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Program Enhancements and Other Adjustments
Department of Social Services
The Department of Social Services (DSS) provides aid, service, and protection to children and adults in need of assistance. DSS programs are aimed at promoting the well-being of children, strengthening families, and helping adults and parents achieve their potential for economic self-sufficiency.
The Governor's Budget includes $18.7 billion ($8.9 billion General Fund) for the DSS, a decrease of $329.9 million General Fund from the revised 2006-07 budget and $214.3 million General Fund from the Budget Act of 2006.
CALIFORNIA WORK OPPORTUNITY AND RESPONSIBILITY TO KIDS
The California Work Opportunity and Responsibility to Kids (CalWORKs) program, California's version of the federal Temporary Assistance for Needy Families (TANF) program, replaced the Aid to Families with Dependent Children program on January 1, 1998. CalWORKs is California's largest cash aid program for children and families and is designed to provide temporary assistance to meet basic needs (shelter, food, and clothing) in times of crisis. While providing time-limited assistance, the program promotes self-sufficiency by establishing work requirements and encouraging personal accountability. The program recognizes the different needs of each county and affords them program design and funding flexibility to ensure successful implementation at the local level.
Total CalWORKs expenditures of $7 billion (state, local, and federal funds) are proposed for 2007-08, including TANF and maintenance-of-effort (MOE) countable expenditures. The amount budgeted includes $4.8 billion for CalWORKs program expenditures within the DSS budget, $136.8 million in county expenditures, $1.9 billion in other programs, and $150.1 million for a CalWORKs program reserve. Other programs include expenditures for the Statewide Automated Welfare System, Child Welfare Services, California Food Assistance Program, State Supplementary Payment, Foster Care, State Department of Education child care (including after school programs), California Community Colleges child care and education services (including fee waivers), DCSS disregard payments, DDS programs, and Cal Grants (see Figure HHS-09). The $1.9 billion in other programs includes expenditures of $203 million counted toward the MOE in excess of the federally-required level, which is described in greater detail below.
After many years of decline, caseload is projected to increase on the natural by a modest amount in 2007-08. Absent the program changes described below, the average monthly caseload in this program is estimated to be 468,000 families in 2007-08, a 0.1-percent increase over the 2006-07 projection. The proposed changes to CalWORKs are estimated to reduce the 2007-08 caseload projection to 412,600 families, an 11.7-percent decrease from the 2006-07 estimate.
Impetus for Change
Because many recipients are not working sufficient hours to meet the federal work participation requirements, California's work participation rate has ranged from a high of over 40 percent in 1999 to less than 24 percent currently. In the past, California met the federal requirements due to significant caseload reduction credits allowed under the original federal welfare reform. The federal DRA reauthorized the TANF program and made changes that will require California to increase work participation rates of individuals receiving assistance funded with TANF and matching MOE resources or face substantial fiscal penalties.
Even with the $230 million investment made in the Budget Act of 2006 taken into consideration, full implementation of current policies is not expected to increase work participation rates enough to meet the federal requirement for at least 50 percent work participation among all families. The Governor's Budget proposes to implement changes that place a greater emphasis on work participation and personal responsibility, improve California's ability to meet federal requirements, and increase program efficiencies. These changes are necessary not only to meet the federal work participation rate requirements but also to refocus the program on engaging individuals in work to become self-sufficient. The following key policy objectives continue to serve as a foundation for the Administration's CalWORKs proposal:
- Emphasize the shared responsibility of government and participants to help families prepare for and achieve self-sufficiency through work.
- Continue to focus on employment to maximize participation in the workforce and decrease dependence upon aid.
- Create incentives for counties to utilize available resources more effectively and efficiently and reward the achievement of welfare-to-work goals.
- Maintain support services necessary to transition recipients to the workforce.
- Maintain a statewide safety net for low-income families.
- Maximize available federal block grant funds and the federally-required level of state funds.
- Align benefit levels with TANF programs in other states to ensure the long-term viability of the program.
Increase Accountability and Improve CalWORKs Outcomes
California's policy to date has been to limit total CalWORKs spending to only the TANF Block Grant (including carryover balances) and the required MOE amount. However, the Governor's Budget identifies MOE expenditures in excess of the required level to achieve a greater caseload reduction credit, as allowable by the federal government. The DRA expanded MOE-eligible spending to include certain expenditures for non-assistance benefits and services. This allows additional expenditures of $203 million to be counted towards the CalWORKs MOE within the State Department of Education child care and after school programs, increasing California's caseload reduction credit by an estimated 5 percent.
Major programmatic changes that place greater emphasis on work participation and reduce reliance upon public assistance are necessary to significantly improve the ability of the state and counties to meet federal work requirements in the TANF program. Failure to do so will result in substantial federal penalties to the state and counties. California must realign its welfare policies while maintaining CalWORKs' core goals to minimize the risk of penalties and improve program outcomes. Key components of this effort include:
- Implement Full Family Sanctions - This proposal strengthens work requirements and recipient accountability by imposing full sanctions for families when the adult continues to not comply with program requirements beyond 90 days. A full family sanction policy will reduce prolonged noncompliance while providing a reasonable timeframe to achieve compliance during which benefits are still available. This component will increase California's work participation rate by 9 percent.
- Modify the Safety Net Program - The current safety net program minimizes the incentive for families to become self-sufficient. This proposal would reward working families by continuing safety net benefits for families beyond their 60-month time limit only if they meet federal work participation requirements. This component will increase the state's work participation rate by 4 percent.
- Consistent Child-Only Benefits - The Administration proposes to provide cash aid for families receiving child-only benefits that are consistent with other CalWORKs families. As such, aid to families receiving child-only benefits will be limited to 60 months. These families include parents or caretakers who are undocumented non-citizens, drug felons or fleeing felons.
- Semi-Annual Reporting - The Administration proposes to modify the process for redetermining benefit levels for CalWORKs and Food Stamp recipients and to change the reporting frequency for recipients from quarterly to semi-annually. This change will simplify the process for both county staff and recipients, will increase the state's ability to track recipients' work participation, and will align California's reporting frequency with that of other states. The goal is to have this component ready for implementation in 2008-09.
To provide recipients sufficient time to comply with work requirements, these reform measures will become effective on November 1, 2007, and are estimated to provide net savings of $324.4 million in 2007-08 and $426 million annually thereafter. With these reforms, the Governor's Budget proposes to maintain the $230 million included in the Budget Act of 2006 to support CalWORKs program improvements, including $90 million for counties to implement program improvements that lead to better outcomes and increased work participation rates for CalWORKs recipients and $140 million to support county administration. The Governor's Budget makes available $40 million in Pay for Performance incentive funds for those counties that achieve improved program outcomes during 2006-07. The combination of CalWORKs reform and county efforts will position counties to increase work participation rates, meet federal requirements, avoid penalties, and successfully move families from welfare to work.
Utilize Proposition 98 Funds to Fully Fund Stage 2 Child Care
Utilizing available Proposition 98 resources in lieu of federal TANF funds to fully fund Stage 2 child care, which is administered by the State Department of Education, maintains child care services while providing significant General Fund relief in CalWORKs. This funding shift will result in savings of $268.9 million in 2007-08 and annually thereafter.
Suspend the July 1, 2007, CalWORKs Maximum Aid Payment Cost-of-Living Adjustment (COLA)
Suspending the 2007-08 COLA will help to alleviate the state's structural deficit without reducing benefits to CalWORKs families. This proposal will result in savings of $140.3 million in 2007-08 and annually thereafter. California's grant levels are currently the highest among the ten most populous states.
Adjust the Single Allocation to Account for Unspent Fraud Recovery Incentives
Savings of $16 million are achieved in 2007-08 through a one-time reduction in the counties' single allocation funding for employment services, child care, and administration. Counties can backfill the reduction with fraud recovery incentive funds previously earned and allocated to counties, but not spent.
Increase Employment Training Fund for CalWORKs
Additional Employment Training Fund revenues are available in 2007-08 to support CalWORKs employment services. This will achieve one-time General Fund savings of $15 million with no impact to recipient families and still allow for an increase in the Employment Training Panel's appropriation compared to the Budget Act of 2006.
Offset General Fund Costs in Child Welfare Services
A portion of the TANF savings generated by the above proposals will be used to offset 2007-08 General Fund costs in the Child Welfare Services (CWS) emergency assistance program by $36.4 million. The availability of $20 million in TANF carryover funds from 2006-07 will increase these General Fund savings to $56.4 million. The use of TANF to fund these CWS expenditures does not negatively impact the state's ability to meet federal work participation requirements.
SUPPLEMENTAL SECURITY INCOME/STATE SUPPLEMENTARY PAYMENT
The federal Supplemental Security Income (SSI) program provides a monthly cash benefit to eligible aged, blind, and disabled persons who meet the program's income and resource requirements. In California, the SSI payment is augmented with a State Supplementary Payment (SSP) grant. These cash grants assist recipients with basic needs and living expenses. The federal Social Security Administration administers the SSI/SSP program, making eligibility determinations and grant computations and issuing combined monthly checks to recipients.
The Governor's Budget proposes $3.9 billion General Fund for the SSI/SSP program in 2007-08. This represents a 9.9-percent increase from the revised 2006-07 budget. The caseload in this program is estimated to be 1.3 million recipients in 2007-08, a 2.1-percent increase over the 2006-07 projected level. The SSI/SSP caseload consists of 29 percent aged, 2 percent blind and 69 percent disabled persons. The overall General Fund contribution to SSI/SSP is projected to grow in 2007-08 by $350.1 million from the revised 2006-07 expenditure level.
The Governor's Budget includes $216.7 million General Fund in 2007-08 to provide the January 2008 state SSI/SSP COLA. SSI/SSP recipients will receive grant increases due to a projected 1.2-percent federal COLA and an estimated 4.2-percent state COLA. Beginning in January 2008, monthly grant payment levels are estimated to increase from $856 to $892 for aged or disabled individuals and from $1,502 to $1,565 for aged or disabled couples. With these increases, California's SSI/SSP payment levels for individuals and couples are expected to maintain rankings of second and first in the nation, respectively.
IN-HOME SUPPORTIVE SERVICES
The In-Home Supportive Services (IHSS) program provides support services, such as house cleaning, transportation, personal care services, and respite care to eligible low-income aged, blind, and disabled persons. These services are provided in an effort to allow individuals to remain safely in their homes and prevent institutionalization.
The Governor's Budget proposes $1.5 billion General Fund for the IHSS program. The average monthly caseload in this program is estimated to be 395,100 recipients in 2007-08, a 5.4-percent increase over the 2006-07 projected level.
Controlling Program Growth
Total IHSS expenditures continue to grow much faster than IHSS caseload. Specifically, General Fund expenditures for the IHSS program are projected to have grown by approximately 147 percent from 1999-00 to 2007-08, while caseload is estimated to have grown by less than 75 percent during the same period. This is predominantly due to an increase in costs per case attributable to wage and benefit increases. The IHSS Quality Assurance Program was implemented in 2004-05 to ensure that individuals receive necessary services consistently and help control costs. While growth in costs initially slowed under this program, savings have not materialized as expected.
Given the state's fiscal constraints, it is necessary to limit the state's share of cost in this program. By maintaining state participation at the combined wage and benefit levels in effect as of January 10, 2007, significant reductions to services can be avoided. Future increases in wages and benefits that are collectively bargained at the local level would be financed by the counties and federal government. Absent this proposal, given the projected growth in statewide revenues, state participation in IHSS wages and benefits would increase from $11.10 per hour to $12.10 per hour in 2007-08. Freezing state participation will result in General Fund savings of $14.1 million by avoiding this increase and lead to significant future cost savings.
CHILD WELFARE SERVICES
The child welfare system in California provides a continuum of services through programs, including CWS, Child Abuse Prevention, Foster Care, Adoption Assistance, and adoptions to children who are either at risk of or have suffered abuse and neglect. The Governor's Budget includes $4 billion ($1.6 billion General Fund) to provide assistance payments and services to children and families under these programs. This is a $94.4 million increase (a decrease of $43.9 million General Fund), or 2.4-percent increase from the revised 2006-07 budget.
CWS has evolved into an outcome-focused program with the implementation of the federal Child and Family Services Review and the new California Outcome and Accountability System. These protocols establish a comprehensive process to measure program performance and track improvement in California's child welfare services delivery system. Program success is measured in terms of improving the safety, permanence, and well-being of children and families served.
The state has made significant improvements by successfully complying with 10 of 14 federal outcome measures it had previously failed. The Governor's Budget maintains last year's investment and includes an additional $5.4 million ($2.9 million General Fund) in 2007-08 for additional programmatic investments designed to ensure the safety of children and improve outcomes. Specifically, these investments include:
- $3.2 million ($2 million General Fund) for probation specific activities related to the implementation and completion of the county system improvement plans. Funds would pay for strategies designed to improve outcomes for children and families under the jurisdiction of the juvenile justice system and placed in out-of-home care by county probation departments.
- $1 million ($0.3 million General Fund) to strengthen state leadership and accountability and improve outcomes in CWS. This funding would be used to improve the identification of mental health and developmental needs of children and youth in foster care and access to mental health treatment resources for children and youth in foster care and children and youth at risk of foster care entry. This proposal includes funding to prevent child trafficking in inter-country adoptions through compliance with new federal requirements.
- $1 million ($0.5 million General Fund) to establish a Child and Family Services Review Unit to oversee data quality and integrity, monitor program performance, and ensure compliance with the federal Child and Family Services Review. This proposal seeks to improve performance in meeting federal outcomes and generally improve the provision of child welfare services. Funding for county staff costs and a contractor to prepare the state for the next federal review is included.
- $0.2 million ($0.1 million General Fund) to support the California Child Welfare Council, which was created by Chapter 384, Statutes of 2006 (AB 2216) to serve as an advisory body to the courts and various agencies that provide services to children and youth receiving child welfare services.
COMMUNITY CARE LICENSING
The Community Care Licensing program directly licenses and monitors approximately 76,000 community care facilities and provides oversight, direction, and training to counties that license approximately 11,000 additional facilities. These facilities include child day care, children's residential, and elderly residential and day support facilities and serve approximately 1.4 million clients statewide. The Governor's Budget includes $119.9 million ($38.2 million General Fund) for licensing activities that promote the health, safety, and quality of life of each person in community care facilities. This is a $7.1 million ($5.9 million General Fund), or 6.3-percent, increase from the revised 2006-07 budget.
The Governor's Budget includes $6.6 million ($6.1 million General Fund) for investments in the licensing program designed to increase protections for clients in licensed facilities and improve the efficiency and effectiveness of the Community Care Licensing program. Specific investments include:
- $4.3 million ($4.1 million General Fund) and 58.5 positions to increase the number of random sample licensing visits from 20 percent to 30 percent annually to comply with statutory requirements. The Administration also proposes to modify the requirement for increasing the random sample based upon growth in citations to account for increases in visits.
- $1.7 million ($1.5 million General Fund) to implement a Licensing Reform Automation Project to improve limitations and weaknesses of information technology systems supporting the licensing program. This augmentation will provide automated tools to enable licensing staff to conduct more follow-up visits and better focus on the health and safety of clients in care.
- $0.6 million ($0.5 million General Fund) and 6.5 positions for follow-up visits when a Temporary Suspension Order, Revocation, or Exclusion Order has been served to ensure that the facility has ceased operation or that the excluded individuals are no longer at the facility. Proper follow-up will further enhance client protections.
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