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

June 30, 2014

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

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

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

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

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

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

— Alissa Anderson

Food Assistance: A Proven Tool for Reducing Hunger and Poverty

May 20, 2014

Advocates from around the state are coming to Sacramento this week to raise awareness of hunger in California. On Wednesday, Hunger Action Day, a select committee will examine how inadequate nutrition can be detrimental to children’s development and discuss policies to prevent hunger early in life.

This issue is particularly timely given the sharp increase in recent years in the number of people facing hunger or the threat of hunger. The share of US households considered “food insecure” — unable to regularly afford nutritionally adequate meals — reached an all-time high in the wake of the Great Recession as millions of workers lost their jobs and struggled to feed their families on reduced incomes. Food insecurity increased in nearly every state during the downturn, but California saw the fourth-largest jump, and between 2010 and 2012, an average of nearly one in six of the state’s households faced hunger or the threat of hunger. An astounding 25 percent of California’s children lived in households that were unable to afford sufficient food at some point in 2010, up from 17 percent of children in 2006.

SNAP’s History of Success

The recent rise in food insecurity is cause for concern, but our nation’s past efforts to reduce hunger show that it’s possible to reverse this trend. In the 1960s, before food assistance was widely available, it was common for children in impoverished communities to show signs of severe malnourishment — such as distended bellies or wasting — that today are typically associated with extreme poverty in developing nations. In fact, just two generations ago, some infants born to very-low-income families in the US would die of hunger. Today such tragedies are rare in our nation thanks to the creation and expansion of food assistance programs. The nation’s largest program, the Supplemental Nutrition Assistance Program (SNAP, known as CalFresh in California) can be credited with largely eliminating severe hunger and malnutrition in the US.

Research shows that SNAP not only reduces hunger, but also it functions like an immunization, protecting young children from illness. It also cuts children’s odds of being underweight and at risk of developmental delays. And SNAP’s benefits appear to last into adulthood. A recent academic paper found that children from disadvantaged families who had access to food assistance early in life were significantly less likely to suffer from serious, chronic health conditions as adults. Furthermore, the girls in these families were better able to support themselves as adults: they generally achieved higher levels of education, had higher earnings, and were less likely to need public assistance as adults.

Food assistance also is one of the most powerful tools for reducing poverty. By boosting families’ food budgets and thus freeing up income for other necessities, SNAP lifted 4.7 million people nationwide — including 2.1 million children — above the poverty line in 2011. CalFresh kept nearly 800,000 Californians out of poverty that year, including 380,000 children — effectively cutting the child poverty rate by about 4 percentage points.

How California Can Build on SNAP’s Success

California’s policymakers can reduce hunger and poverty even more by expanding food assistance to additional families. Currently, California ties with Wyoming for the lowest SNAP participation rate. Estimates suggest that 3.2 million Californians are eligible for the program but are not enrolled. If every eligible Californian participated, millions of state residents would be better able to afford sufficient food and many would be lifted out of poverty. What’s more, because CalFresh is 100-percent federally funded, maximizing program participation would draw an estimated $3.5 billion in additional federal food assistance benefits into the state, providing a significant boost to California’s economy as well as its families.

State policymakers should be commended for taking a number of important steps in recent years to boost participation in CalFresh, but there are additional actions they could take to further increase enrollment. For example, California could establish a stakeholder advisory committee to identify and recommend effective strategies to improve statewide CalFresh participation, service, and performance.

California could also expand so-called “categorical eligibility,” a simplified enrollment process intended to boost participation in CalFresh. Legislation signed into law last year established categorical eligibility for households with individuals enrolled in Medi-Cal, the state’s health care program for low-income Californians. Specifically, this legislation enables households who have a connection to Medi-Cal and whose gross incomes somewhat exceed the CalFresh eligibility requirement — falling between 130 percent and 200 percent of the poverty line — to qualify for CalFresh as long as they meet the program’s net income test, meaning that their incomes, after subtracting certain expenses such as child care, remain at or below the poverty line. (For a family of three, 130 percent to 200 percent of the poverty line corresponds to an annual income of between about $24,000 and $38,000.) As a next step, the Legislature could approve the Governor’s recent proposal, included in his revised budget, to broaden categorical eligibility to all households — not just those with a connection to Medi-Cal — whose incomes meet these requirements. This proposal would remove a significant barrier to CalFresh enrollment primarily for low-income working families who spend much of their incomes on necessities like child care and housing and thus have little left over for food.

In addition to boosting CalFresh participation, policymakers could take action to prevent a pending reduction in food assistance benefits. Recent changes in federal law imposed restrictions on state “Heat and Eat” policies, which boost SNAP benefits for families who also participate in a federal energy assistance program. Absent state action, these restrictions are expected to result in a significant loss of CalFresh benefits — $62 in federal funds per month, on average, for hundreds of thousands of California households. (To put this cut in perspective, the average CalFresh household receives just $200 of food assistance per month.) California policymakers could prevent this substantial cut by adopting the Governor’s recent budget proposal to increase state funding for energy assistance by the amount needed to comply with the new federal requirements. While implementing this proposal would cost the state $10 million, it would prevent California from losing $300 million in federal funds — a substantial bang for the buck.

Why This Matters Now

Boosting participation in food assistance programs is especially critical now given California’s severe drought, which is expected to cause food prices to rise, making it harder for low-income Californians to feed their families. Research suggests that a mere $10 increase in weekly food costs can significantly boost the share of households facing hunger of the threat of hunger.

Moreover, the emergency food providers that many families turn to when they can’t afford enough to eat are anticipating significant challenges ahead. If the drought causes food supplies to drop, food banks expect that they’ll run out of food before serving all of their clients, particularly if demand for their services increases due to higher food prices. Already many food banks have reported increased demand for assistance due to recent cuts to SNAP benefits.

Increasing CalFresh participation has always been a policy win-win given its potential to substantially reduce hunger and poverty while boosting the state’s economy. But with food prices likely to rise in the near future, the case for taking prompt action has never been stronger.

— Alissa Anderson

Taking on Poverty and Inequality: CBP Conference Plenary to Discuss the Key Role of Public Policy

February 4, 2014

There is a growing awareness among policymakers and the public of the serious challenges of high poverty and widening income inequality, both in California and nationally. At the CBP’s annual conference on March 6 in Sacramento, our luncheon plenary will have an expert panel discussing what poverty and inequality mean for California and its communities, as well as the kinds of policy choices that could combat financial hardship and help workers and their families climb the economic ladder.

This luncheon plenary — “Taking On Poverty and Inequality: How Public Policy Can Help Address These Challenges and Promote Greater Social Mobility” — will feature:

Sasha Abramsky, author of The American Way of Poverty: How the Other Half Still Lives, selected by the New York Times Book Review as a Notable Book of 2013.

Sylvia Allegretto, co-chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, and author of several landmark studies on employment, earnings, and wealth trends.

Vanessa Aramayo, director of the California Partnership and one of our state’s leading voices for policy change that addresses root causes of poverty.

Don’t miss this chance to hear insights on — and get your questions answered about — how California can take real steps toward making a bright economic future possible for all.

Register today for our 2014 conference, Raising the Bar: How Smart Policy Choices Can Create Shared Prosperity in California. Be sure to register by February 13 — less than two weeks away — to take advantage of the early-bird discount.

— Steven Bliss

New Census Data Show That California’s Poverty Rate Remained High in 2012, Despite Economic Recovery

September 18, 2013

A new CBP report looks at the Census Bureau data released yesterday, which show that despite the state’s emerging economic recovery, California’s poverty rate was essentially unchanged in 2012 — at 15.9 percent — and remained about one-third higher than in 2006, the year before the recession began. The new Census data show that more than 6 million Californians had incomes below the federal poverty line and that 2.1 million of the state’s children — nearly one out of four — were living in poverty.

The new Census data also show that the state’s median household income in 2012 was $57,020, nearly 10 percent below what it was in 2006, after adjusting for inflation. One positive trend in the new Census data is in the area of health coverage, with a significant year-to-year drop in the share of Californians who are uninsured as well as longer-term gains in providing health coverage for children.

Like our recent report on employment and earnings in California, this new analysis underscores that many of the state’s residents continue to face severe economic challenges in the aftermath of the Great Recession. That’s why it’s critical that policymakers sustain a strong social safety net for individuals and families, while also making the necessary public investments in education, job-related services and supports, and other foundations of widely shared economic growth.

— Steven Bliss

After Years of Deep Cuts, an Increase in the CalWORKs Grant Deserves Serious Consideration

June 3, 2013

Today, members of the California Legislature will meet in Budget Conference Committee to continue resolving differences between the Senate and Assembly’s versions of the 2013-14 state budget. One important item up for discussion is the size of monthly grants for families in the CalWORKs Program, which provides cash assistance to low-income families along with welfare-to-work services to help parents find jobs and overcome barriers to employment.

The Senate and the Brown Administration have proposed keeping the CalWORKs grant frozen at its current level, while the Assembly has proposed a phased-in increase that would raise the maximum grant to 50 percent of the federal poverty line over a five-year period, starting with a 12 percent increase January 1, 2014.

After years of steady decline in the purchasing power of the CalWORKs grant, followed by sharp cuts to the grant in recent years, the $638 maximum aid payment for a family of three is currently equal to about 39 percent of the poverty line, well below the “deep poverty” cutoff of 50 percent. To put things in perspective, today’s cash grant is roughly the same, in actual dollars, as the maximum grant in 1987. The critical difference is that back then, the value of that dollar amount was equal to about 80 percent of the poverty line — or double the percentage today.

The Assembly proposal to increase the CalWORKs grant acknowledges the fact that California is facing a serious poverty problem. This problem came into sharp focus last year when the Census Bureau released state rankings under the new Supplemental Poverty Measure, which compares families’ resources to the cost of housing and other necessities. California was perched at the top of the list, with 23.5 percent of residents living in poverty. Even under the official poverty measure — the basis for the federal poverty line — about one in six Californians, and nearly one in four California children, are living in poverty. (For a family of three, this means an annual income below $19,530.)

The fact that so many of the state’s children experience this daily hardship is deeply troubling in and of itself. But child poverty’s effects extend far beyond individual households. Since children who grow up in poverty are likely to have lower earnings, less education, and poorer health as adults, poverty affects all Californians who care about a strong workforce and a robust tax base for the state.

Augmenting the CalWORKs grant would help address poverty in California by lifting the household income of CalWORKs participants, who make up a large share of the state’s low-income families. Such an increase would directly benefit the more than 1 million children in CalWORKs households. Depending on how the change is implemented, the 12 percent increase in the CalWORKs grant that the Assembly proposes for 2013-14 could bring the maximum grant for a family of three from its current $638 level up to about $714 a month — still below where it was 10 years ago. This change, though modest, would be a step in the right direction after years of repeated cuts to the CalWORKs grant.

— Hope Richardson

Key Facts About the Governor’s Proposed Budget, Part 5: Many Californians Still Hurting in the Aftermath of the Recession

February 6, 2013

This is the latest in a CBP chart series highlighting some of the most important aspects of Governor Brown’s 2013-14 budget proposal and the context for it.

  * * *

As pointed out earlier in this chart series, the significant new revenues approved by voters in November have positioned California to turn the corner on years of severe budget shortfalls. But with the state’s fiscal situation improving, it is important that policymakers not lose sight of the fact that millions of Californians continue to suffer in the wake of the Great Recession.

California’s poverty rate is at its highest point in 15 years and has increased by more than one third — from 12.2 percent to 16.9 percent — since the year before the Great Recession began. About one in six Californians were living in poverty in 2011, according to the most recent Census figures. That means that there are more Californians living in poverty than there are residents of the cities of Los Angeles, San Diego, and San Francisco combined.

California’s child poverty rate is even higher than that of the population as a whole, with approximately one out of four children (24.3 percent) living in poverty in 2011. The long-term consequences for children raised in poverty include lower levels of educational attainment and lower earnings as adults. Childhood poverty not only can mean a life of hardship for individual children — a reason for concern in its own right — but also can impose significant costs on society as a whole through these children’s lost potential.

Meanwhile, California’s weak job market poses a serious and persistent challenge. The state’s current jobless rate of 9.8 percent is still nearly double the rate before the Great Recession began. Only recently — in November 2012 — did the jobless rate finally reach single digits after spending 45 consecutive months in double figures. Long-term unemployment remains near a record high, with more than one in three of California’s unemployed reporting that they have been searching for a job for at least one year.

Our state’s budget policy choices should reflect the fact that many Californians are still confronting the harsh aftereffects of the Great Recession. As lawmakers consider the Governor’s budget proposal and work toward a budget agreement in the coming months, priority should be given to strengthening programs and services — such as child care — that help individuals find and keep jobs and also to ensuring a strong social safety net for those struggling to make ends meet. Wise investment of state dollars can help blunt the impact of our state’s economic challenges while also speeding the state’s recovery and laying the groundwork for widely shared prosperity over the long term.

— Phaelen Parker

State Poverty Rate Remains at One in Six

September 12, 2012

Census Bureau data released today show that 6.4 million Californians – about one in six state residents – were living in poverty in 2011. That means there were more Californians living in poverty last year than there were residents of the cities of Los Angeles, San Diego, and San Francisco combined. The state’s poverty rate increased by a statistically significant 4.7 percentage points from 12.2 percent in 2006, the year before the Great Recession began, to 16.9 percent in 2011 – the highest poverty rate in 15 years. The change in the poverty rate between 2010 and 2011 was not statistically significant.

Children represent a disproportionate share of Californians living in poverty. While individuals under age 18 accounted for only one-quarter (24.7 percent) of the state’s residents in 2011, they accounted for more than one-third (35.6 percent) of Californians living in poverty that year. The child poverty rate also far exceeds that for adults. Approximately one out of four children (24.3 percent) lived in poverty last year, compared to 15.6 percent of Californians ages 18 to 64.

California’s child poverty rate is particularly troubling given research documenting lasting consequences for children raised in poverty, from lower levels of educational attainment to lower earnings as adults. Childhood poverty not only can mean a life of hardship for individual children – a reason for concern in its own right – but also can impose significant costs to society as a whole through these children’s lost potential.

The Census data released today highlight the importance of fostering a faster recovery in California’s job market by avoiding deeper state spending cuts that cost jobs. Poverty tends to rise and fall in tandem with unemployment, and the state’s jobless rate has remained stubbornly high – in recession-like double digits – due to limited job growth since the national recession ended more than three years ago. As we documented in a recent report, continued job losses due to budget cuts are partly to blame for holding back California’s job market recovery. K-12 public schools and community colleges, for example, have lost tens of thousands of jobs since the downturn ended, and these job losses have offset a portion of the state’s private sector job gains.

This November, voters will have the opportunity to approve new revenues that not only would prevent significant midyear cuts to public schools, colleges, and universities – the building blocks of a strong economy – but also could help avoid deeper cuts to the state’s social safety net at a time when millions of Californians remain in poverty in the aftermath of the Great Recession. By raising significant new revenues – predominantly from the wealthiest 1 percent of Californians – Proposition 30 would begin to reverse years of disinvestment in our state and create a solid foundation on which to rebuild, as we discuss in our analysis of the measure published yesterday.

— Alissa Anderson