers. A smaller portion of funds would support other rate increases, such as emergency department services and family planning. Prop. 35 would allow the Department of Health Care Services to allocate 8% of funds — $344 million — to provide overall support to the Medi-Cal program.

If there are remaining MCO tax revenues after these funding allocations are made, the measure contains parameters to allocate the excess revenue. Examples of these other allocations include:

Additional General Fund offset to support existing services in Medi-Cal.
A grant program to expand the number of community health workers.
Supporting the state’s ongoing efforts to reduce the cost of prescription drugs.
Providing additional funding to health workforce initiatives.

In addition, Prop. 35 would establish oversight and accountability measures, requiring the state controller to perform independent financial audits. It would also create an advisory committee that would provide input to the Department of Health Care Services on future MCO tax proposals. This advisory committee would be made up of mostly health care provider representatives.

Would Prop. 35 actually make the MCO tax permanent?

No, the MCO tax funding structure under Prop. 35 is entirely dependent on federal approval and ongoing renewals. Prop. 35 would require the California Department of Health Care Services to request federal approval for the MCO tax on an ongoing basis in an attempt to make this funding stream more permanent. Federal approval is required for the state to levy health care taxes that draw down additional federal dollars.

One issue with Prop. 35 is that the MCO tax may not be a sustainable, long-term funding source. While the federal government has historically approved California’s MCO tax, it has indicated that it may revise the rules governing state MCO taxes in the future, which would have implications for the amount of net revenue that future versions of the tax may bring into the state.

Without federal approval and federal funding, the MCO tax and spending plan under Prop. 35 would not be implemented.

How would Prop. 35 impact the state budget?

While Prop. 35 would ensure more funding is dedicated for health care, its requirement to spend MCO tax revenues on specific services would also limit policymakers’ flexibility in making budget decisions. This is particularly concerning in years when the state is facing a budget shortfall because the reduced flexibility could lead policymakers to make cuts to other critical public services to balance the budget.

State leaders are required to balance the budget each year, and there are already several strict requirements on how some state funds are spent that make budgeting complex. By creating additional mandates on state spending, Prop. 35 would result in policymakers having even less flexibility in making budget decisions. While the measure gives policymakers some ability to modify the structure and uses of the MCO tax, changes would require a three-fourths vote in the Legislature — which can be difficult to obtain — and would need to further the purpose of Prop. 35.

In years when the state is facing a budget shortfall, this limited flexibility could result in cuts to other critical public services that help Californians make ends meet and address vital needs, such as income supports, subsidized child care, food assistance, and investments in reducing homelessness and increasing affordable housing.

Of course, cuts could be limited or avoided during budget deficits if state leaders are able to raise new revenues to address a shortfall. However, the state Constitution requires a two-thirds vote in the Legislature to raise taxes, while spending cuts can be approved with a simple majority, and state leaders have generally been more inclined to make cuts than to increase taxes.

In the near term, Prop. 35 would result in the recently enacted 2024-25 budget being out of balance. This is because a solution to the budget shortfall involves using some MCO tax dollars that were previously intended to support provider rate increases and other augmentations to instead offset General Fund spending on existing Medi-Cal services. Since Prop. 35 would require MCO tax revenues to be used for health program augmentations instead of offsetting existing spending, state leaders would have to identify other solutions — potentially spending cuts or delays, revenue increases, or additional budget reserve withdrawals — in next year’s budget to cover the difference. The Legislative Analyst’s Office estimates that the General Fund impact would be between $1 billion and $2 billion in 2025 and 2026, but in a legislative hearing on August 13, 2024, the Department of Finance noted that it estimates the impact could range from $2.6 billion and $4.9 billion in fiscal years 2024-25 through 2026-27.

In the long term, raising state General Fund revenues — through sources aside from the MCO tax — would help to increase the state’s capacity to cover the costs of existing Medi-Cal services and improve state health services and increase access to care, without jeopardizing other state services. This is especially important given that there is no guarantee the federal government will continue to approve an MCO tax that yields the amount of revenue anticipated from the currently authorized tax.

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How would Prop. 35 impact Californians?

If passed, millions of Californians who receive health care services through Medi-Cal — about half of whom are Latinx — could have better access to care, especially for primary care and specialty health care services. Increasing provider participation in Medi-Cal is critical to improving access to a wide range of health care services, especially in historically underserved areas where there is often a shortage of providers. By increasing the number of providers in the Medi-Cal network, patients can receive more timely care, which can help improve health and well-being for all Californians, but especially Latinx communities.

However, there are some critical health equity investments that are included in the current MCO tax spending plan that are either not included or not prioritized in Prop. 35. Examples include:

Implementing continuous coverage for children from birth to age five.

This would allow children to keep their Medi-Cal coverage without any administrative renewals or disruptions from birth to age five. Consistent and timely access to preventive and primary care services is especially important for children’s health and development. Coverage disruptions are not only harmful to health, but research suggests that Black and Latinx people are more likely to be impacted.

Raising rates for community health workers.

These are frontline public health workers who help patients access health and social services. This workforce supports patients in a way that is linguistically and culturally responsive to their communities, including immigrant communities and people of color. While state leaders have taken steps to integrate community health workers into the Medi-Cal workforce, additional ongoing investments are needed to ensure that they are paid fair wages.

Investing in long-term supports for children with complex medical needs, older adults, and people with disabilities.

These potential cuts raise health equity concerns, as they would disproportionately impact people of color, children, older adults, and people with disabilities. Policymakers should explore alternative revenue-raising measures to sustain and advance these crucial health equity initiatives, if Prop. 35 passes.

Additionally, Prop. 35’s limitations on using MCO tax proceeds to offset General Fund spending on current Medi-Cal services could make policymakers more likely to make cuts to other state services when facing budget shortfalls. Such cuts would likely harm Californians with low incomes most. For example, in the difficult budget years during and following the Great Recession, deep cuts were made to safety net programs such as subsidized child care, income supports for families under the California Work Opportunity and Responsibility to Kids (CalWORKs) program, and income support for older adults and people with disabilities under the Supplemental Security Income/State Supplementary Payment (SSI/SSP) program.

Lastly, the passage of Prop. 35 would lock in spending decisions in the future, which would impact how Californians engage with the state budget process. Advocates and community members would have less opportunity to weigh in on how state resources should be allocated because the MCO tax spending decisions would be constrained by the ballot measure. Currently, Californians can contribute to conversations about how MCO tax revenue should be spent during the budget process via public hearings and interactions with policymakers.

What are arguments for and against Prop. 35?

Supporters of Prop. 35 believe the measure will protect and enhance access to care for Medi-Cal patients by ensuring that MCO tax dollars are directed toward patient care. They argue that it would prevent lawmakers from redirecting funds intended for health care to other purposes. Key supporters include the California Medical Association, Planned Parenthood Affiliates of California, the California Hospital Association, the California Primary Care Association, and the California Dental Association.

Opponents of Prop. 35 argue that the measure would reduce flexibility in how Medi-Cal dollars are allocated and overturn the commitments made in the 2024-25 budget to fund important services with MCO tax dollars, including continuous Medi-Cal coverage for young children and the rate increase for community health workers. Opposition groups include The Children’s Partnership, the California Pan-Ethnic Health Network, the California Alliance for Retired Americans, Courage California, and the League of Women Voters of California.

Ballot Propositions

Health & Safety Net

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key takeaway

Despite being eligible, many Californians lose vital Medi-Cal coverage due to complex paperwork and difficulty reaching county offices. Streamlining the renewal process and improving accessibility are crucial to ensure everyone keeps the health insurance they need.

Continuous access to health care is necessary for everyone to be healthy and thrive. Unfortunately, paperwork challenges often prevent people from obtaining and maintaining health coverage. A clear example of this: Too many individuals continue to be disenrolled from Medi-Cal, California’s Medicaid program, due to paperwork challenges.

Last year, California began processing Medi-Cal renewals for the first time since the start of the pandemic. As a result, over 1.4 million Californians have lost Medi-Cal coverage from June 2023 to February 2024. About 9 in 10 Californians (87.4%) who lost Medi-Cal coverage during this period did so because they did not complete the renewal paperwork or had incorrect or missing information in their forms.

Completing the renewal process often involves complex paperwork and documentation requirements, which can be difficult to navigate. Additionally, many Californians have experienced extended call wait times when attempting to contact county Medi-Cal workers regarding their application.

Certain groups, including older adults and people with disabilities, are at greater risk of losing Medi-Cal coverage during the unwinding period.¹Immigrants and their family members face unique obstacles in remaining covered, such as language barriers, privacy concerns, and fear of immigration-related consequences. Many Californians who are losing Medi-Cal coverage due to paperwork challenges may still meet the eligibility criteria.²

The high disenrollment rate due to paperwork challenges underscores the need to further streamline the renewal process and alleviate the paperwork burden on beneficiaries during the unwinding period and beyond. Addressing these challenges is essential to ensure that those who are eligible for Medi-Cal continue to receive vital health coverage.

While state leaders have implemented measures to reduce barriers to accessing and maintaining Medi-Cal coverage, they can take additional steps to prevent Californians who remain eligible for Medi-Cal from losing coverage. These include:

Permanently extend unwinding flexibilities.

Improving wait times for county call centers.

Accelerating the implementation of continuous Medi-Cal coverage for children from birth to age 5.

Providing continuous Medi-Cal coverage to adults.

Increasing reimbursement rates for Community Health Workers / Promotoras/ Representatives (CHWPRs).

By taking additional action, state leaders can reduce barriers and ensure that all Californians, regardless of race, age, disability, or immigration status, can access and maintain the critical health coverage they need to be healthy and thrive.

Health & Safety Net

1
Jennifer Tolbert and Meghana Ammula, 10 Things to Know About the Unwinding of the Medicaid Continuous Enrollment Provision (Kaiser Family Foundation, June 2023).
2
Of the redeterminations that were received and processed in February 2024, about 9% were ineligible. See California Department of Health Care Services, Medi-Cal Continuous Coverage Unwinding Dashboard (February 2024), 14.

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key takeaway

California’s CalWORKs program, while crucial for low-income families with children, penalizes them financially for not meeting work requirements. This is counterproductive as sanctioned families often face the most barriers to employment.

The California Work Opportunity and Responsibility to Kids (CalWORKs) program is a critical component of California’s safety net for families with low incomes. The program helps over 650,000 children and their families, who are predominantly people of color, with modest cash grants, employment assistance, and critical supportive services. However, the program has a problematic history of prioritizing work over family well-being, exemplified by financial penalties against families and counties that don’t meet narrowly defined performance indicators.

For many families, receiving cash assistance is conditional on engaging in employment or other specified “welfare-to-work” activities intended to lead to employment, such as on-the-job training or unpaid work experience. Additionally, families must navigate through various other paperwork-related stipulations, which further exacerbate the barriers to accessing the much-needed aid. Families who do not comply with all the requirements set forth by the state can be subject to a financial sanction that reduces their monthly cash grant.

California’s sanction policy is harsher than what is required by the federal government. The punitive approach to this safety net cash assistance is counterproductive. Research shows that sanctioned recipients are often those who face the most barriers to employment, such as limited education, learning disabilities, limited work history, physical and mental health problems, and a history of domestic violence.¹ These participants are often not aware of the financial penalties or cannot fully navigate the overly burdensome processes due to limited resources and information.

As states across the country are learning that harsh sanctions do not directly lead to gainful employment and family stability, many have reduced the amount by which cash grants are cut, recognizing that pushing families deeper into poverty only further jeopardizes their well-being. California, which is often at the vanguard of providing cash and safety net support, is unfortunately trailing significantly behind.

How do CalWORKs sanctions impact California families?

CalWORKs families cannot afford to be sanctioned. These artificial barriers put families at risk of falling deeper into poverty. Briana, a Parent Voices California advocate, experienced this reality firsthand. As a mother of four living in Contra Costa County, Briana has been on and off of CalWORKs since the age of 17. Even though her CalWORKs case manager did not help her to utilize the full scope of CalWORKs services (i.e., child care, school tuition assistance), Briana received her certified nursing assistant certification (CNA) and achieved her goal of working in the medical field, which she did for several years. A CNA certification course at Contra Costa College is approximately $322 in fees and CNA students pay over $100 in books, costs that could have been covered by CalWORKs benefits and not paid through Briana’s cash aid.

Special thank you to Briana Burks and Parent Voices California for sharing their testimony from the March 20, 2024, Assembly Budget Subcommittee No. 2 on Human Services hearing, as highlighted in this section.

While experiencing postpartum depression following the births of her son and daughter, Briana went back on CalWORKs assistance to help make ends meet. During this time, Briana was sanctioned several times for reasons such as:

Not having an up-to-date immunization card;
Not having one of her children’s birth certificates on file;
Not turning in a check stub (despite the stub already being in the CalWORKs system);
As well as other reasons unknown to Briana.

These sanctions cost Briana hundreds of dollars, as highlighted in the preceding chart. With the $242 recouped from sanctions, every month, Briana could have paid for:

Six days of groceries for her family;
Three-quarters of her monthly utility bill;
48 gallons of gas; or
Funds to support rent and car payments.

Briana’s sanctions coupled with remaining cash aid paying for her CNA certification exacerbated her financial insecurity. At the time that Briana shared her story at a March 2024 Assembly hearing, she was $300 short on her rent and car payment and had $0 left on her EBT card.

Briana’s story is just one example of how CalWORKs sanctions perpetuate the cycle of poverty and are rooted in a racist and sexist history popularized by figures like then California Governor Ronald Reagan that punished Black and other mothers of color, in particular. In the words of Briana: “Our future generations, our grandkids, somebody down the line is gonna need help. And I just want it to be easier for them. We need to defend these programs against cuts, get rid of these unnecessary sanctions, and reimagine CalWORKs into a program that opens those doors to help us get to where we want to go.”

How can policymakers ensure families in need have access to CalWORKs?

The governor’s commitment, outlined in his January budget proposal, to apply to a federal pilot aiming to center family well-being over work requirements offers California a great opportunity to reevaluate its sanction policy. Policymakers can make a significant difference in CalWORKs families’ lives, like Briana’s, by eliminating non-federally required sanctions and minimizing the amount sanctioned families lose each month. Additionally, policymakers should continue investing in CalWORKs and protect the program from harmful cuts. CalWORKs should center the well-being of families by removing barriers instead of amplifying them.

CalWORKs

Health & Safety Net

1
Rachel Kirzner, TANF Sanctions: Their Impact on Earnings, Employment, and Health (Center for Hunger-Free Communities, Drexel University, March 23, 2015).

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The Supplemental Security Income/State Supplementary Payment (SSI/SSP) program is a critical lifeline that assists over 1 million low-income individuals with disabilities and adults age 65 or older in California by covering expenses such as housing, food, and other essential living costs.

The fiscal year 2021-22 state budget included a significant SSP grant increase of 24%, which became effective on January 1, 2022. This increase has helped to reduce the disparity between grant levels and the Federal Poverty Line (FPL). However, many participants in the program still struggle to afford basic necessities like rent.

Despite the recent increase, grant levels remain insufficient due to damaging budget cuts made by the state during the Great Recession. During this period, the state eliminated the Cost of Living Adjustment (COLA) for the SSP grant. Had the COLA been preserved, grant levels would have already exceeded the FPL. Restoring the COLA can ensure that grants keep up with rising costs especially given recent inflation trends.

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key takeaway

CalWORKs is a crucial safety net program supporting low-income families. However, proposed budget cuts prioritize short-term employment over long-term stability, potentially undermining the program’s effectiveness and contradicting the governor’s stated goals.

The California Work Opportunity and Responsibility to Kids (CalWORKs) program plays a crucial role in supporting children and families with low incomes. CalWORKs helps families with children struggling to meet their basic needs by providing them with modest monthly cash grants and important supportive services. Recent state reforms to CalWORKs have been designed to improve the program’s capacity to support parents in identifying goals, addressing barriers, and securing sustainable economic stability and family well-being.

However, the recent governor’s budget proposal shifts the program’s focus, aligning it more closely with the problematic roots of the federal program. The proposed cuts would narrow the program’s focus to basic cash aid by diminishing vital support services and case management. These cuts prioritize rapidly moving parents into paid employment over addressing the broader, longer-term barriers to work and the resources necessary for families to flourish. This contradicts and would likely undermine the governor’s commitment to pursue a new federal opportunity designed to strengthen the program by focusing on family stability and well-being.

What is the history of the CalWORKs program?

The Temporary Assistance for Needy Families (TANF), as CalWORKs is known federally, was enacted in 1996 as part of President Clinton’s welfare reform, aiming to grant states more autonomy in addressing poverty and assisting families. However, the program fell short of fulfilling its original intent due to the prevailing narrative that not all families were worthy of assistance. This included racist, sexist, and historical biases, such as the “welfare queen” stereotype popularized by figures like then California Governor Ronald Reagan. This narrative influenced the 1990s reform that ultimately cut assistance and imposed punitive “welfare to work” training and employment requirements on TANF participants. Since its inception, the federal program has focused on quickly pushing parents into paid employment over addressing longer-term barriers to work and resources needed to lead thriving lives.

In 1997, California mirrored these federal reforms with the establishment of the CalWORKs program, signed into law by Governor Pete Wilson. Echoing sentiments at the federal level, Wilson framed the program as a means to prompt welfare recipients to “escape from dependency” on assistance while stressing the strict time limits and work requirements. At the core of this is the idea of “self-responsibility” that minimizes the systemic barriers that affect program participants, including racist and sexist discrimination in workplaces and educational settings, as well as the generational trauma stemming from living in poverty.

What does the future of TANF look like?

On June 3, 2023, President Biden signed the Fiscal Responsibility Act (FRA) into law. This piece of legislation was significant to safety net policy because it was the first time Congress had made significant programmatic changes to the TANF program in nearly two decades and provided a window of opportunity to fundamentally change the short-sighted work-first approach to the TANF program. Among various provisions, the FRA includes a pilot program that would fund up to five states to test alternative performance indicators instead of the work participation rate (WPR). States selected to participate in the pilot program would be evaluated based on:

The percentage of work-eligible participants employed after exiting the program;
The level of earnings of these participants; and
Other indicators of family stability and well-being.

The goal of the pilot program is to move away from evaluating program success based on work participation, which has been the single target metric since the program’s inception. The WPR is a process measure that only accounts for whether the parent is able to document their required hours of participation in a narrow set of approved activities. There is little evidence to suggest that work participation as a metric is indicative of long-term employment and self-sufficiency. Rather, research suggests that stringent work requirements push people into jobs similar to the ones they lost, leading up to their TANF participation. This creates an ineffective cycle of moving people between low-wage unstable employment and TANF benefits. There is no clear link between work requirements and reductions in poverty.

Are California policymakers prioritizing a family-first approach to CalWORKs?

In his January 10th proposed budget, Governor Newsom indicated, in reference to the federal pilot program, that “California plans to pursue this opportunity to reform the accountability tools in the CalWORKs program to improve outcomes for families.” While California has made significant progress toward tracking CalWORKs outcomes in creative ways with the introduction of the CalWORKs Outcomes and Accountability Review (Cal-OAR) framework and adopted an evidence-based behavioral approach to guide families in setting goals (CalWORKs 2.0), it has yet to make significant programmatic changes to disrupt the reliance on work participation as a metric for success.

Rather than expanding on this framework, the governor proposed significant cuts to the CalWORKs program, impacting administrative funding as well as reducing intensive case management services and effectively eliminating two programs that make a concerted effort to address barriers to employment and provide support to families with the most complex needs. The two impacted programs are:

The Expanded Subsidized Employment (ESE) Program
The Family Stabilization (FS) Program

The Expanded Subsidized Employment (ESE) Program

The Family Stabilization (FS) Program

This program was created in 2013 under Governor Brown as part of efforts to remove barriers for families facing crises. The goal of this program is to provide housing, mental health, safety, and family stability services for some of the most vulnerable families in California, recognizing that the work-first focus of CalWORKs is not indicative of long-term success in employment outcomes. FS differs from other CalWORKs components in that counties can provide these services to the children in these families as well as adults, which uplifts a family-first approach.

How does the governor’s proposal to cut select CalWORKs programs align with the future of TANF?

The irony of the governor’s proposed cuts to CalWORKs is that they impact programs that would directly align with the intent of the new federal pilot program (described above). The ESE program has been successful in helping participants obtain work experience and development in their journey to finding a permanent job. This could lead to better outcomes in terms of employment and earnings after exiting the program, which is directly linked to the pilot objectives.

The FS program provides families with intensive case management and timely access to crisis management services, which directly aligns with the family stability and well-being goals of the pilot program. These services include a range of housing, mental health, substance abuse, and other supports critical to prevent family instabilities such as homelessness and child welfare system involvement. Additionally, the FS program is essential to remove barriers to work that may prevent participants from obtaining and maintaining employment. Together, these services better support families in exiting the program with sustainable economic security.

The governor’s budget proposal to effectively eliminate these two components of the CalWORKs program is contradictory to his goal of pursuing the federal pilot program. Taking away essential family support is reminiscent of the 1990s discourse that policymakers should move beyond. Rather than taking a step backward, California should continue to lead the way in creating a more family-centered CalWORKs program by leaning into the elimination of barriers to employment so that families can feel fully supported and be able to thrive. This will help ensure the state not only has a successful pilot application, but can demonstrate to the nation progress in the real family outcomes and pathways out of poverty that the pilot will assess.

CalWORKs

Health & Safety Net

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Building Bridges, Not Walls

February 22, 2024

By Mauricio Torres

Embracing and supporting newly arriving immigrants is not just a moral imperative but a strategic investment in our collective prosperity.

Revitalizing Unemployment Insurance in California

key takeaway

Unemployment Insurance is a Lifeline for California, But Low Benefits and Exclusions Undermine Its Effectiveness

Low Unemployment Insurance Benefits Exacerbate Racial and Gender Inequities

A Strong and Effective UI System Requires Adequate Financing: California Needs Major Reforms

Failing to Modernize UI Financing Costs All Californians

Raising and Indexing the Taxable Wage Base Is Critical to Improving UI Financing

What Is the Taxable Wage Base and Why Is It Important for Understanding How Unemployment Insurance Benefits Are Funded?

California Must Shift to Forward Financing of UI Benefits and Reform Experience Rating

Conclusion

You may also be interested in the following resources:

H.R. 1 Jeopardizes Californians’ Access to Behavioral Health Care and Key State Reforms

The State of Health Coverage in California: Progress, Disparities, and Policy Threats

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Explore More on Women’s Well-Being

The 2024 Women’s Well-Being Index was updated in collaboration with the California Commission on the Status of Women and Girls, which provided funding, communications, outreach, and engagement support.

You may also be interested in the following resources:

How Policy Changes Are Affecting Women’s Economic Security in California

California’s Persistent Poverty Crisis: 2024 Rates Remain Alarmingly High

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key takeaway

what is health equity?

table of contents

What is the Managed Care Organization (MCO) tax?

Stay in the know.

How do policymakers currently plan to use MCO tax dollars?

How does Prop. 35 differ from the current MCO tax plan?

Would Prop. 35 actually make the MCO tax permanent?

How would Prop. 35 impact the state budget?

Stay in the know.

How would Prop. 35 impact Californians?

What are arguments for and against Prop. 35?

You may also be interested in the following resources:

H.R. 1 Jeopardizes Californians’ Access to Behavioral Health Care and Key State Reforms

The State of Health Coverage in California: Progress, Disparities, and Policy Threats

Stay in the know.

key takeaway

You may also be interested in the following resources:

H.R. 1 Jeopardizes Californians’ Access to Behavioral Health Care and Key State Reforms

The State of Health Coverage in California: Progress, Disparities, and Policy Threats

Stay in the know.

key takeaway

How do CalWORKs sanctions impact California families?

How can policymakers ensure families in need have access to CalWORKs?

You may also be interested in the following resources:

H.R. 1 Jeopardizes Californians’ Access to Behavioral Health Care and Key State Reforms

The State of Health Coverage in California: Progress, Disparities, and Policy Threats

Stay in the know.

You may also be interested in the following resources:

H.R. 1 Jeopardizes Californians’ Access to Behavioral Health Care and Key State Reforms

The State of Health Coverage in California: Progress, Disparities, and Policy Threats

Stay in the know.

key takeaway

What is the history of the CalWORKs program?

What does the future of TANF look like?

Are California policymakers prioritizing a family-first approach to CalWORKs?

How does the governor’s proposal to cut select CalWORKs programs align with the future of TANF?

You may also be interested in the following resources:

H.R. 1 Jeopardizes Californians’ Access to Behavioral Health Care and Key State Reforms

The State of Health Coverage in California: Progress, Disparities, and Policy Threats

Stay in the know.